EXHIBIT 99.3
FORM OF
PLACEMENT AGENT AGREEMENT
December 29, 1997
Security Capital Markets Group Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Homestead Village Incorporated, a Maryland corporation ("Homestead"), is
issuing as a dividend, at no cost, to each of its shareholders the right (a
"Right") to subscribe for and purchase shares of common stock, par value $.01
per share ("Shares"), of Homestead. The issuance of such Rights and the offering
of such underlying Shares by Homestead is herein referred to as the "Rights
Offering." A holder of Rights who validly exercises all of such holder's Rights
will have the further right to oversubscribe for additional Shares, to the
extent that all of the Shares offered in the Rights Offering are not purchased
by the exercise of Rights (the "Oversubscription Privilege"). Simultaneously
with the Rights Offering, Security Capital Markets Group Incorporated (the
"Agent"), will act as a placement agent for Homestead and seek third-party
investors to acquire Shares offered in the Rights Offering that are not sold
through the exercise of Rights or the Oversubscription Privilege (the
"Unsubscribed Shares") or additional shares, which Homestead may offer in its
sole discretion (the "Additional Shares"). The Agent is a subsidiary of
Security Capital Group Incorporated ("Security Capital"), Homestead's largest
shareholder.
Homestead 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 (File No. 333-37803) on Form S-3 relating to the sale of up to
$300,000,000 of Shares. The registration statement as amended to the date of
this Agreement is hereinafter referred to as the "Registration Statement" and
the related prospectus supplement and the accompanying prospectus in the form
first used to confirm sales of the Shares in the Rights Offering are hereinafter
referred to as the "Prospectus."
ARTICLE I
EMPLOYMENT OF THE AGENT
In reliance upon the representations and warranties and subject to the
terms and conditions of this Agreement:
Section 1.1. Best Efforts. Homestead employs the Agent as Homestead's
exclusive agent to sell for Homestead's account the Unsubscribed Shares and
Additional Shares, if any, on a cash basis only, at the offering price as set
forth in the Prospectus. The Agent agrees to use its best efforts, as agent for
Homestead, to sell the Unsubscribed Shares and Additional Shares, if any,
subject to the terms and conditions set forth in this Agreement and in the
Prospectus. The Agent shall deliver to prospective purchasers of Unsubscribed
Shares and Additional Shares the Prospectus and any other materials the Agent
deems appropriate. It is understood between the parties that there is no firm
commitment by the Agent to purchase any or all of the Shares.
Section 1.2. Compensation. Upon consummation of the Rights Offering and
the sale of the Shares thereunder (the "Closing"), Homestead shall pay to the
Agent a fee of 1% of the gross proceeds raised in the Rights Offering, the
Oversubscription Privilege and the sale of Unsubscribed Shares and Additional
Shares, for the Agent's services in assisting Homestead in the Rights Offering.
Section 1.3. Expenses. In addition to the fee described in Section 1.2
hereof, Homestead will pay, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming effective
or is terminated, all of the Agent's reasonable costs and expenses, including
fees of counsel, incident to the performance of the Agent's obligations under
this Agreement; provided, however, that, if this Agreement is terminated prior
to the Closing, the Agent shall only be reimbursed for its actual accountable
out-of-pocket costs and expenses..
Section 1.4. Obligations Not Exclusive. Homestead agrees that the
obligations of the Agent under this Agreement: (a) shall not preclude the Agent
from contemporaneously participating in, acting as placement agent for, or
underwriting the offering of securities of other issuers; (b) shall not impose
any obligation on the Agent to require its registered representatives, some or
all of whom may be independent contractors, to offer and sell the Shares; and
(c) shall require the Agent to make an effort to find purchasers for the
Unsubscribed Shares and Additional Shares only to the extent the Agent is
motivated to do so by the compensation and other provisions of this Agreement.
