Exhibit 10.1
Conformed Copy
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TRANSACTION AGREEMENT
by and among
SECURITY CAPITAL GROUP INCORPORATED
SC REALTY INCORPORATED
and
SECURITY CAPITAL U.S. REALTY
dated as of September 26, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I Certain Definitions....................................2
ARTICLE II Purchase and Sale of Equity; Liquidation...............8
Section 2.1. Purchase and Sale of Holdings Shares...................8
Section 2.2. Liquidation of USRealty...............................10
Section 2.3. Time and Place of Closings............................10
ARTICLE III Representations and Warranties of USRealty............10
Section 3.1. Incorporation; Authorization; etc.....................10
Section 3.2. Capitalization; Structure.............................12
Section 3.3. Financial Statements..................................13
Section 3.4. Properties; Leases....................................14
Section 3.5. Absence of Certain Changes............................14
Section 3.6. Litigation; Orders....................................14
Section 3.7. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc..........................................15
Section 3.8. Compliance with Laws..................................15
Section 3.9. Insurance.............................................15
Section 3.10. Material Contracts....................................15
Section 3.11. Brokers, Finders, etc.................................16
Section 3.12. No Undisclosed Liabilities............................16
Section 3.13. Joint Proxy Statement/Prospectus; Form S-4............16
Section 3.14. Required Vote.........................................16
Section 3.15. Opinion of USRealty Financial Advisor.................16
Section 3.16. Board Approval........................................17
Section 3.17. No Dissenters' Rights.................................17
Section 3.18. Exemption From Takeover Laws..........................17
ARTICLE IV Representations and Warranties of SCGI and Purchaser..17
Section 4.1. Incorporation; Authorization; etc.....................17
Section 4.2. Capitalization........................................19
Section 4.3. Reports and Financial Statements......................20
Section 4.4. Properties; Leases....................................20
Section 4.5. Absence of Certain Changes............................21
Section 4.6. Litigation; Orders....................................21
Section 4.7. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc..........................................21
Section 4.8. Compliance with Laws..................................21
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Section 4.9. Insurance.............................................21
Section 4.10. Material Contracts....................................22
Section 4.11. Brokers, Finders, etc.................................22
Section 4.12. No Undisclosed Liabilities............................22
Section 4.13. Joint Proxy Statement/Prospectus; Form S-4............22
Section 4.14. Required Vote.........................................23
Section 4.15. Environmental Matters.................................23
Section 4.16. Taxes.................................................23
Section 4.17. Employee Benefits.....................................24
Section 4.18. Board Approval........................................24
Section 4.19. Opinion of SCGI Financial Advisor.....................25
Section 4.20. Exemption From Takeover Laws..........................25
Section 4.21. Required Financing....................................25
Section 4.22. No Knowledge of Breaches..............................25
ARTICLE V Covenants of SCGI, Purchaser and USRealty.............25
Section 5.1. Investigation of Business; Access to Properties and
Records...............................................25
Section 5.2. Efforts; Obtaining Consents...........................26
Section 5.3. Further Assurances....................................27
Section 5.4. Conduct of Business by USRealty.......................27
Section 5.5. Conduct of Business by SCGI...........................29
Section 5.6. Preservation of Business..............................29
Section 5.7. Non-Solicitation......................................29
Section 5.8. Financial Statements..................................30
Section 5.9. Satisfaction and Discharge of USRealty Notes..........30
Section 5.10. Joint Proxy Statement/Prospectus; Form S-4............30
Section 5.11. Stockholders Meetings.................................32
Section 5.12. NYSE Listing..........................................33
Section 5.13. Public Announcements..................................33
Section 5.14. Takeover Laws.........................................33
Section 5.15. Certain Actions.......................................33
Section 5.16. Share Option Equivalents..............................34
Section 5.17 Litigation............................................34
Section 5.18 Notification of Certain Matters.......................35
Section 5.19 Indemnification.......................................35
Section 5.20 Certain Agreement Relating to USRealty Investees......35
ARTICLE VI Conditions Precedent..................................36
Section 6.1. Conditions to Each Party's Obligations................36
Section 6.2. Additional Conditions to Obligations of SCGI and
Purchaser.............................................36
Section 6.3. Additional Conditions to Obligations of USRealty......37
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ARTICLE VII Termination of Agreement..............................37
Section 7.1. Termination...........................................37
Section 7.2. Procedure and Effect of Termination...................38
ARTICLE VIII Miscellaneous.........................................39
Section 8.1. Non-Survival of Representations, Warranties and
Agreements............................................39
Section 8.2. Counterparts..........................................39
Section 8.3. Governing Law.........................................39
Section 8.4. Jurisdiction; Waiver of Trial by Jury.................39
Section 8.5. Entire Agreement......................................39
Section 8.6. Expenses..............................................40
Section 8.7. Notices...............................................40
Section 8.8. Successors and Assigns................................41
Section 8.9. Headings; Definitions.................................41
Section 8.10. Amendments and Waivers................................41
Section 8.11. Severability..........................................41
Section 8.12. Interpretation; Absence of Presumption................42
Exhibit A Plan of Liquidation
Exhibit B Form of Agreement with Trustee
Exhibit C Securities for Satisfaction and Discharge
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TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT (the "AGREEMENT"), dated as of September
26, 2000, is by and among Security Capital Group Incorporated, a Maryland
corporation ("SCGI"), SC Realty Incorporated, a Nevada corporation and an
indirect wholly owned subsidiary of SCGI ("PURCHASER"), and Security Capital
U.S. Realty, incorporated in the Grand Duchy of Luxembourg as a Societe
d'Investissement a Capital Fixe ("USREALTY").
WHEREAS, the Board of Directors of USRealty (the "USREALTY Board") has
appointed a special committee (the "SPECIAL COMMITTEE"), and the Special
Committee has received the written opinion of the USRealty Financial Advisor (as
defined below) to the effect that, based on, and subject to, the various
assumptions and qualifications set forth in such opinion, as of the date of such
opinion, the consideration to be received by holders of USRealty Shares (other
than SCGI and its affiliates) pursuant to this Agreement and the Plan of
Liquidation is fair to such holders from a financial point of view;
WHEREAS, the Special Committee has determined that this Agreement, the
Equity Purchase, the Plan of Liquidation and the other transactions contemplated
hereby are fair to, advisable and in the best interests of USRealty and its
stockholders, and has approved, and has voted to recommend to the USRealty Board
that the USRealty Board approve, this Agreement, the Equity Purchase, the Plan
of Liquidation and the other transactions contemplated hereby;
WHEREAS, the USRealty Board (including a majority of the independent
directors as required by the Articles of Incorporation of USRealty) has
determined that this Agreement, the Equity Purchase, the Plan of Liquidation and
the other transactions contemplated hereby are fair to, advisable and in the
best interests of USRealty and its stockholders and has voted to approve this
Agreement and determined to recommend acceptance and approval by USRealty's
stockholders of this Agreement, the Equity Purchase, the Plan of Liquidation and
the other transactions contemplated hereby;
WHEREAS, the Boards of Directors of SCGI and Purchaser have each
determined that this Agreement, the Equity Purchase, and the SCGI Share Issuance
(as defined below) and the other transactions contemplated hereby are fair to,
advisable and in the best interests of SCGI and Purchaser and their respective
stockholders and have voted to approve this Agreement, and the Board of
Directors of SCGI has determined to recommend that SCGI's stockholders approve
of the SCGI Share Issuance;
WHEREAS, USRealty owns all of the outstanding equity interests of
Security Capital Holdings S.A., a Luxembourg corporation ("HOLDINGS"), except
for one share which is owned by the Operating Advisor (as defined below);
WHEREAS, as the first step in the transactions contemplated hereby,
SCGI desires Purchaser to, and Purchaser desires to, purchase from USRealty, and
USRealty desires to sell to Purchaser, all of the issued and outstanding shares
of common stock and other equity interests of Holdings owned by USRealty and
certain other assets in exchange for shares of Class B Common Stock, par value
US$.01 per share, of SCGI ("SCGI CLASS B COMMON Shares") and cash sufficient to
satisfy and discharge USRealty's outstanding 2% Senior Unsecured Converti-
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ble Notes Due 2003 (the "USREALTY NOTES") and to pay the Shares Cash Amount (as
defined below), all upon the terms and subject to the conditions set forth
herein (the "EQUITY PURCHASE"); and
WHEREAS, as the second step in the transactions contemplated hereby,
USRealty will, pursuant to the terms of the Plan of Liquidation set forth as
Exhibit A, make a liquidating distribution to its stockholders in the form of
the SCGI Class B Common Shares received by USRealty pursuant to the Equity
Purchase, or in the form of cash (to the extent of distributions in respect of
Cash USRealty Shares (as defined below)).
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement the following terms shall have the following
respective meanings:
"ACTION" shall mean any complaint, claim, prosecution, indictment,
action, suit, arbitration, investigation, inquiry or proceeding by or before any
Governmental Authority.
"ADVANCE AGREEMENT" shall mean the Amended and Restated Advance
Agreement, dated as of December 8, 1998, as amended, by and between USRealty and
Holdings.
"ADVANCE AGREEMENT INTERESTS" shall have the meaning set forth in
Section 2.1(a).
"ADVISORY AGREEMENT" shall mean the Advisory Agreement, dated July 1,
1997, between USRealty, Holdings and the Operating Advisor.
"AFFILIATE" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the party specified.
"AGREEMENT" shall have the meaning set forth in the preamble hereof.
"CARR LETTER AGREEMENT" shall mean the Letter Agreement, dated July
28, 2000, among CarrAmerica Realty Corporation, Carr Realty, L.P., USRealty and
Holdings.
"CASH USREALTY SHARES" shall have the meaning set forth in Section
5.11(b)(ii).
"CHARTER AMENDMENT" shall have the meaning set forth in Section 4.18.
"CLOSING DATE" shall have the meaning set forth in Section 2.3.
"CODE" shall mean the U.S. Internal Revenue Code of 1986, as amended,
and any successor thereto.
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"CSSF" shall mean the Luxembourg Commission de Surveillance du
Secteurr Financier.
"DROP DEAD DATE" shall mean March 31, 2001 (such date being the date
of expiration of the funding commitment contained in the commitment letter set
forth in Section 6.2(b) of the SCGI Disclosure Schedule); provided that the Drop
Dead shall be automatically extended from time to time in the event such funding
commitment is extended beyond March 31, 2001, in which case "Drop Dead Date"
shall mean the date to which such funding commitment is so extended; and
provided, further that the Drop Dead Date shall similarly be extended from time
to time if the funding commitment referred to in the preceding proviso is not
extended past March 31, 2001, so long as SCGI from time to time has obtained a
commitment or commitments for replacement funding in amounts sufficient to pay
the Purchase Price Cash Amount, in which case the "Drop Dead Date" shall mean
the date of expiration of such replacement commitment or commitments; and
provided, further, that under no circumstances shall the Drop Dead Date be
extended beyond June 30, 2001 without the prior written consent of USRealty.
"ENCUMBRANCE" shall mean any mortgage, pledge, lien, easement,
restrictive covenant, right of way, lease, purchase agreement, option, security
interest or other encumbrance and agreement.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 4.15.
"ENVIRONMENTAL LIABILITIES" shall have the meaning set forth in
Section 4.15.
"EQUITY PURCHASE" shall have the meaning set forth in the recitals
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall have the meaning set forth in Section 4.17(c).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RATIO" shall have the meaning set forth in Section 2.1(e).
"EXPENSES" shall have the meaning set forth in Section 7.2(b).
"FAIR MARKET VALUE" shall have the meaning set forth in Section
2.1(e).
"FORM S-4" shall have the meaning set forth in Section 5.10.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section
3.1(d).
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in Section
4.15.
"HOLDINGS" shall have the meaning set forth in the recitals hereof.
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"HOLDINGS ADVANCE AGREEMENT" shall mean the Advance Agreement, dated
as of December 30, 1998 among Holdings, Alston Holdings SARL (f/k/a Security
Capital Holdings Investment I SARL), Barcelona Holdings SARL (f/k/a/ Security
Capital Holdings Investment II SARL), Coventry Holdings SARL (f/k/a Security
Capital Holdings Investment III SARL), Dublin Holdings SARL (f/k/a Security
Capital Holdings Investment IV SARL), Edinburgh Holdings SARL (f/k/a Security
Capital Holdings Investment V SARL), Frankfurt Holdings SARL (f/k/a Security
Capital Holdings Investment VI SARL), Geneva Holdings SARL (f/k/a Security
Capital Holdings Investment VII SARL), Helsinki Holdings SARL (f/k/a Security
Capital Holdings Investment VIII SARL), Istanbul Holdings SARL (f/k/a Security
Capital Holdings Investment IX SARL), Johnstone Holdings SARL (f/k/a Security
Capital Holdings Investment X SARL), Kirkwall Holdings SARL (f/k/a Security
Capital Holdings Investment XI SARL), Lisbon Holdings SARL (f/k/a Security
Capital Holdings Investment XII SARL), Madrid Holdings SARL (f/k/a Security
Capital Holdings Investment XIII SARL), Arden Square Holdings SARL (f/k/a
Security Capital Shopping Center I SARL), Blossom Valley Holdings SARL (f/k/a
Security Capital Shopping Center II SARL), Cooper Street Plaza Holdings SARL
(f/k/a Security Capital Shopping Center III SARL), Dallas Holdings SARL (f/k/a
Security Capital Shopping Center IV SARL), El Camino Holdings SARL (f/k/a
Security Capital Shopping Center V SARL), Friars Mission Holdings SARL (f/k/a
Security Capital Shopping Center VI SARL), Security Capital Office Portfolio
SARL, Security Capital Storage Portfolio SARL, Sheffied Holdings SARL (f/k/a
Security Capital Holdings Investment XIV SARL), and Redondo Village Holdings
SARL (f/k/a Security Capital Shopping Center VII SARL).
"HOLDINGS BALANCE SHEET" shall have the meaning set forth in Section
3.3.
"HOLDINGS FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.3.
"HOLDINGS MATERIAL ADVERSE EFFECT" shall mean any change or
development in, or effect on, the business or businesses of Holdings and the
Holdings Subsidiaries that is, or would reasonably be expected to be, materially
adverse to the business, assets, financial condition or results of operations of
Holdings and the Holdings Subsidiaries, taken as a whole, other than any adverse
change or development to the extent attributable to the announcement or pendency
of the Equity Purchase or the Plan of Liquidation.
"HOLDINGS SHARES" shall mean the shares of Common Stock, par value
US$10.00 per share, of Holdings.
"HOLDINGS SUBSIDIARIES" shall mean all of the subsidiaries of
Holdings, more than 90% of the voting power of whose outstanding voting
securities or equity interests are directly or indirectly owned by Holdings
other than the Private Investees.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"JOINT PROXY STATEMENT/PROSPECTUS" shall have the meaning set forth in
Section 5.10.
