SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of June 15, 2005 (this
"Agreement"), is 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"), and each investor executing a signature page
hereto (each an "Investor" and collectively, the "Investors").
RECITALS:
A. The Company has authorized a series of preferred shares designated the
"Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial
Interest" (the "Series B-1 Stock"), which is convertible into shares of Common
Stock in accordance with the terms of the Amended and Restated Certificate of
Designations governing the Series B-1 Stock, in the form attached hereto as
Exhibit A (the "Certificate of Designations").
B. The holders of the outstanding B-1 Stock have approved the amendment of
the Certificate of Designations to authorize the issuance of an additional
360,000 shares of Series B-1 Stock (the "Series B-1 Shares").
C. The Investors desire to purchase from the Company, and the Company
desires to sell to the Investors, upon the terms and subject to the conditions
of this Agreement, the Series B-1 Shares.
D. The Investors have agreed to purchase from the Company, and the Company
has agreed to sell to the Investors, subject to the terms and conditions of this
Agreement, the Series B-1 Shares.
E. The Company, and the Investors desire to set forth certain agreements
herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and undertakings hereunder and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following terms
have the meanings set forth below.
"Accredited Investor" shall mean any Person that is an "accredited
investor" within the definition contained in Rule 501(a) under the Securities
Act.
"Affiliate" shall mean (a) with respect to an individual, any member of
such individual's family residing in the same household; (b) with respect to an
entity: (i) any executive officer, director, partner or Person that owns ten
percent (10%) or more of the outstanding beneficial interest of or in such
entity, or (ii) any brother, sister, brother-in-law, sister-in-law, lineal
descendant or ancestor of any executive officer, director, partner or Person
that owns ten percent (10%) or more of the outstanding beneficial interest of or
in such entity; and (c) with respect to a Person, any Person which directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person or entity or any Person that serves as
a general partner and/or investment manager or in a similar capacity of such a
Person; provided, however, that for purposes of the definition of "Affiliate,"
no Investor shall be deemed an "Affiliate" of the Company.
"Agreement" shall have the meaning set forth in the preamble.
"Audited Financial Statements" shall have the meaning set forth in Section
3.07.
"Balance Sheet" shall have the meaning set forth in Section 3.07.
"Board of Trustees" shall mean the Board of Trustees of the Company.
"Business Day" shall mean any day other than (i) a Saturday, (ii) a Sunday
or (iii) any other day on which banks in the City of New York are authorized or
required to close.
"By-Laws" shall mean, when used with respect to a specified Person, the
by-laws of a Person, as the same may be amended from time to time.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, shares of beneficial interest, interests, participations, rights in or
other equivalents (however designated and whether voting or non-voting) of such
Person's capital stock or any form of membership, ownership or participation
interests, as applicable, including partnership interests, whether now
outstanding or hereafter issued and any and all securities, debt instruments,
rights, warrants or options exercisable or exchangeable for or convertible into
such capital stock.
"Certificate of Designations" shall have the meaning set forth in the
recitals.
"Certificate of Incorporation" shall mean, when used with respect to a
specified Person, the Declaration of Trust, Articles or Certificate of
Incorporation or other applicable organizational document of such Person, as
currently in effect.
"Closing" shall have the meaning set forth in Section 2.02(a).
"Closing Date" shall have the meaning set forth in Section 2.02(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commission Filings" shall have the meaning set forth in Section 3.08.
"Common Stock" shall mean the common shares of beneficial interest, $1 par
value per share, of the Company.
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"Company" shall have the meaning set forth in the preamble.
"Company Group Member" shall mean each of the Company and its Affiliates
and their respective directors, officers, employees, agents and attorneys and
their respective successors and assigns.
"Company Subsidiaries" and "Company Subsidiary" shall have the meaning set
forth in Section 3.03.
"Consents" shall mean all governmental and third party consents,
approvals, filings, authorizations, qualifications and waivers necessary to be
received or made by a Person.
"Contemplated Transactions" shall mean the transactions contemplated by
each of this Agreement, and the other Transaction Documents.
"Contract" shall mean any legally binding contract, agreement, mortgage,
deed of trust, bond, loan, indenture, lease, license, note, option, warrant,
right, instrument, commitment or other similar document, arrangement or
agreement, whether written or oral.
"Environment" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.
"Environmental Laws" shall mean all Laws relating to the pollution of or
protection of the Environment, from contamination by, or relating to injury to,
or the protection of, real or personal property or human health or the
Environment, including, without limitation, all valid and lawful requirements
and agreements with courts and other Governmental Bodies pertaining to
reporting, licensing, permitting, investigation, remediation and removal of,
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials,
pollutants, contaminants or hazardous or toxic substances, materials or wastes.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis as in effect in the United States of America.
