EXHIBIT 10-8
American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Executive Vice President
Ladies and Gentlemen:
This Agreement (the "Agreement") is executed by the undersigned in
connection with the offer by American Real Estate Investment Corporation, a
Maryland corporation (the "Company"), to sell, and the purchase by the
undersigned of, shares of the Company's Series C Convertible Preferred Stock,
par value $.001 per share, of the Company (the "Preferred Stock"), having the
rights, restrictions, privileges and preferences set forth in the form of
Articles Supplementary attached hereto as Exhibit C.
Section 1.
1.01. SUBSCRIPTION. The undersigned hereby agrees to purchase the
number of shares of Preferred Stock indicated on SCHEDULE A attached hereto
(the "Shares") at $25 per share of Preferred Stock (the "Purchase Price"). In
respect of this subscription, the undersigned herewith delivers to the
Company a fully completed Investor Information Sheet and Accredited Investor
Questionnaire attached as Exhibits A and B, respectively.
1.02. CLOSING. The purchase and sale of the Shares shall take
place at the offices of Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, at 10:00 a.m., subject to satisfaction of the conditions set forth in
SECTION 4 and SECTION 5, on (i) the earlier to occur of (a) September 9, 1999
or (b) such earlier date as the Company may elect, provided the Company gives
the undersigned at least four (4) days prior notice; or (ii) such other time
and place as the Company and the undersigned mutually agree (the "Closing").
At the Closing the Company shall deliver to the undersigned a certificate
representing the Shares that the undersigned is purchasing, registered in
such name or names as the undersigned shall designate at least two (2)
business days prior to the date of the Closing, against payment of the
Purchase Price thereof by wire transfer in immediately available funds to an
account designated by the Company at least two (2) business days prior to the
date of the Closing.
1.03. TERMINATION. If the Closing does not occur on or before
October 15, 1999, either party may terminate this Agreement upon notice to
the other party, and thereafter there will be no liability or obligation on
the part of the undersigned or the Company (or any of their respective
officers, directors, employees, agents or other representatives or
affiliates), except that, notwithstanding any other provision in this
Agreement to the contrary, upon termination of this Agreement pursuant to
this SECTION 1.03, the undersigned will remain liable to the Company for any
breach of this Agreement by the undersigned existing at the time of such
termination, and the Company will remain liable to the undersigned for any
breach of the Agreement by the Company existing at the time of such
termination, and the Company or the undersigned may seek such remedies,
including damages and fees of attorneys, against the other with respect to
such breach as are provided in this Agreement or as are otherwise available
at law or in equity.
Section 2. INVESTOR REPRESENTATIONS AND WARRANTIES. The undersigned
hereby acknowledges, represents and warrants to, and agrees with, the Company
as follows, which acknowledgments will be true and correct as of the Closing
and as of the date the undersigned receives any Common Stock (as defined
below) upon conversion of the Shares:
2.01. AUTHORIZATION. This Agreement and the Registration Rights
Agreement (as defined below) constitute valid and legally binding obligations
of the undersigned, enforceable in accordance with their terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Registration Rights
Agreement may be limited by applicable federal or state securities laws,
rules, regulation or public policy. The undersigned represents that it has
full power and authority to enter into this Agreement.
2.02. NO ADVERTISEMENT OR SOLICITATION. The undersigned
acknowledges that the offer and sale of the Shares to it has not been
accomplished by any form of general solicitation or general advertising,
including, but not limited to, (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media, or
broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
2.03. RESTRICTIONS ON TRANSFER.
(a) The undersigned understands and acknowledges that
the Shares have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or applicable state securities laws, by
reason of a specific exemption from the registration provisions thereof which
exemption depends upon, among other things, the bona fide nature of the
investment intent of the undersigned as expressed herein and the accuracy and
completeness of the other representations of the undersigned set forth herein.
(b) The undersigned understands and acknowledges that,
except as provided for by the Registration Rights Agreement attached hereto
as Exhibit D (the "Registration Rights Agreement"), none of the Shares or any
shares of common stock, par value $.001 per share, of the Company (the
"Common Stock") issuable on conversion of the Shares have been registered
under the Securities Act or registered or qualified under the securities laws
of any state and none may be sold, transferred, assigned, pledged or
hypothecated (i) absent effective registration thereof under the Securities
Act and applicable state securities laws, or (ii) absent an opinion of
counsel (including in-house counsel or regular counsel), which opinion is
reasonably satisfactory in form and substance to the Company and its counsel,
in their respective reasonable discretion, to the effect that such
registration is not required under the Securities Act or such state
securities laws or that such transaction complies with the rules promulgated
by the Securities and Exchange Commission (the "Commission") under the
Securities Act or such state securities laws or (iii) except in a transaction
in compliance with Rule 144 under the Securities Act. The undersigned
understands and acknowledges that he, she or it must bear the economic risks
of this investment resulting from such limitations.
