EXHIBIT 1
SECURITY CAPITAL GROUP INCORPORATED
17,365,000 Shares of Class B Common Stock
Underwriting Agreement
September ____, 1997
X.X. Xxxxxx Securities Inc.
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
As Representatives of the several Underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), proposes to issue and sell to the several Underwriters listed in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), an aggregate of 15,100,000 shares of
Class B Common Stock, $.01 par value per share, of the Company (the
"Underwritten Shares") and, for the sole purpose of covering over-allotments in
connection with the sale of the Underwritten Shares, at the option of the
Underwriters, up to an additional 2,265,000 shares of Class B Common Stock of
the Company (the "Option Shares"). The Underwritten Shares and the Option Shares
are herein referred to as the "Shares". The shares of Class A Common Stock, $.01
par value per share, and Class B Common Stock of the Company to be outstanding
after giving effect to the sale of the Shares are herein referred to as the
"Common Stock". The Common Stock, including the Shares, have and will have
attached thereto rights (the "Rights") to purchase shares of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Participating
Preferred Shares"). The Rights are to be issued pursuant to a Rights Agreement
(the "Rights Agreement") dated as of April 21, 1997 between the Company and The
First National Bank of Boston, as Rights Agent.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-1, as amended on Form S-11, including a prospectus, relating
to the Shares and the Rights relating thereto. The registration statement, as
amended at the time when it shall become effective including information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is referred to in
this Agreement as the "Registration Statement", and the prospectus in the form
first used to confirm sales of Shares is referred to in this Agreement as the
"Prospectus". If the Company files or has filed on the date hereof an
abbreviated registration statement pursuant to Rule 462(b) under the Securities
Act (the "Rule 462 Registration Statement") in connection with the transactions
contemplated hereby, then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
It is understood that on April 18, 1997, the Company completed a
recapitalization of its authorized and outstanding stock to (i) cause the then
outstanding common stock of the Company to be reclassified as Class A Common
Stock, (ii) authorize the creation of Class B Common Stock on the terms set
forth in the Company's Amended and Restated Articles of Incorporation (the
"Articles") and (iii) effect certain other changes to the Articles relating to
the authorized and outstanding stock of the Company.
It is further understood that, as further described in the Prospectus, the
Company and each of Security Capital Atlantic Incorporated ("Atlantic"),
Security Capital Pacific Trust ("PTR") and Security Capital Industrial Trust
("SCI") entered into separate Merger and Issuance Agreements dated as of March
24, 1997, each as amended, pursuant to which (i) the Company has transferred by
merger its ownership interests in certain of its affiliates providing REIT
management and property management services to newly formed subsidiaries of each
of Atlantic, PTR and SCI, respectively, in exchange for additional shares of
common stock of Atlantic and additional common shares of beneficial interest of
PTR and SCI, respectively (the "Mergers"), (ii) each of Atlantic, PTR and SCI
have completed rights offerings conducted in connection with the Mergers to
permit common shareholders of such entities to subscribe for additional common
shares of such respective entities and (iii) the Company has agreed to issue
warrants to acquire an aggregate of up to $250 million of its Class B Common
Stock (the "Warrants") to Atlantic common shareholders, PTR common and
2
convertible preferred shareholders and SCI common and convertible preferred
shareholders and holders of certain limited partnership interests in
partnerships for which SCI is the general partner (in each case other than the
Company), following completion of the offering contemplated hereby in the manner
and on the terms described in the Prospectus.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share of
$[_____] (the "Purchase Price"); provided that with respect to the Firm Shares
which may be purchased from the Underwriters by Security Capital Group U.S.
Realty ("U.S. Realty"), the purchase price per share shall be $_______.