Section 1.5. Offering Solely As Agent. In offering the Unsubscribed Shares
and Additional Shares for sale, the Agent shall offer them solely as an agent
for Homestead, and such offer shall be made upon the terms and subject to the
conditions set forth in this Agreement and the Prospectus. The Agent shall
commence making such offer as an agent for Homestead as soon after the date
hereof as it in its sole discretion may deem advisable; provided, however, that
if the Agent does not commence such offering within ten business days after the
date hereof, it shall so advise Homestead.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HOMESTEAD
In order to induce the Agent to enter into this Agreement, Homestead hereby
represents and warrants to and agrees with the Agent as follows:
Section 2.1. Registration Statement and Prospectus. The Registration
Statement has been declared effective by the Commission under the Securities
Act; no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted or, to
the knowledge of Homestead, threatened by the Commission; and the Registration
Statement and the Prospectus (as amended or supplemented, if applicable) comply,
or will comply, as the case may be, in all material respects with the Securities
Act and do not and will
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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 an untrue statement of a material fact or omit to
state a material fact required to be stated therein or, in the case of the
Prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Prospectus, as
amended or supplemented at the date of the Closing (the "Closing Date"), if
applicable, will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; except 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 written information furnished to Homestead through the
Agent or by or on behalf of the Agent specifically for use therein.
Section 2.2. Financial Statements. The financial statements of Homestead
together with related schedules and notes incorporated by reference into the
Registration Statement and the Prospectus present fairly the financial position
of Homestead and the results of its operations and the changes in its financial
position at the respective dates and for the respective periods for which they
apply; such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as otherwise stated therein.
Section 2.3. Independent Public Accountant. Ernst & Young LLP and KPMG
Peat Marwick LLP, each of which has certified or shall certify certain of the
financial statements incorporated by reference into the Registration Statement
and the Prospectus, are each independent certified public accountants within the
meaning of the Securities Act.
Section 2.4. No Material Adverse Change. Except as described in the
Registration Statement or the Prospectus, subsequent to the dates as of which
information is given in the Registration Statement and the Prospectus and as of
the date hereof, (a) there shall not have been any material adverse change in
the condition (financial or other), properties or business of Homestead; (b)
Homestead shall not have entered into any material transaction other than in the
ordinary course of business; (c) Homestead shall not have incurred any material
obligations, contingent or otherwise, other than in the ordinary course of
business; (d) there shall not have been any change in the capital stock or long-
term debt (except current payments) of Homestead and (e) Homestead shall not
have paid or declared any dividends or other distributions on its capital stock,
other than regular periodic dividends.
Section 2.5. Organization and Standing. Homestead is duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Maryland, with full power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
business conducted by it or the location of the properties owned or leased by it
makes such qualification necessary. Homestead holds all material licenses,
certificates and permits from governmental authorities necessary for the conduct
of its business as described in the Prospectus.
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Section 2.6. No Violation. Homestead is not in violation of its Charter,
its Bylaws or other governing documents, nor is it in default in the performance
of any obligation, agreement or condition contained in any license, contract,
indenture, mortgage, deed of trust, lease or loan agreement or in any bond,
debenture, note or any other evidence of indebtedness to which it is a party or
by which it is bound, except where such default does not materially adversely
affect the condition (financial or other), properties or business of Homestead.
The performance of this Agreement and the consummation of the transactions
herein contemplated will not conflict with Homestead's Charter, Bylaws or other
governing documents of Homestead, or result in a breach of, or default under,
any agreement, indenture, mortgage, deed of trust, lease or other instrument to
which Homestead is a party or by which it is bound, or any law, rule, regulation
or decree of any court, governmental agency or body having jurisdiction over
Homestead or its properties or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of Homestead, except as
any of the foregoing would not materially adversely affect the condition
(financial or other), properties or business of Homestead. Homestead is not in
violation of any law, rule, regulation or court decree to which it may be
subject nor has it failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of its property or to the
conduct of its business, which violation or failure is likely to have a material
adverse effect on the condition (financial or other), properties or business of
Homestead. Except as required by the Securities Act, the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission as
promulgated thereunder (collectively, the "Exchange Act"), or applicable state
securities or blue sky laws, no consent, approval, authorization or order of any
court, governmental agency or body is required in connection with the
consummation of the transactions contemplated by this Agreement.
Section 2.7. Capitalization. The authorized, issued and outstanding
capitalization of Homestead is as described in the Prospectus and all of the
issued and outstanding Shares have been duly authorized and validly issued and
are fully paid and nonassessable.
Section 2.8. Legality of Shares. The Shares to be sold by Homestead in the
Rights Offering, including the Additional Shares, have been duly authorized and,
upon issuance and delivery and payment therefor in the manner described in the
Prospectus, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Prospectus. No further
approval or authority of the shareholders or the Board of Directors of Homestead
will be required for the issuance and sale of the Shares as contemplated herein.
Except as described in the Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restrictions upon the voting or
transfer of any Shares to be sold by Homestead pursuant to Homestead's Charter,
Bylaws or any agreement or other instrument to which Homestead is a party.
