AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT, dated as of June
20, 2005 (this "Agreement"), by and among First Union Real Estate Equity and
Mortgage Investments, an unincorporated association in the form of a business
trust organized in Ohio (the "Company"), Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, and
each of the Investors listed on Schedule I attached hereto (referred to
hereinafter collectively as the "Investors" and individually as an "Investor").
RECITALS:
A. Certain of the Investors and the Company have entered into that
certain Securities Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), by and among the Company and the Investors pursuant to
which the Investors will purchase, contemporaneously with the execution and
delivery of this Agreement, 360,000 shares of Series B-1 Cumulative Convertible
Preferred Shares of the Company, which, together with the 3,640,000 shares of
Series B-1 Stock previously issued by the Company under the Securities Purchase
Agreement dated as of February 28, 2005 to which it is a party, will constitute
all of the issued and outstanding shares of Series B-1 Stock (collectively, the
"Series B-1 Stock").
B. It is a condition precedent to the purchase of such Series B-1
Stock that the Company, Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxxx amend the Investors'
Rights' Agreement, dated as of February 28, 2005, with the investors who were
signatories thereto to add certain Investors as parties to such agreement and to
provide for certain additional agreements and obligations of the parties
following the Closing.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms shall have the meanings
ascribed to them below:
"Additional Securities" shall have the meaning set forth in Section
3.2(a).
"Additional Series B Preferred Shares" shall have the meaning
provided in the Certificate of Designations.
"Affiliate" of a Person shall have the meaning set forth in Rule
12b-2 under the Exchange Act. Notwithstanding anything to the contrary set forth
in this Agreement, no limited partner or similar participant of an Investor
shall be deemed an Affiliate of such Investor.
"Agreement" shall mean the Investors' Rights Agreement, dated
February 28, 2005, by and among the Company, the Investors, Xxxxxxx Xxxxxx and
Xxxxx Xxxxxxxxx, as amended on the date hereof, and as amended, modified or
supplemented from time to time, in accordance with the terms hereof, together
with any exhibits, schedules or other attachments thereto.
"Board" or "Board of Trustees" shall mean the Board of Trustees of
the Company.
"Beneficial Holder" shall have the meaning set forth in Section 2.3.
"Certificate of Designations" shall mean the Company's Certificate
of Designations governing the Series B-1 Stock, as amended.
"Co-Investment Right" shall have the meaning set forth in Section
3.3.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Common Stock" shall mean the common shares of beneficial interest,
$1.00 par value per share, of the Company.
"Company" shall have the meaning set forth in the preamble of this
Agreement.
"Declining Preemptive Purchaser" shall have the meaning set forth in
Section 3.2(c).
"Derivative Securities" shall mean any subscriptions, options,
conversion rights, warrants or other agreements, securities or commitments of
any kind obligating the Company or any of its Subsidiaries to issue, grant,
deliver or sell, or cause to be issued, granted, delivered or sold (i) any
Equity Securities of the Company, or (ii) any securities convertible into,
exercisable for or exchangeable for any Equity Securities of the Company.
"Disposition" shall have the meaning set forth in Section 2.3.
"Equity Securities" shall mean Common Stock, Series B-1 Stock and
any other equity securities of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Excluded Shares" shall mean (i) shares of Common Stock issuable
upon conversion of, or distributions with respect to, any shares of Series B-1
Stock or Additional Series B Preferred Shares; (ii) shares of Common Stock
issuable upon the exercise of stock options or other awards made or denominated
in shares of Common Stock under any of the Company's stock plans including any
stock option, stock purchase, restricted stock or similar plan hereafter adopted
by the Board of Trustees and, if required by applicable Law or stock exchange
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requirement, approved by the stockholders of the Company; (iii) shares of Common
Stock issued pursuant to an acquisition of a direct or indirect interest in real
property or assets related thereto, a business (including, without limitation,
by way of an acquisition of capital stock) or the assets of a business (which
assets do not consist primarily of cash or cash equivalents) approved by the
Board of Trustees; and (iv) Shares of Common Stock issuable upon exercise or
conversion of Derivative Securities issued and outstanding on the date hereof.