(c) The undersigned is aware of the provisions of Rule
144 promulgated under the Securities Act as currently in effect, pursuant to
which the undersigned may be able to sell the Shares (or the Common Stock
issuable on conversion of the Shares), subject to certain exceptions, one
year after they receive such Shares so long as certain current public
information is available about the Company, the sale is through a broker in
an unsolicited "broker's transaction" and the undersigned does not sell, in
any three-month period, more than the greater of 1% of the outstanding Shares
or Common Stock, as applicable, or the average weekly trading volume of the
Shares or Common Stock, as applicable, for the four-week period preceding the
sale. The undersigned generally will be able to sell the Shares without
regard to any volume or other limitations discussed above beginning two years
after they receive the Shares, unless they are affiliates of the Company
(i.e., a person controlling, controlled by or under common control with the
Company). Affiliates of the Company will continue to be subject to the volume
limitations on unregistered sales following the expiration of the two-year
period. The preceding
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description is a general summary of the restrictions of Rule 144 as currently
in effect, and each of the undersigned should consult with his, her or its
own legal advisor to ensure compliance with all of the requirements of
applicable federal and state securities laws and regulations. In this
connection, the undersigned understands Rule 144 may or may not be available
for the resale of the Shares (or the Common Stock issuable on conversion of
the Shares) and the undersigned should consult an attorney with regard to the
availability of Rule 144. The Company is subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Upon notice of issuance, the shares of Common Stock issuable
on conversion of the Shares will be listed for trading on the American Stock
Exchange (the "AMEX") or such other national stock exchange or automatic
quotation system as the Company's Common Stock is then listed or quoted. If
not all of the requirements of Rule 144 are met, registration under the
Securities Act or some other registration exemption will be required for any
disposition of the Shares (or the Common Stock issuable on conversion of the
Shares).
The undersigned understands that although Rule 144 is not exclusive,
the Commission has expressed its opinion that persons proposing to sell
restricted securities received in an offering other than a registered
offering or pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales and that such persons and the brokers who participate in the
transactions do so at their own risk.
2.04. DISCLOSURE OF INFORMATION. The undersigned:
(i) has carefully read and reviewed the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1998, the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999, the Company's Current Report on Form 8-K filed
January 8, 1999, the Company's Current Report on Form 8-K/A filed January 13,
1999 and the Company's Current Report of Form 8-K filed August 20, 1999 (all
such reports are referred to collectively herein as the "SEC Filings"), and
has been afforded access to all information necessary to evaluate the merits
and risks of the acquisition of the Shares, and has relied solely (except as
indicated in subsections (ii) and (iii) below) on such materials or documents.
(ii) has been provided an opportunity to obtain any
additional information requested concerning the Shares, the Common Stock
issuable on conversion of the Shares, and the Company;
(iii) has been given the opportunity to ask questions
of, and receive answers from, the Company, or a person or persons acting on
the behalf of the Company, concerning the terms and conditions of this
Agreement, the Articles Supplementary and the Registration Rights Agreement
and other matters pertaining to this investment, and has been given the
opportunity to obtain such additional information necessary to verify the
accuracy of the materials or documents that were provided in order for it to
evaluate the merits and risks of an investment in the Company to the extent
the Company possesses such information or can acquire it without unreasonable
effort or expense, and has not been furnished any other offering literature
or prospectus on which they are entitled to rely except as mentioned herein;
(iv) understands that the materials or documents
provided to the undersigned have not been prepared by, and the accuracy of
such material or documents have not been verified by, Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation ("DLJ") which is acting as placement agent in
connection with the purchase and sale of the Shares, and that DLJ makes no
representations or warranties with respect to the materials or documents
provided to the undersigned;
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(v) understands that the Company makes no
representation or warranties with respect to the materials or documents
provided to the undersigned except as specifically provided for in this
Agreement; and
(vi) has determined that the Shares and the Common
Stock issuable on conversion of the Shares are a suitable investment for it
and that at this time it could bear the economic risk of the investment.