Neither the filing of the Registration Statement nor the offering or sale of the
Shares as contemplated in this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to the registration
of any Shares.
Section 2.9. Authority. Homestead has full right, power and authority to
enter into this Agreement, and this Agreement has been duly authorized, executed
and delivered by Homestead and constitutes a valid and binding agreement of
Homestead enforceable against Homestead in accordance with its terms, except as
its enforceability may be limited by applicable bankruptcy,
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insolvency, reorganization or similar laws affecting the rights of creditors
generally and judicial limitations on the right of specific performance or by
general equitable principles, and except as enforceability of indemnification
provisions contained herein may be limited by federal securities laws.
Section 2.10. Property. Except as otherwise described in the Registration
Statement and the Prospectus, Homestead and it subsidiaries have good and
marketable title or good and indefeasible title (or such substantially
equivalent quality of title as provided by the applicable title insurance
policy), free and clear of all liens and encumbrances to all of the real
property described in the Registration Statement and the Prospectus as being
owned by it or its subsidiaries except liens and encumbrances which are not
material in the aggregate and do not materially interfere with the conduct of
the business of Homestead or its subsidiaries, and, except as otherwise
described in the Registration Statement and the Prospectus, has valid and
binding leases to the real property described in the Registration Statement and
the Prospectus as under lease to it or its subsidiaries with such exceptions as
do not materially interfere with the conduct of the business of Homestead or its
subsidiaries.
Section 2.11. No Litigation. Except as set forth in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings pending
before or by any court, governmental agency or body or any arbitrator, which
might have a material adverse effect on the condition (financial or other),
properties or business of Homestead and, to the best of Homestead's knowledge,
no such action, suit or proceeding is contemplated.
Section 2.12. Price Manipulation. Homestead has not taken and will not
take, directly or indirectly, any action designed to cause or result in, or that
has constituted or that might reasonably be expected to constitute, the unlawful
stabilization or manipulation of the price of the Shares to facilitate the sale
or resale of the Shares.
Section 2.13. Finder. Homestead knows of no outstanding claims for
services in the nature of a finder's fee or origination fee with respect to the
sale of the Shares hereunder resulting from its acts for which the Agent may be
responsible.
Section 2.14. Exhibits. There are no contracts or other documents which
are required to be filed as exhibits to the Registration Statement by the
Securities Act which have not been so filed and each contract to which Homestead
is a party and to which reference is made in the Prospectus has been duly and
validly executed, is in full force and effect in all material respects in
accordance with its terms, and none of such contracts has been assigned by
Homestead. Homestead knows of no present situation or condition or fact which
would prevent compliance with the terms of such contracts, as amended to date.
Except as set forth in the Registration Statement and the Prospectus and except
for amendments or modifications of such contracts in the ordinary course of
business, Homestead has no intention of exercising any right which it may have
to cancel any of its obligations under any of such contracts and has no
knowledge that any other party to any of such contracts has any intention not to
render full performance under such contracts.
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Section 2.15. Tax Returns. Homestead has filed all federal and state tax
returns which are required to be filed by it and has paid all taxes shown on
such returns and on all assessments received by it to the extent such taxes have
become due. All taxes with respect to which Homestead is obligated have been
paid or adequate accruals have been set up to cover any such unpaid taxes.
ARTICLE III
COVENANTS OF HOMESTEAD
Homestead covenants and agrees with the Agent that:
Section 3.1. Delivery of Registration Statement and Prospectus. Homestead
will furnish to the Agent, from time to time and without charge, copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each preliminary prospectus, the Prospectus and all amendments and
supplements to any of such documents, in each case as soon as available and in
such quantities as the Agent may from time to time reasonably request.
Section 3.2. Filing of Prospectus. Homestead will file the Prospectus in a
form approved by the Agent pursuant to, and within the period permitted by, Rule
424 under the Securities Act.
Section 3.3. Use of Prospectus. Homestead authorizes the Agent to use the
Prospectus as from time to time amended or supplemented in connection with the
offering and sale of the Shares and in accordance with the applicable provisions
of the Securities Act and applicable state securities or blue sky laws.