"KNOWLEDGE" of any Person that is not an individual shall mean the
knowledge of those individuals who are senior vice presidents, managing
directors or directors of such Person,
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and in the case of SCGI shall also include such officers and directors of the
Operating Advisor and Jeffrey A. Cozad.
"LICENSES" shall have the meaning set forth in Section 3.7(a).
"LIQUIDATION CLOSING" shall mean the consummation of the transactions
contemplated by Section 2.2.
"LIQUIDATOR" shall mean Security Capital U.S. Realty Management
Holdings S.A. or such Affiliate of SCGI as may be designated by SCGI, and as may
be permitted to serve in such capacity in accordance with applicable Luxembourg
law and the applicable regulations of the CSSF.
"NOTES INDENTURE" shall mean the Indenture, dated as of May 22, 1998,
between USRealty, as Issuer, and State Street Bank and Trust Company, as
Trustee, as amended by the First Supplemental Indenture thereto, dated as of May
22, 1998.
"NOTES PAYOFF AMOUNT" shall have the meaning set forth in Section 5.9.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OPERATING ADVISOR" shall mean Security Capital U.S. Realty Management
Holdings S.A., a wholly owned subsidiary of SCGI.
"PARTICIPATING USREALTY SHARES" shall mean all of the outstanding
USRealty Shares other than the Cash USRealty Shares.
"PER SHARE CASH AMOUNT" shall have the meaning set forth in Section
2.1(e).
"PERMITTED EXCEPTIONS" shall mean (a) mechanics', materialmen's,
carriers', workmen's, warehousemen's, repairmen's, landlords' or similar liens
imposed by law arising and incurred in the ordinary course of business and
securing obligations that are not delinquent, (b) liens for taxes and other
governmental charges, assessments or fees which (i) are not yet due and payable
or which may be paid without penalty or (ii) are being contested in good faith
through appropriate procedures and in respect of which adequate reserves have
been created or (c) Encumbrances which individually or in the aggregate do not
detract in any material respect from the value of any of the property or assets
subject thereto or interfere with the present use thereof.
"PERSON" shall mean any individual, firm, corporation, partnership or
other entity (including Governmental Authorities), and shall include any
successor (by merger or otherwise) of such entity.
"PLAN OF LIQUIDATION" shall mean the plan of liquidation of USRealty
attached as EXHIBIT A.
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"PRIVATE INVESTEES" shall mean City Center Retail Trust, a Maryland
real estate investment trust, CWS Communities Trust, a Maryland real estate
investment trust, and Urban Growth Property Trust, a Maryland real estate
investment trust.
"PURCHASE AND SALE CLOSING" shall mean the consummation of the
transactions contemplated by Section 2.1.
"PURCHASE PRICE CASH AMOUNT" shall have the meaning set forth in
Section 2.1(e).
"PURCHASE PRICE SHARES" shall have the meaning set forth in Section
2.1(e).
"PURCHASER" shall have the meaning set forth in the preamble hereof.
"REDEMPTION AMOUNT" shall have the meaning set forth in Section 5.9.
"REDEMPTION DATE" shall have the meaning set forth in Section 5.9.
"REQUIRED SCGI VOTE" shall have the meaning set forth in Section 4.14.
"REQUIRED USREALTY VOTE" shall have the meaning set forth in Section
3.14.
"RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of April
21, 1997, between SCGI and The First National Bank of Boston, as Rights Agent.
"RSUS" shall mean restricted stock units.
"SATISFACTION AND DISCHARGE" shall have the meaning set forth in
Section 5.9.
"SCGI" shall have the meaning set forth in the preamble hereof.
"SCGI BALANCE SHEET" shall mean the consolidated balance sheet of SCGI
and its subsidiaries as of December 31, 1999 and the notes thereto contained in
the SEC Reports.
"SCGI CLASS A COMMON SHARES" shall mean the shares of Class A Common
Stock, par value US$.01 per share, of SCGI.
"SCGI CLASS B COMMON SHARES" shall have the meaning set forth in the
recitals hereof.
"SCGI DISCLOSURE SCHEDULE" shall have the meaning set forth in the
introductory paragraph of Article IV.
"SCGI EMPLOYEE BENEFIT PLAN" shall mean any employee benefit plan,
program, policy, practices, or other arrangement providing benefits to any
current or former employee, officer or director of SCGI or any of its
subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by SCGI or any of its subsidiaries or to which SCGI or any of its
subsidiaries contributes or is obligated to contribute, whether or not written,
including any employee welfare benefit plan within the meaning of Section 3(1)
of ERISA, any employee pension benefit plan within the meaning of Section 3(2)
of ERISA (whether or not such plan is subject to
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ERISA) and any bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, severance, employment, change of control or fringe
benefit plan, program or agreement.
"SCGI FINANCIAL ADVISOR" shall mean Goldman, Sachs & Co.
"SCGI INCENTIVE PLANS" shall mean the 1995 Option Plan, the 1998 Long
Term Incentive Plan, the Security Capital Realty Investors Incorporated Option
Plans A and B, the Security Capital Group Incorporated 1991 and 1992 Option
Plans A and B and the 1991 and 1992 Option Plans B and the Security Capital
Group Incorporated Outside Directors Plan.
"SCGI MATERIAL ADVERSE EFFECT" shall mean any change or development
in, or effect on, the business or businesses of SCGI and its subsidiaries that
is, or would reasonably be expected to be, materially adverse to the business,
assets, financial condition or results of operations of SCGI and its
subsidiaries, taken as a whole.
"SCGI SEC REPORTS" shall have the meaning set forth in Section 4.3.
"SCGI SERIES B PREFERRED SHARES" shall mean the shares of Series B
Cumulative Convertible Redeemable Voting Preferred Stock, par value US$.01 per
share, of SCGI.
"SCGI SHARE ISSUANCE" shall have the meaning set forth in Section
4.1(b).
"SCGI SHARES" shall mean the SCGI Class A Common Shares and the SCGI
Class B Common Shares.
"SCGI STOCKHOLDERS APPROVAL" shall mean the approval by SCGI's
stockholders of the SCGI Share Issuance by the Required SCGI Vote.
"SCGI STOCKHOLDERS MEETING" shall have the meaning set forth in
Section 5.11(a).
"SCGI VOTING SHARES" shall mean the SCGI Series A Common Shares, the
SCGI Series B Common Shares and the SCGI Series B Preferred Shares.
"SEC" shall mean the United States Securities and Exchange Commission
or any successor thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARE OPTION EQUIVALENT GRANTS" shall mean the rights of certain
directors of USRealty pursuant to those certain Share Option Equivalent Grant
letter agreements entered into between such directors and USRealty, which are
listed on Section 5.16 of the USRealty Disclosure Schedule.
"SHARES CASH AMOUNT" shall have the meaning set forth in Section
2.1(e).
"SPECIAL COMMITTEE" shall have the meaning set forth in the recitals
hereof.
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"SUBSIDIARY" of any entity means any entity more than 50% of the
voting power of whose outstanding voting securities or equity interests are
directly or indirectly owned by such other entity.
"TAKEOVER LAWS" shall have the meaning set forth in Section 5.14.
"TAXES" shall have the meaning set forth in Section 4.16.
"TAX RETURNS" shall have the meaning set forth in Section 4.16.
"TITLE IV PLANS" shall have the meaning set forth in Section 4.17(c).
"TRUSTEE" shall mean the trustee under the Notes Indenture.
"USREALTY" shall have the meaning set forth in the preamble hereof.
"USREALTY BOARD" shall have the meaning set forth in the recitals
hereof.
"USREALTY DISCLOSURE SCHEDULE" shall have the meaning set forth in the
introductory paragraph of Article III.
"USREALTY FINANCIAL ADVISOR" shall mean Merrill Lynch & Co.
Incorporated.
"USREALTY NOTES" shall have the meaning set forth in the preamble
hereof.
"USREALTY OTHER ASSETS" shall have the meaning set forth in Section
3.3(c).
"USREALTY REPORTS" shall have the meaning set forth in Section 3.3(b).
"USREALTY SHARES" shall mean the shares of Common Stock, par value
US$4.00 per share, of USRealty.
"USREALTY STOCKHOLDERS APPROVAL" shall mean the approval by the
stockholders of USRealty of this Agreement and the Plan of Liquidation by the
Required USRealty Vote.
"USREALTY STOCKHOLDERS MEETING" shall have the meaning set forth in
Section 5.11(b).
ARTICLE II
PURCHASE AND SALE OF EQUITY; LIQUIDATION
Section 2.1. PURCHASE AND SALE OF HOLDINGS SHARES. (a) On the basis of
the representations, warranties, covenants and agreements and subject to the
satisfaction or waiver (to the extent permitted) of the conditions set forth in
Article VI, at the Purchase and Sale Closing USRealty will sell and SCGI will
cause Purchaser to, and Purchaser will, purchase (x) all of the Holdings Shares
owned by USRealty and (y) all of USRealty's right, title and interest in amounts
then owing and accrued under the Advance Agreement (the "ADVANCE AGREEMENT
INTERESTS"),
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which together constitute, and will constitute as of the Purchase and Sale
Closing, all of the issued and outstanding shares of capital stock or other
equity interests of Holdings and debt and other interests in Holdings owned by
USRealty, and (z) any cash on hand.
(b) In payment for such Holdings Shares, Advance Agreement Interests
and cash on hand, and subject to the satisfaction or waiver (to the extent
permitted) of the applicable conditions set forth herein, (1) SCGI will issue
and deliver to an account specified by Purchaser and Purchaser will cause to be
delivered to USRealty certificates representing the Purchase Price Shares, (2)
SCGI will cause Purchaser to, and Purchaser will, pay to USRealty the Purchase
Price Cash Amount, by wire transfer in immediately available funds to the
account or accounts specified by USRealty, and (3) Purchaser and USRealty
will deliver to each other executed counterparts to appropriate instruments
effecting the transfer, sale and conveyance to Purchaser of the Advance
Agreement Interests (to the extent not theretofore capitalized pursuant to
Section 5.15(a)) and, in accordance with Section 5.15(c), USRealty will deliver
to Purchaser an appropriate instrument effecting the transfer to Holdings, and
assumption by Holdings, of any assets and liabilities transferred to or assumed
by Holdings pursuant to Section 5.15(c). Certificates for the Purchase Price
Shares shall be in book entry form and registered in the name of USRealty.
(c) Immediately following the delivery by Purchaser of the Purchase
Price Cash Amount and the Purchase Price Shares to USRealty pursuant to Section
2.1(b), USRealty shall effect the Satisfaction and Discharge of the USRealty
Notes.
(d) Immediately following the Satisfaction and Discharge, USRealty
shall deliver to Purchaser certificates for all of the Holdings Shares owned by
USRealty, properly signed, in form suitable for the transfer of such Holdings
Shares to Purchaser.
(e) For purposes hereof: the term "PURCHASE PRICE SHARES" shall mean a
number of SCGI Class B Common Shares equal to the product of (i) 1.15 (the
"EXCHANGE RATIO") and (ii) the Participating USRealty Shares; the term "FAIR
MARKET VALUE" shall mean the average of the high and low per share sales prices
of the SCGI Class B Common Shares during the regular trading sessions on the New
York Stock Exchange for each of the 15 full trading days immediately preceding
(but not including) the date that is five trading days prior to the date of the
USRealty Stockholders Meeting; the term "PER SHARE CASH AMOUNT" shall mean an
amount equal to the Fair Market Value multiplied by the Exchange Ratio; and the
term "PURCHASE PRICE CASH AMOUNT" shall mean an amount in cash equal to the sum
of (i) the Notes Payoff Amount plus (ii) the product of (x) the number of Cash
USRealty Shares and (y) the Per Share Cash Amount (such product, being equal to
the fair market value of the additional SCGI Class B Common Shares that would
otherwise have been received by USRealty had there been no Cash USRealty Shares,
the "SHARES CASH AMOUNT"). SCGI and USRealty shall make prompt public
announcement of the dollar amount of Fair Market Value and the Per Share Cash
Amount following their determination, by press release and by publishing such
information in newspapers of general circulation in Luxembourg, Amsterdam and
New York.
(f) Effective as of the time of the Purchase and Sale Closing, the
Advisory Agreement will be terminated and of no further force or effect.
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Section 2.2. LIQUIDATION OF USREALTY. As promptly as practicable
following completion of the transactions contemplated by Section 2.1, USRealty
shall enter into voluntary liquidation and the Liquidator shall distribute the
Purchase Price Shares and the Shares Cash Amount to the stockholders of USRealty
pursuant to the terms of the Plan of Liquidation. SCGI and Purchaser will,
through USRealty's transfer agent, or such other bank trust company designated
by the Liquidator and reasonably satisfactory to USRealty, cooperate with the
Liquidator to expedite the issuance or recordation of certificates or other
evidence of ownership of the Purchase Price Shares in the names or for the
accounts of the USRealty stockholders entitled to receive such Purchase Price
Shares. From and after the Purchase and Sale Closing, SCGI shall make available
such funds as may be necessary to defray the reasonable costs and expenses of
the liquidation of USRealty pursuant to the Plan of Liquidation, and which are
not otherwise available to USRealty or the Liquidator.
Section 2.3. TIME AND PLACE OF CLOSINGS. Subject to satisfaction or
waiver of the conditions to the Purchase and Sale Closing and the Liquidation
Closing set forth herein, the Purchase and Sale Closing and the Liquidation
Closing shall take place at the offices of counsel to USRealty in Luxembourg,
Luxembourg, as promptly as practicable after satisfaction or waiver, if
permissible, of the conditions set forth in Article VI or at such other time and
date as SCGI and USRealty may agree (the "CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF USREALTY
Except as set forth in the USRealty Disclosure Schedule delivered by
USRealty to SCGI prior to the execution hereof (the "USREALTY DISCLOSURE
SCHEDULE") (each Section of which qualifies the correspondingly numbered
representation and warranty or covenant), USRealty hereby represents and
warrants to SCGI and Purchaser as follows:
Section 3.1. INCORPORATION; AUTHORIZATION; ETC. (a) Each of Holdings
and the Holdings Subsidiaries has been duly organized and is validly existing
under the laws of the jurisdiction of its incorporation. Each of Holdings and
the Holdings Subsidiaries has full corporate power and authority to own its
properties and assets and to conduct its business as it is now being conducted
and is duly qualified to transact business in each jurisdiction in which the
nature of property owned or leased by it or the conduct of its business requires
it to be so qualified, except where the failure to be so qualified or to have
such power or authority would not have a Holdings Material Adverse Effect. Each
jurisdiction in which Holdings or any of the Holdings Subsidiaries is qualified
to do business is set forth in Section 3.1(a) of the USRealty Disclosure
Schedule.
(b) USRealty has been duly organized and is validly existing under the
laws of Luxembourg.
(c) USRealty has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by USRealty, the performance by USRealty of its obligations hereunder
and the consummation by USRealty of the transactions
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contemplated hereby have been duly and validly authorized by the USRealty Board
and, except for obtaining the USRealty Stockholders Approval, no other corporate
proceeding or action on the part of USRealty, the USRealty Board or the
stockholders of USRealty is necessary therefor.
