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EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated as of March 19, 1998 among Security
Capital Corporation (the "Company"), CP Acquisition, L.P. No. 1, FGS, Inc.,
Capital Partners, Inc., A. Xxxxxx Xxxxxxx, Xxxxx X. Xxxxx, Xxxx X. Xxxxxxxx, Xx.
and the Trust dated 6/26/81 f/b/o the children of Xxxxx X. Xxxxxxxxxx
(collectively, the "Stockholders"), and Xxxxx X. Xxxxxxxxxx (solely with respect
to Section 4.3 of this Agreement).
W I T N E S S E T H :
WHEREAS, Capital Partners, Inc., on behalf of the holders of
all the outstanding shares of the Company's Class A Preferred Stock, par value
$.01 per share (the "Class A Preferred Stock"), has suggested that the Company
consider an exchange of all the outstanding shares of the Class A Preferred
Stock, and all accrued dividends thereon, for shares of the Company's Class A
Common Stock (as defined below), at an exchange price per share equal to $4.00;
and
WHEREAS, as of December 31, 1997, 30,000 shares of Class A
Preferred Stock were outstanding, and such shares had an aggregate liquidation
preference of $3,000,000, not including accrued dividends thereon of $1,987,500;
and
WHEREAS, the Company and the Stockholders desire that the
Stockholders exchange shares of the Company's Preferred Stock and all accrued
dividends thereon for shares of the Company's Class A Common Stock, upon the
terms set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the parties hereto hereby
agree as follows:
SECTION 1. Exchange of Shares
(a) Exchange Shares. Subject to the terms and
conditions set forth herein, each Stockholder shall tender all shares of the
Class A Preferred Stock held by it as of December 31, 1997, in exchange for
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), of the Company (the "Exchange"). The shares of Class A Common Stock to
be received by the Stockholders in the Exchange shall be hereinafter referred
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to as the "Exchange Shares" and shall be calculated as to each Stockholder as
follows:
Number of Exchange Shares =
(number of shares of Class A Preferred Stock X $100.00) + all accrued dividends thereon
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$4.00
Schedule 1 to this Agreement lists, as to each Stockholder, the number of shares
of Class A Preferred Stock held, the accrued dividends thereon and the number of
Exchange Shares to be received in the Exchange.
(b) The Exchange. Subject to the terms and conditions set
forth herein, the Exchange shall close on March 19, 1998 (the "Closing Date"),
and shall be effective as of December 31, 1997 (the "Exchange Date").
Certificates representing shares of Class A Preferred Stock shall be canceled as
of the Exchange Date and, upon presentation of the canceled certificates to the
Company, Stockholders shall be entitled to receive certificate(s) representing
the Exchange Shares for which such canceled shares have been exchanged, and all
other rights of the Stockholders as to the shares of Class A Preferred Stock
being exchanged shall cease. All certificates representing the Exchange Shares
shall conspicuously bear the following legend:
"The shares represented by this certificate are subject to
certain restrictions on transfers set forth in Article FOURTH (C) of the
Company's Certificate of Incorporation, the full text of which is printed on the
reverse side of this certificate. ANY DIRECT OR INDIRECT ATTEMPT TO ACQUIRE
CLASS A COMMON STOCK OF THE COMPANY OR CONTINGENT OR NONCONTINGENT RIGHTS TO
ACQUIRE SUCH STOCK IN VIOLATION OF SUCH RESTRICTIONS SHALL BE NULL AND VOID AND
MAY RESULT IN FINANCIAL LOSS TO THE PERSON OR ENTITY ATTEMPTING SUCH
ACQUISITION."
SECTION 2. Representations, Warranties
and Agreements of the Company
The Company represents and warrants to and agrees with the
Stockholders as follows (which representations, warranties and agreements shall
survive the Closing Date):
2.1 Execution, Etc. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms, subject to
the effect of any applicable bankruptcy, reorganization, insolvency (including
without limitation all laws relating to fraudulent transfers), moratorium or
similar laws affecting creditors' rights and remedies generally and subject to
general principles of equity (regardless of whether considered in a proceeding
at law or in equity).