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as hereinafter provided, and the Underwriters on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company the Option Shares at the Purchase Price, for the
sole purpose of covering over-allotments (if any) in the sale of Underwritten
Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number increased as set forth in Section 9 hereof)
bears to the aggregate number of Underwritten Shares being purchased from the
Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Representatives in their sole discretion
shall make.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as
to which the option is being exercised and the date and time when the Option
Shares are to be delivered and paid for, which may be the same date and time as
the Closing Date (as hereinafter defined) but shall not be earlier than the
Closing Date nor later than the third full Business Day (as hereinafter defined)
after the date of such notice (unless such time and date are postponed in
accordance with
3
the provisions of Section 9 hereof). Any such notice shall be given at least
two Business Days prior to the date and time of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus;
provided that with respect to up to ________ Firm Shares which may be purchased
from the Underwriters by SCPG Holdings Pte. Ltd., such Firm Shares will be sold
at the Purchase Price.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
(no later than noon the Business Day prior to the Closing Date) in the case of
the Underwritten Shares, on [_____], 1997, or at such other time on the same or
such other date, not later than the fifth Business Day thereafter, as the
Representatives and the Company may agree upon in writing or, in the case of the
Option Shares, on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option Shares. The
time and date of such payment for the Underwritten Shares is referred to herein
as the "Closing Date" and the time and date for such payment for the Option
Shares, if other than the Closing Date, are herein referred to as the
"Additional Closing Date". As used herein, the term "Business Day" means any day
other than a day on which banks are permitted or required to be closed in New
York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of X.X. Xxxxxx Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
4
(a) no order preventing or suspending the use of any preliminary
prospectus included in the Registration Statement prior to its
effectiveness has been issued by the Commission, and the preliminary
prospectus dated August 22, 1997 filed as part of the Registration
Statement, complied when used in all material respects with the Securities
Act, and each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, did 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; provided
that the foregoing representations and warranties shall not apply to any
statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended
or supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the foregoing representations and
warranties shall not apply to statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use therein;
(c) the financial statements, and the related notes thereto, of (i)
the Company and its consolidated subsidiaries, (ii) PTR, (iii) SCI and (iv)
USRealty, included in the Registration Statement and the Prospectus present
fairly the consolidated financial position of each such entity as of
5
the dates indicated and the results of their respective operations and
changes in their respective consolidated cash flows for the periods
specified; said financial statements have been prepared in conformity with
United States generally accepted accounting principles, and with respect to
USRealty, Luxembourg regulatory requirements, applied on a consistent
basis, and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein;
(d) the compound annual return and average annual total return
percentages for investments in Xxxxxxxx, XXX, XXX and USRealty and the
annualized return for investments in Homestead Village Incorporated
("Homestead") included in the Registration Statement and Prospectus under
the caption "Business" have been calculated as described in the
Registration Statement and Prospectus and present fairly on the basis
described the compound annual return, average annual total return and
annualized return, as the case may be, for investments in each relevant
entity for the periods indicated;
(e) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as described in or
contemplated by the Prospectus there has not been any change in the Common
Stock (except for non-material changes due to the grant or exercise of
stock options in the ordinary course) or increase in the long-term debt of
the Company or any material change in the stock or long-term debt of
Atlantic, Homestead, PTR, SCI, USRealty or SC Realty Incorporated (each a
"Principal Affiliate" and, collectively, the "Principal Affiliates"), or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, prospects, financial
position, stockholders' equity or results of operations (a "Material
Adverse Change") of the Company and its direct or indirect interests in the
Principal Affiliates, taken as a whole (the "SCGI Group"), otherwise than
as set forth or contemplated in the Prospectus;
(f) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Maryland, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
other than where the failure to be so qualified or in good standing would
not reasonably be expected to have a material adverse
6
effect on or affecting the business, prospects, financial position,
stockholders' equity or results of operations (a "Material Adverse Effect")
of the SCGI Group.
(g) each of the Company's direct or indirect subsidiaries or
affiliated entities identified on Exhibit A hereto (each a "Specified
Affiliate") has been duly organized and is validly existing as a
corporation or real estate investment trust, as the case may be, under the
laws of its jurisdiction of organization, with power and authority
(corporate, partnership and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified for
the transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group; and all the outstanding
shares of stock or common shares of each Principal Affiliate owned directly
or indirectly by the Company have been duly authorized and validly issued,
are fully-paid and, with respect to Principal Affiliates that are
corporations, non-assessable, and are owned directly or indirectly by the
Company free and clear of all liens, encumbrances, security interests and
claims, except as set forth in the Prospectus or as have been established
or permitted to remain pursuant to financing arrangements entered into in
the ordinary course of business;
(h) the Company has the equity interest in Atlantic, Xxxxxxxxx, XXX,
XXX and USRealty in the percentage amounts set forth in the Prospectus, and
USRealty has the equity interest in CarrAmerica Realty Corporation, Storage
USA, Inc., Regency Realty Corporation and Pacific Retail Trust in the
percentage amounts set forth in the Prospectus, except in each case for
non-material changes due to the grant or exercise of stock options in the
ordinary course;
(i) this Agreement has been duly authorized, executed and delivered by
the Company;
(j) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized stock conforms as to legal matters to the
description thereof set forth in the Prospectus, and all of the outstanding
shares of stock of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable and are not subject to any
preemptive or similar rights; and, except as described in or contemplated
by the Prospectus, there are no outstanding rights (including, without
7
limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of stock or
other equity interest in the Company or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company, any such convertible or
exchangeable securities or any such rights, warrants or options;
(k) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and will conform to the
descriptions thereof in the Prospectus; and the issuance of the Shares is
not subject to any preemptive or similar rights;
(l) the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the
Company and, when issued upon issuance of the Shares, will be validly