"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.
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"Hazardous Materials" shall mean any substance whether solid, liquid or
gaseous in nature: (i) the creation, processing, use, transfer, release or
presence of which requires or may hereafter require notification, investigation,
or remediation under any Environmental Law; (ii) which is or becomes defined as
"toxic", a "hazardous waste", "hazardous material" or "hazardous substance" or
"pollutant" or "contaminant" under any present or future Environmental Laws;
(ii) the presence of which adversely affects or is injurious to human health or
safety or the Environment; (iv) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
or becomes regulated by any Governmental Body; (v) which contains gasoline,
diesel fuel or other petroleum hydrocarbons or volatile organic compounds; (vi)
which contains polychlorinated byphenyls (PCBs) or asbestos or urea formaldehyde
foam insulation; or (vii) which contains or emits radioactive particles, waves
or materials, including radon gas.
"Indemnitee" shall have the meaning set forth in Section 9.01.
"Indemnitor" shall have the meaning set forth in Section 9.01.
"Investors" shall have the meaning set forth in the preamble.
"Investor Related Party Member" shall mean the Investors and their
Affiliates and each of their respective members, directors, partners, officers,
employees, agents and attorneys and their respective successors and permitted
assigns.
"Investors' Rights Agreement" shall have the meaning set forth in Section
7.01(g).
"IRS" shall mean the Internal Revenue Service.
"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.
"Legal Proceeding" shall mean any judicial, administrative or arbitral
actions, suits, proceedings (public or private) or governmental proceedings.
"Legend" shall mean the Legend set forth in Section 4.01(e).
"Liability" shall mean any debt, liability or obligation, whether known or
unknown, asserted or unasserted, accrued, absolute, contingent or otherwise,
whether due or to become due.
"Lien" shall mean any mortgage, pledge, lien (statutory or otherwise),
security interest, hypothecation, conditional sale agreement, encumbrance or
similar restriction or agreement.
"Loss" shall have the meaning set forth in Section 9.01.
"Material Adverse Effect" shall mean any event, condition or contingency
that has had, or is reasonably likely to have, a material adverse effect on the
business, assets, liabilities (including contingent liabilities), results of
operations, financial condition or, to the knowledge of the Company, prospects
of the Company and the Company Subsidiaries, taken as a whole or the ability of
the Company to perform its obligations under the Transaction Documents or the
validity or enforceability thereof.
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"Notice" shall have the meaning set forth in Section 9.02(a).
"NYSE" shall mean the New York Stock Exchange.
"Order" shall mean any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Permits" shall mean any approvals, authorizations, licenses, permits or
certificates by or of any Governmental Body. "Permitted Liens" shall mean (a)
easements, restrictions, covenants, rights of way or other minor irregularities
of title currently of record against any of the Properties, (b) real and
personal property leases, (c) Liens for Taxes not yet due and payable, or for
Taxes being contested in good faith, provided that in each such case, adequate
reserves are maintained in accordance with GAAP on the Balance Sheet, and (d)
any Lien created by statute of carriers, warehousemen, vendors, mechanics,
laborers or materialmen incurred in the ordinary course of business for sums not
yet due and payable.
"Person" shall mean any individual, corporation, partnership, firm,
limited liability company, joint venture, trust, association, unincorporated
organization, group, joint-stock company, Governmental Body or other entity.
"Properties" shall have the meaning set forth in Section 3.12(a).
"Purchase Price" shall mean $9,000,000 in the aggregate, payable as set
forth in Section 2.02.
"Registration Rights Agreement" shall have the meaning set forth in
Section 7.01(f).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Series A Stock" shall mean the Series A Cumulative Convertible Redeemable
Preferred Shares of Beneficial Interest, $25 par value per share, of the
Company.
"Series B-1 Designees" shall mean the Trustees elected by the holders of
Series B-1 Stock to the Board of Trustees pursuant to the Certificate of
Designations.
"Series B-1 Shares" shall have the meaning set forth in the recitals.
"Series B-1 Stock" shall have the meaning set forth in the recitals.
"Specified Purchase Price" shall have the meaning set forth in Section
2.01.
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"Subsidiary" shall mean, as to any Person, any other Person more than 50%
of the shares of the voting stock, voting interests, membership interests or
partnership interests of which are owned or controlled, or the ability to select
or elect more than 50% of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries; provided, however, that First
Union Management, Inc. shall not be deemed to be a Subsidiary of the Company.