Section 3.4. Further Amendments and Supplements. If, during such period of
time as in the opinion of the Agent or its counsel a prospectus relating to the
Rights Offering is required to be delivered under the Securities Act, any event
occurs or any event known to Homestead relating to or affecting Homestead shall
occur as a result of which the Prospectus as then amended or supplemented would
contain an untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
or supplement the Prospectus to comply with the Securities Act, Homestead will
forthwith notify the Agent thereof and prepare and file with the Commission such
further amendment to the Registration Statement or supplement or amendment to
the Prospectus as may be required and furnish and deliver to the Agent, at the
cost of Homestead, a reasonable number of copies of the amended or supplemented
Prospectus which as so amended or supplemented will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the Prospectus not misleading in light of the circumstances when it is delivered
to a purchaser or prospective purchaser, and which will comply in all respects
with the Securities Act; and in the event the Agent is required to deliver a
prospectus 90 days or more after the Closing Date, upon request will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10 of the Securities Act.
Section 3.5. Objection of Agent to Amendments or Supplements. After the
date hereof, Homestead will not at any time file any amendment or supplement to
the Registration Statement or the Prospectus unless and until a copy of such
amendment or supplement has been previously
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furnished to the Agent within a reasonable time period prior to the proposed
filing thereof, or to which the Agent or counsel for the Agent has reasonably
objected, in writing, on the ground that such amendment or supplement is not in
compliance with the Securities Act.
Section 3.6. Events Relating to Registration Statement and Prospectus. For
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares, Homestead will promptly advise the Agent (a)
when any amendment to the Registration Statement shall have become effective and
when any amendment or supplement to the Prospectus shall be filed with the
Commission, (b) when the Commission shall make a request or suggestion for any
amendment to the Registration Statement or the Prospectus or for additional
information and the nature and substance thereof, (c) of the issuance by the
Commission of an order suspending the effectiveness of the Registration
Statement pursuant to Section 8 of the Securities Act or of the initiation or
notice of intended initiation of any actions or proceedings for that purpose,
(d) of the happening of any event which in the judgment of Homestead makes any
material statement in the Registration Statement or the Prospectus untrue or
which requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading and (e) of the
refusal to qualify or the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or notice of intended
initiation of any actions or proceedings for any of such purposes. Homestead
will use every reasonable effort to prevent the issuance of any such order, to
prevent any such refusal to qualify or any such suspension, and to obtain as
soon as possible a lifting of any such order, the reversal of any such refusal
or the termination of any such suspension.
Section 3.7. Preparation and Filing of Amendments and Supplements.
Homestead will prepare and file promptly with the Commission, upon request of
the Agent, such amendments or supplements to the Registration Statement or the
Prospectus, in form satisfactory to counsel for Homestead, as in the opinion of
counsel to the Agent and counsel to Homestead may be necessary in connection
with the offering or distribution of the Shares and will use its best efforts to
cause the same to become effective as promptly as possible.
Section 3.8. Blue Sky Qualification. Homestead will, when and as requested
by the Agent, use reasonable efforts to qualify the Rights Offering, including
the sale of Additional Shares, or such part thereof as the Agent may determine
for sale under the state securities or blue sky laws of such states as the Agent
may reasonably request, and to continue such qualification in effect so long as
required for purposes of the distribution of the Shares; provided, however, that
Homestead shall not be obligated to (a) file any general consent to service of
process, (b) qualify as a foreign business in any jurisdiction in which it is
not so qualified or (c) take any action that would subject it to income taxation
in any such jurisdiction. The blue sky work shall be undertaken by counsel
selected by Homestead and shall be at Homestead's expense.
Section 3.9. Reports and Financial Statements. Homestead will file on a
timely basis all reports and any definitive proxy or information statements
required to be filed by Homestead with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of the Shares.
Homestead at its own expense will prepare and give and will continue to give
such financial statements and
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other information to and as may be required by the Commission, or the proper
public bodies of the states in which the Shares may be qualified.
Section 3.10. Earning Statement. Homestead will make generally available
to its security holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Securities Act), an earning statement of
Homestead and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act (including, at Homestead's option, Rule 158
under the Securities Act).
Section 3.11. Reports and Financial Statements to the Agent. During the
period of five years from the effective date of the Registration Statement,
Homestead shall make available to the Agent copies of all periodic and special
reports furnished to the security holders of Homestead and of all information,
documents and current, quarterly or annual reports filed by Homestead with the
Commission. Upon request in writing from the Agent, Homestead shall furnish to
the Agent such other information as may reasonably be requested and which may be
properly disclosed to the Agent with respect to the property, business and
operations of Homestead and its subsidiaries, if any.