(d) The execution, delivery and performance of this Agreement by
USRealty will not (i) violate or conflict with any provision of the respective
articles of incorporation of USRealty or Holdings, (ii) except as set forth in
Section 3.1(d) of the USRealty Disclosure Schedule, conflict with, violate or
constitute a default under any provision of, or be an event that is (or with the
giving of notice or passage of time or both will result in) a violation of or
default under, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation or right under, or result in the imposition of any lien upon or the
creation of a security interest in any of the Holdings Shares or any of the
assets or properties of Holdings or any of the Holdings Subsidiaries pursuant
to, or require a consent or create a penalty or increase Holdings' or any
Holdings Subsidiary's payment or performance obligations under, any mortgage,
lien, lease, instrument, order, arbitration award, judgment or decree, or any
contract, agreement, license or permit, to which USRealty, Holdings or any
Holdings Subsidiary is a party or by which any of them or any of their property
is bound, other than as would not, individually or in the aggregate, have a
Holdings Material Adverse Effect or materially delay the consummation of the
Equity Purchase and the transactions contemplated by the Plan of Liquidation or
(iii) assuming that all consents, approvals, authorizations and other actions
described in Section 3.7(b) have been obtained and all filings and obligations
set forth in Section 3.7(b) have been made, violate or conflict with, or result
in the imposition of any lien (other than liens arising from any actions taken
or arrangements made by SCGI or any of its subsidiaries) upon any of the
Holdings Shares, or any of the assets or properties of Holdings or any Holdings
Subsidiary pursuant to, any provision of law, regulation, rule, writ,
injunction, decree, statute, order, judgment or ruling of any federal, state,
local, foreign, supernational or supranational court or tribunal (including any
court or tribunal dealing with labor matters), governmental, regulatory or
administrative agency, department, bureau, authority or commission or arbitral
panel ("GOVERNMENTAL AUTHORITY") or any other restriction of any kind or
character to which USRealty, Holdings or any Holdings Subsidiary is or may be
subject or by which any of them or any of their property is or may be bound,
other than violations, conflicts, liens and restrictions that would not,
individually or in the aggregate, have a Holdings Material Adverse Effect or
materially delay the consummation of the Equity Purchase and the transactions
contemplated by the Plan of Liquidation. This Agreement has been duly executed
and delivered by USRealty, and, assuming the due execution hereof by SCGI and
Purchaser, this Agreement constitutes the legal, valid and binding obligation
of USRealty enforceable against USRealty in accordance with its terms, except
as may be limited or otherwise affected by Luxembourg laws relating to the
collective procedures of undertaking of collective investment.
(e) Upon consummation of the Equity Purchase at the Purchase and Sale
Closing, as contemplated by this Agreement, USRealty will deliver to SCGI good
and valid title to all of the outstanding Holdings Shares that it owns, free and
clear of any liens, claims, charges, security interests, options or other legal
or equitable encumbrances or other rights of third parties (except those imposed
by any action taken or arrangement made by SCGI or any of its subsidiaries).
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(f) USRealty has made available to SCGI complete and correct copies of
the articles of incorporation (or similar instruments), as amended to date, of
USRealty, Holdings and each of the Holdings Subsidiaries, and has made available
to SCGI the corporate minute books containing the records of meetings of the
stockholders and boards of directors, the stock certificate books and the stock
record books of Holdings and the Holdings Subsidiaries. The stock record books
of Holdings and the Holdings Subsidiaries which USRealty has made available to
SCGI are complete and correct in all material respects and accurately reflect
the ownership of all of the outstanding shares of Holdings' and the Holdings
Subsidiaries' respective capital stock and all other securities issued by any of
Holdings or the Holdings Subsidiaries. Neither Holdings nor any of the Holdings
Subsidiaries is in default under or in violation of any provision of its
articles of incorporation (or similar instruments).
(g) The sale of the Holdings Shares pursuant hereto and the
liquidation of USRealty pursuant to the Plan of Liquidation will not give rise
to any material Tax for or to USRealty or Holdings in Luxembourg or any of its
political subdivisions, other than Taxes, if any, arising from the transactions
contemplated by Section 5.15.
Section 3.2. CAPITALIZATION; STRUCTURE. (a) As of June 30, 2000, the
authorized capital stock of USRealty consisted of 250,000,000 USRealty Shares,
of which (i) 74,877,121 USRealty Shares were issued and outstanding, (ii)
11,684,751USRealty Shares were owned by USRealty, and (iii) 11,875,298 USRealty
Shares are reserved or available for issuance upon the conversion of the
USRealty Notes. Since June 30, 2000, no shares of capital stock of USRealty or
options or warrants or other rights to acquire capital stock from USRealty have
been issued or reserved for issuance except upon any conversion of the USRealty
Notes in accordance with the terms thereof. All of the outstanding shares of
capital stock of USRealty are validly issued, fully paid and nonassessable.
Except for the USRealty Notes, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which USRealty, Holdings or any Holdings Subsidiary is a party or by which
any of them is bound obligating USRealty, Holdings or any Holdings Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of USRealty or obligating
USRealty, Holdings or any Holdings Subsidiary to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking, and there are no outstanding obligations of
USRealty, Holdings or any Holdings Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of USRealty. No bonds, debentures, notes or
other indebtedness of USRealty having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
(b) The authorized capital stock of Holdings consists of 800,000,000
Holdings Shares, of which 4,300 shares are issued and outstanding. All of the
outstanding shares of capital stock of Holdings are validly issued, fully paid
and nonassessable and are owned beneficially and of record by USRealty, except
for one share which is owed by the Operating Advisor. All of the outstanding
shares of capital stock or other equity interests of the Holdings Subsidiaries,
and, to the knowledge of USRealty, all of the shares of capital stock of the
Private Investees directly or indirectly owned by Holdings, all as listed in
Section 3.2(b) of the USRealty Disclosure Schedule, are validly issued, fully
paid and nonassessable. The outstanding shares of capital stock or other equity
interests of the Holdings Subsidiaries and the Private Investees are owned by
Holdings, in the amounts set forth in Section 3.2(b) of the USRealty Disclosure
Schedule.
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Neither the Holdings Shares nor the shares of outstanding common stock or other
equity interests of any Holdings Subsidiary, or, to the knowledge of USRealty,
any Private Investee, have been issued in violation of, or are subject to, any
preemptive rights. The shares of capital stock or other equity interests of the
Holdings Subsidiaries and the Private Investees (to the extent such shares or
interests are owned by Holdings) and the Holdings Shares are owned in each case
free and clear of any liens, claims, charges, security interests, options or
other legal or equitable encumbrances or restrictions. Other than pursuant to
the Advance Agreement and the Holdings Advance Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which USRealty, Holdings or any
Holdings Subsidiary is a party or by which any of them is bound obligating
USRealty, Holdings or any Holdings Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Holdings or any Holdings Subsidiary or obligating
USRealty, Holdings or any Holdings Subsidiary to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking, and there are no outstanding obligations of
USRealty, Holdings or any Holdings Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of Holdings or any Holdings Subsidiary.
(c) Neither Holdings nor any Holdings Subsidiary directly or
indirectly owns or has the right to acquire any capital stock of or other equity
interests, investment, partnership, joint venture or similar interest in any
corporation, partnership or other entity or other Person except for the
ownership of the outstanding shares or other equity interests of the Holdings
Subsidiaries as set forth in Section 3.2(b) of the USRealty Disclosure Schedule
or as set forth in Section 3.2(c) of the USRealty Disclosure Schedule.
Section 3.3. FINANCIAL STATEMENTS. (a) USRealty has previously
furnished to SCGI true and complete copies of (i) the financial statements of
Holdings and each of its subsidiaries, including statements of net assets as of
December 31, 1999 and 1998, statements of operations and consolidated statements
of cash flows for the fiscal years ended December 31, 1999, 1998 and 1997 (such
financial statements being audited and accompanied by the unqualified opinions
of PricewaterhouseCoopers (Luxembourg) S.a.r.l.), as applicable, and (ii)
unaudited financial statements for Holdings and its subsidiaries as of and for
the six-month period ended June 30, 2000 (collectively, the "HOLDINGS FINANCIAL
STATEMENTS"). The audited balance sheet as of December 31, 1999 is referred to
in this Agreement as the "HOLDINGS BALANCE SHEET". The Holdings Financial
Statements (including, in each case, any notes thereto) present fairly in all
material respects the financial position and results of operations and cash
flows of Holdings and each of its subsidiaries for the respective periods or as
of the respective dates set forth therein, in each case in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as
otherwise indicated therein and except, in the case of the unaudited Holdings
Financial Statements, for changes resulting from normal and recurring year-end
adjustments). The Holdings Financial Statements have been prepared from and in
accordance with the books and records of Holdings and its subsidiaries.
(b) USRealty has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents required
to be filed by it with the SEC and the CSSF since January 1, 1999 (collectively,
including all exhibits thereto, the "USREALTY REPORTS"). As of their respective
dates, none of the USRealty Reports (and, if amended or super-
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seded by a filing prior to the date hereof or the Closing Date, then on the
date of such filing), contained, and none of the USRealty Reports filed
subsequent to the date hereof will contain, any untrue statement of a material
fact or omit to state 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. Each of the financial statements
(including the related notes) included in the USRealty Reports presents fairly,
in all material respects, the consolidated financial position and consolidated
results of operations and cash flows of USRealty and its subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments. All of such
USRealty Reports, as of their respective dates (and as of the date of any
amendment to the respective USRealty Report), complied as to form in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder and the
applicable rules and regulations of the CSSF, respectively.
(c) USRealty has no assets or property other than the Holdings Shares,
and other than as set forth in Section 3.3(c) of the USRealty Disclosure
Schedule (the assets and property set forth in such Section 3.3(c) of the
USRealty Disclosure Schedule, the "USREALTY OTHER ASSETS").
Section 3.4. PROPERTIES; LEASES. Except for Permitted Exceptions, at
the Purchase and Sale Closing, Holdings or a Holdings Subsidiary will have good
and, with respect to real property, marketable title to, or valid leasehold
interests in, as the case may be, and hold free and clear of all Encumbrances,
all of the material properties reflected in the Holdings Balance Sheet or
acquired in the ordinary course of business since the date of the Holdings
Balance Sheet other than properties sold in the ordinary course of business
consistent with past practice. USRealty has delivered to SCGI or otherwise made
available, correct and complete copies of all material leases relating to real
property to which Holdings or any of the Holdings Subsidiaries is a party, all
of which are identified in Section 3.4 of the USRealty Disclosure Schedule.
There are no pending or, to USRealty's knowledge, threatened condemnation
proceedings relating to any of such material real property.
Section 3.5. ABSENCE OF CERTAIN CHANGES. Except as contemplated by
this Agreement, since December 31, 1999, there has been no (a) Holdings Material
Adverse Effect or (b) action taken by Holdings or any Holdings Subsidiary which,
if taken from the date hereof through the Purchase and Sale Closing, would
violate Section 5.4(b) through (k).
Section 3.6. LITIGATION; ORDERS. Except as set forth in the USRealty
Reports filed prior to the date hereof, or as set forth in Section 3.6 of the
USRealty Disclosure Schedule, there are no Actions pending or, to the knowledge
of USRealty, threatened or claims asserted against Holdings or any Holdings
Subsidiary that would, individually or in the aggregate, have a Holdings
Material Adverse Effect. There are no judgments or outstanding orders,
injunctions, decrees, stipulations, settlement agreements, citations,
investigations, fines or awards against or binding upon Holdings or any Holdings
Subsidiary or any of their respective properties or businesses that would,
individually or in the aggregate, have a Holdings Material Adverse Effect.
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Section 3.7. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. (a) Holdings and the Holdings Subsidiaries possess or have been
granted all registrations, filings, applications, certifications, notices,
consents, licenses, permits, approvals, certificates, franchises, orders,
qualifications, authorizations and waivers ("LICENSES") of any Governmental
Authority necessary to conduct their businesses in the manner in which they are
presently being conducted, except where the failure to possess or be granted
such Licenses would not, individually or in the aggregate, have a Holdings
Material Adverse Effect.
(b) Except (i) as set forth in Section 3.7(b) of the USRealty
Disclosure Schedule, (ii) the applicable notification requirements of the HSR
Act and the approval of the CSSF, (iii) required filings under the Exchange Act,
(iv) any required filings and notices to the NYSE or the Amsterdam Stock
Exchange, and (v) those the failure to make, file, give or obtain which
would not, individually or in the aggregate, have a Holdings Material Adverse
Effect or prevent the consummation of the Equity Purchase and the other
transactions contemplated hereby, there are no Licenses required to be made,
filed, given or obtained by USRealty, Holdings or any of the Holdings
Subsidiaries with, to or from any Governmental Authority in connection with the
consummation of the Equity Purchase and the other transactions contemplated
under this Agreement.
Section 3.8. COMPLIANCE WITH LAWS. To the knowledge of USRealty, the
conduct of the businesses of Holdings and the Holdings Subsidiaries is in and
has been in compliance in all material respects with all material statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees applicable
thereto. None of USRealty, Holdings or the Holdings Subsidiaries has received
written notice of any alleged violation of any statute, law, regulation,
ordinance, rule, judgment, order or decree from any Governmental Authority
applicable to Holdings or any of the Holdings Subsidiaries or to their
properties which has not been satisfactorily addressed and which give rise to
material fines or other civil penalties or to any criminal liabilities.
Section 3.9. INSURANCE. Each of Holdings and the Holdings Subsidiaries
is covered by valid and currently effective insurance policies issued in its
favor that are customary in scope and amount of coverage for companies of
similar size and financial condition in the industry and locale in which it
operates. Except as would not, individually or in the aggregate, have a Holdings
Material Adverse Effect, all such policies are in full force and effect, all
premiums due thereon have been paid and Holdings and the Holdings Subsidiaries
have complied with the provisions of such policies.
Section 3.10. MATERIAL CONTRACTS. Section 3.10 of the USRealty
Disclosure Schedule sets forth, as of the date hereof, (i) each contract,
agreement, arrangement or understanding to which Holdings or any Holdings
Subsidiary is a party or by which any of them or any of their properties or
assets is bound and which, if Holdings were subject to the periodic reporting
requirements under the Exchange Act, would constitute a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange
Act) which is not filed as an exhibit to the USRealty Reports filed prior to the
date hereof or (ii) any non-competition agreement or any other agreement or
arrangement that materially limits or otherwise materially restricts Holdings or
any Holdings Subsidiary or any successor thereto or acquiror thereof from
engaging or competing in any material line of business or in any geographic
area.
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Section 3.11. BROKERS, FINDERS, ETC. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of USRealty or any of its subsidiaries, except
the USRealty Financial Advisor, whose fees and expenses will be paid by USRealty
in accordance with USRealty's agreement with such firm, a copy of which has been
provided to SCGI.