"Tax Return" shall have the meaning set forth in Section 3.11(a).
"Taxes" shall mean all U.S. federal, state, local and foreign income,
gross income, corporation, advance corporation, gross receipts, estimated,
import, customs, duties, transfer, excise, property, sales, use, value-added,
license, payroll, pay as you earn, withholding, social security and franchise or
other governmental taxes, imposed by any Governmental Body and any interest,
penalties or additions to tax with respect thereto.
"Transaction Documents" shall mean this Agreement, the schedules and
exhibits hereto, the Certificate of Designations, the Series B-1 Shares, the
Registration Rights Agreement, the Investors' Rights Agreement, and any
certificate or other document delivered by or on behalf of the Company or the
Investors pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement.
"Unaudited Financial Statements" shall have the meaning specified in
Section 3.07.
Section 1.02. Rules of Construction. Unless the context otherwise
requires:
(a) an accounting term defined by GAAP that is not otherwise defined
herein has the meaning assigned to it in accordance with GAAP;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) the words "include" and "including" shall be deemed to mean
"include, without limitation," and "including, without limitation";
(e) "herein," "hereof," "hereto," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
article, section, paragraph or clause where such terms may appear;
(f) references to sections mean references to such section in this
Agreement, unless stated otherwise; and
(g) the use of any gender shall be applicable to all genders.
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ARTICLE II
ISSUANCE, SALE AND PURCHASE OF THE SERIES B-1 STOCK
Section 2.01. Sale and Purchase of the Series B-1 Stock. Upon the terms
and subject to the conditions of this Agreement, the Company will sell to the
Investors, and the Investors will purchase from the Company, an aggregate of
360,000 shares of the Series B-1 Stock (the "Series B-1 Shares") for an
aggregate purchase price of $9,000,000 (the "Purchase Price"). The number of
Series B-1 Shares to be purchased by each Investor at the Closing and the
portion of the aggregate purchase price to be paid by each Investor at the
Closing in the exchange therefor, shall be as specified in Schedule 2.01 (with
respect to each such Investor, such Investor's "Specified Purchase Price").
Section 2.02. Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the transactions contemplated by Section
2.01 (the "Closing") shall take place at 10:00 AM on June 20, 2005, or at such
other time as may be mutually agreed upon by the Investors and the Company (the
"Closing Date"). The Closing shall occur on the Closing Date at the offices of
Xxxxxx Xxxxxx Xxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
(b) At the Closing: (i) the Company will deliver to the Investors
certificates for the Series B-1 Shares to be sold in accordance with the
provisions of Section 2.01, in such denominations as such Investor shall
request, registered in the respective name of each Investor in the amounts set
forth on Schedule 2.01 attached hereto; (ii) each Investor, in full payment for
the Series B-1 Shares, will deliver to the Company immediately available funds,
by wire transfer to such account as the Company shall specify, such Investor's
Specified Purchase Price; and (iii) each party shall take or cause to happen
such other actions, and shall execute and deliver such other instruments or
documents, as shall be required under Article VII.
Section 2.03. Use of Proceeds. The Company shall use the proceeds from the
sale of the Series B-1 Stock for general corporate purposes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Investors as follows:
Section 3.01. Organization and Good Standing. The Company is an
unincorporated association in the form of a business trust organized, validly
existing and in good standing under the Laws of the State of Ohio, and has full
trust power and authority to own, lease and operate its properties, and carry on
its business as presently conducted. The Company is duly qualified, registered
or licensed as a foreign business entity to do business and is in good standing
in each jurisdiction in which the ownership or leasing of its properties or the
character of its present operations makes such qualification, registration or
licensing necessary, except where the failure to so qualify or be in good
standing could not individually or in the aggregate reasonably have a Material
Adverse Effect. The Company has heretofore delivered or made available to the
Investors complete and correct copies of the Declaration of Trust and all
amendments thereto of the Company, as in effect as of the date of this
Agreement.
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Section 3.02. Authority; Binding Effect. The Company has full trust power
and authority to execute, deliver and perform this Agreement and the other
Transaction Documents and to consummate the Contemplated Transactions. The
execution and delivery of this Agreement and the other Transaction Documents and
the consummation by the Company of the transactions contemplated hereby and by
the other Transaction Documents have been duly and validly approved by all
necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be subject to the effects of any applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar Laws affecting creditors' rights generally and subject to the effects of
general equitable principles. The other Transaction Documents, when executed and
delivered by the Company, will be duly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
subject to the effects of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting creditors'
rights generally and subject to the effects of general equitable principles.
