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EXHIBIT 10.11
SUBSCRIPTION AGREEMENT
(REIT)
American Residential Investment Trust, Inc.
c/x XxXxxx XxXxxxx & Co.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
The undersigned understands that American Residential Investment Trust,
Inc., a Maryland corporation (the "Company"), is offering for sale to its
initial founding shareholders up to 2,017,500 shares of its Common Stock, par
value $0.01 per share (the "Shares"), having the rights, privileges and
obligations as set forth in the Articles of Incorporation (the "Articles")
attached hereto as Exhibit 1. The undersigned further understands that the
offering is being made without registration of the Shares under the Securities
Act of 1933, as amended (the "Securities Act"), and is being made only to the
initial founding shareholders of the Company, all of whom are "accredited
investors" (as defined in Rule 501 of Regulation D under the Securities Act).
The undersigned acknowledge that the investment in the Shares involves a high
degree of risk and that the Company has not commenced business operations.
l. Subscription. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for that number of Shares set forth on
Schedule A hereto a price per share of $10.00, which is payable as described in
Section 4 hereof.
2. Acceptance of Subscription and Issuance of Shares. It is
understood and agreed that this Subscription shall be deemed to be accepted by
the Company only when it is signed by a duly authorized officer of the Company
and delivered to the undersigned at the Closing referred to in Section 3 hereof.
3. The Closing. The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx, 000
Xxxx Xxxxxx, Xxx Xxxx, XX 00000 at 10:00 a.m. on February 11, 1997 or at such
other time and place as the Company shall designate by notice to the
undersigned.
4. Payment for Shares. Payment for the Shares shall be received by
the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing, in an amount as set
forth in Schedule A hereto. The Company shall deliver the Shares to the
undersigned at the Closing.
5. Registration Rights Agreement. At the Closing, the Company shall
enter into the Registration Rights Agreement attached to this Agreement as
Exhibit 2.
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6. Representations and Warranties of the Company. As of the
Closing, the Company represents and warrants that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Maryland, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets; and has secured any other authorizations,
approvals, permits and orders required by law for the conduct by the
Company of its business as it is currently being conducted.
(b) The Company has duly authorized the issuance and sale of the
Shares by all requisite corporate action.
(c) The Shares, when issued and paid for, will represent validly
authorized, duly issued and fully paid and nonassessable Shares of the
Company, and the issuance thereof will not conflict with the Articles or
bylaws of the Company nor with any outstanding warrant, option, call,
preemptive right or commitment of any type relating to the Company's
capital stock. The Shares shall have the rights, preferences and
privileges set forth in the Articles.
(d) No representation or warranty by the Company in this
Agreements and no statement by an officer of the Company contained in
any document, certificate or other writing furnished to the undersigned
in connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements herein or therein
not misleading in light of the circumstances in which they are made.
7. Representations, Warranties and Covenants of the Undersigned.
The undersigned hereby represents and warrants to and covenants with the Company
that:
(a) General:
(i) The undersigned has all requisite authority to enter
into this Agreement and to perform all the obligations required
to be performed by the undersigned hereunder.
(ii) The undersigned is a resident of the state set forth
on the signature page hereto and is not acquiring the Shares as
an agent or otherwise for any other person.
(b) Information Concerning the Company:
(i) The undersigned is familiar with the business and
financial condition, properties, operations and prospects of the
Company. The undersigned has been given the opportunity to obtain
any information necessary to evaluate the purchase of the Shares
and has been furnished all such information so requested. The
undersigned has had a reasonable opportunity to ask questions of
and receive answers from a person or persons acting on behalf of
the Company concerning the
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offering of Shares, and all such questions have been answered to
the full satisfaction of the undersigned.
(ii) The undersigned understands that the purchase of the
Shares involves various risks, including those outlined in this
Agreement.
(iii) The undersigned understands that no federal or state
agency has passed upon the Shares or made any finding or
determination concerning the fairness or advisability of this
investment.
