EXHIBIT 4.1
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement") is entered into as of the
7th day of May, 1998 between Commerzbank Aktiengesellschaft, Grand Cayman Branch
(the "Investor"), and Security Capital Group Incorporated, a Maryland
corporation ("Security Capital").
WHEREAS, the Investor has purchased (i) shares of Security Capital's
Series A Cumulative Convertible Redeemable Voting Preferred Stock, par value
$.01 per share (the "Series A Preferred Shares"), from Security Capital and (ii)
shares of Security Capital's Class A Common Stock, par value $0.01 per share
(the "Class A Shares"), and Security Capital's Class B Common Stock, par value
$0.01 per share (the "Class B Shares"), in the open market or in negotiated
transactions with third parties and wishes to exchange those shares (or, in the
case of Class A Shares, the Class B Shares into which they were converted) for
shares of Security Capital's Series B Cumulative Convertible Redeemable Voting
Preferred Stock, par value $.01 per share (the "Series B Preferred Shares"), the
terms of which shall be as set forth in Articles Supplementary in the form of
Exhibit A (the "Articles Supplementary"); and
WHEREAS, Security Capital is willing to issue to the Investor Series B
Preferred Shares upon exchange of Series A Preferred Shares and Class B Shares
in accordance with and subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties hereby agree
as follows:
1. EXCHANGE OF SHARES.
(A) EXCHANGE. The Investor and Security Capital agree that the Investor
shall exchange all of its Series A Preferred Shares and 3,293,288 Class B Shares
(the Series A Preferred Shares and Class B Shares exchanged pursuant to this
Agreement are collectively referred to herein as the "Exchange Shares") for
Series B Preferred Shares in accordance with and subject to the terms and
conditions set forth herein.
(B) CLOSING OF EXCHANGE. The closing (the "Closing") of the exchange of
the Exchange Shares for Series B Preferred Shares shall take place at Security
Capital Group Incorporated, 000 Xxxxxxx Xxxxxx, Xxxxx Xx, Xxx Xxxxxx 00000 at
9:00 a.m., Mountain time, on May 12, or at such other location, date and time as
may be agreed on by Security Capital and the Investor, but not later than May
15, 1998 (such date and time being hereinafter referred to as the "Closing
Date").
(C) NUMBER OF SERIES B PREFERRED SHARES ISSUABLE UPON EXCHANGE. The
number of Series B Preferred Shares issuable to the Investor upon exchange of
the Exchange Shares shall
equal the aggregate Fair Market Value of the Exchange Shares divided by $1,000.
The Fair Market Value of the Exchange Shares shall equal $257,642,000 as of the
date hereof.
(D) SURRENDER OF EXCHANGE SHARES. At the Closing, the Investor shall
surrender the certificates representing the Exchange Shares, duly endorsed or
assigned to Security Capital or in blank.
(E) ISSUANCE OF SERIES B PREFERRED SHARES. At the Closing, Security
Capital shall issue and shall deliver to the Investor, or on its written order,
a certificate or certificates for the number of full Series B Preferred Shares
issuable upon the exchange of the Exchange Shares in accordance with the
provisions of this Agreement. No fractional shares or scrip representing
fractional interests in respect of Series B Preferred Shares shall be issued
upon exchange of the Exchange Shares. Instead of any fractional interest in
respect of Series B Preferred Shares that would otherwise be deliverable upon
the exchange of the Exchange Shares, Security Capital shall pay to the Investor
an amount in cash based on the Fair Market Value of the Exchange Shares not so
exchanged.
(F) SPECIAL DIVIDEND. At the Closing, Security Capital shall pay a
special dividend on the Series A Preferred Shares exchanged at the rate provided
for therein for the portion of the Dividend Period (as defined in Security
Capital's Charter) from the prior Dividend Payment Date (as defined in Security
Capital's Charter) to and including the Closing Date.
(G) STOCKHOLDER AGREEMENT. The Stockholder Agreement between Security
Capital and the Investor, dated as of February 20, 1998, shall automatically
terminate upon the consummation of the Closing.
(H) SETTLEMENT. Without admitting that any claim would arise, or any
liability would exist, under Section 16(b) of the Securities Exchange Act of
1934, as amended ("Section 16(b)"), as a result of this Agreement and the
transactions contemplated hereby, at the Closing, the Investor shall deliver to
Security Capital certificates representing 3,352 Class B Shares, duly endorsed
or assigned to Security Capital or in blank, in full settlement of any such
claim, or any liability in connection therewith, which may arise under Section
16(b) as a result of this Agreement and the transactions contemplated hereby.