Section 3.12. Expenses Paid by Homestead. Homestead will pay, whether or
not the transactions contemplated hereunder are consummated or this Agreement is
prevented from becoming effective or is terminated, all costs and expenses
incident to the performance of its obligations under this Agreement, including,
without limitation, all costs and expenses (a) incident to the preparation,
issuance and delivery of the Shares, (b) 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), (c) incurred in connection with the
registration or qualification and determination of eligibility for investment of
the Shares under the laws of such jurisdictions as the Agent may designate and
(d) in connection with the photocopying and delivery of this Agreement and the
furnishing to the Agent of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided.
Section 3.13. Post-Effective Availability of Prospectus. For so long as a
prospectus is required to be delivered under the Securities Act, Homestead will
comply, at its own expense, with all requirements imposed upon it by the
Securities Act, as in effect from time to time, and by any order of the
Commission, so far as necessary to permit the continuance of sales or dealings
in the Shares.
Section 3.14. Application of Proceeds. Homestead will apply the net
proceeds from the sale of the Shares substantially in the manner set forth in
the Registration Statement and the Prospectus.
Section 3.15. Cooperation with Agent's Due Diligence. Homestead will
cooperate with the Agent in such investigation as the Agent may make or cause to
be made of all the properties, business and operations of Homestead in
connection with the purchase and public offering of the Shares, and Homestead
will make available to the Agent in connection therewith such information in its
possession as the Agent may reasonably request.
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Section 3.16. Compliance with Conditions Precedent. Homestead will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Agent in Article V hereof.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.1. Indemnification by Homestead. Homestead will indemnify and
hold harmless the Agent, each of the Agent's directors and officers, and each
person, if any, who controls the Agent within the meaning of the Securities Act
against any loss, claim, damage or liability, joint or several, to which the
Agent or any such controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage or liability (or action in
respect thereof) arises out of or is based upon (a) an untrue statement or
alleged untrue statement made by Homestead in Article II hereof or (b) an untrue
statement or alleged untrue statement of a material fact contained (i) in the
Registration Statement or any preliminary prospectus or the Prospectus or any
amendment or supplement thereto or (ii) in any blue sky application or other
document executed by Homestead specifically for that purpose or based upon
written information furnished by Homestead filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof (any such application, document or information being hereinafter
called a "Blue Sky Application") or (c) the omission or alleged omission to
state in the Registration Statement or any preliminary prospectus or the
Prospectus or any amendment or supplement thereto or in any Blue Sky Application
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Agent and each such
controlling person for any legal or other expenses reasonably incurred by the
Agent or such controlling person in connection with investigating or defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action; provided, however, that Homestead will not
be liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to Homestead
through the Agent or by or on behalf of the Agent specifically for use in the
preparation of the Registration Statement or any such preliminary prospectus or
the Prospectus or any such amendment or supplement thereto or any such Blue Sky
Application; and provided, further, that the foregoing indemnification
obligation is subject to the condition that, insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made in any
preliminary prospectus but eliminated or remedied in the Prospectus, such
indemnification obligation shall not inure to the benefit of the Agent from whom
the person asserting any loss, claim, damage or liability purchased the Shares
which are the subject thereof (or to the benefit of any person who controls the
Agent), if a copy of the Prospectus was not sent or given to such person with or
prior to the written confirmation of the sale of such Shares to such person.
This indemnification obligation is in addition to any liability which Homestead
may otherwise have and shall survive the delivery of and payment for the
Unsubscribed Shares and Additional Shares.
Section 4.2. Indemnification by Agent. The Agent will indemnify and hold
harmless Homestead, each of Homestead's directors, each of Homestead's officers
who has signed the Registration Statement, and each person, if any, who controls
Homestead within the meaning of the
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Securities Act, against any loss, claim, damage or liability to which Homestead
or any such director, officer or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon (a) an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any preliminary prospectus or the Prospectus or any
amendment or supplement thereto or in any Blue Sky Application or (b) the
omission or alleged omission to state in the Registration Statement or any
preliminary prospectus or the Prospectus or any amendment or supplement thereto
or in any Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Homestead through the Agent or by or on behalf of the Agent
specifically for use in the preparation of the Registration Statement or any
such preliminary prospectus or the Prospectus or any such amendment or
supplement thereto or any such Blue Sky Application; and will reimburse any
legal or other expenses reasonably incurred by Homestead or any such director or
officer or controlling person in connection with investigating or defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action. This indemnification obligation is in
addition to any liability which the Agent may otherwise have and shall survive
the delivery of and payment for the Unsubscribed Shares and Additional Shares.