issued, and the Participating Preferred Shares have been duly authorized by
the Company and validly reserved for issuance upon the exercise of the
Rights and when issued upon such exercise in accordance with the terms of
the Rights Agreement, will be validly issued, fully paid and non-
assessable;
(m) neither the Company nor any of its Specified Affiliates is, or
with the giving of notice or lapse of time or both would be, in violation
of or in default under, its charter, declaration of trust, or by-laws, as
applicable, or any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its Specified
Affiliates is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults which
individually and in the aggregate would not reasonably be expected to have
a Material Adverse Effect on the SCGI Group; the issue and sale of the
Shares and the performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein will
not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
of its Specified Affiliates is a party or by which the Company or any of
its Specified Affiliates is bound or to which any of the property or assets
of the Company or any of its Specified Affiliates is subject except for
such conflicts, breaches or defaults that would not reasonably be expected
to have a Material Adverse Effect on the SCGI Group, nor will any such
action result in any violation of any applicable
8
law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, its
Specified Affiliates or any of their respective properties except for such
violations that would not reasonably be expected to have a Material Adverse
Effect on the SCGI Group, nor will any such action result in any violation
of the provisions of the Articles or the by-laws of the Company; and no
consent, approval, authorization, order, license, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(n) other than as described in or contemplated by the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Specified Affiliates or any of their
respective properties or to which the Company or any of its Specified
Affiliates is or may be a party or to which any property of the Company or
any of its Specified Affiliates is or may be subject which, if determined
adversely to the Company or any of its Specified Affiliates, could
individually or in the aggregate have, or reasonably be expected to have, a
Material Adverse Effect on the SCGI Group, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required;
(o) the Company and its Specified Affiliates have directly or
indirectly good and marketable title in fee simple or in leasehold
interest, as the case may be, to all items of real property and good and
marketable title to all personal property owned by them except where the
failure to have such good and marketable title would not be expected to
have a Material Adverse Effect on the SCGI Group, in each case free and
clear of all liens, encumbrances and defects except such as have been
established or permitted to remain pursuant to financing arrangements
entered into in the ordinary course of business or such as do not
materially affect the value of such property and do not interfere with the
use made or proposed to be made of such property by such entity; and any
real property and
9
buildings held under lease by the Company and its Specified Affiliates are
held by them under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company or its
Specified Affiliates;
(p) no person has the right to require the Company to include any
securities owned by such person in the securities registered pursuant to
the Registration Statement;
(q) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(r) (i) Xxxxxx Xxxxxxxx, LLP, who have certified certain financial
statements of the Company and its subsidiaries and SCI and its
subsidiaries, (ii) Ernst & Young LLP, who have certified certain financial
statements of Atlantic and its subsidiaries and Homestead and its
subsidiaries, (iii) KPMG Peat Marwick LLP, who have certified certain
financial statements of PTR and its subsidiaries and (iv) Price Xxxxxxxxxx
X.X., who have certified certain financial statements of USRealty and its
subsidiaries, are each independent public accountants as required by the
Securities Act;
(s) the Company and its Principal Affiliates have filed all federal,
state, local and foreign tax returns which have been required to be filed
and have paid all taxes shown thereon and all assessments received by them
or any of them to the extent that such taxes have become due and are not
being contested in good faith; and, there is no tax deficiency which has
been or might reasonably be expected to be asserted or threatened against
the Company or any Principal Affiliate except such asserted or threatened
deficiencies that would not reasonably be expected to have a Material
Adverse Effect on the SCGI Group;
(t) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Class A Common Stock or the Class B Common Stock in violation of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "Exchange Act");
10
(u) except as would not have a Material Adverse Effect on the SCGI
Group, (i) each of the Company and its Specified Affiliates owns, possesses
or has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, and (ii) neither the
Company nor any such Specified Affiliates has received any actual notice of
any proceeding relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other authorization; and
each of the Company and its Specified Affiliates is in compliance with all
laws and regulations relating to the conduct of its business as conducted
as of the date hereof except such as would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group;
(v) there are no existing or, to the best knowledge of the Company,
threatened employment or labor disputes with the employees of the Company
or any of its Principal Affiliates which are reasonably likely to have a
Material Adverse Effect on the SCGI Group;
(w) the Company and its Specified Affiliates (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect on the
SCGI Group;
(x) there are no costs or liabilities associated with Environmental
Laws that are expected to, individually or in the aggregate, have a
Material Adverse Effect on the SCGI Group;
11
(y) except as described in or contemplated by the Prospectus, the
Company and its Specified Affiliates own or possess all material licenses,
inventions, copyrights, know-how (including trade secrets and other
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and other intellectual property
rights ("Intellectual Property") currently employed by them in connection
with the business now operated by them, and neither the Company nor any
Specified Affiliate has received any notice of infringement of or conflict
with asserted rights of others with respect to the Intellectual Property
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect on the
SCGI Group;
(z) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company or any of
its Principal Affiliates for employees or former employees of the Company
and its Principal Affiliates has been maintained in substantial compliance
with its terms and the requirements of any applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"); to the best knowledge of the
Company no prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code has occurred with respect to any such
plan, excluding transactions effected pursuant to a statutory or
administrative exemption; for each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived;
(aa) the assets of the Company do not constitute "plan assets" within
the meaning of Department of Labor Regulation Section 2510.3-101 under
ERISA;
(bb) the Company is not a "United States real property holding
corporation" within the meaning Section 897(c)(2) of the Code;
(cc) USRealty is not a "passive foreign investment company" within the
meaning of Section 1296(a) of the Code or subject to the accumulated
earnings tax for United States income tax purposes; and
(dd) subsequent to completion of the Mergers and on the date hereof,
each of Atlantic, PTR and SCI continues to satisfy the requirements for
qualification as a real estate investment trust under
12
Section 856 through 860 of the Code and the rules and regulations
thereunder and the Company reasonably expects that each of the such
entity's current method of operation will enable it to meet the