Section 3.12. NO UNDISCLOSED LIABILITIES. Except as and to the extent
disclosed in the USRealty REPORTS and the Holdings Financial Statements,
respectively, since December 31, 1999, neither USRealty nor Holdings and the
Holdings Subsidiaries, respectively, have incurred any liabilities that are of
a nature that would be required to be disclosed on a balance sheet of,
respectively, USRealty or Holdings and the Holdings Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, other than (i) liabilities
incurred in the ordinary course of business or (ii) liabilities that would not,
individually or in the aggregate, have a Holdings Material Adverse Effect.
Section 3.13. JOINT PROXY STATEMENT/PROSPECTUS; FORM S-4. (a) None of
the information supplied or to be supplied by USRealty for inclusion or
incorporation by reference in (A) the Form S-4 will, at the time the Form S-4
becomes effective under the Securities Act or at the time of any post-effective
amendment thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) the Joint Proxy Statement/Prospectus
will, on the date it is first mailed to USRealty stockholders or SCGI
stockholders or at the time of the USRealty Stockholders Meeting or the SCGI
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Joint Proxy Statement/Prospectus will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC thereunder and with all applicable Luxembourg
regulations and requirements.
(b) Notwithstanding the foregoing provisions of this Section 3.13, no
representation or warranty is made by USRealty with respect to statements made
or incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus
based on information supplied by SCGI or Purchaser for inclusion or
incorporation by reference therein.
Section 3.14. REQUIRED VOTE. The affirmative vote of the holders of at
least 66-2/3% of the USRealty Shares present or represented at a meeting at
which at least a majority of the outstanding USRealty Shares are present or
represented is the only vote of the holders of any class of capital stock of
USRealty necessary to approve this Agreement and the dissolution and liquidation
of USRealty in accordance with the Plan of Liquidation (the "REQUIRED USREALTY
VOTE").
Section 3.15. OPINION OF USREALTY FINANCIAL ADVISOR. USRealty has
received the opinion of the USRealty Financial Advisor, dated the date hereof,
to the effect that, based on, and subject to, the various assumptions and
qualifications set forth in such opinion, as of such date, the consideration to
be received by the USRealty stockholders (other than SCGI and its af-
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filiates) pursuant to the transactions contemplated hereby are fair to such
stockholders from a financial point of view, a copy of which opinion has been
made available to SCGI.
Section 3.16. BOARD APPROVAL. The Special Committee by resolutions
duly adopted by unanimous vote at a meeting duly called and held and not
subsequently rescinded or modified in any way, has duly (a) determined that this
Agreement is fair to and in the best interests of USRealty and its stockholders
other than SCGI and its affiliates, (b) approved this Agreement, the Equity
Purchase and the Plan of Liquidation, and (c) recommended that the full USRealty
Board approve this Agreement, the Equity Purchase and the Plan of Liquidation.
The USRealty Board, based upon the unanimous recommendation of the Special
Committee, by resolutions duly adopted by unanimous vote at a meeting duly
called and held and not subsequently rescinded or modified in any way, has duly
(i) determined that this Agreement is fair to and in the best interests of
USRealty and its stockholders other than SCGI and its affiliates, (ii) approved
this Agreement, the Equity Purchase and the Plan of Liquidation, (iii)
determined to recommend that the stockholders of USRealty approve this Agreement
and the Plan of Liquidation, and (iv) directed that this Agreement and the Plan
of Liquidation be submitted for consideration by USRealty's stockholders at the
USRealty Stockholders Meeting. To the knowledge of USRealty, no foreign, state
or local takeover statute is applicable to the Equity Purchase or the other
transactions contemplated by this Agreement.
Section 3.17. NO DISSENTERS' RIGHTS. The transactions contemplated by
this Agreement will not give rise to any right on the part of the stockholders
of USRealty to obtain in respect of their USRealty Shares any amount determined
by any Governmental Authority under any law or regulation of any Governmental
Authority applicable to USRealty.
Section 3.18. EXEMPTION FROM TAKEOVER LAWS. The transactions
contemplated hereby are not subject to the requirements of any "moratorium",
"control share", "fair price" or other anti-takeover laws and regulations
(collectively, "TAKEOVER LAWS") of the Grand Duchy of Luxembourg.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SCGI AND PURCHASER
Except as set forth in the SCGI Disclosure Schedule delivered by SCGI
to USRealty prior to the execution hereof (the "SCGI DISCLOSURE SCHEDULE")(each
Section of which qualifies the correspondingly numbered representation and
warranty or covenant) SCGI and Purchaser, jointly and severally, hereby
represent and warrant to USRealty as follows:
Section 4.1. INCORPORATION; AUTHORIZATION; ETC. (a) Each of SCGI,
Purchaser and SCGI's subsidiaries has been duly organized, is validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
Each of SCGI, Purchaser and SCGI's subsidiaries has full corporate power and
authority to own its properties and assets and to conduct its business as it is
now being conducted and is in good standing and is duly qualified to transact
business in each jurisdiction in which the nature of property owned or leased by
it or the conduct of its busi-
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ness requires it to be so qualified, except where the failure to be in good
standing or so qualified would not, individually or in the aggregate, have an
SCGI Material Adverse Effect.
(b) Each of SCGI and Purchaser has full corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by SCGI and Purchaser, the performance by SCGI and Purchaser
of their obligations hereunder and the consummation by SCGI and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by the
respective Boards of Directors of SCGI and Purchaser and, except for (i)
obtaining the Required SCGI Vote for the issuance of the Purchase Price Shares
pursuant hereto (the "SCGI SHARE ISSUANCE") and (ii) the filing of articles
supplementary with the Maryland State Department of Assessments and Taxation in
connection with the Charter Amendment, no other corporate proceeding or action
on the part of SCGI or Purchaser or their respective Boards of Directors and
stockholders are necessary therefor.
(c) The execution, delivery and performance of this Agreement by SCGI
and Purchaser will not (i) (assuming the Charter Amendment has become
effective), violate or conflict with any provision of the respective charters
(or similar organizational documents) of SCGI, Purchaser and SCGI's
subsidiaries, (ii) except as set forth in Section 4.1(c) of the SCGI Disclosure
Schedule, conflict with, violate or constitute a default under any provision of,
or be an event that is (or with the giving of notice or passage of time or both
will result in) a violation of or default under, or result in the acceleration
of or entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any obligation or right under, or result in the
imposition of any lien upon or the creation of a security interest in any of the
Purchase Price Shares or any of the assets or properties of SCGI or any of its
subsidiaries pursuant to, or require a consent or create a penalty or increase
SCGI's or any such subsidiary's payment or performance obligations under, any
material mortgage, lien, lease, instrument, order, arbitration award, judgment
or decree, or any material contract, agreement, license or permit, to which SCGI
or any of its subsidiaries is a party or by which any of them or any of their
property is bound, or (iii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.7 have been obtained and
all filings and obligations set forth in Section 4.7 have been made, violate or
conflict with in any material respect, or result in the imposition of any
material lien upon any of the Purchase Price Shares or any of the assets or
properties of SCGI and its subsidiaries pursuant to, any provision of law,
regulation, rule, writ, injunction, decree, statute, order, judgment or ruling
of any Governmental Authority or any other material restriction of any kind or
character to which SCGI or any of its subsidiaries is or may be subject or by
which any of them or any of their property is or may be bound. This Agreement
has been duly executed and delivered by SCGI and Purchaser, and, assuming the
due execution hereof by USRealty, this Agreement constitutes the legal, valid
and binding obligation of SCGI and Purchaser, enforceable against SCGI and
Purchaser in accordance with its terms, except as may be limited or otherwise
affected by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the rights of creditors generally and
principles of equity, whether considered at law or in equity, including concepts
of materiality, reasonableness, public policy and unconscionability.
(d) Upon consummation of the Equity Purchase at the Purchase and Sale
Closing, as contemplated by this Agreement, Purchaser will deliver to USRealty
good and valid title to the Purchase Price Shares, free and clear of any liens,
claims, charges, security interests,
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options or other legal or equitable encumbrances or other rights of third
parties (except those imposed by any action taken or arrangement made by
USRealty or any of its subsidiaries).
(e) SCGI has made available to USRealty complete and correct copies of
the charters (or similar instruments), as amended to date, of SCGI and each of
its subsidiaries, and has made available to USRealty the corporate minute books
containing the records of meetings of the stockholders and boards of directors
of SCGI and each of its subsidiaries. None of SCGI, Purchaser or SCGI's
subsidiaries is in default under or in violation of any provision of its charter
(or similar instruments).
Section 4.2. CAPITALIZATION. (a) As of August 31, 2000, the authorized
capital stock of SCGI consisted of (i) 20,000,000 SCGI Class A Common Shares, of
which 1,094,121 shares were issued and outstanding and no shares were held in
the treasury of SCGI, 204,484 shares were reserved for issuance upon conversion
of SCGI's 6.50% Convertible Subordinated Debentures Due March 29, 2016, 153,135
shares were reserved for issuance upon the exercise of stock options
outstanding under the SCGI Incentive Plans and 2,994 shares were reserved for
issuance under the 6.5% Debenture Interest Reinvestment Plan, (ii) 229,537,385
SCGI Class B Common Shares, of which 53,157,330 shares were outstanding, no
shares were held in the treasury of SCGI, 15,238,483 shares were reserved for
issuance upon the exercise of stock options and vesting of RSUs outstanding
under the SCGI Incentive Plans or conversion of Class A Common Shares issuable
upon their exercise or vesting, 54,706,050 shares were reserved for issuance
upon conversion of outstanding Class A Common Shares, 6,606,205 shares were
reserved for issuance upon conversion of Series B Preferred Shares, 10,224,189
shares were reserved for issuance upon conversion of Class A Common Shares
reserved for issuance upon conversion of SCGI's 6.5% Convertible Subordinated
Debentures and 149,700 shares were reserved for issuance upon conversion of
Class A Common Shares reserved for issuance under the 6.5% Debenture
Reinvestment Plan (iii) 65,973 shares of Series A Junior Participating
Preferred Stock, US$.01 par value per share, of which no shares were
outstanding and all of which shares were reserved for issuance upon exercise of
the Rights issued pursuant to the Rights Agreement, (iv) 139,000 shares of
Series A Cumulative Convertible Redeemable Voting Preferred Stock, US$.01 par
value per share, of which no shares were issued and outstanding, and
(v) 257,642 SCGI Series B Preferred Shares, of which 257,642 shares were issued
and outstanding. Since August 31, 2000, no shares of capital stock of SCGI or
options or warrants or other rights to acquire capital stock from SCGI have been
issued or reserved for issuance except (x) in respect of the securities
described in the foregoing sentence and (y) in respect of the grant or exercise
of stock options or RSUs as permitted by Section 5.5. All issued and outstanding
shares of capital stock of SCGI are validly issued, fully paid and
nonassessable. As a result of the Charter Amendment, the number of authorized
Class A Common Shares will be changed to 15,543,012 Class A Common Shares, the
number of authorized Class B Common Shares will be changed to 234,133,373 Class
B Common Shares and the Series A Cumulative Convertible Redeemable Voting
Preferred Stock will be eliminated.
(b) Except (i) as set forth in Section 4.2(b) of the SCGI Disclosure
Schedule or in the SCGI SEC Reports, (ii) as contemplated by this Agreement,
(iii) as set forth in Section 4.2(a), and (iv) the Rights issued pursuant to the
Rights Agreement, (x) there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which SCGI
or any of its subsidiaries is a party or by which any of them is bound obli-
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gating SCGI or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
voting securities of SCGI or obligating SCGI or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking, (y) there are no
outstanding obligations of SCGI or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of SCGI, and (z) no bonds,
debentures, notes or other indebtedness of SCGI having the right to vote on any
matters on which stockholders may vote are issued or outstanding. The Purchase
Price Shares, when issued as contemplated herein, will be duly authorized,
validly issued, fully paid and nonassessable, and will not have been issued in
violation of, or be subject to, any preemptive rights.
(c) All the outstanding shares of capital stock of, or other equity
interests in, each SCGI subsidiary have been validly issued and are fully paid
and nonassessable and are owned to the extent set forth in Section 4.2(c) of the
SCGI Disclosure Schedule directly or indirectly by SCGI, free and clear of any
liens, claims, charges, security interests, options or other legal or equitable
encumbrances or restrictions. Except as set forth in the SCGI SEC Reports,
neither SCGI nor any of its subsidiaries directly or indirectly owns any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity (other than SCGI's subsidiaries), that is or would
reasonably be expected to be material to SCGI and its subsidiaries taken as a
whole.
Section 4.3. REPORTS AND FINANCIAL STATEMENTS. SCGI has filed all
required registration statements, prospectuses, reports, schedules, forms,
statements and other documents required to be filed by it with the SEC since
January 1, 1999 (collectively, including all exhibits thereto, the "SCGI SEC
REPORTS"). As of their respective dates, none of the SCGI SEC Reports (and, if
amended or superseded by a filing prior to the date hereof or the Closing Date,
then on the date of such filing), contained, and none of the SCGI SEC Reports
filed subsequent to the date hereof will contain, any untrue statement of a
material fact or omit to state 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. Each of the financial statements
(including the related notes) included in the SCGI SEC Reports presents fairly,
in all material respects, the consolidated financial position and consolidated
results of operations and cash flows of SCGI and its subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments. All of such
SCGI SEC Reports, as of their respective dates (and as of the date of any
amendment to the respective SCGI SEC Report), complied as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
Section 4.4. PROPERTIES; LEASES. Except for Permitted Exceptions or as
set forth in Section 4.4 of the SCGI Disclosure Schedule, at the Purchase and
Sale Closing SCGI or a subsidiary of SCGI will have good and marketable title
to, or valid leasehold interests in, as the case may be, and hold free and clear
of all Encumbrances, all of the material properties reflected in the SCGI
Balance Sheet or acquired in the ordinary course of business since the date of
the SCGI Balance Sheet other than properties sold in the ordinary course of
business consistent with past practice. SCGI has delivered to USRealty or
otherwise made available, correct and complete
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copies of all material leases relating to real property to which SCGI or any of
its subsidiaries is a party. There are no pending or, to SCGI's knowledge,
threatened condemnation proceedings relating to any of such material real
property.
Section 4.5. ABSENCE OF CERTAIN CHANGES. Except as contemplated by
this Agreement, since December 31, 1999, there has been no (a) SCGI Material
Adverse Effect or (b) action taken by SCGI which, if taken from the date hereof
through the Closing Date, would violate Section 5.5.
Section 4.6. LITIGATION; ORDERS. Except as set forth in the SCGI SEC
Reports, there are no Actions pending or, to the knowledge of SCGI, threatened
or claims asserted against SCGI or any of its subsidiaries that would have an
SCGI Material Adverse Effect. There are no material judgments or material
outstanding orders, injunctions, decrees, stipulations, settlement agreements,
citations, investigations, fines or awards against or binding upon SCGI and its
subsidiaries or any of their respective properties or businesses.