2.05. INVESTMENT EXPERIENCE. The undersigned represents that it
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Shares and
protecting its own interests in connection with the investment and has
obtained, in its judgment, sufficient information from the Company to
evaluate the merits and risks of an investment in the Shares. The undersigned
is an "accredited investor" as defined in Regulation D promulgated under the
Securities Act. The undersigned has not utilized any person as its purchaser
representative or professional advisor in connection with evaluating such
risks and merits. The undersigned acknowledges that it has the financial
ability to bear the economic risk of its investment in the Company (including
its possible loss). The undersigned also represents it has not been organized
solely for the purpose of acquiring the Shares.
2.06. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the undersigned in reliance upon its representation to the Company,
which by the undersigned's execution of this Agreement it hereby confirms,
that the Shares and the Common Stock issuable on conversion of the Shares, to
be received by the undersigned and any certificate which may be issuable in
respect thereof (the "Certificate") will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof in violation of the Securities
Act, and that it has no present intention of selling, granting any
participation in, or otherwise distributing the same, except as provided in
the Registration Rights Agreement, or under an exemption from registration
available under the Securities Act and applicable state securities laws.
2.07. LEGENDS. In addition to the legend required by Section
6.2.9 of the Company's Amended and Restated Articles of Incorporation, dated
as of December 12, 1997, as amended (the "Charter"), and the statements
required by Section 7.1 of the Company's By-Laws, as amended on August 3,
1999, to the extent applicable, any certificate or other document issued in
respect of any Shares (or shares of Common Stock issuable upon conversion of
the Shares) shall be endorsed with the legends set forth below, and the
undersigned covenants that, except to the extent such restrictions are waived
by the Company, the undersigned shall not transfer any Shares (or shares of
Common Stock issuable upon conversion of the Shares) without complying with
the restrictions on transfer described in such legends:
(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED (1) ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT, (2)
ABSENT AN OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY IN
FORM AND SUBSTANCE TO THE COMPANY AND ITS COUNSEL, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR SUCH STATES OR THAT SUCH
TRANSACTION COMPLIES WITH THE RULES PROMULGATED BY THE SECURITIES AND
EXCHANGE COMMISSION UNDER SAID ACT OR SUCH STATES OR (3) EXCEPT IN A
TRANSACTION IN COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT."
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(ii) "THESE SECURITIES ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF
______________, 1999, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF
THE COMPANY."
(iii) Any legend required by any applicable state
securities law.
Section 3. COMPANY REPRESENTATIONS AND WARRANTIES. Except as set forth
in a letter delivered by the Company to the undersigned prior to the
execution of this Agreement (the "Disclosure Letter," which Disclosure Letter
shall be deemed to be part of this Agreement), the Company hereby
acknowledges, represents and warrants to, and agrees with, the undersigned as
follows:
3.01. ORGANIZATION, GOOD STANDING AND QUALIFICATION; AUTHORITY.
Each of the Company and its direct or indirect subsidiaries, whether wholly
or majority owned (each, a "Subsidiary" and collectively, the
"Subsidiaries"), is a corporation duly incorporated, or a partnership,
limited partnership or a limited liability company duly formed, and is
validly existing and in good standing under the laws of its jurisdiction of
its incorporation or formation and has all requisite power and authority to
carry on its business as now conducted. Each of the Company and the
Subsidiaries is duly qualified to transact business and is in good standing
in each jurisdiction where the failure to so qualify would have a material
adverse effect on its business, operations, condition (financial or
otherwise), assets or properties (a "Material Adverse Effect") of the Company
and the Subsidiaries on a consolidated basis. Each of the Company and the
Subsidiaries has all requisite power and authority to own or lease and to
operate its properties and assets in order to carry on its business as now
conducted.
3.02. AUTHORIZATION.
(a) All action on the part of the Company, its
officers, directors and stockholders necessary for the adoption,
authorization, execution, filing (where applicable) and delivery of this
Agreement, the Articles Supplementary, the Registration Rights Agreement, and
the other documents contemplated thereby or delivered in connection
therewith, the performance of all obligations of the Company hereunder and
thereunder, and the authorization, issuance (or reservation for issuance),
sale and delivery of the Preferred Stock being sold hereunder and the Common
Stock issuable upon conversion of the Shares has been taken or will be taken
prior to the Closing. This Agreement and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable
in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification and contribution provisions contained in the Registration
Rights Agreement may be limited by applicable federal or state securities
laws, rules or regulations. The Company does not have any shareholder rights
plan or other "poison pill." The Company has opted out of Subtitle 7 of Title
3 of the Maryland General Corporation Law.