The Investor and Security Capital agree that such Class B Shares have a value of
$30.00 per share as of the date hereof, representing $100,560 in the aggregate.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SECURITY
CAPITAL.
Security Capital represents, warrants and covenants, as of the date of
this Agreement and as of the Closing Date, that:
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(A) ORGANIZATION. Security Capital has been 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, lease and operate its
properties and conduct its business as now being conducted.
(B) POWER AND AUTHORITY. Security Capital has all requisite power and
authority and has taken all required action necessary to execute, deliver and
perform this Agreement, to receive the Exchange Shares and to issue the Series B
Preferred Shares as herein provided.
(C) ENFORCEABILITY. This Agreement has been duly executed and delivered
by Security Capital and constitutes the legal, valid and binding obligation of
Security Capital enforceable against Security Capital in accordance with its
terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
(D) VALID ISSUANCE OF SERIES B PREFERRED SHARES. Any Series B Preferred
Shares issued upon exchange of the Exchange Shares as described above to the
Investor hereunder, when issued and delivered in accordance with the terms
hereof for the consideration expressed herein, shall be duly and validly issued,
fully paid and nonassessable and, assuming the accuracy of the Investor's
representations set forth in Section 3, shall be issued in compliance with all
applicable federal and state laws.
(E) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this Agreement by Security Capital and the consummation by
Security Capital of the transactions contemplated hereby do not and will not (i)
result in a violation of Security Capital's charter (the "Charter") or Bylaws or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Security Capital is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
applicable to Security Capital or by which any property or asset of Security
Capital is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not impair
Security Capital's ability to perform in all material respects its obligations
under this Agreement).
(F) NO REGISTRATION UNDER THE SECURITIES ACT. Assuming the accuracy of
the Investor's representations set forth in Section 3, it is not necessary in
connection with the issuance and delivery of the Series B Preferred Shares in
the manner contemplated by this Agreement to register the Series B Preferred
Shares under the Securities Act of 1933, as amended (the "Securities Act").
(G) LIMITED EXEMPTION FROM OWNERSHIP LIMIT. Security Capital's Board of
Directors has duly adopted a resolution substantially in the form of Exhibit B,
thereby exempting
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the Investor from the Ownership Limit contained in Article FIFTH of Security
Capital's Charter to the extent provided therein.
(H) FILING OF ARTICLES SUPPLEMENTARY. Security Capital shall adopt and
file the Articles Supplementary with the State Department of Assessments and
Taxation of Maryland (the "SDAT") on or before the Closing Date.
(I) NO DILUTIVE TRANSACTIONS. Since January 1, 1998, Security Capital
has not engaged in any transaction, or approved or set a record date for any
transaction, which would require any adjustment to the Conversion Price (as
defined in Security Capital's Charter) of the Series A Preferred Shares or the
Conversion Price (as defined in the Articles Supplementary) of the Series B
Preferred Shares, if outstanding at such time, or would have required an
adjustment in the absence of paragraph (g)(v) of Article FOURTH, C, Section 6 of
the Charter or paragraph (g)(v) of Article FIRST, Section 6 of the Articles
Supplementary and the last sentence of paragraph (h) of Article FOURTH, C,
Section 6 of the Charter or the next to the last sentence of paragraph (h) of
Article FIRST, Section 6 of the Articles Supplementary.
(J) SETTLEMENT. Security Capital has reviewed the terms of the
settlement of any claim or liability which may arise pursuant to Section 16(b)
set forth in Section 1(h), and has made a finding that the terms of the
settlement are fair, reasonable and adequate and were arrived at as a result of
good faith negotiations between Security Capital and the Investor.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
The Investor represents, warrants and covenants, as of the date of this
Agreement and as of the Closing Date, that:
(A) ORGANIZATION. The Investor has been duly licensed as a branch of
Commerzbank Aktiengesellschaft, a bank duly organized and validly existing under
the laws of Germany, with full power and authority to conduct its business as
now being conducted.
(B) POWER AND AUTHORITY. The Investor has the requisite power and
authority, and has taken all required action necessary, to execute, deliver and
perform this Agreement, to deliver the Exchange Shares and to acquire any Series
B Preferred Shares acquired hereunder.