"Governmental Body" shall mean any government or governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, arbitral body (public or
private), department or other instrumentality or political unit or subdivision,
whether located in the United States or abroad, the National Association of
Securities Dealers, Inc., the New York Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market or the American Stock Exchange.
"Holder" shall mean (i) any Investor holding shares of Series B-1
Stock (or shares of Common Stock issued on conversion thereof) and (ii) any
Person to whom an Investor has transferred shares of Series B-1 Stock during the
term of this Agreement pursuant to Section 2.3(a), Section 2.3(b)(ii) or Section
2.3(c) who is holding such Series B-1 Stock or Common Stock issued on conversion
thereof.
"Institutional Investor" shall mean any of the following Persons:
(i) a bank, trust company, savings and loan or other financial institution,
pension plan, broker-dealer or similar entity, (ii) an insurance company, (iii)
a pension fund, (iv) a hedge fund, (v) a venture capital fund, (vi) a mutual
fund, (vii) a leveraged buyout fund, (viii) an investment bank, (ix) a savings
association, (x) an investment fund whose principal investors are Institutional
Investors, (xi) any Investor, or (xii) any Person that is an Affiliate of any
Person named in clauses (i) through (xi).
"Investors" shall have the meaning set forth in the preamble of this
Agreement.
"Law" shall mean any treaty, statute, ordinance, code, rule,
regulation, Order or other legal requirement enacted, adopted, promulgated,
applied or followed by any Governmental Body.
"NYSE" shall mean the New York Stock Exchange.
"Order" shall mean any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award.
"Overallotment Right" shall have the meaning set forth in Section
3.3(a).
"Other Transferee" shall have the meaning set forth in Section
2.3(b).
"Participation" shall have the meaning set forth in Section 3.3.
"Permitted Disposition" shall have the meaning set forth in Section
2.3.
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"Person" shall mean any natural person, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"Preemptive Acceptance Notice" shall have the meaning set forth in
Section 3.2(b).
"Principal Holder" shall mean each of Xxxxxxx Xxxxxx and Xxxxx
Xxxxxxxxx.
"Preemptive Acceptance Period" shall have the meaning set forth in
Section 3.2(b).
"Preemptive Notice" shall have the meaning set forth in Section
3.2(b).
"Preemptive Right" shall have the meaning set forth in Section
3.2(a).
"Purchase Agreement" shall have the meaning ascribed thereto in the
recitals.
"Redemption Date" shall have the meaning set forth in the
Certificate of Designations.
"Registration Rights Agreement" shall mean that certain Amended and
Restated Registration Rights Agreement, dated as of the date hereof, by and
among the Company and the Investors.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Series B-1 Designees" shall mean the Trustees elected by the
Holders pursuant to the Certificate of Designations.
"Series B-1 Stock" shall have the meaning ascribed thereto in the
recitals.
"Trustee" shall mean a Trustee of the Company.
"Voting Securities" shall mean the shares of Common Stock,
Additional Series B Preferred Shares, preferred shares and any other securities
of the Company entitled to vote generally for the election of Trustees, and any
securities which are convertible into, or exercisable or exchangeable for,
Voting Securities.
SECTION 1.2 General Interpretive Principles. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. The name assigned this Agreement
and the section captions used herein are for convenience of reference only and
shall not be construed to affect the meaning, construction or effect hereof.
Unless otherwise specified, the terms "hereof," "herein" and similar terms refer
to this Agreement as a whole (including the exhibits hereto), and references
herein to Sections refer to Sections of this Agreement.
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ARTICLE II
ADDITIONAL AGREEMENTS
SECTION 2.1 [Intentionally omitted.]
SECTION 2.2 No Shorting. No Holder, or any of its Affiliates under
its control, will engage in, or will cause any person or entity, directly or
indirectly, to engage in "short sales" of the Company's Common Stock unless: (i)
such Holder has converted all of the Series B-1 Stock held by such Holder into
Common Stock; or (ii) the Company fails to pay a dividend on the Series B-1
Stock after it first declares and pays a regular dividend on the Common Stock;
or (iii) the fair market value of the Company's issued and outstanding Common
Stock (determined by multiplying the number of shares of Common Stock issued and
outstanding by the average closing price of the Common Stock on the NYSE over
the five most recent trading days) shall at any time be less than $71,200,000.