requirements for taxation as a real estate investment trust under the Code
for the fiscal year ending December 31, 1997.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its reasonable best efforts to cause the Registration
Statement to become effective at the earliest possible time and, if
required, to file the final Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rule 430A under the Securities Act and
to use its reasonable best efforts to furnish copies of the Prospectus to
the Underwriters in New York City, on the Business Day next succeeding the
date of this Agreement in such quantities as the Representatives may
reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
a total of four signed copies of the Registration Statement (as originally
filed) and each amendment thereto, in each case including exhibits, and to
each other Underwriter a conformed copy of the Registration Statement (as
originally filed) and each amendment thereto, in each case without exhibits
and, during the period mentioned in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments and
supplements thereto) as the Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly (i) when the Registration
Statement has become effective, (ii) when any amendment to the Registration
Statement has been filed or becomes effective, (iii) when any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for any additional information, (v) of the
issuance by the Commission of any stop
13
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or the
Prospectus or the initiation or threatening of any proceeding for that
purpose, (vi) of the occurrence of any event, within the period referenced
in paragraph (e) below, as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, and (vii) of the receipt by the Company of
any notification with respect to any suspension of the qualification of the
Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its reasonable
best efforts to prevent the issuance of any such stop order, or of any
order preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any order suspending any such qualification of the
Shares, or notification of any such order thereof and, if issued, to use
its reasonable best efforts to obtain as soon as possible the withdrawal
thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with federal or applicable state securities law, reasonably promptly
to prepare and furnish, at the expense of the Company if delivery of the
Prospectus is required at any time prior to the expiration of 9 months
after the Closing Date (and at the expense of such Underwriters if delivery
of the Prospectus is required 9 months or more after the Closing Date), to
the Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Shares may have been
sold by the Representatives on behalf of the Underwriters and to any other
dealers upon request, such amendments or supplements to the Prospectus as
may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with federal or applicable state securities law;
(f) to make generally available to its security holders and to the
Representatives as soon as practicable an earning statement covering a
14
period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder;
(g) for two years from the date of this Agreement, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(h) for a period of 180 days after the date of the Prospectus, without
the prior written consent of X.X. Xxxxxx Securities Inc., on behalf of the
Underwriters, not to (i) offer, pledge, announce the intention to sell,
sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences of ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, other than (1)
pursuant to employee or director stock option plans, (2) the conversion,
exchange, redemption or retirement of convertible or exchangeable
securities, whether or not such securities are converted, exchanged,
redeemed or retired pursuant to their terms, outstanding on the date of the
Prospectus, (3) the exercise of options or warrants to purchase securities
(including by means of a "cashless exercise"), (4) the issuance of Warrants
to purchase up to an aggregate amount of $250 million of shares of Class B
Common Stock and the issuance of shares of Class B Common Stock upon
exercise thereof, (5) the Shares to be sold hereunder and (6) the issuance
of shares of Class A Common Stock pursuant to interest reinvestment plans
relating to outstanding Convertible Debentures.
(i) to use the net proceeds received by the Company from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(j) to the extent requested by the Representatives, to endeavor to
qualify the Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Representatives shall request and to continue
such qualification in effect so long as reasonably required for
distribution
15
of the Shares; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it not currently so
qualified;
(k) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution and
delivery of the Shares, (ii) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including reasonable
fees of counsel for the Underwriters and its disbursements incurred in
connection with such registration or qualification), (iv) in connection
with the listing of the Shares on the New York Stock Exchange ("NYSE"), (v)
related to the filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc., (vi) in connection with the
printing, delivery and the furnishing to the Underwriters and dealers of
copies of the Registration Statement and the Prospectus, including mailing
and shipping, as herein provided, (vii) any expenses incurred by the
Company in connection with a "road show" presentation to potential
investors, (viii) the cost of preparing stock certificates and (ix) the
cost and charges of any transfer agent and any registrar; and
(l) to take such corporate action to confirm that any Shares to be
purchased by an Underwriter hereunder which continue to be held after the
Closing Date by such Underwriter shall be exempt from application of the
Ownership Limit (as defined in Article Fifth of the Articles) until the
earlier to occur of (x) 120 days after the Closing Date or (y) the
completion of the distribution of such Shares by such Underwriter.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:00 P.M., New York City time, on the date hereof; and no stop order
16
suspending the effectiveness of the Registration Statement or any post-
effective amendment shall be in effect, and no proceedings for such purpose
shall be pending before or threatened by the Commission; the Prospectus
shall have been filed with the Commission pursuant to Rule 424(b) within
the applicable time period prescribed for such filing by the rules and
regulations under the Securities Act and in accordance with Section 5(a)
hereof; and all requests for additional information shall have been
complied with to the reasonable satisfaction of the Representatives;
(b) The representations and warranties of the Company contained herein
are true and correct on and as of the Closing Date or the Additional
Closing Date, as the case may be, as if made on and as of the Closing Date
or the Additional Closing Date, as the case may be, and the Company shall
have complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date or the
Additional Closing Date, as the case may be;
(c) Since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the common stock (except
for non-material changes due to the grant or exercise of stock options in
the ordinary course) or increase in the long-term debt of the Company or
any material change in the stock or long-term debt of any Principal
Affiliate, or any Material Adverse Change in the SCGI Group, otherwise than
as set forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus; and neither the
Company nor any of its Principal Affiliates has sustained since the date of
the latest audited financial statements included in the Prospectus any loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute,
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus and except such loss or
interference that would not reasonably be expected to have a Material
Adverse Effect on the SCGI Group;
(d) The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of
an executive officer of the Company, with specific knowledge about the