(c) Status of Undersigned:
(i) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so that
he is capable of evaluating the merits and risks of an investment
in the Shares. To the extent necessary, the undersigned has
retained, at his own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal
merits and consequences of this Agreement and owning Shares.
(ii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The undersigned
agrees to furnish any additional information requested to assure
compliance with applicable federal and state securities laws in
connection with the purchase and sale of the Shares.
(d) Restrictions on Transfer or Sale of Shares:
(i) The undersigned is acquiring the Shares solely for his
own beneficial account, for investment purposes, and not with a
view to, or for resale in connection with, any distribution of
the Shares. The undersigned understands that the Shares have not
been registered under the Securities Act or any state securities
laws by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of the
undersigned and of the other representations made by the
undersigned in this Agreement. The undersigned understands that
the Company is relying upon the representations and agreements
contained in this Agreement (and any supplemental information)
for the purpose of determining whether this transaction meets the
requirements for such exemptions
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities laws
and that the Securities Act and the rules of the Securities and
Exchange Commission (the "Commission") provide in substance that
the undersigned may dispose of the Shares only pursuant to an
effective registration statement under the Securities Act or an
exemption there from, and the undersigned understands that the
Company has no obligation or intention to register any of the
Shares (except for the registration rights granted pursuant to
the Registration Rights Agreement), or to take action so as to
permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly,
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the undersigned understands that under the Commission's rules,
the undersigned may dispose of the Shares principally only in
"private placements" which are exempt from registration under the
Securities Act, in which event the transferee will acquire
"restricted securities" subject to the same limitations as in the
hands of the undersigned. As a consequence, the undersigned
understands that he must bear the economic risks of the
investment in the Shares for an indefinite period of time.
(iii) The undersigned understands that there is no public
market for the Shares or the Common Stock of the Company and such
a public market may never develop.
(iv) The undersigned agrees: (A) that the Shares shall not
be transferred, sold, assigned, encumbered, gifted, pledged,
hypothecated or otherwise disposed of (a "Transfer") except upon
compliance with the provisions of the Securities Act and the
Articles and any attempted Transfer of any Shares other than in
accordance with the terms of the Articles is void ab initio and
transfers no right, title or interest in or to such Shares to the
purported transferee, buyer, donee, assignee or encumbrance
holder; (B) that the certificate(s) for the Shares will bear a
legend making reference to the foregoing restrictions; and (C)
that the Company and any transfer agent for the Shares shall not
be required to give effect to any purported transfer of such
shares except upon compliance with the foregoing restrictions.
Notwithstanding the above, the Company and the undersigned
acknowledge that the shares being purchased by MDC Reit Holdings,
LLC, a Delaware limited liability company ("Holdings"), are being
pledged as security for obligations owed to the purchasers of
senior secured notes pursuant to a Securities Purchase Agreement,
dated the date hereof. The parties hereto consent to the pledge
of such Shares.
(v) The undersigned has not offered or sold any portion of
his Shares and has no present intention of dividing his Shares
with others or of reselling or otherwise disposing of any portion
of his Shares either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or
nonoccurrence of any predetermined event or circumstance.
(vi) The undersigned acknowledges that neither the Company
nor any other person offered to sell the Shares to it by means of
any form of general advertising, such as rnedia advertising or
seminars.
(e) Change of Control Transaction.
(i) The undersigned hereby agrees that upon dissolution or
liquidation of the Company or the consummation of a Change of
Control Transaction (as defined in Section 7(e)(ii), in which the
Shares purchased hereby are being sold or otherwise settled for
consideration, the undersigned shall cooperate in, and shall take
all actions which stockholders holding a majority of the voting
power of the
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Company deem reasonably necessary or desirable to consummate the
Change of Control Transaction, including, without limitation, (A)
entering into agreements with third parties on terms
substantially identical or better than those applicable to the
holders of a majority of the outstanding shares of Common Stock
(which agreements may require the undersigned to sell all of his,
her or its Shares and may require representations, indemnities,
holdbacks, and escrows), and (B) obtaining all governmental
consents and approvals reasonably necessary or desirable to
consummate such Change of Control Transaction (to the extent such
consents and approvals may be obtained without any significant
effort or expense by the undersigned).