(b) Neither the execution nor delivery by the Company
of this Agreement or the Registration Rights Agreement nor the consummation
of the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms and provisions hereof or thereof by the Company or
any subsidiary, will (i) violate or conflict with any organizational document
of the Company or any of its subsidiaries, (ii) conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default, an
event of default or an event which, with notice or lapse of time or both,
would constitute a default under, or create rights of acceleration,
termination or cancellation or a loss of rights, or result in the creation or
imposition of any encumbrance upon any of the assets or properties of the
Company or any of its subsidiaries, or result in the triggering of any
payment or other obligations under, any instrument,
5
agreement, mortgage, indenture, deed of trust, permit, concession, grant,
franchise, license, judgment, order, award, decree or other restriction to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their assets or properties may
be bound, or any Laws (as defined below), which would have a Material Adverse
Effect, (iii) except for filings with the AMEX or the Commission, require the
approval, consent or authorization of, or the making of any declaration,
filing or registration with, any third party or any Governmental Entity (as
defined below), by or on behalf of the Company or any of its subsidiaries, or
(iv) cause the Company to fail to qualify to be taxed as a "real estate
investment trust," as defined in Section 856 of the Code ("REIT"), for the
taxable year ending December 31, 1999.
3.03. VALID ISSUANCE OF PREFERRED STOCK; CAPITALIZATION.
(a) The Preferred Stock that is being purchased by the
undersigned hereunder, when issued, sold and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, will be duly
and validly issued, fully paid, and nonassessable, and, based in part upon
the representations of the undersigned in this Agreement, will be issued in
compliance with all applicable federal and state securities laws. The
issuance and sale of the Preferred Stock will not violate any preemptive
rights. The undersigned will acquire good and valid title to the Shares, free
and clear of any preemptive rights, restrictions or encumbrances, other than
the ownership limitations contained in the Charter, the resale restrictions
contained in the Registration Rights Agreement and restrictions under state
and federal securities laws, rules and regulations.
(b) The Common Stock issuable upon conversion of the
Shares, when issued, will be duly and validly issued, fully paid, and
nonassessable, and, based in part upon the representations of the undersigned
in this Agreement, will be issued in compliance with all applicable federal
and state securities laws. The issuance of such Common Stock to the
undersigned will not violate any preemptive rights. The undersigned will
acquire good and valid title to such Common Stock, free and clear of any
preemptive rights, restrictions or encumbrances, other than the ownership
limitations contained in the Charter, the resale restrictions contained in
the Registration Rights Agreement and restrictions under state and federal
securities laws, rules and regulations.
(c) On August 12, 1999, the capital stock of the
Company consists solely of 65,000,000 shares of capital stock, of which
59,200,000 shares are designated as Common Stock, 800,000 shares are
designated as Series A Convertible Preferred Stock, 4,200,000 are designated
as Series B Convertible Preferred Stock and 800,000 shares are designated as
Series C Convertible Preferred Stock, of which on the date hereof (i)
7,501,558 shares of Common Stock, 800,000 shares of Series A Convertible
Preferred Stock, no shares of Series B Convertible Preferred Stock, and no
shares of Series C Convertible Preferred Stock, are validly issued and
outstanding and fully paid and nonassessable; (ii) 1,297,050 shares of Common
Stock are reserved for issuance upon exercise of outstanding options and
warrants; and (iii) 8,170,463 shares of Common Stock are reserved for
issuance upon the conversion of units of limited partnership interest in
American Real Estate Investment, L.P. Other than as set forth in the SEC
Filings or that certain Contribution and Exchange Agreement (the
"Contribution Agreement") dated as of August 6, 1999 by and among each of
those persons set forth on Exhibit A annexed thereto, American Real Estate
Investment, L.P. and the Company, there are no securities convertible into or
exchangeable for, or options, rights or warrants to purchase, any shares of
capital stock of the Company or agreements or commitments pursuant to which
the Company is obligated to issue, sell, purchase or redeem, shares of
capital stock of the Company. The Common Stock is currently listed for
trading on the AMEX.
3.04. DISCLOSURE. The Company has provided the undersigned with
all the information that the undersigned has requested for deciding whether
to purchase the Shares. The written information and
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certificates provided to the undersigned pursuant to this Agreement or the
Registration Rights Agreement are true and accurate in all material respects.