Company's financial matters, reasonably satisfactory to the Representatives
to the effect set forth in subsections (a) through (c) (with respect to the
respective representations, warranties, agreements and
17
conditions of the Company) of this Section and to the further effect that
there has not occurred any Material Adverse Change in the SCGI Group from
that set forth or contemplated in the Registration Statement;
(e) Xxxxx, Xxxxx & Xxxxx, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) the Company has been duly incorporated and is validly
existing as a corporation under the laws of Maryland and in good
standing with the State Department of Assessments and Taxation of
Maryland, with corporate power to own its properties and conduct its
business substantially as described under the heading "Business" in
the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect on the SCGI Group;
(ii) each Principal Affiliate has been duly organized and is
validly existing as a corporation or real estate investment trust, as
the case may be, under the laws of its jurisdiction of organization
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus; and all of
the outstanding shares of stock or common shares of each Principal
Affiliate owned directly or indirectly by the Company have been duly
authorized and validly issued, are fully paid and, with respect to
Principal Affiliates that are corporations, non-assessable, and are
owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims, except as set forth in the
Prospectus or as have been established or permitted to remain pursuant
to financing arrangements entered into in the ordinary course of
business;
(iii) other than as described in or contemplated by the
Prospectus and to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Principal Affiliates or any of their respective properties or to which
the Company or any of its
18
Principal Affiliates is or may be a party or to which any property of
the Company or its Principal Affiliates is or may be the subject
which, if determined adversely to the Company or any of its Principal
Affiliates, could individually or in the aggregate have, or reasonably
be expected to have, a Material Adverse Effect on the SCGI Group and;
other than as described in or contemplated by the Prospectus and to
the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others; and such counsel does not know of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement that are not described or
filed as required;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the authorized stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained under the heading "Description of Capital Stock" in the
Prospectus;
(vi) the shares of stock of the Company outstanding prior to
the issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and non-assessable;
(vii) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when delivered to and paid
for by the Underwriters in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and
the issuance of the Shares is not subject to any preemptive or similar
statutory rights afforded by the Company;
(viii) the statements in the Prospectus under the
captions "Risk Factors -- Limitations on Acquisition of Shares and
Change of Control", "Management -- Outside Directors Plan",
"Management -- 1995 Option Plan", "Management -- Other Option Plans",
"Relationships with Operating Companies", "Certain Relationships and
Transactions", "Description of Capital Stock", "Certain Provisions of
Maryland Law and of Security Capital's Charter and Bylaws", "Shares
Available For Future Sale" and "Certain United States Federal Tax
Considerations for Non-
19
U.S. Holders of Class B Shares" and in the Registration Statement in
Items 33 and 34, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein,
fairly present in all material respects the information called for
with respect to such legal matters, documents or proceedings;
(ix) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements
thereto (other than the financial statements and related schedules and
other financial and statistical data therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and believes that (other
than the financial statements and related schedules and other
financial and statistical data therein, as to which such counsel need
express no belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that the
Prospectus, as amended or supplemented, if applicable, does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(x) neither the Company nor any of its Principal Affiliates
is, or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its charter, declaration of trust,
or by-laws or to such counsel's knowledge any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its Principal
Affiliates is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults
which individually and in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the SCGI Group; the
issue and sale of the Shares being delivered on the Closing Date or
the Additional Closing Date, as the case may be, and the performance
by the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not conflict
with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other
20
agreement or instrument known to such counsel to which the Company or
any of its Principal Affiliates is a party or by which the Company or
any of its Principal Affiliates is bound or to which any of the
property or assets of the Company or any of its Principal Affiliates
is subject, nor will any such action result in any violation of any
applicable law or statute or any order, rule or regulation of any
court or governmental agency or body known to such counsel having
jurisdiction over the Company, its Principal Affiliates or any of
their respective properties except for conflicts, breaches, defaults
or violations which would not reasonably be expected to have a
Material Adverse Effect on the SCGI Group nor will any such action
result in any violation of the provisions of the Articles or by-laws
of the Company;
(xi) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation of the other transactions contemplated by this Agreement,
except such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the
Securities Act and as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(xii) to the best of such counsel's knowledge, no person has
any right to require the Company to include any securities owned by
such person in the securities registered pursuant to the Registration
Statement; and
(xiii) the Rights Agreement has been duly authorized, executed
and delivered by the Company; the Rights have been duly authorized by
the Company and, when issued upon issuance of the Shares, will be
validly issued, and the Participating Preferred Shares have been duly
authorized by the Company and validly reserved for issuance upon the
exercise of the Rights and, when issued upon such exercise in
accordance with the terms of the Rights Agreement, will be validly
issued, fully paid and non-assessable.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of the laws (i) of the State of Maryland on an
opinion of Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, (ii) of the Grand Duchy of
Luxembourg on an opinion of Xxxxxx & Xxxxxxxxx, (iii) of the
21
State of Nevada on an opinion of Hale, Lane, Peek, Xxxxxxxx, Xxxxxx,
Xxxxxxxx and Pearl, and (iv) other than the laws of the foregoing named
jurisdictions, the United States and the State of New York to the extent
such counsel deems proper and to the extent specified in such opinion, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates
of responsible officers of the Company and its Principal Affiliates and
certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good
standing of the Company and its Principal Affiliates. The opinion of such
counsel for the Company shall state that the opinion of any such other
counsel upon which they relied is in form satisfactory to such counsel and,
in such counsel's opinion, the Underwriters and they are reasonably
justified in relying thereon. With respect to the matters to be covered in
subparagraph (ix) above such counsel may state their opinion and belief is
based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendment or supplement thereto and
review and discussion of the contents thereof but is without independent
check or verification except as specified.