Section 4.7. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. (a) SCGI and its subsidiaries possess or have been granted all
material Licenses of any Governmental Authority necessary to conduct their
businesses in the manner in which they are presently being conducted.
(b) Except (i) as set forth in Section 4.7(b) of the SCGI Disclosure
Schedule, (ii) for the applicable notification requirements of the HSR Act,
(iii) required filings under the Exchange Act and the Securities Act, (iv) the
filing of articles supplementary with the Maryland State Department of
Assessments and Taxation in connection with the Charter Amendment, (v) any
required filings and notices to the NYSE or the Amsterdam Stock Exchange, and
(vi) those the failure to make, file, give or obtain which would not,
individually or in the aggregate, have an SCGI Material Adverse Effect or
prevent the consummation of the Equity Purchase and the other transactions
contemplated hereby, there are no Licenses required to be made, filed, given or
obtained by SCGI or any of its subsidiaries with, to or from any Governmental
Authority in connection with the consummation of the Equity Purchase and the
other transactions contemplated by this Agreement.
Section 4.8. COMPLIANCE WITH LAWS. To the knowledge of SCGI and
Purchaser, the conduct of the businesses of SCGI and its subsidiaries is in and
has been in compliance in all material respects with all material statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees applicable
thereto. Neither SCGI nor any of its subsidiaries has received written notice of
any alleged violation of any statute, law, regulation, ordinance, rule,
judgment, order or decree from any Governmental Authority applicable to SCGI or
any of its subsidiaries or to their properties which has not been satisfactorily
addressed and which give rise to material fines or other civil penalties or to
any criminal liabilities.
Section 4.9. INSURANCE. Each of SCGI and its subsidiaries is covered
by valid and currently effective insurance policies issued in its favor that are
customary in scope and amount of coverage for companies of similar size and
financial condition in the industry and locale in which it operates. All such
policies are in full force and effect, all premiums due thereon
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have been paid and SCGI and its subsidiaries have complied with the provisions
of such policies in all material respects.
Section 4.10. MATERIAL CONTRACTS. As of the date hereof, except as set
forth in the SCGI SEC Reports filed prior to the date hereof, neither SCGI nor
any of its subsidiaries is a party to or bound by (i) any "MATERIAL CONTRACT"
(as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange
Act), or (ii) any non-competition agreement or any other agreement or
arrangement that limits or otherwise restricts SCGI or any of its subsidiaries
or any successor thereto from engaging or competing in any line of business or
in any geographic area, which agreement or arrangement would reasonably be
expected to have an SCGI Material Adverse Effect, giving effect to the Equity
Purchase.
Section 4.11. BROKERS, FINDERS, ETC. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of SCGI or any of its subsidiaries except the
SCGI Financial Advisor, whose fees and expenses will be paid by SCGI in
accordance with SCGI's agreement with such firm.
Section 4.12. NO UNDISCLOSED LIABILITIES. Except as disclosed in the
SCGI SEC Reports filed prior to the date hereof, since December 31, 1999, SCGI
and its subsidiaries have not incurred any liabilities that are of a nature that
would be required to be disclosed on a balance sheet of SCGI and its
subsidiaries or the footnotes thereto prepared in conformity with GAAP, other
than (i) liabilities incurred in the ordinary course of business, (ii)
liabilities that would not have an SCGI Material Adverse Effect, and (iii)
liabilities incurred in connection with the financing for the Equity Purchase,
as described in the commitment letter set forth in Section 6.2(b) of the SCGI
Disclosure Schedule, and fees and expenses (including fees and expenses of legal
counsel and accountants) relating to such financing.
Section 4.13. JOINT PROXY STATEMENT/PROSPECTUS; FORM S-4. (a) None of
the information supplied or to be supplied by SCGI for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form S-4
becomes effective under the Securities Act or at the time of any post-effective
amendment thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Joint Proxy Statement/Prospectus
will, on the date it is first mailed to USRealty stockholders or SCGI
stockholders or at the time of the USRealty Stockholders Meeting or the SCGI
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Form S-4 and the Joint Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act, as applicable, and the rules and regulations of the
SEC thereunder.
(b) Notwithstanding the foregoing provisions of this Section 4.13, no
representation or warranty is made by SCGI with respect to statements made or
incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus
based on information supplied in writing by USRealty for inclusion or
incorporation by reference therein.
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Section 4.14. REQUIRED VOTE. The affirmative vote of the holders of at
least a majority of the votes cast by the holders of the SCGI Voting Shares
voting as a single class, provided that the total vote cast represents over 50%
in interest of all SCGI Voting Shares entitled to vote, is the only vote of the
holders of any class of capital stock of SCGI necessary to approve the SCGI
Share Issuance (the "REQUIRED SCGI VOTE").
Section 4.15. ENVIRONMENTAL MATTERS. Except as would not have an SCGI
Material Adverse Effect and except as disclosed in the SCGI SEC Reports filed
prior to the date hereof, (a) the operations of SCGI and its subsidiaries have
been and are in compliance with all Environmental Laws and with all licenses
required by Environmental Laws, (b) there are no pending or, to the knowledge of
SCGI, threatened, Actions under or pursuant to Environmental Laws against SCGI
or any of its subsidiaries or involving any real property currently or, to the
knowledge of SCGI, formerly owned, operated or leased by SCGI or any of its
subsidiaries, and (c) SCGI and its subsidiaries are not subject to any
Environmental Liabilities and, to the knowledge of SCGI, no facts, circumstances
or conditions relating to, arising from, associated with or attributable to any
real property currently or, to the knowledge of SCGI, formerly owned, operated
or leased by SCGI or any of its subsidiaries or operations thereon would
reasonably be expected to result in Environmental Liabilities.
As used in this Agreement, "ENVIRONMENTAL LAWS" means any and all
foreign, federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Authority, any and all common law requirements,
rules and bases of liability regulating, relating to or imposing liability or
standards of conduct concerning pollution, Hazardous Materials or protection of
human health, safety or the environment, as in effect on or prior to the Closing
Date and includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 ET SEQ., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 ET SEQ., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., the Clean Water Act, 33 U.S.C.
Section 1251 ET SEQ., the Clean Air Act, 33 U.S.C. Section 2601 ET SEQ., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C., Section 136 ET SEQ.,
Occupational Safety and Health Act 29 U.S.C. Section 651 ET SEQ. and the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ., as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, and
all analogous state or local statutes. As used in this Agreement, "ENVIRONMENTAL
LIABILITIES" with respect to any Person means any and all liabilities of or
relating to such Person or any of its subsidiaries (including any entity which
is, in whole or in part, a predecessor of such Person or any of such
subsidiaries), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to matters covered
by Environmental Laws, and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date. As used in this Agreement, "HAZARDOUS
MATERIALS" means any hazardous or toxic substances, materials or wastes,
defined, listed, classified or regulated as such in or under any Environmental
Laws and which includes petroleum, petroleum products, friable asbestos, urea
formaldehyde and polychlorinated biphenyls.
Section 4.16. TAXES. Each of SCGI and its subsidiaries has filed all
Tax Returns re-
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quired to have been filed (or extensions have been duly obtained) and has paid
all Taxes required to have been paid by it, except where failure to file such
Tax Returns or pay such Taxes would not have an SCGI Material Adverse Effect.
For purposes hereof: (i) "TAX" (and, with correlative meaning,
"TAXES") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, AD VALOREM, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority, and (ii) "TAX RETURN" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 4.17. EMPLOYEE BENEFITS. (a) With respect to each SCGI
Employee Benefit Plan, except for SCGI Employee Benefit Plans the liabilities
under which are reflected in the financial statements included in the SCGI SEC
Reports or which would not have an SCGI Material Adverse Effect, SCGI has made
available to USRealty a true, correct and complete copy of: (i) all plan
documents, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (iv) the most recent annual financial report, if any;
(v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the IRS, if any.
(b) With respect to each SCGI Employee Benefit Plan, SCGI and its
subsidiaries have complied, and are now in compliance, with all provisions of
ERISA, the Code and all other laws and regulations applicable to such SCGI
Employee Benefit Plans and each SCGI Employee Benefit Plan has been administered
in accordance with its terms, in each case except as would not have an SCGI
Material Adverse Effect. Each SCGI Employee Benefit Plan that is required by
ERISA to be funded is fully funded in accordance with reasonable actuarial
assumptions, except as would not have an SCGI Material Adverse Effect.
(c) To the extent that any entity which, together with SCGI, would be
treated as a single employer within the meaning of Code Section 414(b), (c), (m)
or (o) (an "ERISA AFFILIATE") has or at any time has had an obligation to
contribute to a plan subject to Title IV of ERISA, including a multi-employer
plan within the meaning of ERISA Section 4001(a)(3) (collectively, the "TITLE IV
PLANS"), except in each case as would not individually or in the aggregate have
an SCGI Material Adverse Effect or as otherwise disclosed or reflected in the
SCGI SEC Reports, there is no liability under Title IV of ERISA that has
occurred or is likely to occur in respect of such Title IV Plan.
Section 4.18. BOARD APPROVAL. The Board of Directors of SCGI, by
resolutions duly adopted by unanimous vote at a meeting duly called and held and
not subsequently rescinded or modified in any way, has duly (a) determined that
this Agreement is fair to and in the best interests of SCGI and its
stockholders, (b) approved this Agreement, the Equity Purchase, and the SCGI
Share Issuance, (c) determined to recommend that the stockholders of SCGI
approve the SCGI Share Issuance and directed that the SCGI Share Issuance be
submitted for consideration by SCGI's stockholders at the SCGI Stockholders
Meeting, and (d) approved an
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amendment to the Charter of SCGI reclassifying 4,456,988 authorized but unissued
Class A Common Shares and 139,000 authorized but unissued shares of Series A
Preferred Stock into a total of 4,595,988 Class B Common Shares (the "CHARTER
AMENDMENT").
Section 4.19. OPINION OF SCGI FINANCIAL ADVISOR. SCGI has received the
opinion of the SCGI Financial Advisor, as of the date hereof, to the effect
that, as of such date, and based upon and subject to the assumptions and matters
set forth therein, the consideration (consisting of the Purchase Price Shares
and the Purchase Price Cash Amount) to be paid by SCGI pursuant to this
Agreement is fair from a financial point of view to SCGI.
Section 4.20. EXEMPTION FROM TAKEOVER LAWS. SCGI and Purchaser have
taken all action required to be taken by it in order to exempt this Agreement
and the transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of any
Takeover Laws (a) of the State of Maryland, in the case of SCGI and (b) of the
State of Nevada, in the case of Purchaser.
Section 4.21. REQUIRED FINANCING. SCGI and/or Purchaser have received
the commitment letter set forth on Section 6.2(b) of the SCGI Disclosure
Schedule, and the funds proposed to be made available thereunder, upon receipt
thereof, will be sufficient to consummate the Equity Purchase, including funds
sufficient to pay the Purchase Price Cash Amount.
Section 4.22. NO KNOWLEDGE OF BREACHES. As of the date of this
Agreement, neither SCGI nor the Operating Advisor has any knowledge of any
breach by USRealty of USRealty's representations and warranties hereunder.
ARTICLE V
COVENANTS OF SCGI, PURCHASER AND USREALTY
Section 5.1. INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND
Records. (a) Prior to the Closing Date, USRealty shall and shall cause Holdings
and the Holdings Subsidiaries to, and SCGI shall and shall cause its
subsidiaries to, afford to representatives of the other party full access to
their respective personnel, offices, plants, properties, books and records
during normal business hours, in order that USRealty and SCGI may have full
opportunity to make such investigations as such party desires of the affairs and
assets of SCGI, on the one hand, or Holdings and the Holdings Subsidiaries on
the other hand; PROVIDED, HOWEVER, that such investigation by USRealty and SCGI
shall not unreasonably disrupt the personnel and operations of SCGI and its
subsidiaries, on the one hand, or Holdings and the Holdings Subsidiaries, on the
other hand.
(b) On the Closing Date or as soon thereafter as practicable, USRealty
will deliver or cause to be delivered to SCGI all corporate records of Holdings
and the Holdings Subsidiaries, and all other original (or copies thereof, if
originals are not immediately available) agreements, documents, books and
records relating to the businesses of Holdings and the Holdings Subsidiaries.
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(c) Except as required by law or a regulatory body or court having
jurisdiction over USRealty and except to the extent such information becomes
publicly available other than as a result of any action taken by USRealty, from
and after the Closing Date, USRealty shall maintain the confidentiality of
non-public information with respect to Holdings and the Holdings Subsidiaries.
In the event that USRealty after the Closing Date is requested, or becomes
required by law or a regulatory body or court having jurisdiction over USRealty,
to disclose any confidential information relating to Holdings and the Holdings
Subsidiaries, USRealty will provide SCGI with prompt notice thereof (before such
information is disclosed if practicable) so that SCGI may at its expense seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Section 5.1(c).
Section 5.2. EFFORTS; OBTAINING CONSENTS. (a) Subject to the terms and
conditions herein provided, each of USRealty, SCGI and Purchaser agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with the other in connection with the foregoing,
including using its reasonable efforts (i) to obtain all waivers, consents and
approvals from other parties to loan agreements, leases, mortgages and other
contracts necessary for the consummation of the transactions contemplated
hereby, (ii) to make all required filings and registrations with, and
submissions of information requested by, and to obtain all consents, approvals
and authorizations that are required to be obtained from, Governmental
Authorities, (iii) to lift or rescind any injunction, restraining order, decree
or other order adversely affecting the ability of the parties hereto to
consummate the transactions contemplated hereby, and (iv) to fulfill all
conditions to this Agreement. Each of USRealty, SCGI and Purchaser shall use all
reasonable efforts to prevent the entry, enactment or promulgation of any
threatened or pending preliminary or permanent injunction or other order, decree
or ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby.
(b) SCGI and USRealty shall promptly file or cause to be filed with
the Antitrust Division of the United States Department of Justice and the United
States Federal Trade Commission pursuant to the HSR Act all requisite documents
and notifications in connection with the transactions contemplated by this
Agreement. SCGI shall pay the filing fee incurred in connection with such
filings under the HSR Act. Each party hereto shall promptly inform the other of
any material communication from the Federal Trade Commission, the Department of
Justice or any other Governmental Authority regarding any of the transactions
contemplated hereby. If either SCGI or USRealty or any Affiliate thereof
receives a request for additional information or documentary material from any
such government or Governmental Authority with respect to the transactions
contemplated hereby, then such party shall endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation with
the other party, an appropriate response in compliance with such request. Each
of the parties hereto will advise the other promptly in respect of any
understandings, undertakings or agreements (oral or written) which it proposes
to make or enter into with the Federal Trade Commission, the Department of
Justice or any other Governmental Authority in connection with the transactions
contemplated hereby.