SECTION 2.3 Dispositions. During the term of this Agreement, no
Investor shall directly or indirectly (including, without limitation, through
the disposition or transfer of any equity interest in another Person), sell,
assign, transfer, pledge, hypothecate, grant any option with respect to or
otherwise dispose of any interest in (or enter into an agreement or
understanding with respect to the foregoing) any Series B-1 Stock (a
"Disposition"), except as set forth below in this Section 2.3 (each such
exception being hereinafter referred to as a "Permitted Disposition"):
(a) Pro rata Dispositions of Series B-1 Stock may be made to any
direct or indirect partner, investor or participant (a "Beneficial
Holder") of any Investor pursuant to the terms of the limited partnership
agreement, operating agreement or similar agreement of such Investor,
provided, that no such Disposition shall be made unless the Beneficial
Holder agrees in writing to be bound by the terms of this Agreement.
(b) Dispositions of Series B-1 Stock may be made to any Person
pursuant to (i) a public offering effected in accordance with the
Registration Rights Agreement, (ii) in privately-negotiated transactions
to (A) an Institutional Investor or (B) if such Disposition is approved by
the Board ("Other Transferee") any other Person or (iii) pursuant to Rule
144 promulgated under the Securities Act; provided, that no Disposition
shall be made pursuant to clause (ii) of this Section 2.3(b) unless such
Institutional Investor or Other Transferee agrees in writing to become a
Holder under the terms of this Agreement.
(c) Dispositions of Series B-1 Stock may be made to any Affiliate of
an Investor, provided that such Affiliate agrees in writing to be bound by
the terms of this Agreement.
ARTICLE III
ADDITIONAL COVENANTS
SECTION 3.1 Affiliate Transactions. So long as at least 1,000,000
shares of Series B-1 Stock are outstanding, except for (i) transactions between
the Company and any wholly-owned subsidiary and (ii) pursuant to compensatory or
contractual arrangements existing on the date hereof, neither the Company nor
any subsidiary shall enter into any transaction with, any Affiliate without the
consent of a majority of those Trustees who are considered independent under
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Section 303 of the NYSE listing standards (including at least one Series B-1
Designee). Without regard to the number of shares of Series B-1 Stock
outstanding, all such transactions shall be on fair and reasonable terms no less
favorable to the Company than would be obtainable in a comparable arm's length
transaction with a person not an Affiliate.
SECTION 3.2 Preemptive Rights.
(a) Until the earlier of (i) the termination of this Agreement
pursuant to Article IV hereunder or (ii) January 2, 2010, if the Company
proposes to sell any subordinated debt, Equity Securities or Derivative
Securities (other than Excluded Shares) (all such securities, other than
Excluded Shares, are referred to collectively herein as "Additional
Securities"), the Company shall first give to each Investor (and, only
with respect to preferred shares, to any Holders) holding shares of Series
B-1 Stock the opportunity (such opportunity being herein referred to as
the "Preemptive Right") to purchase (on the same terms as such Additional
Securities are proposed to be sold) the same percentage of such Additional
Securities proposed to be sold by the Company as equals the percentage
equal to the quotient of (i) the number of shares of Common Stock into
which the shares held by such Investor of Series B-1 Stock could be
converted, divided by (ii) the sum of (A) all the outstanding shares of
Common Stock of the Company and (B) the number of shares of Common Stock
into which all the shares of Series B-1 Stock held by all Investors (and
Holders, if applicable) could be converted; provided, however, that no
Preemptive Rights shall apply (i) to any issuance of Additional Securities
pursuant to a registration statement filed under the Securities Act; or
(ii) any issuance of rights to all holders of Common Stock (or of all
Voting Securities) of the Company.