Section 3.03. Organization and Good Standing of Company Subsidiaries.
Schedule 3.03 lists all Subsidiaries of the Company and their respective
jurisdictions of incorporation (collectively, the "Company Subsidiaries" and
each, a "Company Subsidiary"). Except as set forth in Schedule 3.03, the Company
owns, directly or indirectly, all the shares of outstanding Capital Stock of
each Company Subsidiary. There are no outstanding securities or rights
convertible into or exchangeable for shares of any Capital Stock of any Company
Subsidiary and there are no Contracts by which any Company Subsidiary is bound
to issue additional shares of Capital Stock. All of the shares of Capital Stock
of each of the Company Subsidiaries are duly and validly authorized, fully paid
and non-assessable and, except for the Liens set forth in Schedule 3.03, are
owned by the Company free and clear of any Lien with respect thereto. Each
Company Subsidiary is duly organized, validly existing and in good standing
under the Laws of its jurisdiction of organization, and has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where the failure to be so licensed or qualified in any such jurisdiction
could not individually or in the aggregate reasonably have a Material Adverse
Effect. Except for the limitations relating to the Liens set forth in Schedule
3.03, no Company Subsidiary is subject to any restriction on its ability to make
distributions to its owners.
Section 3.04. Capitalization.
(a) Schedule 3.04(a) sets forth (i) the authorized capitalization of
the Company, the number of shares of each class issued and outstanding and the
number of shares reserved for issuance in connection with the Company's stock
option plans or otherwise, and (ii) all options, warrants, rights to subscribe
to, calls, contracts, undertakings, arrangements and commitments to issue which
may result in the issuance of stock of the Company. All of the issued and
outstanding shares of the Company's stock have been and all shares reserved for
issuance will on issuance be, duly and validly authorized and issued and are
fully paid and non-assessable and are not subject to any preemptive rights.
Except as set forth on Schedule 3.04(a), pursuant to this Agreement, and as
provided in the Certificates of Designations of the Series A Stock and Series
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B-1 Stock, (i) no equity securities of the Company are or may be required to be
issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever, (ii) there are outstanding no
securities or rights convertible into or exchangeable for shares of any stock of
the Company, and (iii) there are no contracts, commitments, understandings or
arrangements by which the Company is bound to issue additional shares of its
stock or securities or rights convertible into or exchangeable for shares of any
stock of the Company, or options, warrants or rights to purchase or acquire any
additional shares of its stock. Except as provided in the Transaction Documents,
neither the Company nor any Company Subsidiary is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any of
its Capital Stock. Except as contemplated by the Registration Rights Agreement
or as set forth on Schedule 3.04(a), there are no Contracts between the Company
and any Person granting such Person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such Person or to require the Company to
include such securities in any other registration statement filed by the Company
under the Securities Act.
(b) The Series B-1 Shares will have the voting powers, designations,
preferences and rights, and the qualifications, limitations and restrictions
thereof, set forth in the Certificate of Designations. The Company has reserved,
or will on or before Closing reserve, for issuance the shares of Common Stock
issuable upon conversion of the Series B-1 Shares. When paid for by, and issued
to, the Investors, the Series B-1 Shares will be duly authorized, validly
issued, fully paid and non-assessable and will be free and clear of any Liens.
The issuance and sale of the Series B-1 Shares is not subject to any preemptive
rights except as provided in the Investor Rights Agreement and the sale of the
Series B-1 Shares will not violate the preemptive rights provided by the
Investor Rights Agreement. Except for the restrictions set forth, or referred
to, in the Legend, the Series B-1 Shares when issued and sold will not be
subject to any restriction on use, voting or transfer; and the shares of Common
Stock issuable to each such Investor upon conversion of the Series B-1 Shares,
when issued in accordance with the Company's Declaration of Trust, will be duly
authorized, validly issued, fully paid and non-assessable, and will be free and
clear of any Liens and except for the restrictions set forth, or referred to, in
the Legend, will not be subject to any restriction on use, voting or transfer or
to any preemptive rights.