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(c) SCGI shall use all reasonable efforts to cause the financing
necessary for the satisfaction of the condition in Section 6.2(b) to be obtained
on the terms set forth in the commitment letter attached to Schedule 6.2(b) of
the SCGI Disclosure Schedule or on such other terms as may be commercially
available at the time of funding.
(d) SCGI shall file articles supplementary with the Maryland State
Department of Assessments and Taxation in connection with the Charter Amendment.
Section 5.3. FURTHER ASSURANCES. SCGI, Purchaser and USRealty agree
that, from time to time, whether before, at or after the Closing Date, each of
them will take such other action (including using its reasonable best efforts to
cause its subsidiaries to take such action) as may be reasonably necessary to
carry out the purposes and intents of this Agreement.
Section 5.4. CONDUCT OF BUSINESS BY USREALTY. From the date hereof
through the Closing Date, except as disclosed in Section 5.4 of the USRealty
Disclosure Schedule or otherwise provided for in this Agreement (including
pursuant to the Plan of Liquidation or Section 5.14), and, except as advised,
recommended or agreed to by the Operating Advisor, or as consented to or
approved by SCGI in writing, USRealty covenants and agrees that:
(a) each of Holdings and the Holdings Subsidiaries shall operate its
business in the ordinary and usual course in accordance with past practices;
(b) none of USRealty, Holdings or the Holdings Subsidiaries shall
issue, sell or agree to issue or sell (i) any shares of its capital stock, or
(ii) any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of its capital stock or make any
change in its issued and outstanding capital stock or redeem, purchase or
otherwise acquire any of its capital stock, other than as required pursuant to
obligations set forth in Section 5.4 of the USRealty Disclosure Schedule;
(c) neither Holdings nor any Holdings Subsidiary shall (i) increase in
any manner the compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any of its directors, officers or other employees
other than increases in compensation in the ordinary course of business and
consistent with past practice and which are not material in the aggregate; (ii)
pay or agree to pay any pension, retirement allowance or other employee benefit
to any director, officer or employee, whether past or present, other than as
required by applicable law, contracts or plan documents in effect on the date
hereof; (iii) enter into any new employment, severance, consulting, or other
compensation agreement with any director, officer or employee or other person
other than in connection with any new hires or promotions in the ordinary course
and consistent with past practice; or (iv) commit itself to any additional
pension, profit-sharing, deferred compensation, group insurance, severance pay,
retirement or other employee benefit plan, fund or similar arrangement or adopt
or amend or commit itself to adopt or amend any of such plans, funds or similar
arrangements in existence on the date hereof;
(d) none of USRealty, Holdings nor any of the Holdings Subsidiaries
shall (i) amend its articles of incorporation (or similar instruments), (ii)
declare any dividend or make any distribution with respect to its capital stock
(other than any dividend or distribution by Holdings to USRealty as may be
necessary to allow USRealty to defray the reasonable costs and
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expenses of the liquidation of USRealty pursuant to the Plan of Liquidation, and
which cannot be satisfied out of the USRealty Other Assets), (iii) assume, incur
or guarantee any obligation for borrowed money other than trade payables in the
ordinary course of business consistent with past practice, (iv) cancel or
compromise, except for compromises of current or former short-term trade
receivables or other current assets in the ordinary course of business
consistent with past practice, any debts owed to it, or (v) waive or release any
rights of material value;
(e) none of USRealty, Holdings nor any of the Holdings Subsidiaries
shall (i) sell, transfer, lease or otherwise dispose of any of its assets other
than inventory, accounts receivable or fixtures in the ordinary course of
business consistent with past practice, (ii) create or permit to exist any new
security interest, lien or encumbrance on any of its properties or assets, other
than Permitted Exceptions, (iii) enter into any joint venture, partnership or
other similar arrangement, (iv) make any investment in or purchase any
securities of any Person other than in connection with the cash management
activities of USRealty, Holdings and the Holdings Subsidiaries in the ordinary
course of business consistent with past practice, other than as required
pursuant to obligations set forth in Section 5.4 of the USRealty Disclosure
Schedule, (v) purchase any assets of any Person other than in the ordinary
course of business consistent with past practice or (vi) incur any liabilities
which are, in the aggregate, in excess of liabilities that can be funded with
internally generated cash flows, other than liabilities incurred to fund binding
commitments in effect as of the date hereof or liabilities the incurrence of
which is necessary to fund the ordinary course business activities of such
entities consistent with past practice;
(f) neither Holdings nor any Holdings Subsidiary shall permit a change
in its methods of maintaining its books, accounts or business records or, except
as required by GAAP or applicable Luxembourg accounting principles (in which
event prior notice shall be given to SCGI), change any of its accounting
principles or the methods by which such principles are applied for tax or
financial reporting purposes;
(g) the Holdings Subsidiaries together shall incur capital
expenditures only in the ordinary course of business consistent with prior
practice and not in excess of the capital budget provided to SCGI prior to the
date hereof;
(h) none of USRealty, Holdings nor any of the Holdings Subsidiaries
shall (i) enter into or terminate any material lease, contract or agreement, or
make any change in any of their material leases, contracts and agreements, (ii)
reclassify any assets or liabilities, or (iii) do any other act that (A) would
cause any representation or warranty of USRealty in this Agreement to be or
become untrue in any material respect or (B) would reasonably be expected to
have a Holdings Material Adverse Effect;
(i) USRealty, Holdings and the Holdings Subsidiaries will comply in
all material respects with all material laws and regulations applicable to them;
(j) neither Holdings nor any of the Holdings Subsidiaries shall make
any election with respect to Taxes, consent to any waiver or extension of time
to assess or collect any Taxes or file any Tax Return other than a Tax Return
filed in the ordinary course of business and prepared in a manner consistent
with past practice;
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(k) none of USRealty, Holdings nor any of the Holdings Subsidiaries
shall agree to take any action prohibited by this Section 5.4;
(l) None of USRealty, Holdings or any of the Holdings Subsidiaries
shall propose, initiate or approve any action to be taken by a Private Investee,
if such action if taken by a Holdings Subsidiary would be prohibited by this
Section 5.4 or Section 5.7.
Section 5.5. CONDUCT OF BUSINESS BY SCGI. From the date hereof through
the Closing Date, except as otherwise contemplated in this Agreement or set
forth in Section 5.5 of the SCGI Disclosure Schedule, and except as consented to
or approved by USRealty in writing, SCGI covenants and agrees that (a) except
for (i) issuances of SCGI Shares (including the related Rights) upon exercise of
outstanding stock options or vesting of outstanding RSUs or upon the exercise,
conversion or redemption pursuant to their terms of securities outstanding on
the date hereof and under the 6.5% Debenture Interest Reinvestment Plan and (ii)
new grants of stock options (and issuances of SCGI Shares and the related Rights
upon exercise thereof), SCGI Shares and RSUs in each case pursuant to the terms
of the SCGI Incentive Plans, it shall not issue, sell or agree to issue or sell
(x) any shares of its capital stock or (y) any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe for, any
shares of its capital stock or make any change in its issued and outstanding
capital stock; (b) except for the filing of articles supplementary with the
Maryland State Department of Assessments and Taxation in connection with the
Charter Amendment, it shall not amend its charter; (c) it shall not declare any
dividend or make any distribution with respect to its capital stock, other than
pursuant to the terms of SCGI capital stock outstanding as of the date hereof;
(d) it shall not redeem, purchase or otherwise acquire any SCGI Shares other
than in open market transactions or in negotiated transactions with third
parties or in connection with cashless exercises; and (e) it shall not agree to
take any action prohibited by this Section 5.5.
Section 5.6. PRESERVATION OF BUSINESS. From the date hereof through
the Closing Date, subject to the terms and conditions of this Agreement,
USRealty shall, and shall cause Holdings and the Holdings Subsidiaries to, use
all reasonable efforts to preserve the business of Holdings and the Holdings
Subsidiaries intact, to preserve the good will of customers, suppliers,
employees and others having significant business relations with Holdings and the
Holdings Subsidiaries, to retain their key employees, and to maintain insurance
in full force and effect.
Section 5.7. NON-SOLICITATION. Except as otherwise contemplated in
this Agreement or in Section 5.4 of the USRealty Disclosure Schedule, USRealty
shall not, and shall not permit Holdings or the Holdings Subsidiaries to,
directly or indirectly, (a) solicit any inquiries or proposals for, or enter
into or continue or resume any discussions with respect to or enter into any
negotiations or agreements relating to the sale or exchange of any Holdings
Shares, any shares of capital stock of U.S. Realty, any Holdings Subsidiary or
any Private Investee or all, or a substantial part, of the assets of U.S.
Realty, Holdings, any Holdings Subsidy or any Private Investee or (b) furnish or
cause to be furnished any non-public information concerning the business and
operations of any of them to any Person (other than to or at the request of SCGI
and its representatives) other than in the ordinary course of business
consistent with past practice or as required by applicable law (including
applicable laws relating to the duties of the USRealty Board).
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Section 5.8. FINANCIAL STATEMENTS. Prior to and through the Closing
Date, USRealty shall deliver to SCGI promptly after they are prepared such
monthly or other financial statements or financial reports of USRealty, Holdings
and the Holdings Subsidiaries as are prepared by or relating to USRealty,
Holdings and the Holdings Subsidiaries in the ordinary course of business and
such other financial information as SCGI may reasonably request, promptly after
such request. USRealty shall use its reasonable efforts to have
PricewaterhouseCoopers (Luxembourg) S.a.r.l. consent to SCGI's use of and
reliance on the Holdings Financial Statements and such other financial
statements of USRealty and its subsidiaries and/or Holdings and the Holdings
Subsidiaries as may be required in connection with filings under the U.S.
federal securities laws.
Section 5.9. SATISFACTION AND DISCHARGE OF USREALTY NOTES. Section 401
of the Notes Indenture provides for the satisfaction and discharge of the Notes
Indenture with respect to the USRealty Notes under certain circumstances
specified in such Section 401 of the Notes Indenture, including among other
things, the deposit by USRealty with the Trustee of funds for the purpose and in
an amount sufficient to pay and discharge the entire indebtedness on the
USRealty Notes at a specified redemption date and the entering into of
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name and at the expense of USRealty. Prior to the date
hereof, Purchaser, USRealty and the Trustee have arranged (and USRealty and SCGI
do hereby agree), for purposes of effecting, at the Purchase and Sale Closing as
contemplated by Section 2.1, the satisfaction and discharge of the Notes
Indenture with respect to the USRealty Notes pursuant to Section 401 of the
Notes Indenture (the "SATISFACTION AND DISCHARGE"), that, at the Purchase and
Sale Closing: (a) Purchaser and USRealty shall enter into an agreement with the
Trustee in the form attached as EXHIBIT B, (b) USRealty shall deliver in trust
to the Trustee an amount of cash (the "NOTES PAYOFF AMOUNT") equal to, at SCGI's
election, either (i) the Accreted Value (as defined in the Notes Indenture) on
the later of May 23, 2001 or such date as is 30 days following the Closing Date
(the "REDEMPTION DATE") of all USRealty Notes outstanding on the Closing Date
plus any interest payments required to be made on such USRealty Notes following
the Closing Date through and including the Redemption Date (the "REDEMPTION
AMOUNT") or (ii) an amount sufficient to purchase on the Closing Date securities
set forth on EXHIBIT C with face amounts and maturity dates to provide for funds
in such trust, on the Redemption Date, equal to the Redemption Amount, provided
that in the case of this clause (ii), SCGI shall provide to USRealty for
delivery to the Trustee a verified accountant's report thereon, and (c) USRealty
shall deliver to the Trustee the Company Order contemplated by Section 401 of
the Notes Indenture (which shall specify that the USRealty Notes shall be
redeemed on the Redemption Date) and such other documents as may be required by
the Notes Indenture, the Trust Indenture Act or the agreement with the Trustee
referred to in clause (a) above..
Section 5.10. JOINT PROXY STATEMENT/PROSPECTUS; FORM S-4. As promptly
as practicable after the execution hereof, SCGI and USRealty shall prepare and
file with the SEC proxy materials which shall constitute the Joint Proxy
Statement/Prospectus relating to (i) the SCGI Stockholders Meeting and the vote
of the stockholders of SCGI with respect to the SCGI Share Issuance pursuant
hereto, and (ii) the USRealty Stockholders Meeting and the vote of USRealty
Stockholders with respect to this Agreement and the Plan of Liquidation (such
proxy materials, together with any amendments thereof or supplements thereto, in
the form delivered to the stockholders of USRealty and SCGI, the "JOINT PROXY
STATEMENT/PROSPECTUS") and SCGI shall
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prepare and file a registration statement on Form S-4 with respect to the
issuance and distribution of the Purchase Price Shares pursuant hereto and the
Plan of Liquidation (the "FORM S-4"). The Joint Proxy Statement/Prospectus will
be included in and will constitute a part of the Form S-4 as SCGI's prospectus.
Each of SCGI and USRealty shall use reasonable best efforts (i) to have the Form
S-4 declared effective by the SEC as promptly as practicable after filing with
the SEC and to keep the Form S-4 effective as long as it is necessary to
consummate the transactions contemplated by this Agreement (including the Plan
of Liquidation), and (ii) to have the Joint Proxy Statement/Prospectus cleared
by the CSSF. SCGI and USRealty shall, as promptly as practicable after receipt
thereof, provide the other party copies of any written comments and advise the
other party of any oral comments, with respect to the Joint Proxy
Statement/Prospectus or the Form S-4 received from the SEC or the CSSF and shall
notify the other of any request by the SEC for amendments or supplements to the
Form S-4 or the Joint Proxy Statement/Prospectus. SCGI and USRealty shall
respond promptly to any comments made by the SEC, the CSSF or any other
governmental official with respect to the Joint Proxy Statement/Prospectus or
the Form S-4. SCGI and USRealty shall each supply the other with copies of all
correspondence between such party or any of its representatives and the SEC, the
CSSF or any other Governmental Authority with respect to the Form S-4, the Joint
Proxy Statement/Prospectus and the transactions contemplated hereby. SCGI shall
provide USRealty with a reasonable opportunity to review and comment on any
amendment or supplement to the Form S-4 prior to filing such with the SEC, and
with a copy of all such filings made with the SEC or the CSSF. SCGI and USRealty
shall, to the extent reasonably practicable, each have the opportunity to
participate in all communications with the SEC and its staff and the CSSF,
including meetings and telephone conferences regarding the Form S-4 and the
Joint Proxy Statement/Prospectus and the transactions contemplated therein.
Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation by reference) to the Joint Proxy
Statement/Prospectus or the Form S-4 shall be made without the approval of both
parties, which approval shall not be unreasonably withheld or delayed; provided,
that with respect to documents filed by a party which are incorporated by
reference in the Form S-4 or Joint Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the other
party or its business, financial condition or results of operations. USRealty
will use reasonable best efforts to cause the Joint Proxy Statement/Prospectus
to be mailed to USRealty stockholders of record as of the record date for the
USRealty Stockholders Meeting (by registered mail, if an available method), and
SCGI will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to SCGI's stockholders of record as of the
record date for the SCGI Stockholders Meeting, in each case as promptly as
practicable after the Form S-4 is declared effective under the Securities Act,
and sufficiently in advance of the USRealty Stockholders Meeting and SCGI
Stockholders Meeting so as to allow USRealty's and SCGI's record stockholders
reasonably sufficient time to distribute the Joint Proxy Statement/Prospectus to
the beneficial holders of the USRealty and SCGI securities entitled to vote at
the USRealty Stockholders Meeting and the SCGI Stockholders Meeting,
respectively. Each party will advise the other party, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective, the issuance
of any stop order, the suspension of the qualification of the Purchase Price
Shares issuable in connection with the Equity Purchase and the Plan of
Liquidation for offering or sale in any jurisdiction, or any request by the SEC
or the CSSF for amendment of the Joint Proxy Statement/Prospectus or the Form
S-4. If at any time prior to the Closing Date any information should be
discovered by USRealty or SCGI which should be set forth in an amendment
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or supplement to any of the Form S-4 or the Joint Proxy Statement/Prospectus so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and, to the extent required by law, rules or regulations, an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and the CSSF and disseminated to the stockholders of SCGI and USRealty.
SCGI will also take such actions (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) as may be required to be taken
under the applicable "blue sky" laws in connection with the issuance and
distribution of the Purchase Price Shares pursuant hereto and to the Plan of
Liquidation. SCGI and USRealty shall share equally all fees and expenses, other
than attorneys' and accounting fees and expenses, incurred in relation to the
preparation, printing and mailing of the Form S-4 and the Joint Proxy
Statement/Prospectus.
Section 5.11. STOCKHOLDERS MEETINGS. (a) SCGI shall, as promptly as
reasonably practicable following the execution hereof, duly take all lawful
action to call, give notice of, convene and hold a meeting of its stockholders
(the "SCGI STOCKHOLDERS MEETING") for the purpose of obtaining the SCGI
Stockholders Approval with respect to the SCGI Share Issuance, and shall take
all lawful action to solicit the approval of the SCGI Share Issuance; and the
Board of Directors of SCGI shall, subject to its legal and regulatory duties
under applicable law, recommend approval of the SCGI Share Issuance by the
stockholders of SCGI, and shall not, subject to its legal and regulatory duties
under applicable law, withdraw, modify or materially qualify in any manner
adverse to USRealty such recommendation or take any action or make any statement
in connection with the SCGI Stockholders Meeting materially inconsistent with
such recommendation.
(b) (i) USRealty shall, as promptly as reasonably practicable
following the execution hereof, duly take all lawful action to call, give notice
of, convene and hold a meeting of its stockholders (the "USREALTY STOCKHOLDERS
MEETING") for the purpose of obtaining the USRealty Stockholders Approval with
respect to this Agreement and the dissolution and liquidation of USRealty
pursuant to the Plan of Liquidation, and shall take all lawful action to solicit
the approval of this Agreement and the Plan of Liquidation. The USRealty Board
shall recommend approval of this Agreement by the stockholders of USRealty, and
shall not withdraw, modify or materially qualify in any manner adverse to SCGI
such recommendation or take any action or make any statement in connection with
the USRealty Stockholders Meeting materially inconsistent with such
recommendation; provided that the USRealty Board shall have no obligation to
take any such action or fail to take any such action if taking or failing to
take, as the case may be, such action would be inconsistent with its legal and
regulatory duties (including its duty to act in the best interests of the
USRealty stockholders) under applicable law.
(ii) The Joint Proxy Statement/Prospectus and the proxy card sent to
the stockholders of USRealty in connection with the USRealty Stockholders
Meeting shall specify that any USRealty Share the holder of which does not wish
to consent to receive SCGI Class B Common Shares upon consummation of the
transactions contemplated by the Plan of Liquidation, but instead wishes to
receive cash upon consummation of the transactions con-
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templated by the Plan of Liquidation, and votes against approval of this
Agreement and the Plan of Liquidation and who so indicates such wish to receive
cash upon consummation of the transactions contemplated by the Plan of
Liquidation on a proxy card properly completed and returned in accordance with
the instructions and rules relating thereto (each such USRealty Share, a "CASH
USREALTY SHARE"), shall not receive SCGI Class B Common Shares upon consummation
of the transactions contemplated by the Plan of Liquidation, but instead shall
receive the Per Share Cash Amount for each USRealty Share held by such holder.
USRealty stockholders who do not so properly indicate their desire to receive
cash instead of SCGI Class B Common Shares upon consummation of the liquidation
and distribution to stockholders contemplated by the Plan of Liquidation, shall
be for all purposes considered to have elected to receive SCGI Class B Common
Shares upon consummation of the liquidation and distribution to stockholders
contemplated by the Plan of Liquidation. USRealty stockholders who vote in favor
of approval of this Agreement and the Plan of Liquidation or abstain from
voting, and USRealty stockholders who do not return the proxy card in connection
with the USRealty Stockholders Meeting, will be deemed to have consented to
receive SCGI Class B Common Shares upon consummation of the liquidation and
distribution to stockholders contemplated by the Plan of Liquidation, and
prominent disclosure of these matters shall be included the Joint Proxy
Statement/Prospectus and the proxy card sent to the stockholders of USRealty in
connection with the USRealty Stockholders Meeting.
(c) SCGI shall vote, or shall cause to be voted, all of the USRealty
Shares beneficially owned by it in favor of the approval of this Agreement and
the Plan of Liquidation.
Section 5.12. NYSE LISTING. SCGI shall promptly prepare and submit to
the NYSE a supplemental listing application covering the Purchase Price Shares,
and shall use all reasonable efforts to cause such shares to be approved for
listing on the NYSE, subject only to official notice of issuance, prior to the
consummation of the Equity Purchase.
Section 5.13. PUBLIC ANNOUNCEMENTS. Each of the parties hereto agrees,
unless otherwise required by applicable law or by obligations pursuant to any
listing agreement with or rules of any securities exchange (in which case such
party shall use its reasonable efforts to provide the other party the
opportunity to review and comment), to consult with each other, and provide each
other the opportunity to review and comment, before issuing any press release
or, to the extent practical, otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby. The parties agree
that the initial joint press release to be issued with respect to the
transactions contemplated hereby will be in the form agreed to by the parties
hereto prior to the execution of this Agreement.
Section 5.14. TAKEOVER LAWS. Each of the parties hereto shall take all
reasonable steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect, that purports to apply to this Agreement or the
transactions contemplated hereby.
Section 5.15. CERTAIN ACTIONS. (a) At the request of Purchaser and
subject to the satisfaction of the applicable conditions set forth in Article
VI, prior to the delivery by Purchaser of the Purchase Price Cash Amount and the
Purchase Price Shares pursuant to Section 2.1 at the Purchase and Sale Closing,
(i) Holdings shall declare and pay a dividend in the amount of, or repay to
USRealty, in cash, a portion specified by Purchaser (but in no event more than
US$200 million in aggregate of dividends and repayments) of the total amount
then owing to USRealty
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under the Advance Agreement and/or (ii) USRealty shall contribute to Holdings,
by way of a capital contribution in a manner to be determined by Purchaser, all
or a portion of the total amount then owing to USRealty under the Advance
Agreement.
(b) At the request of Purchaser, and subject to the satisfaction of
the applicable conditions set forth in Article VI, prior to delivery by
Purchaser of the Purchase Price Cash Amount and Purchase Price Shares pursuant
to Section 2.1 at the Purchase and Sale Closing, (i) Holdings shall cause its
wholly owned subsidiaries to declare and pay dividends in the amount of, or
repay to Holdings, in cash, a portion specified by Purchaser (but in no event a
total of more than US$50 million in aggregate of dividends and repayments) of
the total amount owed to Holdings by such wholly owned subsidiaries under the
Holdings Advance Agreement and/or (ii) Holdings shall contribute to its wholly
owned subsidiaries, by way of a capital contribution in a manner to be
determined by Purchaser, all or a portion of the total amount then owing by such
subsidiaries to Holdings under the Holdings Advance Agreement and/or (iii)
Holdings shall cause certain asset transfers as between it and its wholly owned
subsidiaries.
(c) Immediately prior to the delivery by Purchaser of the Purchase
Price Cash Amount and the Purchase Price Shares pursuant to Section 2.1,
USRealty shall transfer, convey and otherwise assign to Holdings all of
USRealty's assets, if any, other than the Holdings Shares, the Advance Agreement
Interests and any cash on hand, and all of USRealty's liabilities, if any, other
than with respect to the USRealty Notes or pursuant to the Advance Agreement,
and shall cause Holdings to accept such transfer, conveyance and assignment.
(d) SCGI shall indemnify and hold USRealty harmless from, and shall
pay when due, any Taxes for or to USRealty arising from the transactions
contemplated by this Section 5.15.
Section 5.16. SHARE OPTION EQUIVALENTS. Effective as of the time of
the Purchase and Sale Closing, and notwithstanding anything to the contrary in
the Share Option Equivalent Grants, and whether or not then vested, the
restricted cash payment specified in paragraph 2 of each of the Share Option
Equivalent Grants shall be vested, deemed to be exercised as of the last full
trading day prior to such time, be due and payable, and shall be paid, but the
recipients of such payments shall, notwithstanding the terms of the Share Option
Equivalent Grants, have no obligation to apply any such restricted cash payment
to any particular purpose.
Section 5.17. LITIGATION. SCGI shall have the right to conduct and
control, through counsel of its own choosing, in consultation and cooperation
with USRealty and the Special Committee and their respective counsel, the
defense or settlement of any action or claim brought by any stockholder or
purported stockholder of USRealty before any domestic or foreign court of
competent jurisdiction which challenges the acquisition in whole or in part the
Equity Purchase or the entering into of this Agreement, seeks to restrain or
prohibit the consummation of the transactions contemplated hereby or seeks to
obtain material damages, and USRealty shall not, and shall cause its
subsidiaries and affiliates not to, pay or settle any such claim or action to
which it is a party without the prior written consent of SCGI; PROVIDED, that
the Special Committee shall be permitted to fully participate in such defense or
settlement through counsel chosen by it; and PROVIDED FURTHER, that SCGI shall
not, and shall cause its subsidiaries and affiliates not to, settle any such
action or claim naming as parties any of the members of the USRealty
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Board without the consent of such members of the USRealty Board, which consent
shall not be unreasonably withheld.
Section 5.18. NOTIFICATION OF CERTAIN MATTERS. Each of USRealty, SCGI
and Purchaser shall give prompt notice to the other parties hereof of any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
Section 5.19. INDEMNIFICATION. (a) SCGI agrees that all rights to
indemnification or exculpation now existing in favor of the directors and
officers of USRealty, Holdings and the Holdings Subsidiaries as provided in
their respective articles, certificates, charter or bylaws or otherwise in
effect as of the date hereof with respect to matters occurring prior to the
consummation of the last to occur of any of the transactions contemplated hereby
shall survive such consummation and shall continue in full force and effect, and
no action shall be taken by SCGI during the six year period beginning on the
last to occur of any of the transactions contemplated hereby if such action
could reasonably be expected to materially reduce any such rights to
indemnification or exculpation. To the maximum extent permitted by law, such
indemnification shall be mandatory rather than permissive, and SCGI shall
advance expenses in connection with such indemnification.
(b) SCGI shall maintain in effect for not less than six (6) years from
the consummation of the last to occur of any of the transactions contemplated
hereby, the policies of the directors' and officers' liability and fiduciary
insurance most recently maintained by USRealty (PROVIDED that SCGI may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the beneficiaries thereof so long
as such substitution does not result in gaps or lapses in coverage) with respect
to matters occurring prior to the consummation of the last to occur of any of
the transactions contemplated hereby to the extent available; PROVIDED that in
no event shall SCGI be required to expend more than an amount per year equal to
150% of the current annual premiums paid by USRealty (the "PREMIUM AMOUNT") to
maintain or procure insurance coverage pursuant hereto, and PROVIDED, FURTHER,
that, if SCGI is unable to obtain the insurance called for by this Section
5.20(b), SCGI will obtain as much comparable insurance as is available for the
Premium Amount per year.
Section 5.20. CERTAIN AGREEMENT RELATING TO USREALTY INVESTEES.
USRealty hereby agrees on its own behalf and on behalf of Holdings, effective as
of the Purchase and Sale Closing, to the matters set forth in paragraph 1(iv) of
the Carr Letter Agreement. USRealty shall, and shall cause Holdings to, prior to
the Purchase and Sale Closing, cooperate with SCGI and take all such actions as
SCGI may reasonably request in order to afford SCGI from and after the Purchase
and Sale Closing the rights and benefits of USRealty and/or Holdings under the
agreements, arrangements and understandings with the Persons in which Holdings
holds investments.
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of SCGI, Purchaser and USRealty to effect the Equity Purchase and
the SCGI Share Issuance are subject to the satisfaction or waiver prior to the
Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. (i) SCGI shall have obtained the Required
SCGI Vote in connection with the approval of the SCGI Share Issuance by the
stockholders of SCGI, and (ii) USRealty shall have obtained the Required
USRealty Vote in connection with the approval of this Agreement and the Plan of
Liquidation.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Authority of competent jurisdiction shall be in effect, (i) having the effect of
making the transactions contemplated hereby or by the Plan of Liquidation
illegal or otherwise prohibiting consummation of the transactions contemplated
hereby; PROVIDED, HOWEVER, that the provisions of this Section 6.1(b) shall not
be available to any party whose failure to fulfill its obligations pursuant to
Section 5.2 shall have been the cause of, or shall have resulted in, such order
or injunction.
(c) REQUIRED REGULATORY FILINGS. The waiting period (and any extension
thereof) applicable to the Equity Purchase under the HSR Act shall have been
terminated or shall have expired.
(d) OTHER GOVERNMENTAL AND REGULATORY APPROVALS. Other than with
respect to the matters addressed in Section 6.1(c), all consents, approvals and
actions of, filings with and notices to any Governmental Authority required of
SCGI, USRealty or any of their subsidiaries to consummate the Equity Purchase,
the SCGI Share Issuance and the other transactions contemplated hereby, the
failure of which to be obtained or taken would reasonably be expected to have a
Holdings Material Adverse Effect or an SCGI Material Adverse Effect shall have
been obtained; PROVIDED, HOWEVER, that the provisions of this Section 6.1(d)
shall not be available to any party whose failure to fulfill its obligations
pursuant to Section 5.2 shall have been the cause of, or shall have resulted in,
the failure to obtain such consent or approval.
(e) NYSE LISTING. The Purchase Price Shares shall have been approved
for listing on the NYSE, subject only to official notice of issuance.
(f) EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall be pending before or threatened by the SEC.