(b) At least 20 days prior to the issuance by the Company of any
Additional Securities, the Company shall give written notice thereof (the
"Preemptive Notice") to each Investor and Holders (if applicable). The
Preemptive Notice shall specify (i) the name and address of the bona fide
investor (if known) to whom the Company proposes to issue or sell
Additional Securities, (ii) the total amount of capital to be raised by
the Company pursuant to the issuance or sale of Additional Securities,
(iii) the number of such Additional Securities proposed to be issued or
sold, (iv) the price and other terms of the Additional Securities and of
their proposed issuance or sale, (v) the number of such Additional
Securities which such Investor is entitled to purchase (determined as
provided in Section 3.2(a)), and (vi) the period during which such
Investor may elect to purchase such Additional Securities, which period
shall extend for at least 20 days following the receipt by such Investor
or Holder, as applicable, of the Preemptive Notice (the "Preemptive
Acceptance Period"). Each Investor who desires to purchase Additional
Securities shall notify the Company within the Preemptive Acceptance
Period of the number of Additional Securities he wishes to purchase, as
well as the number, if any, of extra Additional Securities ("Extra
Additional Securities") he would be willing to purchase in the event that
all of the Additional Securities subject to the Preemptive Right are not
subscribed for by the other Investors and Holders (the "Preemptive
Acceptance Notice"). Notwithstanding the foregoing, the rights of
Grandview, LLC ("Grandview") under this Section 3.2 shall be subject to
Grandview's prior written consent to receive material non-public
information as set forth in Section 6.01 of the Purchase Agreement.
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(c) In the event an Investor or Holder, as applicable, declines to
subscribe for all or any part of its pro rata portion of any Additional
Securities which are subject to the Preemptive Right (the "Declining
Preemptive Purchaser") during the Preemptive Acceptance Period, then the
other Investors or Holders, as applicable, shall have the right to
subscribe for all (or any declined part) of such Declining Preemptive
Purchaser's pro rata portion of such Additional Securities (to be divided
among the other Investors desiring to exercise such right on a ratable
basis) (the "Overallotment Right"). Each Investor's Overallotment Right,
if any, shall be deemed to be exercised on the date the Preemptive
Acceptance Notice is given.
(d) After the conclusion of the Preemptive Acceptance Period,
Additional Securities, less any Additional Securities for which Preemptive
Rights or Overallotment Rights are exercised, may be sold by the Company,
within a period of 4 months after the expiration of the Preemptive
Acceptance Period, to any other Person or Persons at not less than the
price and upon other terms and conditions not less favorable to the
Company than those set forth in the Preemptive Notice.
SECTION 3.3 Co-Investment Rights. If the Company offers to any third
party the right to participate in an investment made by the Company, then the
Company shall offer to the Investors the opportunity (a "Co-Investment Right"),
on a pro rata basis, to contribute to such investment on the same terms offered
by contributing up to twenty-seven and 47/100 percent (27.47%) of the aggregate
dollar amount of such investment (the "Participation"). The Company shall send
written notice to all Investors as soon as practicable of any Co-Investment
Right (which notice shall describe the terms of the investment and the identity,
nature and business of the investee), and all Investors shall within five
business days notify the Company of any election to exercise their Co-Investment
Right. If any Investor elects not to exercise its Co-Investment Right with
respect to any particular investment, the amount subject to such holder's
Co-Investment Right shall be offered to the remaining Investors on a pro rata
basis. Notwithstanding the foregoing, (i) the Company shall not be obligated to
offer Co-Investment Rights on any investment made by the Company (A) with a
third party who initiated the investment opportunity or brought the investment
opportunity to the attention of the Company or (B) with a third party who was a
bidder for the investment opportunity, (ii) the Company shall not be obligated
to offer Co-Investment Rights in any joint venture, investment vehicle or
special purpose entity formed by the Company provided that Co-Investment Rights
are offered with respect to investments made by such joint venture, investment
vehicle or entity, and (iii) the Company shall offer Co-Investment Rights to the
Investors in the event that the Company makes a tender offer for limited
partnership interests of an unaffiliated entity, provided, however, that any
such Co-Investment Right shall be made on terms which provide for the Company to
receive a 20% promotional interest after Investors who exercise Co-Investment
Rights have received their initial investment plus a 7% per annum return. If an
Investor elects not to exercise Co-Investment Rights with respect to any
investment, and the other Investors elect not to participate in the investment
in which such investor elects not to participate, the Company may offer the
right to participate in such investment to such parties as the Company shall
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determine in its sole discretion. In the event the Company grants rights
substantially similar to the Co-Investment Right to any purchaser of Additional
Series B Preferred Shares, the Participation shall be increased to such
percentage as shall equitably maintain the Co-Investment Rights of the Investors
(which, in the event of $25 million in Liquidation Preference (as defined in the
Certificate of Designations) of Additional Series B Preferred, shall mean
34.347%). In the event that an Investor's Co-Investment Rights terminate as a
result of the disposition of 50% of such Investor's Series B-1 Stock, the
remaining Investors shall retain in the aggregate the same Co-Investment Rights
that all Investors held on the date hereof.