Section 3.05. No Violations; Consents. Except as set forth on Schedule
3.05, neither the execution, delivery or performance by the Company of this
Agreement or the other Transaction Documents nor the consummation of the
Contemplated Transactions, will (a) conflict with, or result in the breach of,
any provision of the organizational documents or by-laws of the Company or any
Company Subsidiary, (b) conflict with, violate, result in the breach or
termination of, or constitute a default or give rise to any right of termination
or acceleration or right to increase the obligations or otherwise modify the
terms thereof under any Contract, Permit or Order to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or any of the properties or assets of the Company or any Company Subsidiary is
bound, (c) constitute a violation of any Law applicable to the Company or any
Company Subsidiary; or (d) result in the creation of any Lien upon the
properties or assets of the Company or any Company Subsidiary other than with
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respect to the foregoing clauses (b), (c) and (d), such requirements, conflicts,
violations, breaches or rights which could not individually or in the aggregate
reasonably have a Material Adverse Effect. Except as set forth on Schedule 3.05,
other than those which have been obtained or made or which could not
individually or in the aggregate reasonably have a Material Adverse Effect, no
Consent is required on the part of the Company or the Company Subsidiaries in
connection with the execution and delivery of this Agreement or the Transaction
Documents, or the compliance by the Company with any of the provisions hereof or
thereof.
Section 3.06. Listing. The Company is not in violation of the listing
requirements of the NYSE in any material respect. The Company has not received
any notice from the NYSE that the Common Stock is to be delisted by the NYSE.
Conditioned upon the approval of a listing application by the NYSE, stockholder
approval is not required under the rules and regulations of the NYSE in order to
authorize the issuance of the Series B-1 Shares pursuant to this Agreement or
the listing of the Common Stock into which the Series B-1 Stock is convertible.
Section 3.07. Financial Statements. The Company has previously delivered
to the Investors copies of (i) the combined balance sheet of the Company, First
Union Management, Inc. and the Company Subsidiaries as of December 31, 2004 and
December 31, 2003 and the related combined statements of operations,
shareholder' equity and cash flow for the years ended December 31, 2004 and
December 31, 2003 as reported in the Company's Annual Report on Form 10-K for
the fiscal years ended December 31, 2004 and December 31, 2003, filed by the
Company with the SEC under the Exchange Act, and accompanied by the audit report
of Deloitte & Touche LLP and KPMG LLP, independent public accountants
(collectively, the "Audited Financial Statements"), and (ii) the unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
March 31, 2005 (the "Balance Sheet") and the related unaudited consolidated
income statements and cash flows for the three months ended March 31, 2005 as
reported in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2005, filed with the SEC under the Exchange Act (the "Unaudited
Financial Statements"). The Audited Financial Statements accurately reflect the
books and records of the Company and present fairly, in all material respects,
the combined financial position of the Company, First Union Management, Inc. and
the Company Subsidiaries and the combined results of their operations and their
cash flows for the periods and dates covered thereby, in conformity with GAAP.
The Unaudited Financial Statements accurately reflect the books and records of
the Company and present fairly, in all material respects, the combined financial
position of the Company and the Company Subsidiaries and the combined results of
their operations and their cash flows for the period and date covered thereby,
in conformity with GAAP, except for changes resulting from normal year-end
adjustments (none of which will be material in amount).
Section 3.08. Commission Filings. The Company has filed all reports,
registration statements, proxy statements and other materials, together with any
amendments required to be made with respect thereto, that were required to be
filed with the SEC under the Securities Act or the Exchange Act from and after
December 31, 2003 (all such reports and statements are collectively referred to
herein as the "Commission Filings"). As of their respective dates, the
Commission Filings, including the financial statements contained therein,
complied in all material respects with all of the statutes and published rules
and regulations enforced or promulgated by the regulatory authority with which
the Commission Filings were filed, and, except to the extent the information in
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any Commission Filing has been revised or superseded by a later filed Commission
Filing, did not and do not as of the date hereof contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.09. Absence of Certain Developments.