The opinion of Xxxxx, Xxxxx & Xxxxx described above shall be rendered
to the Underwriters at the request of the Company and shall so state
therein.
(f) Xxxxx, Xxxxx & Xxxxx, counsel for the Company, shall have
furnished to the Representatives their reasoned written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in form
and substance reasonably satisfactory to the Representatives, to the effect
that the Company is not, and after giving effect to the offering and sale
of the Shares will not be, an "investment company" as such term is defined
in the Investment Company Act.
(g) Xxxxx, Xxxxx & Xxxxx, counsel for the Company, shall have
furnished to the Representatives an affirmation, dated the Closing Date or
the Additional Closing Date as the case may be, of their reasoned opinion
dated April 22, 1997, in form and substance satisfactory to the
Representatives to the effect that the assets of the Company do not
constitute "plan assets" within the meaning of Department of Labor
Regulation Section 2510.3-101 under ERISA.
22
(h) Xxxxxxx X. Xxxxx, General Counsel of the Company, shall have
furnished to the Representatives his written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, to the effect that:
(i) other than as described in or contemplated by the
Prospectus and to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Principal Affiliates or any of their respective properties or to which
the Company or any of its Principal Affiliates is or may be a party or
to which any property of the Company or its Principal Affiliates is or
may be the subject which, if determined adversely to the Company or
any of its Principal Affiliates, could individually or in the
aggregate have, or reasonably be expected to have, a Material Adverse
Effect on the SCGI Group; to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and such counsel does not know of
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement that are not
described or filed as required;
(ii) such counsel believes that (other than the financial
statements and related schedules and other financial and statistical
data therein, as to which such counsel need express no belief) the
Registration Statement and the prospectus included therein at the time
the Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or supplemented, if
applicable, does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(iii) neither the Company nor any of its Principal Affiliates
is, or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its charter, declaration of trust or
by-laws or any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the
Company or any of its Principal Affiliates is a party or
23
by which it or any of them or any of their respective properties is
bound, except for violations and defaults which individually and in
the aggregate would not reasonably be expected to have a Material
Adverse Effect on the SCGI Group; the issue and sale of the Shares
being delivered on the Closing Date or the Additional Closing Date, as
the case may be, and the performance by the Company of its obligations
under this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Company or any of its
Principal Affiliates is a party or by which the Company or any of its
Principal Affiliates is bound or to which any of the property or
assets of the Company or any of its Principal Affiliates is subject,
nor will any such action result in any violation of any applicable law
or statute or any order, rule or regulation of any court or
governmental agency or body known to such counsel having jurisdiction
over the Company, its Principal Affiliates or any of their respective
properties except for such conflicts, breaches, defaults or violations
which would not reasonably be expect to have a Material Adverse Effect
on the SCGI Group nor will any such action result in any violation of
the provisions of the Articles or by-laws of the Company;
(iv) no person has any right to require the Company to include
any securities owned by such person in the securities registered
pursuant to the Registration Statement;
(v) to the best of such counsel's knowledge based on
reasonable inquiry, the Company and each Principal Affiliate owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof except for such licenses, permits,
certificates, consents, orders, approvals and other authorizations,
declarations and filings as would not reasonably be expected to have a
Material Adverse Effect on the SCGI Group and neither the Company nor
to the best of such counsel's knowledge based on reasonable inquiry,
any Principal Affiliate has
24
received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, and to the best of such counsel's
knowledge based on reasonable inquiry, each of the Company and its
Principal Affiliates, is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the date of
the Prospectus except for such laws and regulations as would not
reasonably be expected to have a Material Adverse Effect on the SCGI
Group; and
(vi) to the best of such counsel's knowledge based on
reasonable inquiry, the Company and its Principal Affiliates (i) are
in compliance with any and all applicable Environmental Laws, (ii)
have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect on
the SCGI Group.