SECTION 3.4 Drag-Along Rights.
(a) Scope of Rights. As long as the Principal Holders and their
Affiliates in the aggregate own at least 10% of the outstanding Common
Stock of the Company, if both Principal Holders propose to make a
Disposition of all of the Voting Securities held by the Principal Holders
to an unaffiliated third party or parties (other than sales of Common
Stock on the principal market on which the Common Stock of the Company is
listed or traded or a pledge of Common Stock in connection with a
financing) in a transaction pursuant to which the third party or parties
would obtain all or substantially all of the outstanding Common Stock,
such Principal Holder shall have the right to require each Holder who does
not exercise its redemption rights under Section 5(b) of the Certificate
of Designation to sell all of its Common Stock and to convert its Series
B-1 Stock then held by it and sell the Common Stock issuable on converting
to such third party on the same terms as the Principal Holders (subject to
paragraph (b) below) and each Holder agrees to vote all of the Voting
Securities owned by it in favor of such transaction (a transaction
described in this paragraph, a "Drag-Along Sale," and rights described in
such clauses, the "Drag-Along Rights").
(b) Procedures. In order to exercise a Drag-Along Right, the
Principal Holder shall notify each Holder, no later than thirty (30) days
prior to the closing of such Drag-Along Sale, such notice to set forth the
timing, proposed amount and form of consideration, terms and conditions of
such proposed sale. Each Holder will take all actions reasonably requested
by the Principal Holder or the Company as are required to be taken by the
holders of all outstanding shares, in connection with the consummation of
such sale, and shall cause all of its Common Stock to be sold to the
designated purchaser at the same time on the same terms and conditions and
for the same type and amount of consideration as the Common Stock being
sold by the Principal Holders in such proposed sale (subject to the
provisions of this paragraph). In furtherance of the foregoing, in
connection with a Drag-Along Sale each Investor will (i) waive any
appraisal or dissenters rights or similar rights under the law of Ohio,
and (ii) execute all documents containing such terms and conditions as
those executed by all other stockholders as reasonably directed by the
Principal Holder (subject to the provisions of this Section 3.4(b)).
Notwithstanding any other provisions hereof, with respect to the terms and
conditions of any Drag-Along Sale, such terms and conditions will provide
that the maximum liability for any Holder in respect of all
representations, warranties and indemnities given to the purchaser in any
Drag-Along Sale shall not exceed the value of the net proceeds received by
such Holder with respect to the Drag-Along Shares in such Drag-Along Sale.
(c) Closing. The closing of the Drag-Along Sale shall be held at
such time and place as the Principal Holder exercising such rights shall
specify and at least five (5) days notice of the time and place of the
Closing shall be given to each Holder. At such closing, each Investor
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shall deliver certificates representing the Common Stock to be
transferred, duly endorsed for transfer and accompanied by all requisite
stock transfer taxes, if any, and the Common Stock to be transferred shall
be free and clear of any liens, claims or encumbrances (other than
restrictions imposed pursuant to applicable federal and state securities
laws or by the Principal Holder thereof) and each Investor shall so
represent and warrant.
SECTION 3.5 Tag-Along Rights.
(a) Applicable Dispositions; Tag-Along Rights. The term "Co-Sale
Transaction" means a Disposition by either Principal Holder of the Common
Stock beneficially owned under Rule 13d-3 under the Exchange Act by such
Principal Holder; provided that the following transactions shall not
constitute a Co-Sale Transaction: (i) a Disposition in connection with a
Drag-Along Sale in which Drag-Along Rights are exercised; (ii) a pledge of
Common Stock to a financial institution or other lender in connection with
a financing; (iii) a sale of Common Stock on the principal market on which
Common Stock is listed or traded, and (iv) a Disposition to an Affiliate
of the Principal Holder or to its members so long as such Affiliate (or
members) becomes a party to this Agreement and agrees to be bound by the
terms and conditions hereof to the same extent and in the same manner as
the Principal Holder. In the event the Principal Holder proposes to make a
Disposition of Common Stock in a Co-Sale Transaction it shall provide
notice thereof to each Holder at least thirty (30) days prior to the date
of such Disposition (the "Tag-Along Notice").
