Exhibit 11
[Security Capital Group Incorporated Letterhead]
July 7, 2000
Xx. Xxxx Xxxxxxxx
Chairman, President and Chief Executive Officer
Storage USA, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000
Dear Xxxx:
Reference is made to the Strategic Alliance Agreement, dated as of March
19, 1996, by and among Storage USA, Inc., SUSA Partnership, L.P., Security
Capital Holdings S.A. and Security Capital U.S. Realty (as amended, the
"Strategic Alliance Agreement"). Capitalized terms used but not defined herein
have the meanings ascribed to such terms in the Strategic Alliance Agreement,
and if not defined therein, as defined in the Amended and Restated Charter of
the Company, as in effect as of the date hereof (the "Company Charter").
This letter is to confirm your understanding and agreement that in the
event Security Capital Group Incorporated ("Group") or any controlled Affiliate
that is at least 98% directly or indirectly owned by Group (collectively, "SCZ",
but excluding USREALTY and Buyer and any person already included within the
definition of Investor in the Strategic Alliance Agreement) should directly or
indirectly purchase or otherwise acquire all or at least 95% of the Company
Common Stock now owned by Buyer that, subject to the conditions set forth in the
following paragraph,
(i) such acquisition will not constitute a Transfer prohibited or
restricted by the Strategic Alliance Agreement (including without
limitation by Section 5.2(a)(ii) or 5.2(a)(vii) of the Strategic
Alliance Agreement) or by the Company Charter, but shall instead be
permitted as if SCZ were (and SCZ shall, from and after such
acquisition, for all purposes of the Strategic Alliance Agreement be
considered by the Company to be and treated by the Company as) an
"Investor" under the provisions of the Strategic Alliance Agreement
and, based on SCZ's representation that it is an Affiliate of USREALTY
and Buyer, a "Special Shareholder" under the Company Charter (and the
Board of Directors of the Company has also, for the avoidance of
doubt, taken action pursuant to Section 12.12 of the Company Charter
to exempt SCZ and its Affiliates from the Ownership Limit, to the
extent and with the effect that SCZ and its Affiliates will, in all
events, notwithstanding the Ownership Limit, and regardless of the
actual application of the Special Shareholder Limit, be permitted
under the Company Charter to Beneficially Own such shares of Company
Common Stock as would be permitted a Special Shareholder; in
connection with such exemption, SCZ has provided to the Company the
Representation Letter attached as Exhibit A to this letter);
(ii) SCZ will from and after such acquisition be bound by the terms and
conditions of the Strategic Alliance Agreement (and under any other
agreements between the Company and Buyer or USREALTY) to the same
extent as Investor is bound thereunder (and SCZ does hereby agree to
be so bound), shall be entitled to the same benefits and rights
thereunder (and under any other agreements between the Company and
Buyer or USREALTY), and shall for all purposes be considered to be an
"Investor" thereunder;
Xx. Xxxx Xxxxxxxx
July 7, 2000
Page 2
(iii) from and after such acquisition, Section 5.1(a)(x) of the Strategic
Alliance Agreement shall be modified to replace the words "June 5,
2003" with the words "December 5, 2004";
(iv) from and after such acquisition, Section 5.2(a)(ii) of the Strategic
Alliance Agreement shall be modified by adding the words "(as such
Company Charter is in effect on the date hereof, and without giving
effect to any challenge to the operation or legality thereof) or to
any person who, after giving effect to such Transfer, would
Beneficially Own more than 9.8% of the outstanding shares of Company
Common Stock, on a primary basis" immediately prior to the semi-colon
at the end of such Section;
(v) the provisions of Sections 6.1(a)(B), 6.1(a)(E), 6.1(b), 6.1(c) and
6.2 of the Strategic Alliance Agreement shall no longer be applicable
from and after such acquisition; and
(vi) following such acquisition, SCZ agrees to permit the Company to submit
to the shareholders of the Company for their consideration a proposal
to eliminate Section 12.21 and the definition of "Non-U.S. Person"
contained in Section 12.1 of the Company Charter, and modify
accordingly the legend contained in Section 12.13 of the Company
Charter, and SCZ will vote or cause to be voted all shares of Company
Common Stock Beneficially Owned by it in favor of such proposal.
The Company's consent to any such acquisition of Company Common Stock by
SCZ (and the application of the exemption pursuant to Section 12.12 of the
Company Charter contemplated by paragraph (i) on the first page of this letter)
is conditioned on the following:
(i) on or prior to such acquisition, no "change of control" of SCZ, as
defined below, shall have occurred and SCZ shall not have agreed to
engage in any transaction that would result in a change of control of
SCZ;
(ii) on or prior to such acquisition, (x) no default (or event or
circumstance that, with the passage of time, would result in a
default) under the Strategic Alliance Agreement shall have occurred on
the part of Security Capital U.S. Realty or Security Capital Holdings
S.A., and (y) each of such entities shall have confirmed either (A)
that it has no knowledge of any such default on the part of the
Company or the Operating Partnership or (B) shall have provided the
Company with notice of any such default that may exist;
(iii) on or prior to such acquisition, SCZ shall have provided to the
Company an opinion of its counsel reasonably satisfactory to the
Company with respect to due authorization, execution and
enforceability of the Strategic Alliance Agreement with respect to
SCZ; and
(iv) SCZ shall have consummated the purchase of the Company Common Stock
within 24 months from the date of this letter.
In addition, the application of the exemption pursuant to Section 12.12 of
the Company Charter contemplated by the first paragraph (i) above is conditioned
on the accuracy of the representations and warranties of SCZ set forth in
Exhibit A to this letter as of the date of such acquisition of Company Common
Stock by SCZ.
Xx. Xxxx Xxxxxxxx
July 7, 2000
Page 3
For purposes of this agreement, "change of control" of SCZ shall mean:
(i) any person or group (within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended) who is not already
such an owner as of the date of this letter becomes, directly or
indirectly, the beneficial owner of voting securities of Group
entitled to cast 20% or more of the votes entitled to be cast in
respect of the election of directors of Group by all outstanding
voting securities of Group;
(ii) the sale, lease or other transfer of all or substantially all of the
consolidated assets of Group to any unrelated person or group; or
(iii)Group's consolidation with or merger with or into any person if
immediately following the consummation of such transaction persons
owning a majority of the voting securities of Group outstanding prior
to such transaction cease to own a majority of the voting securities
of Group or the surviving corporation in such transaction.
This will further confirm that in the event SCZ should not directly or
indirectly purchase or otherwise acquire all or a portion of or any interest in
the Company Common Stock now owned by Buyer, SCZ will reimburse you for your
reasonable attorney's fees incurred in connection with entering into this letter
agreement (but which shall be borne by you if such an acquisition is
consummated).
Each of the parties to this letter agree that, from time to time, each of
them will take such actions as may be necessary or reasonably requested by
another party to carry out the purposes and intents hereof. This letter may be
amended, modified, superseded, cancelled, renewed or extended only by a written
instrument signed by the party to be charged therewith.
If you are in agreement with the foregoing, please sign below to indicate
your understanding and agreement regarding this matter.
Sincerely,
SECURITY CAPITAL GROUP
INCORPORATED
/s/ X. Xxx Xxxxxxxxxxx
X. Xxxxxx Xxxxxxxxxxx
Vice Chairman
Agreed and Acknowledged:
STORAGE USA, INC.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chairman, Chief Executive Officer
Xx. Xxxx Xxxxxxxx
July 7, 2000
Page 4
SUSA PARTNERSHIP, L.P.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Chairman, Chief Executive Officer and President