(a) Except as set forth on Schedule 3.09(a), or disclosed in the
Commission Filings, since December 31, 2003:
(i) no event, condition or contingency has occurred which
could reasonably have a Material Adverse Effect;
(ii) neither the Company nor any Company Subsidiary has
transferred, issued, sold or disposed of any shares of their Capital Stock or
granted any options, warrants, calls or other rights to purchase or otherwise
acquire shares of their Capital Stock other than under the Company's employee
stock option plans and the dissolution of former Company Subsidiaries;
(iii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property of the Company
or any Company Subsidiary having a material adverse impact on the business of
the Company or the Company Subsidiaries, taken as a whole;
(iv) neither the Company nor any Company Subsidiary has made
any change in the accounting principles, methods or practices followed by it
(including, without limitation, its method of accounting for stock options)
other than a change which was required by reason of a concurrent change in Law
or GAAP;
(v) neither the Company nor any Company Subsidiary has amended
its organizational documents or By-Laws except as contemplated by this
Agreement;
Section 3.10. Litigation. There are no Legal Proceedings pending or, to
the knowledge of the Company, threatened, that question the validity of this
Agreement or the Transaction Documents or any action taken or to be taken by the
Company or any Company Subsidiary in connection with the consummation of the
Contemplated Transactions. Except as otherwise disclosed herein or in the
Commission Filings or on Schedule 3.10, there are no Legal Proceedings pending
or, to the knowledge of the Company, threatened, against or affecting the
Company or any Company Subsidiary or any of their respective properties or
assets, at Law or in equity, involving claims of more than $1,000,000 or that
otherwise individually or in the aggregate could reasonably have a Material
Adverse Effect if adversely determined. There is no outstanding or, to the
knowledge of the Company, threatened, Order of any Governmental Body against the
Company or any Company Subsidiary or any of their respective properties or
assets, which Orders could individually or in the aggregate reasonably have a
Material Adverse Effect.
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Section 3.11. Tax Matters.
(a) For the periods since January 1, 2001, the Company and each
Company Subsidiary has timely filed or caused to be timely filed any and all
returns, declarations, reports (including any consolidated, combined or unitary
returns), claims for refund, information returns, or other documents or
statements relating to Taxes, including any schedule or attachment thereto and
any amendment or supplement thereof (each, a "Tax Return") required to be filed
by it under applicable federal, state, local or foreign Law, except to the
extent that any failure to do so could not individually or in the aggregate
reasonably have a Material Adverse Effect. The reserves for Taxes contained in
the financial statements of the Company or carried on the books and records of
the Company and the Company Subsidiaries, as applicable, are in the aggregate
adequate to cover all Tax liabilities and deferred Taxes of the Company and the
Company Subsidiaries as of the date of this Agreement, except to the extent that
any inadequacy could not individually or in the aggregate reasonably have a
Material Adverse Effect.
(b) For the periods since January 1, 2001, all Taxes shown as being
due and owing by the Company or any Company Subsidiary on any Tax Return have
been paid.
(c) The Company and each Company Subsidiary has timely withheld and
paid all Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or third party, except to the extent that any failure to do so
could not individually or in the aggregate reasonably have a Material Adverse
Effect.
(d) None of the Company nor any Company Subsidiary has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency, in each case except as to Taxes
that are disclosed on Schedule 3.11(d) or in the financial statements of the
Company and the Company Subsidiaries, as applicable, or that, if assessed could
not individually or in the aggregate reasonably have a Material Adverse Effect.
(e) The Company has elected under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), to be taxed as a real estate
investment trust ("REIT"), and such election has not been revoked or terminated
and remains in full force and effect. The Company is qualified under the Code as
a REIT.
Section 3.12. Real Property.
(a) Each of the Company and the Company Subsidiaries owns interests
in the properties listed on Schedule 3.12(a) (the "Properties"), free and clear
of all Liens other than Permitted Liens and the Liens set forth on Schedule
3.12(a) or disclosed in the Commission Filings.
(b) Each of the Company and the Company Subsidiaries owns either a
fee simple interest or a land estate or interest as a ground lessee in the
Properties as set forth in Schedule 3.12(b).
Section 3.13. Material Contracts. Except as listed on Schedule 3.13, there
is no default and the Company has received no written notice of default under
any Contract or a Contract listed in the Commission Filings by the Company, the
Company Subsidiaries or, to the knowledge of the Company, by any other party
thereto, in each case which could individually or in the aggregate reasonably
12
have a Material Adverse Effect, and no event has occurred that, individually or
in the aggregate, with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company, the Company Subsidiaries or, to
the knowledge of the Company, by any other party thereto, that could
individually or in the aggregate reasonably have a Material Adverse Effect.
Section 3.14. Company Employees. The Company has no employees and is
administered by FUR Advisors LLC pursuant to an Advisory Agreement, dated
December 31, 2003. The Company does not presently maintain or contribute to, or
have any liability with respect to, any employee benefit plan.
Section 3.15. Compliance with Laws. (a) The Company and the Company
Subsidiaries are in compliance in all material respects with all material Laws
and material Orders promulgated by any Governmental Body applicable to the
Company and the Company Subsidiaries or to the conduct of the business or
operations of the Company and the Company Subsidiaries or the use of their
properties (including any leased properties) and assets. Since January 1, 2004,
neither the Company nor any Company Subsidiary has received any written notice
of violation or alleged material violation of any such Law or Order by any
Governmental Body in any material respect that has not been resolved. Since
January 1, 2004, neither the Company nor any Company Subsidiary has received
written notice that it is the subject of an investigation by any Governmental
Body which could individually or in the aggregate reasonably have a Material
Adverse Effect.