(b) Election to Participate. The Tag-Along Notice shall describe the
terms and conditions of such Disposition, including without limitation the
form and amount of all consideration payable to the Principal Holder and
any other party in connection therewith, the proposed closing date, any
conditions to closing and all other material terms and conditions. Upon
receipt of the Tag-Along Notice, each Holder may elect to participate by
converting Series B-1 Stock and transferring the Common Stock issued upon
such conversion, on a pro rata (based upon its percentage ownership of
Common Stock, on an as-converted basis, relative to the combined ownership
of the Principal Holder and all Holders with rights under this Section
3.5) basis in such Disposition by giving written notice of its election to
participate to the Principal Holder not later than twenty (20) days
following such receipt. Such transfer shall be made on the same terms and
conditions of the Disposition described in the Tag-Along Notice. The
number of shares of Common Stock to be transferred by the Principal Holder
in connection with such transfer shall be reduced by the number of shares
of Common Stock transferred by each Holder pursuant to this Section 3.5,
unless the proposed Transferee is willing to purchase all of the Common
Stock owned by each Holder, and the Tag-Along Notice so indicates.
(c) Closings. The closing of the Co-Sale Transaction shall be held
at such time and place as the Principal Holder shall specify in the
Tag-Along Notice. At such closing, each Holder shall deliver certificates
representing the Common Stock to be transferred by each Holder in the
Co-Sale Transaction, duly endorsed for transfer and accompanied by all
requisite stock transfer taxes, if any, and the Common Stock to be
transferred shall be free and clear of any liens, claims or encumbrances
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(other than restrictions imposed pursuant to applicable federal and state
securities), and each Holder shall so represent and warrant. Each Holder
will bear its pro rata share of the costs and expenses incurred in
connection with the Co-Sale Transaction in which its participates to the
extent such costs are incurred for the benefit of all stockholders
Transferring securities in such transaction. Costs incurred by each Holder
on its own behalf will not be reimbursed.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination. Without limiting any liability of the
Company or the Holders for any breach of its obligations hereunder, this
Agreement will be terminated: (i) if the Company, the Investors and the Holders
holding a majority of the Series B-1 Stock or the Common Stock issued upon
conversion thereof mutually agree in writing; (ii) on any Redemption Date under
Section 5(a) of the Certificate of Designations if no Series B-1 Stock remains
outstanding; and (iii) with respect to any Investor or Holder when such Investor
makes a Disposition of all of the Series B-1 Stock and all of the Common Stock
issued on conversion thereof held by such Investor. Notwithstanding the
foregoing, the following rights and obligations will terminate prior to
termination of the Agreement as follows, if (i) the rights and obligations
provided in Section 3.2 and 3.3 shall terminate (x) for all Holders upon the
redemption of all Series B-1 Stock pursuant to Section 5(a) of the Certificate
of Designations, (y) in the case of any specific Investor shall terminate with
respect to such Investor (but not remaining Investors) upon the Disposition by
such Investor of 50% or more of the Common Stock issuable upon conversion of the
Series B-1 Stock purchased by such Investor, (ii) the provisions of Section 3.4
and 3.5 shall terminate upon the commencement of the Shelf Effective Period
pursuant to the Registration Rights Agreement, and (iii) no person who acquires
Series B-1 Stock in connection with a Permitted Disposition under Section
2.3(b)(i) or 2.3(b)(iii) or Common Stock issued upon conversion thereof shall
succeed to any rights or obligations under Article III.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Amendment and Modification. This Agreement may be
amended, modified and supplemented, and any of the provisions contained herein
may be waived, only by a written instrument signed by the Company and by the
Investors and the Holders owning at least a majority of the outstanding Series
B-1 Stock and Common Stock issued upon conversion thereof owned by all Holders
or Investors as the case may be. No course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
SECTION 5.2 Assignment; No Third Party Beneficiaries. Neither this
Agreement, nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties, provided, however, that
(i) the obligations contained in Sections 2.2 and 2.3 shall be binding upon
Beneficial Holders, Institutional Investors, Other Transferees and Affiliates of
Investors to whom a Permitted Disposition is made and the rights provided in
Section 3.5 shall be assignable in the event of such a Permitted Disposition,
and (ii) any Affiliate of an Investor may share in the Co-Investment Rights held
by such Investor under Section 3.3. Notwithstanding anything to the contrary in
this Agreement and except as provided in clause (ii) of the preceding sentence,
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the rights and obligations provided in Sections 3.2 and 3.3 are personal to each
Investor and shall inure solely to the benefit of, and be binding upon, the
Investors and may not be assigned except to another Investor and except that the
rights provided in Section 3.2 with respect to offerings of preferred shares
shall inure to the benefit of any Beneficial Holder, Institutional Investor,
Other Transferee or Affiliate of an Investor, in any Permitted Disposition to
such party.