Section 4.3. Notice. Promptly after receipt by an indemnified party under
this Article IV of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Article IV, notify in writing the indemnifying party of the
commencement thereof within a reasonable time thereafter; the omission so to
notify the indemnifying party will relieve it from any liability under this
Article IV as to the particular item for which indemnification is then being
sought, but not from any other liability which it may have to any indemnified
party. In case any such action, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly and with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel who shall be
reasonably satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to the indemnified
party under this Article IV for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if, in the
judgment of the indemnified party, it is advisable for the indemnified party and
its controlling person to be represented by separate counsel, the indemnified
party shall have the right to employ separate counsel to represent the
indemnified party and such controlling person, in which event the reasonable
fees and expenses of such separate counsel shall be borne by the indemnifying
party.
Section 4.4. Contribution. In order to provide for just and equitable
contribution in any case in which Homestead or the Agent (or any of their
respective directors or officers or any person who controls either of them
within the meaning of the Securities Act) makes claim for indemnification
pursuant to this Article IV but it is judicially determined (by entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case,
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notwithstanding the fact that the provisions of this Article IV provide for
indemnification in such case, then, and in each such case, (a) Homestead and
each person who controls Homestead, in the aggregate, and (b) the Agent, shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from all others) in such proportion so that
the Agent is responsible for the portion represented by the percentage that the
fee received by the Agent pursuant to Section 1.2 hereof bears to the aggregate
public offering price for all Shares offered by Homestead in the Rights
Offering, including the sale of Additional Shares, and Homestead and its
controlling persons, in the aggregate, are responsible for the remaining
portion; provided, however, that if such allocation is not permitted by
applicable law then the relative fault of Homestead and the Agent in connection
with the statements or omissions which resulted in such damages and other
relevant equitable considerations shall also be taken into account. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by
Homestead or by the Agent and the parties' relative intent, knowledge, access to
the information and opportunity to correct or prevent such untrue statements or
omissions. Homestead and the Agent agree that it would not be just and equitable
if the respective obligations of Homestead and the Agent to contribute pursuant
to this Section 4.4 were to be determined by pro rata or per capita allocation
of the aggregate damages (even if the Agent and its controlling person in the
aggregate were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the first sentence of this Section 4.4. For purposes of this Section 4.4,
the term "damages" shall include any legal or other expenses reasonably incurred
by the indemnified party in connection with investigating or defending against
or appearing as a third-party witness in any action or claim that is the subject
of the contribution provisions of this Section 4.4. Notwithstanding the
provisions of this Section 4.4, the Agent and its controlling person in the
aggregate shall not be required to contribute any amount in excess of the amount
by which the total price of the Unsubscribed Shares and Additional Shares sold
by it exceeds the amount of any damages that the Agent and its controlling
person in the aggregate have otherwise been required to pay by reason of such
untrue statement or omission. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
The foregoing contribution agreement shall in no way affect the
contribution liabilities of any person having liability under Section 11 of the
Securities Act other than Homestead and the Agent and persons controlling
Homestead or the Agent.
Promptly after receipt by any party to this Agreement of notice of the
commencement of any action, suit or proceeding, such person will, if a claim for
contribution in respect thereof is to be made against another party, notify the
contributing party of the commencement thereof within a reasonable time
thereafter; but the omission so to notify the contributing party will not
relieve the contributing party from any liability which it may have to any party
other than for contribution. Any notice given pursuant to any other Section of
this Article IV shall be deemed to be the like notice hereunder. In case any
such action, suit or proceeding is brought against any party, and such person
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified.
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ARTICLE V
CONDITIONS OF THE AGENT'S OBLIGATIONS
The Agent's obligations hereunder shall be subject to the accuracy of the
representations and warranties on the part of Homestead herein contained, to the
performance by Homestead of all of its agreements herein contained, to the
fulfillment of or compliance by Homestead with all covenants and conditions
hereof, and to the following additional conditions:
Section 5.1. Filing of Prospectus. The Prospectus shall have been filed
with the Commission pursuant to Rule 424 under the Securities Act within the
permitted time period, no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for that purpose
shall have been initiated or threatened by the Commission or be pending and all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Agent.
Section 5.2. Accuracy of Prospectus. As of the Closing Date, Homestead
shall not have disclosed in writing to the Agent that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel to Homestead, is material,
or omits to state a fact which, in the opinion of such counsel, is material and
is required to be stated therein, or is necessary to make the statements therein
not misleading.