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2.2 Consents. No consent, approval or authorization of, or any
registration, filing, qualification or declaration with, any federal, state,
local or foreign governmental authority or any other person is required on the
part of the Company in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
2.3 No Violations, etc.. Neither the Exchange nor the
consummation of any of the other transactions contemplated by this Agreement,
nor the fulfillment of the terms of this Agreement by the Company conflicts
with, results in a breach of or constitutes a default under any agreement,
contract, mortgage, note, undertaking, indenture or other agreement or
instrument to which the Company is a party or by which it is bound or to which
its assets are subject, or any judgment, writ, decree, order, statute, rule or
regulation applicable to the Company or to which its assets are subject.
SECTION 3. Representations, Warranties and Agreements
of the Stockholders
Each Stockholder severally represents and warrants to and
agrees with the Company as follows (which representations, warranties and
agreements shall survive the Closing Date):
3.1 Execution, Etc. This Agreement has been duly executed and
delivered by such Stockholder and constitutes the legal, valid and binding
obligation of such Stockholder, enforceable against it in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including without limitation all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights and remedies
generally and subject to general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
3.2 Consents. No consent, approval or authorization of, or any
registration, filing, qualification or declaration with, any federal, state,
local or foreign governmental authority or any other person is required on the
part of such Stockholder in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.3 No Violations, etc. Neither the Exchange nor the
consummation of any of the other transactions contemplated by this Agreement,
nor the fulfillment of the terms of this Agreement by such Stockholder conflicts
with, results in a breach of or constitutes a default under any agreement,
contract, mortgage, note, undertaking, indenture or other agreement or
instrument to which such Stockholder is a party or by which it is bound or to
which its assets are subject, or any judgment, writ, decree, order, statute,
rule or regulation applicable to such Stockholder or to which its assets are
subject.
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3.4 Title to Shares. Such Stockholder is the record and
beneficial owner of the shares of Class A Preferred Stock listed opposite its
name on Schedule 1 to this Agreement and owns such shares free and clear of all
liens, claims, charges, encumbrances, rights of third parties and security
interests of any kind or nature whatsoever including, without limitation, any
restrictions on the voting or transfer thereof.
SECTION 4. Covenants and Other Agreements
4.1 Listing of Exchange Shares. The Company will use its best
efforts to cause all of the Exchange Shares to be listed on the Pacific Stock
Exchange or any securities exchange or interdealer quotation system on which
similar securities issued by the Company are listed.
4.2 Registration Rights. The Stockholders are hereby granted
rights relating to the registration of the Exchange Shares under the Securities
Act of 1933, as amended, identical to any such rights previously granted to
Capital Partners, Inc. in respect of shares of Class A Common Stock owned by it.
4.3 "Going Private" Transactions. Xxxxx X. Xxxxxxxxxx hereby
agrees that neither he nor any entity controlled by him will, directly or
indirectly, propose or effect, during the five-year period following the
Exchange Date any Rule 13e-3 transaction (within the meaning of Rule 13e-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) which (i)
involves any class of equity securities of the Company which is (x) subject to
Section 12(g) or Section 15(d) of the Exchange Act or (y) listed on a national
securities exchange or authorized to be quoted in an inter-dealer quotation
system, and (ii) has one of the effects referred to in Rule 13e-3(a)(3)(ii).
4.4 Certificate of Incorporation. The Company hereby agrees to
use its best efforts to cause a proposal to amend the Company's Amended and
Restated Certificate of Incorporation to delete Article Twelfth therefrom to be
submitted to its stockholders at the 1998 Annual Meeting of stockholders.
SECTION 5. Conditions to the Parties' Obligations
5.1 Conditions to Each Stockholder's Obligation.
(a) Each Stockholder's obligation to participate in
the Exchange is subject to the satisfaction, at or before the Exchange Date and
the Closing Date, of each of the following conditions:
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(i) The representations and warranties of the Company
shall be true and accurate in all respects at and as of the
Exchange Date and the Closing Date.