(i) On the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing
Date, as the case may be, each of Xxxxxx Xxxxxxxx LLP, KPMG Peat Marwick
LLP, Ernst & Young LLP and Price Xxxxxxxxxx X.X., shall have furnished to
the Representatives letters, dated the respective dates of delivery
thereof, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus, including
statements with respect to a review in accordance with SAS 71 of any
interim financial information contained in the Registration Statement and
Prospectus and, with respect to Xxxxxx Xxxxxxxx LLP, statements, in form
and substance satisfactory to the Representatives, with respect to their
review of the compound annual return, average annual total return and
annualized return percentages set forth under the caption "Business" in the
Registration Statement and Prospectus.
25
(j) The Shares to be delivered on the Closing Date, or Additional
Closing Date, as the case may be, shall have been approved for listing on
the NYSE, subject to official notice of issuance.
(k) The Representatives shall have received on and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Xxxxx
Xxxx & Xxxxxxxx, counsel to the Underwriters, with respect to the due
authorization and valid issuance of the Shares, the Registration Statement,
the Prospectus and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters. In rendering such opinion, such counsel may rely as to matters
involving the application of the laws of the State of Maryland on an
opinion of Xxxxxxx Xxxxx Xxxxxxx & Ingersoll.
(l) The Representatives shall have received on or prior to the
Closing Date, or the Additional Closing Date, as the case may be,
certificates from the transfer agent or registrar setting forth for (i)
each of Atlantic, Xxxxxxxxx, XXX, XXX and USRealty the number of shares of
capital stock owned by the Company and its subsidiaries in such entities
and the total amount of outstanding capital stock of such entities and (ii)
the Company the number of shares of outstanding Common Stock, in each case
as of the date of the Prospectus and as of the Closing Date or Additional
Closing Date, as the case may be.
(m) On or prior to the Closing Date or Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives
such further certificates and documents as the Representatives shall
reasonably request.
(n) Separate "lock-up" agreements, each substantially in the form of
Exhibit B hereto, between the Representatives and Security Capital Holdings
S.A., Security Capital Group Incorporated Employee Investment Partnership
and Security Capital Investment Research Group Incorporated and the
directors or executive officers of the Company relating to sales and
certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date or Additional Closing Date, as the
case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
26
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use
therein.
The Company also agrees to indemnify and hold harmless, X.X. Xxxxxx
Securities Inc. ("X.X. Xxxxxx") and each person, if any, who controls X.X.
Xxxxxx within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages and
liabilities incurred as a result of X.X. Xxxxxx'x participation as a "qualified
independent underwriter" within the meaning of the Rules of Conduct of the
National Association of Securities Dealers, Inc. in connection with the offering
of the Shares.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to any of the three
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person jointly with any other
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding
27
and shall pay the reasonable fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and in the reasonable opinion of
counsel to the Indemnified Person representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred; provided,
however that if indemnity may be sought pursuant to the second paragraph of this
Section 7 in respect of such proceeding, then in addition to such separate firm
of the Underwriters and such control persons of the Underwriters the
indemnifying party shall be liable for the fees and expenses of not more than
one separate firm (in addition to any local counsel) for X.X. Xxxxxx in its
capacity as a "qualified independent underwriter" and all persons, if any, who
control X.X. Xxxxxx within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act. Any such separate firm shall be
reasonably satisfactory to the Indemnifying Person and any such firm for the
Underwriters and such control persons of the Underwriters shall be designated in
writing by X.X. Xxxxxx Securities Inc., and any such separate firm for the
Company, its directors, its officers who sign the Registration Statement and
such control persons of the Company shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in the first, second or third
paragraphs of this Section 7 is unavailable to an Indemnified Person in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person
28
under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters or X.X. Xxxxxx in its capacity as a
"qualified independent underwriter", as the case may be, on the other hand from
the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters or
X.X. Xxxxxx in its capacity as a "qualified independent underwriter", as the
case may be, on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters or X.X. Xxxxxx in its capacity as a
"qualified independent underwriter", as the case may be, on the other shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, or the fee
received by X.X. Xxxxxx in its capacity as a "qualified independent
underwriter", as the case may be, bear to the aggregate public offering price of
the Shares. The relative fault of the Company on the one hand and the
Underwriters or X.X. Xxxxxx in its capacity as a "qualified independent
underwriter", as the case may be, on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, by the Underwriters or X.X.
Xxxxxx in its capacity as a "qualified independent underwriter", as the case may
be, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which
29
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7 are several in proportion to the respective number of Shares set forth
opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the NYSE or any other
national securities exchange or national interdealer quotation system, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities involving the United States or any change
in United States financial markets or any calamity or crisis that, in the
judgment of the Representatives, is material and adverse and which, in the
judgment of the Representatives, makes it impracticable to market the Shares
being delivered at the Closing Date or the Additional Closing Date, as the case
may be, on the terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
30
effectiveness of the Registration Statement (or, if applicable, any post-
effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as the Representatives may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements reasonably satisfactory to the Representatives
and the Company for the purchase of such Shares are not made within 36 hours
after such default, this Agreement (or the obligations of the several
Underwriters to purchase the Option Shares, as the case may be) shall terminate
without liability on the part of any non-defaulting Underwriter or the Company.
