LETTER AGREEMENT
September 10, 1997
SCPG Holdings Pte. Ltd.
c/o GSIC Realty Corporation
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Re: Expression of Interest to purchase shares of Class B Common Stock of
Security Capital Incorporated by SCPG Holdings Pte. Ltd.
This letter (the "Agreement") will confirm our agreement as to the terms
upon which SCPG Holdings Pte. Ltd. or any of its affiliates ("SCPG") has
expressed an interest to purchase shares of Class B Common Stock, par value $.01
per share ("Class B Shares") of Security Capital Group Incorporated ("Security
Capital") as part of the initial public offering of Class B Shares of Security
Capital (the "Offering").
1. EXPRESSION OF INTEREST
We understand that SCPG has expressed its interest in purchasing $100
million of Class B Shares in the Offering assuming that (i) Security Capital
sells its Class B Shares in the Offering at a price to the public of between $25
and $28 per Class B Share, (ii) the total size of the Offering equals or exceeds
$400 million and (iii) the pricing of the Offering occurs on or before September
18, 1997. If SCPG elects to purchase such Class B Shares, and does so purchase,
the price per Class B Share to be paid by SCPG will be at the price per Class B
Share to the public in the Offering, net of the same percentage investment
banking fee paid to the underwriters in the Offering, and payment for such
Class B Shares shall be made at the same time, on the same terms and by the
same method as other investors in the Offering. In exchange for being
permitted to purchase the Class B Shares at such price, SCPG agrees that it
will not sell, transfer, pledge, assign, hypothecate or otherwise dispose of
any of the Class B Shares it elects to purchase in the Offering and any Class
B Shares it purchases subsequent to the Offering until, subject to the terms
of the Registration Rights Agreement attached hereto as Annex A, 210 days
after the closing of the Offering without the prior written consent of
Security Capital (the "Lock-up Period").
2. REGISTRATION RIGHTS
Although, as of the date of this Agreement, Security Capital does not
believe, based on the facts and circumstances available to it, that SCPG is, or
should be deemed to be, an
Security Capital Group Incorporated
September 10, 1997
Page 2
affiliate of Security Capital, Security Capital agrees to register for resale
the Class B Shares owned by SCPG in accordance with the terms of the
Registration Rights Agreement attached hereto as Annex A.
3. LEGENDS ON CERTIFICATES
Except for a legend to reflect the existence of the Lock-up Period (which
shall be promptly removed after expiration of the Lock-up Period), any Class B
Shares purchased by SCPG in the Offering will not contain any special
restrictive transfer legends nor will Security Capital give any "stop order"
instructions to the transfer agent in connection with such Class B Shares. SCPG
acknowledges that all Class B Shares will contain legends reflecting the
existence of the Preferred Share Purchase Rights and the share ownership limits
contained in Security Capital's Charter.
4. SALES ASSISTANCE
In the event that SCPG decides to sell any Class B Shares it elects to
acquire in the Offering and any Class B Shares it purchases subsequent to the
Offering after the expiration of the Lock-up Period, at SCPG's request, Security
Capital will make available Security Capital Markets Group Incorporated
("Capital Markets Group") to assist SCPG in any such sale. Such assistance will
be available on customary terms and arrangements subject to agreement of the
parties.
SCPG acknowledges that Capital Markets Group is a restricted broker-dealer
and member of the National Association of Securities Dealers, Inc. that, among
other restrictions, cannot hold securities or funds for customers' accounts and
cannot participate in a firm underwritten offering.
Upon request of SCPG, Security Capital will make all appropriate
information available at such locations to be mutually agreed upon and, if
necessary in the reasonable judgment of SCPG, will make its executive officers
available at Security Capital's principal executive offices at times to be
mutually agreed upon to discuss the affairs of Security Capital with SCPG and
any potential purchasers of the Class B Shares owned by SCPG.