(ii) The Company shall have performed in all respects
all obligations required by this Agreement to be performed by
it before or on the Closing Date.
5.2 Conditions to the Company's Obligation.
(a) The Company's obligation to issue the Exchange Shares is
subject to the satisfaction, at or before the Exchange Date and the Closing
Date, of each of the following conditions:
(i) The Stockholders shall have delivered to the
Company the shares of Class A Preferred Stock pursuant to
Section 1 of this Agreement.
(ii) The representations and warranties of the
Stockholders set forth in this Agreement shall be true and
accurate in all respects at and as of the Exchange Date and
the Closing Date.
(iii) The Stockholders shall have performed in all
respects all obligations required by this Agreement to be
performed by them before or on the Closing Date.
SECTION 6. Miscellaneous
6.1 Benefits; Assignments. This Agreement shall inure
exclusively to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. This Agreement may not be assigned
by the Company or any Stockholder without the prior written consent of the
other.
6.2 Amendment and Waiver. No provision of this Agreement may
be amended or otherwise modified except in writing executed by the Company and
the Stockholders holding, at the time of any amendment, a majority in interest
of the Exchange Shares. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provisions of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
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6.3 Governing Law; Headings. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
giving effect to conflict of laws, except to the extent that the Delaware
General Corporation Law applies, in which case such law shall apply. The
headings in this Agreement are for convenience only and shall not affect the
construction hereof.
6.4 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original and all of which
together will be deemed to be one and the same instrument, and all signatures
need not appear on any one counterpart.
6.6 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
Exchange. Any certificate or other document delivered pursuant to or in
connection with this Agreement shall be deemed to be part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SECURITY CAPITAL CORPORATION
By: /s/ A. Xxxxxx Xxxxxxx
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Name: A. Xxxxxx Xxxxxxx
Title: President
CP ACQUISITION, L.P. NO.1
By: Capital Partners, Inc.
General Partner
By: /s/ A. Xxxxxx Xxxxxxx
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Name: A. Xxxxxx Xxxxxxx
Title: Vice President
FGS, INC.
By: /s/ A. Xxxxxx Xxxxxxx
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Name: A. Xxxxxx Xxxxxxx
Title: Vice President
CAPITAL PARTNERS, INC.
By: /s/ A. Xxxxxx Xxxxxxx
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Name: A. Xxxxxx Xxxxxxx
Title: Vice President
/s/ A. Xxxxxx Xxxxxxx
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A. Xxxxxx Xxxxxxx
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/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
/s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
TRUST DATED 6/26/81
F/B/O THE CHILDREN OF
XXXXX X. XXXXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Trustee
/s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx (solely for purposes of
Section 4.3)
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Schedule 1
As of December 31, 1997
No. of No. of Shares
Shares of Class A Principal Accrued Total of Class A Common
Holder Preferred Stock Amount Dividends Principal & Dividends Stock at $4/Share
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CP Acquisition L.P., No. 1 23,168 $2,316,800 $1,534,880 $3,851,680 962,920
FGS, Inc. 4,160 416,000 275,600 691,600 172,900
Capital Partners, Inc. 650 65,000 43,062 108,062 27,016
A. Xxxxxx Xxxxxxx 703 70,300 46,574 116,874 29,218
Xxxxx X. Xxxxx 335 33,500 22,194 55,694 13,923
Xxxx X. Xxxxxxxx, Xx 334 33,400 22,127 55,527 13,882
Trust Dated 6/26/81 FBO Children of
Xxxxx X. Xxxxxxxxxx, Xxxxx X
Xxxxxxxxxx, Trustee 650 65,000 43,063 108,063 27,016
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30,000 $3,000,000 $1,987,500(1) $4,987,500 1,246,875
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(1) $66.25 accrued dividends per share as of 12/31/97.