(b) To the knowledge of the Company, except as set forth on Schedule
3.15(b), the Company and the Company Subsidiaries have all Permits necessary for
the conduct of their business, except where the failure to have such Permits
would not individually or in the aggregate reasonably have a Material Adverse
Effect.
Section 3.16. Preferred Stock Exemption.
(a) Assuming the representations and warranties of the Investors
contained in Article IV are true, the offer and sale of the Series B-1 Shares
(and the issuance of the Common Stock to such Investors upon the conversion of
such Series B-1 Shares) are exempt from the registration requirements of the
Securities Act. The Company has not taken and will not take any actions which
would cause the offers and sales contemplated hereunder to become ineligible for
exemption under the Securities Act.
(b) Neither the Company nor any Person acting on its behalf has
offered the Series B-1 Stock to any Person by means of general or public
solicitation or general or public advertising, such as by newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting whose attendees
were solicited by such means.
Section 3.17. Investment Company Act. The Company and the Company
Subsidiaries are not, nor are they directly or indirectly controlled by or
acting on behalf of any Person that is, an investment company within the meaning
of the Investment Company Act of 1940, as amended.
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Section 3.18. Financial Advisors. Except as set forth on Schedule 3.18, no
agent, broker, investment banker, finder, financial advisor or other Person is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee as a result of actions taken by the Company or its Affiliates,
directly or indirectly, in connection with the Contemplated Transactions.
Section 3.19. No General Solicitation. None of the Company or any of its
"affiliates" (as defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")), has, directly or through an agent, engaged in any form of
general solicitation or general advertising in connection with the offering of
the Series B-1 Shares (as those terms are used in Regulation D) under the
Securities Act or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act; and the Company has not entered into any
contractual arrangement with respect to the distribution of the Series B-1
Shares except for this Agreement and the Registration Rights Agreement, and the
Company will not enter into any such arrangement.
Section 3.20. Environmental Laws. Except as set forth in Schedule 3.20,
each of the Company and the Company Subsidiaries is in compliance in all
material respects with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Laws, or in any plan, Order, notice or demand
letter issued, entered, promulgated or approved thereunder except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE INVESTORS
Section 4.01. Investors Representations. Each of the Investors represents
and warrants, severally, to the Company as follows:
(a) Authorization. Such Investor is a corporation, partnership or
limited liability company duly organized and validly existing under the Laws of
the state or country of its jurisdiction of formation. Such Investor has the
full corporate , partnership or limited liability company power and authority to
enter into this Agreement and the other Transaction Documents and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the other Transaction Documents and the consummation by the
Investors of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Investors. This Agreement
and the other Transaction Documents have been and will be, as the case may be,
duly executed and delivered by such Investor and constitute legal, valid and
binding obligations of such Investor, enforceable in accordance with their
respective terms, except as such enforceability may be subject to the effects of
any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally and subject to
the effects of general equitable principles.
(b) Investment Representations. Such Investor is an Accredited
Investor and is acquiring the Series B-1 Shares allocated to such Investor for
such Investor's own account, for investment, and not with a view to, or for sale
in connection with, the distribution thereof or of any interest therein. Such
Investor has adequate net worth and means of providing for its current needs and
14
contingencies and is able to sustain a complete loss of the investment in such
Series B-1 Shares, and has no need for liquidity in such investment. Such
Investor, itself or through its officers, employees or agents, has sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of an investment such as an investment in the
Series B-1 Shares, and such Investor, either alone or through its officers,
employees or agents, has evaluated the merits and risks of the investment in
such Series B-1 Shares. Such Investor understands that the Series B-1 Stock has
not been registered under the Securities Act by reason of its issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to the exemption provided in Section 4(2) and/or Regulation D
promulgated under the Securities Act, and that the Series B-1 Stock may not be
sold or otherwise disposed of unless registered under the Securities Act or
exempted from such registration.
(c) Investors' Acknowledgment. Such Investor has had the
opportunity, directly or through its representatives, to ask questions of and
receive answers from Persons acting on behalf of the Company concerning the
transactions contemplated by this Agreement.