SECTION 5.3 Binding Effect; Entire Agreement. Except as otherwise
provided herein, this Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and executors, administrators and heirs. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
SECTION 5.4 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable Law, such provision(s)
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms so long as the economic or legal substance of the
transactions contemplated by this Agreement are not affected in any manner
materially adverse to any party.
SECTION 5.5 Notices and Addresses. Any notice, demand, request,
waiver, or other communication under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service, if personally
served or sent by facsimile or electronic mail; on and upon receipt, if
delivered to a courier or mailed by express mail, if sent by courier delivery
service or express mail for next day delivery, or if mailed to the party to whom
notice is to be given, by first class mail, registered, return receipt
requested, postage prepaid and addressed as follows:
If to the Company:
First Union Real Estate Equity and Mortgage Investments
0 Xxxxxxxx Xxxxx, Xxxxx 000,
X.X. Xxx 0000,
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxx@xxxxxxxxxx.xxx
If to Xxxxxxx Xxxxxx or Xxxxx Xxxxxxxxx:
Two Jericho Plaza
Wing A
Xxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxx@xxxxxxxxxx.xxx
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with a copy to:
Xxxxxx Xxxxxx Rosenman LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxx.xxxxxx@xxxxxxxxx.xxx
If to any Holder, to the address set forth on such Holder's
signature page attached hereto, with a copy to:
Xxxx Xxxxxxxx, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxx.xxx
SECTION 5.6 Governing Law. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and consents hereunder shall be
governed by the internal Laws of the State of New York, without regard to the
conflicts of Law principles thereof which would specify the application of the
Law of another jurisdiction.
SECTION 5.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
SECTION 5.8 Counterparts. This Agreement may be executed via
facsimile and in any number of counterparts, each of which shall be deemed to be
an original instrument and all of which together shall constitute one and the
same instrument.
SECTION 5.9 Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 5.10 Remedies. In the event of a breach or a threatened
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
12
granted by Law, it being agreed by the parties that the remedy at Law, inducing
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at Law would be adequate
is waived.
SECTION 5.11 Jurisdiction. Each of the Investors and the Company (a)
hereby irrevocably and unconditionally submits to the exclusive jurisdiction of
any state or federal court sitting in New York County, New York for the purposes
of any suit, action or other proceeding arising out of this Agreement or the
subject matter hereof brought by the Company, or any Investor and (b) hereby
waives and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court. If a judgment is obtained, this
Section shall not preclude enforcement thereof in any forum.
SECTION 5.12 Waiver of Jury Trial. Each of the parties hereto hereby
waives all right to trial by jury in any action or proceeding under, arising out
of or related to this forbearance agreement.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By:
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
-----------------------------------
Xxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
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Schedule I
Halcyon Structured Opportunities Fund, L.P.
Halcyon Fund, L.P.
HBK Fund X.X.
Xxxx Street Capital, L.P.
Fairholme Ventures II LLC
Xxxxxxx Xxxxx & Co.
Kimco Realty Corporation
Basso Multi-Strategy Holding Fund Ltd.
Grandview, LLC
Spectrum Investment Partners, LP
Voschel Investments, LLC
Omicron Master Trust
Riva Ridge Master Fund, LTD.
Mariner, LDC
15