3.05. COMPLIANCE WITH LAWS; LITIGATION.
(a) Neither the Company nor any of its subsidiaries is
in violation of any federal, state or local law, statute, ordinance, rule,
regulation, order, judgment, ruling or decree ("Laws") of any federal, state
or local judicial, legislative, executive, administrative or regulatory body
or authority or any court, arbitration, board or tribunal ("Governmental
Entity") applicable to the Company or any of its subsidiaries, or any of
their properties or assets, except for violations which would not, either
individually or in the aggregate, have a Material Adverse Effect. Each of the
Company and its subsidiaries holds and is in compliance with all permits,
certificates, licenses, approvals, registrations and authorizations required
under all Laws (including without limitation those relating to environmental
protection, occupational safety and health, equal employment practices and
fair trade practices) in connection with its business ("Permits"), all of
which Permits are in full force and effect, except where the failure to hold
such Permits or be in compliance would not, either individually or in the
aggregate, have a Material Adverse Effect.
(b) There are no claims, actions, suits, proceedings,
arbitrations, investigations or audits (collectively, "Litigation") by a
third party other than a Governmental Entity pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, at
law or in equity, other than those in the ordinary course of business which
would not, either individually or in the aggregate, have a Material Adverse
Effect. There is no Litigation by a Governmental Entity pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries. No Governmental Entity has indicated in writing or, to the
knowledge of the Company, verbally, an intention to conduct any audit,
investigation or other review with respect to the Company or any of its
subsidiaries which investigation or review, if adversely determined, would,
either individually or in the aggregate, have a Material Adverse Effect.
3.06. SEC FILINGS; SUBSEQUENT EVENTS.
(a) The SEC Filings represent each report filed by the
Company under Sections 13 and 15 of the Exchange Act since January 1, 1999.
As of their respective dates, the SEC Filings (i) complied as to form in all
material respects with the applicable requirements of the Exchange Act, and
the rules and regulations thereunder and (ii) did not 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 made therein, in the light
of the circumstances under which they were made, not misleading. The Company
has no liabilities or obligations, contingent or otherwise, except (i)
liabilities and obligations in the respective amounts reflected or reserved
against in the Company's financial statements (including the footnotes
thereto) as of December 31, 1998 and June 30, 1999 included in the SEC
Filings, (ii) liabilities and obligations incurred in the ordinary course of
business since July 1, 1999 which, either individually or in the aggregate,
would not have a Material Adverse Effect, or (iii) liabilities and
obligations with respect to the Contribution Agreement.
(b) Since the respective dates as of which information
is given in the Company's quarterly report for the period ending June 30,
1999, and other than changes in general economic conditions or industry
conditions, there has not been any change in the condition (financial or
otherwise) or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, which
either individually or in the aggregate would have a Material Adverse Effect
except for the Contribution Agreement.
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3.07. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY;
U.S. ENTITY. The Company (i) is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act"),
(ii) is not an "investment company" for purposes of Section 12(d)(1) of the
1940 Act, (iii) is not and will not become a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, (iv) is not and will not be headquartered or
organized in any jurisdiction outside the United States of America or (v)
does not directly or indirectly conduct activities or own assets in any
foreign jurisdiction.
3.08. TAX MATTERS.
(a) The Company has been, for each year ending on or
after December 31, 1993, organized and operated in conformity with the
requirements for qualification and taxation as a "real estate investment
trust" under the Code and the Treasury Regulations promulgated hereunder.
(b) To the best knowledge of the Company, the Company
is not currently a "pension-held REIT" within the meaning of Code Section
856(h)(3)(D) and the Treasury Regulations promulgated thereunder.
(c) American Real Estate Investment, L.P., a Delaware
limited partnership (the "Operating Partnership"), and each of the
Subsidiaries that is eligible to be classified as a partnership for federal
income tax purposes is so classified and taxed.
(d) The Company will use reasonable efforts not to
take any action or not to permit any action to be taken (to the extent the
action is within the control of the Company) that would cause any of the
representations set forth in this Section 3.09 to be incorrect or incomplete
if made as of any date following the Closing. In the event of the taking or
proposed taking of any action that would cause the representation set forth
in Section 3.09(b) to be incorrect if made as of any date following the
Closing, the Company shall use reasonable efforts to notify the undersigned
prior to the taking of such action.