Section 5.3. Casualty and Other Calamity. Between the date hereof and the
Closing Date, Homestead shall not have sustained any loss on account of fire,
explosion, flood, accident, calamity or any other cause, of such character as
materially adversely affects the condition (financial or other), properties or
business of Homestead, whether or not such loss is covered by insurance.
Section 5.4. Litigation and Other Proceedings. Between the date hereof and
the Closing Date, there shall be no litigation instituted or threatened against
Homestead and there shall be no proceeding instituted or threatened against
Homestead before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially adversely affect the
condition (financial or other), properties or business of Homestead.
Section 5.5. Lack of Material Change. Except as described in the
Registration Statement and the Prospectus, subsequent to the date of the last
audited balance sheet included in the Registration Statement and the Prospectus
and prior to the Closing Date, (a) Homestead shall have conducted its business
in the usual and ordinary manner as the same was being conducted on the date of
such last audited balance sheet; (b) there shall not have been any material
adverse change in the condition (financial or other), properties or business of
Homestead; (c) Homestead shall not have entered into any material transaction
other than in the ordinary course of business; (d) Homestead shall not have
incurred any material obligations, contingent or otherwise, other than in the
ordinary course of business; (e) there shall not have been any change in the
capital stock or long-term debt (except current payments) of Homestead, other
than the sales of Shares in the Rights Offering, including Additional Shares;
and (f) Homestead shall not have paid or declared any
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dividends or other distributions on the Shares, other than regular periodic
dividends and the distribution of the Rights.
Section 5.6. Opinion of Counsel. The Agent shall have received an opinion
of Xxxxx, Xxxxx & Xxxxx as to the due organization and existence of Homestead
and to the effect that the Shares, when issued, will be duly authorized, validly
issued, fully paid and nonassessable, and as to such other matters as may be
reasonably requested by the Agent. In addition to the foregoing opinions such
counsel shall state that, in the course of its representation of Homestead, such
counsel has no reason to believe that, as of its effective date, the
Registration Statement (other than the financial statements and related
schedules and other financial information included therein, as to which such
counsel need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of its date,
the Prospectus (other than the financial statements and related schedules and
other financial information included therein, as to which such counsel need
express no opinion) contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or that, as of the
Closing Date, either the Registration Statement or the Prospectus (other than
the financial statements and related schedules and other financial information
included therein, as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were make, not misleading.
Section 5.7. Blue Sky Qualifications. The Rights Offering, including the
sale of Additional Shares, shall be qualified in such states as the Agent may
reasonably request pursuant to Section 3.8 hereof, and each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
date of this Agreement.
Section 5.8. Approval of Agent's Counsel. All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in
form and substance satisfactory to counsel to the Agent, whose approval shall
not be unreasonably withheld. The suggested form of such documents shall be
provided to counsel to the Agent upon request.
Section 5.9. Officers' Certificates. Any certificate signed by an officer
of Homestead and delivered to the Agent or to counsel to the Agent will be
deemed a representation and warranty by Homestead to the Agent as to the
statements made therein.
ARTICLE VI
TERMINATION
Section 6.1. Termination Because of Non-Compliance. This Agreement may be
terminated by the Agent by notice to Homestead in the event that Homestead shall
have failed or been unable to comply with any of the terms, conditions or
provisions of this Agreement on the part of Homestead to be performed, complied
with or fulfilled (including but not limited to those specified in Articles I,
II, III and V hereof) within the respective times herein provided for, unless
compliance
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therewith or performance or satisfaction thereof shall have been expressly
waived by the Agent in writing.
Section 6.2. Market Out Termination. This Agreement may be terminated by
the Agent by notice to Homestead at any time if, in the reasonable judgment of
the Agent, payment for and delivery of the Unsubscribed Shares or Additional
Shares is rendered impracticable or inadvisable because (a) additional material
governmental restrictions not in force and effect on the date hereof shall have
been imposed upon trading in securities generally, or minimum or maximum prices
shall have been generally established on the American Stock Exchange, or trading
in securities generally on such Exchange shall have been suspended, or a general
moratorium shall have been established by federal or state authorities or (b) a
war involving the United States or other national calamity shall have occurred
or (c) substantial and material changes in the condition of the market (either
generally or with respect to the sale of the Shares subject to the Rights
Offering) beyond normal fluctuations are such that it would be undesirable,
impracticable or inadvisable to proceed with this Agreement or with the Rights
Offering or the sale of Additional Shares or (d) of any matter materially
adversely affecting Homestead.