5. INDEMNIFICATION
In the event of third-party claims made against SCPG in connection with the
Offering:
Security Capital Group Incorporated
September 10, 1997
Page 3
(1) INDEMNITY BY SECURITY CAPITAL. Without limitation of any other
indemnity provided to SCPG, to the extent permitted by law, Security Capital
will indemnify and hold harmless SCPG, its affiliates, officers, directors,
employees, agents and partners of SCPG, and each person, if any, who controls
SCPG (within the meaning of the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act)), against any losses, claims, damages, liabilities and
expenses (joint or several) to which they may become subject as a result of
any actions, suits, proceedings or claims brought by a third party, as and
when incurred, insofar as such actions, suits, proceedings or claims arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in a registration statement
(including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto); (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) any other violation or alleged
violation by Security Capital of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law, and Security
Capital will reimburse SCPG and each such affiliate, officer, director,
employee, agent, partner or controlling person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that Security Capital shall not be liable to SCPG in any such case
for any such loss, claim, damage, liability, expense or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly for use
in connection with such registration by SCPG or any officer, director,
partner or controlling person thereof.
(2) INDEMNITY BY SCPG. SCPG will furnish to Security Capital in writing
such information and affidavits as Security Capital reasonably requests for use
in connection with the registration statement or prospectus used in the Offering
relating to SCPG and, to the extent permitted by law, will indemnify Security
Capital, its directors, officers, employees and agents and each person who
controls Security Capital (within the meaning of the Securities Act or Exchange
Act) against any losses, claims, damages, liabilities and expenses resulting
from any Violation, but only to the extent that such Violation occurs solely in
reliance upon and in conformity with any information or affidavit so furnished
in writing by SCPG; PROVIDED that the obligation to indemnify will be several
and not joint and several with any other person and will be limited to the
amount of the investment by SCPG in the Offering.
(3) NOTICE; RIGHT TO DEFEND. Promptly after receipt by an indemnified
party under this Section 5 of notice of the commencement of any action
(including any governmental
Security Capital Group Incorporated
September 10, 1997
Page 4
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, if the
indemnifying party agrees in writing that it will be responsible for any costs,
expenses, judgments, damages and losses incurred by the indemnified party with
respect to such claim, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the
parties; PROVIDED, HOWEVER, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding, PROVIDED that the indemnifying party shall not be
responsible for the fees and expenses of more than one counsel for the
indemnified parties; PROVIDED, FURTHER, that the indemnifying party shall not,
without the written consent of the indemnified party, settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action in respect to which indemnification or contribution
may be sought hereunder, unless such settlement, compromise or consent includes
an unconditional release of such indemnified person from all liability on claims
that are the subject matter of the proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5 only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party other than under this
Section 5.
(4) CONTRIBUTION. If the indemnification provided for in this Section 5
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether the untrue statement 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 indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and
Security Capital Group Incorporated
September 10, 1997
Page 5
opportunity to correct or prevent such statement or omission. Notwithstanding
the foregoing, the amount SCPG shall be obligated to contribute pursuant to this
Section 5 shall be limited to the amount of the investment by SCPG in the
Offering (less the aggregate amount of any damages which SCPG has otherwise been
required to pay in respect of such loss, claim, damage, liability or expense or
any substantially similar loss, claim, damage, liability or expense arising from
such Violation).
(5) SURVIVAL OF INDEMNITY AND CONTRIBUTION. The indemnification and
contribution provided by this Section 5 shall be a continuing right to
indemnification and contribution and shall survive the registration and sale of
any securities by any person entitled to indemnification and contribution
hereunder and the expiration or termination of this Agreement.
6. AMENDMENT
This Agreement may not be amended except by a written instrument signed by
all of the parties hereto.
7. MISCELLANEOUS
This Agreement constitutes the entire agreement among the parties
pertaining to the purchase of Class B Shares by SCPG in the Offering.
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland without regard to the principles of conflicts of
law.
Security Capital Group Incorporated
September 10, 1997
Page 6
If this Agreement is satisfactory to you, please sign in the appropriate
place below.
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ C. Xxxxxx Xxxxxxxxxxx
-------------------------------------
Name:
Title:
Agreed to and acknowledged
as of the date set forth above:
SCPG HOLDINGS PTE. LTD.
By: /s/ Guy F. Tcheau
---------------------------
Name: GUY F. TCHEAU
Title: REGIONAL MANAGER
By: /s/ X. Xxxxxxxx Child
---------------------------
Name: X. Xxxxxxxx Child
Title: Senior Investment Manager