3.09. NO OTHER REPRESENTATIONS. The Company shall not be deemed
to have made to the undersigned any representation or warranty other than as
expressly made by the Company in this SECTION 3. Without limiting the
generality of the foregoing, and notwithstanding any otherwise express
representations and warranties made by the Company, in this SECTION 3, the
Company makes no representation or warranty to the undersigned with respect
to any projections, estimates or budgets heretofore delivered to or made
available to the undersigned of future revenues, expenses or expenditures or
future results of operations.
Section 4. CONDITIONS OF INVESTORS' OBLIGATIONS AT CLOSING. The
obligations of the undersigned under SECTION 1.02 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:
4.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in SECTION 3 (other than those made as of
a specified date earlier than the date of Closing) shall be true and correct
in all material respects on and as of the date of the Closing with the same
effect as though such representation or warranty was made on and as of the
date of such Closing, and any representation or warranty made as of a
specified date earlier than the date of such Closing shall have been true and
correct in all material respects as of such earlier date; except, in each
case, to the extent any inaccuracy of any representation or warranty of the
Company contained herein results solely as a result of the merger of the
Company after the date hereof, with and into Keystone Property Trust, a
wholly-owned subsidiary of the Company, with Keystone Property Trust being
the surviving entity.
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4.02. PERFORMANCE. The Company shall have performed and complied
with, in all material respects, all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing.
4.03. COMPLIANCE CERTIFICATE. The President or a Vice President
of the Company shall deliver to the undersigned at the Closing a certificate
certifying that the conditions specified in SECTIONS 4.01 AND 4.02 have been
fulfilled.
4.04. QUALIFICATIONS. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States
or of any state that are required in connection with the lawful issuance and
sale of the Shares pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
4.05. OPINION OF XXXXXX & XXXXX LLP. The undersigned shall have
received from Xxxxxx & Xxxxx LLP, counsel for the Company, an opinion dated
as of the Closing, to the effect that the issuance of the Shares contemplated
by this Agreement is exempt from registration under the Securities Act.
4.06. OPINION OF XXXXX & XXXXXXX L.L.P. The undersigned shall
have received from Piper & Marbury L.L.P., special Maryland counsel for the
Company, an opinion dated as of the Closing, to the effect that the Shares,
when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, have been duly authorized
and validly issued, are fully paid, and are nonassessable and that the
execution, delivery and performance by the Company of this Subscription
Agreement and the Registration Rights Agreement are within the Company's
corporate powers and have been duly authorized by all necessary corporate
action.
4.07. REGISTRATION RIGHTS AGREEMENT. The Company shall have
executed the Registration Rights Agreement in the form attached hereto as
EXHIBIT D.
4.08. CERTIFICATES. Certificates representing the number of
Shares set forth on Schedule A, in such name as the undersigned has
designated pursuant to SECTION 1.02 hereof shall have been delivered to the
undersigned.
4.09. STAGE I CLOSING. The Stage I Closing (as defined in the
Contribution Agreement) shall have occurred.
Section 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the undersigned under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by the undersigned:
5.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the undersigned contained in SECTION 2 (other than those made
as of a specified date earlier than the date of Closing) shall be true and
correct in all material respects on and as of the date of the Closing with
the same effect as though such representation or warranty was made on and as
of the date of such Closing, and any representation or warranty made as of a
specified date earlier than the date of such Closing shall have been true and
correct in all material respects as of such earlier date.
5.02. COMPLIANCE CERTIFICATE. The undersigned shall deliver to
the Company at the Closing a certificate certifying that the condition
specified in SECTION 5.01 has been fulfilled and that the information
provided in the Investor Information Sheet and Accredited Investor
Questionnaire delivered by the undersigned upon execution of this Agreement
remain true and correct on and as of the date of the
9
Closing with the same effect as though such information was provided on and
as of the date of such Closing.
5.03. PAYMENT OF PURCHASE PRICE. The undersigned shall have
delivered the Purchase Price.
5.04. QUALIFICATIONS. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States
or of any state that are required in connection with the lawful issuance and
sale of the Shares pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
5.05. STAGE I CLOSING. The Stage I Closing shall have occurred.
Section 6. MISCELLANEOUS.