Section 6.3. Homestead's Right to Terminate. In the event any action or
proceeding of the type referred to in Section 7.2 hereof shall be instituted or
threatened against the Agent at any time prior to the date hereof, or in the
event there shall be filed by or against the Agent in any court pursuant to any
federal, state, local or municipal statute, a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
of the Agent's assets or if the Agent makes an assignment for the benefit of
creditors, Homestead shall have the right on three days' written notice to the
Agent to terminate this Agreement.
Section 6.4. Effect of Termination Hereunder. Any termination of this
Agreement pursuant to this Article VI shall be without liability of any
character (including, but not limited to, loss of anticipated profits or
consequential damages) on the part of any party hereto, except that Homestead
shall remain obligated to pay the costs and expenses provided to be paid by it
in Section 3.12 hereof and Homestead and the Agent shall be obligated to pay,
respectively, all losses, claims, damages or liabilities, joint or several,
under Article IV hereof.
ARTICLE VII
AGENT'S REPRESENTATIONS AND WARRANTIES
The Agent represents and warrants to and agrees with Homestead that:
Section 7.1. Registration as Broker-Dealer and Member of NASD. The Agent
is registered as a broker-dealer with the Commission and is registered as a
broker-dealer in each state within the United States in which it will offer the
Unsubscribed Shares and Additional Shares and is a member in good standing of
the National Association of Securities Dealers, Inc.
Section 7.2. No Pending Proceedings. There is not now pending or
threatened against the Agent any action or proceeding of which it has been
advised, in any court of competent jurisdiction,
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before the Commission or any state securities commission concerning its
activities as a broker or dealer, nor has the Agent been named as a "cause" in
any such action or proceeding.
Section 7.3. Delivery of Documents. The Agent will deliver a copy of the
Prospectus to each subscriber at or prior to such time as it is required under
the Securities Act to be delivered by the Agent to such person, and the Agent
will use supplemental sales material in connection with the sales of the
Unsubscribed Shares and Additional Shares (a) only as has been either prepared
or approved by Homestead and delivered to the Agent and (b) only in the manner
and in the jurisdictions authorized by Homestead.
Section 7.4. Distribution Sheets. Upon request, the Agent shall furnish to
Homestead after the Closing a breakdown by states of the number of Unsubscribed
Shares and Additional Shares sold in each state in which the Unsubscribed Shares
are offered.
ARTICLE VIII
NOTICES
Except as otherwise expressly provided in this Agreement:
Section 8.1. Notice to Homestead. Whenever notice is required by the
provisions of this Agreement to be given to Homestead, such notice shall be
given in writing addressed to Homestead as follows:
Homestead Village Incorporated
0000 XxxxxXxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Section 8.2. Notice to the Agent. Whenever notice is required by the
provisions of this Agreement to be given to the Agent, such notice shall be
given in writing addressed to the Agent as follows:
Security Capital Markets Group Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
ARTICLE IX
MISCELLANEOUS
Section 9.1. Benefit. This Agreement is made solely for the benefit of the
Agent, Homestead, their respective officers, directors and any controlling
person referred to in Section 15 of the Securities Act, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successor" or the term
"successors
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and assigns" as used in this Agreement shall not include any purchasers, as
such, of any of the Shares.
Section 9.2. Survival. The respective agreements, representations,
warranties, covenants and other statements of Homestead or its officers set
forth in or made pursuant to this Agreement and the indemnification agreements
of Homestead and the Agent contained in Article IV hereof shall survive and
remain in full force and effect, regardless of (a) any investigation made by or
on behalf of Homestead or the Agent or any officer or director thereof or any
controlling person of Homestead or of the Agent, (b) delivery of or payment for
the Unsubscribed Shares or Additional Shares or (c) the Closing, and any
successor of Homestead and the Agent or any controlling person, officer or
director thereof, as the case may be, shall be entitled to the benefits hereof.
Section 9.3. Governing Law. The validity, interpretation and construction
of this Agreement and of each part hereof will be governed by the laws of the
State of Maryland.
Section 9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the Agreement
between you and Homestead.
Very truly yours,
HOMESTEAD VILLAGE INCORPORATED
By:__________________________________
Xxxxxx X. Xxxxxxxx
Senior Vice President and Chief Financial Officer
We hereby confirm as of the date hereof that the above letter sets forth
the Agreement between Homestead and us.
SECURITY CAPITAL MARKETS GROUP INCORPORATED
By:__________________________________
Xxxxxx X. Xxxxx
Managing Director
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