In any such case either you or the Company shall have the right to postpone the
Closing Date (or, in the case of the Option Shares, the Additional Closing
Date), but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations set forth in Section
6 cannot be fulfilled (except the condition set forth in Section 6(k), in which
case the Company shall have no such reimbursement obligation), the Company
agrees to reimburse the Underwriters or such Underwriters as have so terminated
this
31
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the reasonable fees and expenses of its counsel) reasonably incurred
by the Underwriters in connection with this Agreement or the offering
contemplated hereunder. This Agreement shall inure to the benefit of and be
binding upon the Company, the Underwriters, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
11. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax: (000) 000-0000); Attention: Syndicate Department. Notices
to the Company shall be given to it at Security Capital Group Incorporated, 000
Xxxxxxx Xxxxxx, Xxxxx Xx, XX 00000, (telefax: (000) 000-0000); Attention:
Xxxxxxx X. Xxxxx.
12. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
13. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws provisions thereof.
32
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
SECURITY CAPITAL GROUP
INCORPORATED
By:
--------------------------------------
Name:
Title:
Accepted:_________, 1997
X.X. XXXXXX SECURITIES INC.
XXXXXXX, XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
Acting severally on behalf of themselves
and the several Underwriters listed in
Schedule I hereto
By: X.X. Xxxxxx Securities Inc.,
Acting on behalf of itself and the several
Underwriters listed in Schedule I hereto
By:
-----------------------------------------
Name:
Title:
33
SCHEDULE I
Number of Shares
of Class B Common Stock
To Be Purchased
-----------------------
Underwriter
-----------
X.X. Xxxxxx Securities Inc..................
Xxxxxxx, Sachs & Co.........................
Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated.......................
--------------------
[ ]
Total....................................
====================
34
EXHIBIT A
Specified Affiliates
State of
Name Formation
---- ---------
Services Division:
SC Group Incorporated Texas
Security Capital Markets Group Incorporated Delaware
Security Capital Investment Incorporated Delaware
Security Capital (US) Management Group Delaware
Security Capital Investment Research Group Inc. Delaware
Security Capital Real Estate Research Group Maryland
Incorporated
Security Capital (EU) Management S.A. Luxembourg
New Businesses:
Belmont Corporation Maryland
SCERF Incorporated Maryland
Security Capital Employee REIT Fund Incorporated Maryland
Security Capital Preferred Growth Incorporated Maryland
Security Capital EuroPacific Real Estate Shares Maryland
Incorporated
Strategic Hotel Capital Incorporated Delaware
Security Capital Global Realty (in formation) Luxembourg
Capital Division:
SC Realty Incorporated Nevada
Security Capital Industrial Trust Maryland
Security Capital Atlantic Incorporated Maryland
Security Capital Pacific Trust Maryland
Homestead Village Incorporated Maryland
Security Capital U.S. Realty Luxembourg
Security Capital Holdings S.A. Luxembourg
CarrAmerica Realty Corporation Maryland
Regency Realty Corporation Florida
1
State of
Name Formation
---- ---------
Storage USA, Inc. Tennessee
Pacific Retail Trust Maryland
U.S. Realty New Businesses:
City Center Retail Trust Maryland
Urban Growth Property Trust Maryland
Parking Services International Incorporated Maryland
2
LOCK-UP AGREEMENT
September __, 1997
X.X. XXXXXX SECURITIES INC.
XXXXXXX, SACHS & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
As Representatives of
the Underwriters named in
Schedule I to the Underwriting
Agreement referred to below
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Security Capital Group Incorporated - Public Offering
Dear Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
Underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Security Capital Group Incorporated, a Maryland corporation
(the "Company"), providing for the public offering (the "Public Offering") by
the several Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), of Class B Common Stock, par value $.01 per share, of the
Company. The shares of Class A Common Stock, par value $.01 per share and Class
B Common Stock of the Company to be outstanding after giving effect to the sale
of the Shares (as defined in the Underwriting Agreement) are herein referred to
as the "Common Stock". Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Shares, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of X.X. Xxxxxx Securities Inc., on behalf of
the Underwriters, the undersigned will not, during the period ending 180 days
after the date of the prospectus relating to the Public Offering (the
"Prospectus"), (1)
1
offer, pledge, announce the intention to sell, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and
Exchange Commission and securities which may be issued upon exercise of a stock
option or warrant) or (2) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of X.X. Xxxxxx Securities Inc. on behalf of the Underwriters, it will
not, during the period ending 180 days after the date of the Prospectus, make
any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares to be sold thereunder, the undersigned
shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
2
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
By:_____________________________
Name:
Title:
Accepted as of the date
first set forth above:
X.X. XXXXXX SECURITIES INC.
XXXXXXX, XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I to the Underwriting Agreement.
By: X.X. Xxxxxx Securities Inc.
By: ____________________________
Name:
Title:
3