6.01. MODIFICATION. Neither this Agreement nor any provisions
hereof shall be waived, modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
6.02. NOTICES. All notices, payments, demands or other
communications given hereunder shall be deemed to have been duly given and
received (i) upon personal delivery, (ii) in the case of notices sent within,
and for delivery within, the United States, as of the date shown on the
return receipt after mailing by registered or certified mail, return receipt
requested, postage prepaid, or (iii) the second succeeding business day after
deposit with Federal Express or other equivalent air courier delivery
service, unless the notice is held or retained by the customs service, in
which case the date shall be the fifth succeeding business day after such
deposit.
6.03. BINDING EFFECT. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns. The Company may transfer its rights and obligations by
operation of law to Keystone Property Trust, a wholly-owned subsidiary of the
Company, in connection with the merger of the Company with and into Keystone
Property Trust, with Keystone Property Trust as the surviving entity having a
Declaration of Trust substantially in the form set forth as Appendix A to the
Proxy Statement of the Company filed with the SEC on April 30, 1999, it being
understood that, upon the consummation of such merger, all references herein
and in the documents contemplated hereby to the Company shall mean Keystone
Property Trust, as successor to the Company, with appropriate revision hereto
to reflect the reorganization of the Company from a Maryland corporation to a
Maryland real estate investment trust.
6.04. ENTIRE AGREEMENT. This Agreement and all exhibits hereto
including, without limitation, the Investor Information Sheet, Accredited
Investor Questionnaire, Articles Supplementary and Registration Rights
Agreement, contain the entire agreement of the parties with respect to this
subscription, and there are no representations, covenants or other agreements
except as stated or referred to herein or therein.
6.05. CONFIDENTIALITY. The undersigned shall not disclose the
information furnished to the undersigned by the Company or any of its
affiliates or their representatives in connection with the undersigned's
consideration of the transactions contemplated by this Agreement (the
"Evaluation Materials"), unless requested in any judicial or administrative
proceeding or by any governmental or regulatory authority to disclose any
Evaluation material, and if the undersigned is so requested, it shall give
the Company prompt notice of such request so that the Company may seek an
appropriate protective order; PROVIDED, HOWEVER, that Evaluation Material
does not include information which was or becomes
10
available to the undersigned on a non-confidential basis from a source other
than the Company or its representatives, provided that the undersigned is not
aware that such source is under an obligation (whether contractual, legal or
fiduciary) to the Company to keep such information confidential.
6.06. ASSIGNABILITY. This Agreement is not transferable or
assignable by the undersigned.
6.07. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State without giving
effect to the conflict of law provisions thereof. The parties agree that all
disputes between any of them arising out of, connected with, related to, or
incidental to the relationship established between them in connection with
this Agreement or the Registration Rights Agreement, and whether arising in
law or in equity or otherwise, shall be resolved by the federal or state
courts located in New York, New York. Nothing herein shall affect the right
of any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against the other in any other
jurisdiction. In addition, each of the parties hereto consents to submit to
the personal jurisdiction of any federal or state court located in the State
of New York in the event that any dispute arises out of this Agreement or the
Registration Rights Agreement or any of the transactions contemplated hereby
or thereby. The parties, for themselves and their respective affiliates,
hereby irrevocably waive all right to a trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to the actions of the parties or their respective
affiliates pursuant to this Agreement in the negotiation, administration,
performance or enforcement thereof.
6.08. GENDER. All pronouns contained herein and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the parties hereto may require.
6.09. COUNTERPARTS. This Agreement may be executed through the
use of separate signature pages or in counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on the
parties hereto, notwithstanding that the parties hereto are not signatories
to the same counterpart.
6.10. FURTHER ASSURANCES. The undersigned will, from time to
time, execute and deliver to the Company all such other and further
instruments and documents and take or cause to be taken all such other and
further action as the Company may reasonably request in order to effect the
transactions contemplated by this Agreement.
6.11. EXPENSES. Each party shall pay all costs and expenses which
it incurs in connection with the negotiation, execution, delivery and
performance of this Agreement.
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
The undersigned, desiring to enter into this Subscription Agreement for
the subscription of the number of Shares indicated below, hereby agrees to all
of the terms and provisions of this Subscription Agreement and agrees to be
bound by all such terms and provisions.
The undersigned has executed this Subscription Agreement as of the 27TH
day of September, 1999.
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICAN
-------------------------------------------------------
By: /s/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
Agreed and Accepted this
27TH day of September, 1999.
AMERICAN REAL ESTATE INVESTMENT CORPORATION,
a Maryland corporation
By: /s/ XXXXXXX X. BUTTE
--------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