(ii) "Change of Control Transaction" means a "Change of
Control Transaction" (as defined in the Amended and Restated
Limited Liability Company Agreement of MDC REIT Holdings, LLC,
dated as of February 11, 1997, by and among the members listed on
Schedule 1 thereto, as amended from time to time) or a
transaction, approved or agreed to by the holders of a majority
of the outstanding shares of Common Stock of the Company (the
"Common Stock"), in which all of the business or assets of the
Company, or a majority of the shares of Common Stock, are sold or
otherwise transferred in an arm's-length transaction in which the
form and amount of consideration per share, if any, payable to
the holders of Common Stock is distributed pro rata based upon
ownership of such Common Stock and in which the other significant
terms of the transaction (including, but not limited to,
indemnification or escrow arrangements) apply, in all material
respects, equally to the holders of a majority of the outstanding
shares of Common Stock and to the undersigned. The assumption by
such majority stockholders of greater potential liability in a
Change of Control Transaction than the undersigned shall be
deemed to constitute equal treatment. A Change of Control
Transaction may take the form of a majority of the outstanding
voting stock of the Company, a merger or consolidation in which
the holders of the outstanding voting stock of the Company before
the transaction do not own a majority of the outstanding voting
stock of the combined entity or a sale of all the business assets
of the Company (other than an insignificant amount of immaterial
assets).
8. Legend. Each certificate for Shares (sold pursuant to this
Agreement) will be imprinted with legends required under federal and state
securities laws and as required by the Articles with respect to restrictions on
transfer relating to qualification of the Company as an REIT.
9. Waivers; Amendment. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought.
10. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
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11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
12. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
14. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
(a) If to the Company, to it at the following address:
American Residential Investment Trust, Inc.
c/x XxXxxx XxXxxxx & Co.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xx Xxxxx
(b) If to the undersigned, at the address set forth on Schedule A
hereto; or at such other address as either party shall have specified by
notice in writing to the other.
15. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
16. Survival. All representations, warranties and covenants contained in
this Agreement shall survive (i) the acceptance of the subscription by the
Company, (ii) changes in the transactions, documents and instruments described
herein which are not material or which are to the benefit of the undersigned,
and (iii) the death or disability of the undersigned.
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IN WITNESS WHEREOF, each of the undersigned has executed Subscription
Agreement this ___ th day of February, 1997.
SUBSCRIBERS
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Xxxx X. Xxxxxxx, Xx.
(###-##-####)
----------------------------------
Xxx X. Xxxxxx
(###-##-####)
MDC REIT HOLDINGS, LLC
By: Home Asset Management Corp.,
its managing member
By:
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Xxxxx X. Xx Xxxxx, President
Accepted as of
February ___, 1997
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
By: ____________________________
Name: ____________________________
Title: ____________________________
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SCHEDULE A
Number of Subscription
Name Address Shares Amount
---- ------- ------ ------
MDC REIT c/x XxXxxx XxXxxxx 2,000,000 $20,000,000
Holdings, LLC 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Xxxx X. Xxxxxxx, Xx. P.O. Box 9668 10,000 $100,000
00000 Xxxxx Xxxxxxx
Xxxxxx Xxxxx Xx, XX 00000
Xxx X. Xxxxxx X.X. Xxx 000000 7,500 $75,000
0000 Xxxxxx Xxxxxxx
Xxxxxx Xxxxx Xx, XX 00000
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EXHIBIT 1
ARTICLES OF INCORPORATION
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EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