Section 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF SCGI AND
PURCHASER. The obligation of SCGI and Purchaser to effect the Equity Purchase
and the SCGI Share Issuance are subject to the satisfaction of, or waiver by
SCGI and Purchaser, on or prior to the Closing Date of the following additional
conditions:
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(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF USREALTY. The
representations and warranties of USRealty contained in this Agreement shall be
true and correct when made and, except for representations and warranties that
speak as of a specific date or time (which need only be true and correct as of
such date or time), on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, except
for such inaccuracies or breaches as would not, individually or in the
aggregate, have a Holdings Material Adverse Effect, and also except for such
inaccuracies or breaches as have arisen on the advice, recommendation or
approval of the Operating Advisor, and the covenants and agreements of USRealty
contained in this Agreement to be performed on or before the Closing Date in
accordance with this Agreement shall have been duly performed in all material
respects, and SCGI shall have received at the Purchase and Sale Closing a
certificate to the effect of the foregoing dated the Closing Date and validly
executed by an executive officer of USRealty.
(b) FINANCING. SCGI and/or its subsidiaries shall have received the
proceeds of financing pursuant to the commitment letter set forth on and
attached to Section 6.2(b) of the SCGI Disclosure Schedule on terms and
conditions set forth therein (or (as modified in accordance with Section 5.2(c))
on such other terms and conditions, or involving such other financing sources,
as SCGI shall determine in its discretion) in amounts sufficient to pay the
Purchase Price Cash Amount.
(c) SHARES CASH AMOUNT. The Shares Cash Amount shall not exceed
US$200,000,000.
Section 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF USREALTY. The
obligation of USRealty to effect the Equity Purchase is subject to the
satisfaction of, or waiver by USRealty, on or prior to the Closing Date of the
following additional conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF SCGI AND PURCHASER.
The representations and warranties of SCGI and Purchaser contained in this
Agreement shall be true and correct when made and, except for representations
and warranties that speak as of a specific date or time (which need only be true
and correct as of such date or time), on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date, except for such inaccuracies or breaches as would not,
individually or in the aggregate, have an SCGI Material Adverse Effect, and the
covenants and agreements of SCGI contained in this Agreement to be performed on
or before the Closing Date in accordance with this Agreement shall have been
duly performed in all material respects, and USRealty shall have received at the
Purchase and Sale Closing a certificate to the effect of the foregoing dated the
Closing Date and validly executed by an executive officer of SCGI and an
executive officer of Purchaser.
ARTICLE VII
TERMINATION OF AGREEMENT
Section 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Purchase and Sale Closing:
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(a) by mutual written consent of Purchaser and USRealty;
(b) by either Purchaser or USRealty, if any Governmental Authority of
competent jurisdiction shall have issued an injunction, restraining order or
decree that restrains or prohibits the consummation of the Equity Purchase or
the transactions contemplated by the Plan of Liquidation, and such injunction,
restraining order or decree shall have become final and nonappealable;
(c) by either Purchaser or USRealty, if the Purchase and Sale Closing
has not occurred by the close of business on the Drop Dead Date, unless the
failure of the Purchase and Sale Closing to occur by such date shall be due to
the failure of the party seeking to terminate this Agreement to perform or
observe in all material respects the covenants and agreements of such party set
forth herein;
(d) by either Purchaser or USRealty, if the SCGI Stockholders Approval
shall not have been obtained at the SCGI Stockholders Meeting or the USRealty
Stockholders Approval shall not have been obtained at the USRealty Stockholders
Meeting; or
(e) by Purchaser, if (i) the USRealty Stockholder Approval shall have
been obtained at the USRealty Stockholders Meeting and (ii) the Shares Cash
Amount exceeds US$200,000,000.
Section 7.2. PROCEDURE AND EFFECT OF TERMINATION. (a) In the event of
termination of this Agreement by either or both of Purchaser or USRealty
pursuant to Section 7.1, written notice thereof shall forthwith be given by the
terminating party or parties to the other party or parties hereto, and this
Agreement shall thereupon terminate and become void and have no effect, and the
transactions contemplated hereby shall be abandoned without further action by
the parties hereto, except that the provisions of Section 7.2(b) and Section 8.6
shall survive the termination of this Agreement; PROVIDED, HOWEVER, that such
termination shall not relieve any party hereto of any liability for any willful
breach of this Agreement (other than a breach of a representation, as to which
no party shall be liable hereunder).
(b) In the event that this Agreement is terminated pursuant to Section
7.1(c): (i) by Purchaser, if the failure of the Purchase and Sale Closing to
occur by the Drop Dead Date shall be due to the failure of USRealty to perform
or observe in all material respects its covenants and agreements set forth
herein or (ii) by USRealty, if the failure of the Purchase and Sale Closing to
occur by the Drop Dead Date shall be due to the failure of SCGI or Purchaser to
perform or observe in all material respects their covenants and agreements set
forth herein, the non-terminating party shall pay or cause to be paid to the
terminating party, in same day funds, such terminating party's Expenses, upon
demand. If this Agreement is terminated by any party on or after the Drop Dead
Date and as of such date all conditions to the parties' obligations set forth in
Article VI, other than (A) the condition set forth in Section 6.2(b), (B) the
delivery at the Purchase and Sale Closing of the certificates referenced in
Section 6.2(a) and 6.3(a), and (C) any condition which has not been or cannot be
satisfied as a result of the failure of SCGI or Purchaser to perform or observe
in all material respects their covenants and agreements set forth herein, shall
have been satisfied or waived, SCGI shall pay or cause to be paid to USRealty,
in same day funds, USRealty's Expenses upon demand. For purposes of this Section
7.2(b), "EX-
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PENSES" of a party means the documented out-of-pocket fees and expenses incurred
or paid by or on behalf of USRealty or Holdings, in the case of Expenses of
USRealty, or Purchaser or SCGI, in the case of Expenses of Purchaser, in
connection with the Equity Purchase or the other transactions contemplated by
this Agreement (including fees and expenses of counsel, commercial banks,
investment banking firms and accountants), but in any event not to exceed
US$2,100,000.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants and other
agreements herein or in any instrument delivered pursuant hereto, including any
rights arising out of any breach of such representations, warranties, covenants
and other agreements, shall survive the Purchase and Sale Closing and the
Liquidation Closing, and thereafter there shall be no liability on the part of
any of the parties or any of their respective officers, directors or
stockholders in respect thereof, except for (a) the covenants of USRealty
contained in Sections 2.1 and 2.2 (to the extent not performed at the Purchase
and Sale Closing or the Liquidation Closing), (b) those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in
whole or in part after the Purchase and Sale Closing or the Liquidation Closing,
which shall survive the Purchase and Sale Closing and the Liquidation Closing
until fully satisfied, and (c) the provisions of this Article VIII.
Section 8.2. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
Section 8.3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland without regard to
principles of conflict of laws; PROVIDED, HOWEVER, that the parties agree that
all questions of Luxembourg corporate or securities law and the interpretation
thereof (including questions relating to the legal and regulatory duties of the
directors of USRealty) shall be governed by the laws of the Grand Duchy of
Luxembourg.
Section 8.4. JURISDICTION; WAIVER OF TRIAL BY JURY. The parties hereby
consent to the exclusive jurisdiction of the United States District Court for
the Southern District of New York and any of the courts of the state of New York
in any dispute arising under this Agreement and agree further that service of
process or notice in any such action, suit or proceeding shall be effective if
in writing and delivered in person or sent as provided in Section 8.7. ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF THIS
AGREEMENT OR IN CONNECTION HEREWITH IS HEREBY WAIVED.
Section 8.5. ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto contain the entire agreement between the parties with respect to
the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties
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other than those set forth or referred to herein. This Agreement is not intended
to confer and shall not confer upon any Person not a party hereto any rights or
remedies hereunder.
Section 8.6. EXPENSES. Except as otherwise set forth in this
Agreement, all legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
Section 8.7. NOTICES. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to USRealty shall be addressed to:
Security Capital U.S. Realty
25b, boulevard Royal
L-2449 Luxembourg
Attention: Managing Director
Facsimile Number: 011-352-46-37-56-5555
with a copy to:
King & Spalding
1100 Louisiana
Houston, Texas 77002-3200
Attention: Randolph C. Coley, Esq.
Facsimile Number: (713) 751-3280
and
Arendt & Medernach
8-10 Rue Mathias Hardt
Boite Postale 39
Luxembourg L-2010
Luxembourg
Attention: Claude Niedner, Esq.
Facsimile Number: 011-352-40-78-04
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Edward J. Schneidman, Esq.
Facsimile Number: (312) 701-7711
or at such other address and to the attention of such other person as USRealty
may designate by written notice to SCGI. Notices to SCGI or Purchaser shall be
addressed to:
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Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Attention: Jeffrey A. Klopf, Esq.
Facsimile Number: (505) 988-8920
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich, Esq.
Facsimile Number: (212) 403-2000
or at such other address and to the attention of such other person as SCGI may
designate by written notice to USRealty.
Section 8.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto.
Section 8.9. HEADINGS; DEFINITIONS. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 8.10. AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing waive compliance
by the other party hereto with any term or provision of this Agreement on the
part of such other party hereto to be performed or complied with. The waiver by
any party hereto of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
Section 8.11. SEVERABILITY. In the event that this Agreement, or any
of its provisions, or the performance of any provision, is found to be illegal
or unenforceable under applicable law now or hereafter in effect, the parties
shall be excused from performance of such portions of this Agreement as shall be
found to be illegal or unenforceable under the applicable laws or regulations
without affecting the validity of the remaining provisions of the Agreement;
provided that (i) the remaining provisions of the Agreement shall in their
totality constitute a commercially reasonable agreement, and (ii) should any
method of termination of this Agreement or a portion thereof be found to be
illegal or unenforceable, such method shall be reformed to comply with the
requirements of applicable law so as, to the greatest extent possible, to allow
termination by that method. Nothing herein shall be construed as a waiver of any
party's right to challenge the validity of such law.
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Section 8.12. INTERPRETATION; ABSENCE OF PRESUMPTION. (a) For the
purposes hereof, (1) words in the singular shall be held to include the plural
and VICE VERSA and words of one gender shall be held to include the other gender
as the context requires, (2) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole (including all of the Exhibits hereto) and not to any
particular provision of this Agreement, and Article, Section, paragraph and
Exhibit references are to the Articles, Sections, paragraphs and Exhibits to
this Agreement unless otherwise specified, (3) references to the "transactions
contemplated hereby" or "transactions contemplated by this Agreement" shall
include the transactions contemplated by the Equity Purchase and Plan of
Liquidation, (4) the word "including" and words of similar import when used in
this Agreement shall mean "including without limitation" unless the context
otherwise requires or unless otherwise specified, (5) the word "or" shall not be
exclusive, (6) provisions shall apply, when appropriate, to successive events
and transactions, (7) all references to any period of days shall be deemed to be
to the relevant number of calendar days unless otherwise specified and (8)
references to a "business day" shall be deemed to be references to any day that
is not a Saturday, Sunday or other day on which the commercial banks in New York
City are authorized or required by law to remain closed.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
SECURITY CAPITAL GROUP INCORPORATED
By:/s/ C. Ronald Blankenship
---------------------------------
Name: C. Ronald Blankenship
Title: Vice Chairman and Chief Operating
Officer
SC REALTY INCORPORATED
By:/s/ Jeffrey A. Klopf
---------------------------------
Name:Jeffrey A. Klopf
Title: Secretary
SECURITY CAPITAL U.S. REALTY
By:/s/ C. Kremer
---------------------------------
Name: C. Kremer
Title: Director
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Exhibit A
PLAN OF LIQUIDATION
Capitalized terms used and not defined herein have the meanings ascribed to
such terms in the Transaction Agreement, dated as of September 26, 2000, by and
among Security Capital Group Incorporated, SC Realty Incorporated and Security
Capital U.S. Realty (the "AGREEMENT").
LIQUIDATING DISTRIBUTION TO USREALTY STOCKHOLDERS.
1. In the liquidation, each holder of USRealty Shares will receive (a) in
respect of such holder's Cash USRealty Shares, an amount in cash equal
to the number of Cash USRealty Shares held by such holder multiplied
by the Per Share Cash Amount and (b) in respect of such holder's
Participating USRealty Shares (x) a number of full SCGI Shares equal
to the product of the number of Participating USRealty Shares held by
such holder multiplied by the Exchange Ratio, rounded down to the next
whole number, and (y) cash in lieu of any fractional share in an
amount as set forth in Paragraph (2) below.
2. No fractional SCGI Shares and no certificates or scrip therefor, or
other evidence of ownership thereof, will be distributed in the
liquidation. In lieu of any such fractional share, each holder of
Participating USRealty Shares who would otherwise have been entitled
to a fraction of an SCGI Share will receive in the liquidation cash in
an amount equal to such holder's proportionate interest in the net
proceeds from the sale or sales in the open market by the Liquidator,
on behalf of all such holders, of the aggregate fractional SCGI Shares
that would otherwise have been distributed pursuant to clause (a) of
Paragraph 1 above, but for the rounding down to a whole number of SCGI
Shares. Promptly following the Liquidation Closing, the Liquidator
shall determine the excess of (a) the number of Purchase Price Shares
over (b) the total number of full SCGI Shares to be distributed by the
Liquidator to holders of Participating USRealty Shares (such excess
being herein called the "EXCESS SHARES"), and the Liquidator shall
sell the Excess Shares at the prevailing prices on the NYSE. Such sale
of Excess Shares by the Liquidator shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. SCGI shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs incurred in
connection with such sale of Excess Shares. As soon as practicable
after the determination of the amount of cash to be paid to holders of
Participating USRealty Shares in lieu of any fractional share
interests, the Liquidator shall distribute in accordance with this
Plan of Liquidation such amounts to such holders of Participating
USRealty Shares. For purposes of determining the number of full SCGI
Shares to be distributed to any holder of Participating USRealty
Shares and the fractional share, if any, in lieu of which such holder
shall receive cash, all Participating USRealty Shares held by such
holder shall be aggregated, and in no event shall any such holder
receive an amount of cash in respect of more than one SCGI Share.
<PAGE>
3. The Liquidator shall be entitled to deduct and withhold from the cash
otherwise distributed pursuant to this Plan of Liquidation to any
holder of USRealty Shares such amounts as the Liquidator is required
to deduct and withhold with respect to the making of such distribution
under the Code or under any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Liquidator,
such withheld amounts shall be treated for all purposes as having been
distributed to the holder of the USRealty Shares in respect of which
such deduction and withholding was made by the Liquidator.
4. The Liquidator and/or USRealty may engage and authorize USRealty's
transfer agent, or such other bank trust company designated by the
Liquidator and reasonably satisfactory to USRealty (the "DISTRIBUTION
AGENT"), to assist in the distribution of the SCGI Shares and cash to
holders of USRealty Shares in accordance with the Agreement and this
Plan of Liquidation. Following the Purchase and Sale Closing, USRealty
shall, promptly upon receipt of instructions from the Liquidator,
deposit such SCGI Shares and cash with the Distribution Agent.
A-2