(C) ENFORCEABILITY. This Agreement has been duly executed and delivered
by the Investor and constitutes the legal, valid and binding obligation of the
Investor enforceable in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
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(D) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this Agreement by the Investor and the consummation by the
Investor of the transactions contemplated hereby do not (i) result in a
violation of the Investor's constituent documents or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Investor is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Investor
(including, without limitation, the Bank Holding Company Act of 1956, as
amended, and the International Banking Act of 1978, as amended) or by which any
property or asset of the Investor is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not impair the Investor's ability to perform in all material
respects its obligations under this Agreement).
(E) TITLE TO EXCHANGE SHARES. The Investor will own any Exchange Shares
exchanged pursuant to this Agreement free and clear of all liens, encumbrances,
security interests and adverse claims and will convey the Exchange Shares to
Security Capital on the Closing Date free and clear of all liens, encumbrances,
security interests and adverse claims.
(F) OWNERSHIP LIMITATIONS. The Investor has received a copy of the
Charter and understands the restrictions on transfer and ownership of Security
Capital's stock included therein.
(G) SOPHISTICATED INVESTOR. In the normal course of its business or its
investing activities, the Investor invests in or purchases securities similar to
the Series B Preferred Shares and the Class B Shares and it has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of acquiring the Series B Preferred Shares or
the Class B Shares into which the Series B Preferred Shares are convertible. The
Investor is aware that it may be required to bear the economic risk of an
investment in the Series B Preferred Shares or the Class B Shares into which the
Series B Preferred Shares are convertible for an indefinite period of time and
it is able to bear such risk for an indefinite period.
(H) UNREGISTERED SECURITIES. The Investor understands and acknowledges
and agrees that neither the Series B Preferred Shares nor the Class B Shares
into which the Series B Preferred Shares are convertible have been registered
under the Securities Act or any other applicable securities law and, unless so
registered, may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act or any other
applicable securities law, pursuant to an exemption therefrom or in a
transaction not subject thereto. The Investor acknowledges that the Series B
Preferred Shares received by it pursuant to this Agreement shall be in the form
of physical certificates and that, unless and until the Series B Preferred
Shares have been registered under the Securities Act or the Investor shall have
furnished an opinion of counsel, in form and substance satisfactory to Security
Capital, to the effect that such legend may be deleted, the certificates shall
bear a legend to the following effect:
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THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT. THESE SECURITIES MAY NOT BE TRANSFERRED IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
(I) ACCESS TO INFORMATION. The Investor has had access to such
financial and other information concerning Security Capital or any of its
affiliates and the Series B Preferred Shares and the Class B Shares as it deemed
necessary in connection with the transactions contemplated by this Agreement,
including an opportunity to ask questions and request information from Security
Capital.
(J) ACQUIRING FOR OWN ACCOUNT. The Investor will acquire any Series B
Preferred Shares acquired pursuant to this Agreement for its own account and not
with any view toward the resale or distribution thereof or with any present
intention of selling or distributing any of the Series B Preferred Shares, but
subject nevertheless to the disposition of the Series B Preferred Shares being
at all times within the Investor's control subject to the instruments
constituting and governing the Series B Preferred Shares.
4. MISCELLANEOUS
(A) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding on the respective successors and assigns of the parties hereto, provided
that no rights set forth in or under this Agreement may be assigned by either
party without the prior written consent of the other party.
(B) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, without giving effect to the
conflict of law provisions thereof.
(C) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(D) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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(E) NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified, (ii)
on the fifth business day after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, (iii) on the next business day
after dispatch via nationally recognized overnight courier or (iv) upon
confirmation of transmission by facsimile, all addressed to the party to be
notified at the address indicated for such party below or at such other address
as such party may designate by ten days' advance written notice to the other
parties. Notices should be provided in accordance with this Section at the
following addresses:
if to the Investor, to
Commerzbank Aktiengesellschaft, Grand Cayman Branch
c/o Commerzbank Aktiengesellschaft, New York Branch
Two World Financial Center
New York, New York 10281
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxxxxx
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
if to Security Capital, to:
Security Capital Group Incorporated
000 Xxxxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxxxx
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
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(F) EXPENSES. Each party shall pay all costs and expenses which it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or the Articles Supplementary, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
(G) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended,
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of Security Capital and the Investor.
(H) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
(I) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein.
(J) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ C. Xxxxxx Xxxxxxxxxxx
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Name: C. Xxxxxx Xxxxxxxxxxx
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Title: Managing Director
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COMMERZBANK AKTIENGESELLSCHAFT,
GRAND CAYMAN BRANCH
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
--------------------------------
Title: Senior Vice President
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By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
--------------------------------
Title: Vice President
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