(d) Financial Advisors. No agent, broker, investment banker, finder,
financial advisor or other Person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee as a result of actions taken
by such Investor, directly or indirectly, in connection with any of the
transactions contemplated by this Agreement or any of the Transaction Documents
except that Credit Suisse First Boston has acted as the Company's placement
agent for the Transaction as set forth on Schedule 3.18.
(e) Legend.
(i) The certificates evidencing the Series B-1 Stock and the
Common Stock issuable upon conversion of the Series B-1 Stock will bear a legend
(the "Legend") substantially similar to the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. NO INTEREST IN THESE SECURITIES MAY BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION STATEMENT IS IN EFFECT UNDER SAID ACT OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT. THIS
CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON
TRANSFER AND OTHER PROVISIONS OF THE AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT BETWEEN THE COMPANY, AND THE INVESTORS REFERRED TO
THEREIN, A COPY OF WHICH IS ON FILE WITH THE COMPANY. EXCEPT AS
PROVIDED IN SUCH AGREEMENT, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER IN
VIOLATION OF THE PROVISIONS OF SUCH AGREEMENT SHALL BE VOID AND OF
NO FORCE AND EFFECT.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER CONTAINED IN THE BY-LAWS AND
THE CERTIFICATE OF DESIGNATIONS FOR THE PURPOSE OF THE COMPANY'S
MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). IF THE
RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED THE ISSUANCE OR
TRANSFER RESULTING IN SUCH VIOLATION WILL BE VALID ONLY WITH RESPECT
TO SUCH AMOUNT OF SECURITIES AS DOES NOT RESULT IN A VIOLATION OF
THE COMPANY'S BY-LAWS OR CERTIFICATE OF DESIGNATIONS, AND SUCH
ISSUANCE OR TRANSFER SHALL BE NULL AND VOID WITH RESPECT TO ANY
EXCESS SECURITIES. ALL TERMS IN THIS LEGEND NOT OTHERWISE DEFINED
HEREIN HAVE THE MEANINGS ASCRIBED THERETO IN THE COMPANY'S BY-LAWS
OR CERTIFICATE OF DESIGNATIONS AS THE SAME MAY BE FURTHER AMENDED
FROM TIME TO TIME."
(ii) The first paragraph of the legend endorsed on the
certificates pursuant to Section 4.01(e) hereof shall be removed and the Company
shall issue a certificate without such portion of the legend to the holder
thereof at such time as the securities evidenced thereby cease to be restricted
securities upon the earliest to occur of (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) the securities shall have been sold to
the public pursuant to Rule 144 (or any successor provision) under the
Securities Act, and (iii) such securities may be sold by the holder without
restriction or registration under Rule 144(k) under the Securities Act (or any
successor provision).
(f) Ownership and Transfer Limitations. Such Investor has received a
copy of the By-Laws of the Company and the Certificate of Designations for the
Series B-1 Stock, and understands the restrictions on transfer and ownership of
the Company's Capital Stock included therein. As of the Closing, no Person who
or which is a beneficial owner of such Investor will own indirectly (based
solely on such Person's percentage ownership of Series B-1 Stock through the
Investor) 9.8% or more of the Series B-1 Stock. The Investors are not acting as
a "group" under Section 13(d) of the Exchange Act.
16
(g) No Other Representation. Such Investor acknowledges that the
Company is not making any representation, warranty, covenant or agreement in
connection with the transactions contemplated by this Agreement, other than as
set forth in this Agreement and the other Transaction Documents.
(h) NYSE Compliance. Such Investor acknowledges that it does not
beneficially own more than five percent of the Company's outstanding Common
Shares and is not otherwise a substantial stockholder of the Company, as defined
under Rule 312.03 of the NYSE Listed Company Manual.
Section 4.02. Each of the parties hereto acknowledges that Credit Suisse
First Boston and its Affiliates are acting solely as financial advisor and/or
placement agent to the Company and have not provided advice to any Investor in
connection with the transaction contemplated by this Agreement. Each Investor
further acknowledges and agrees that it has not relied upon any representation
by Credit Suisse First Boston or any of its Affiliates, nor have Credit Suisse
or any of its Affiliates made any representation to such Investor in connection
with this Agreement and the transactions contemplated hereby.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees that for so long as the Series B-1 Shares
are outstanding (and in the case of Section 5.06, as long as the Investor holds
shares of Common Stock issued on conversion thereof):
Section 5.01. Accounting System. The Company will maintain a system of
accounting and proper books of record and account, in accordance with GAAP and
applicable Laws.
Section 5.02. Corporate Existence. The Company will preserve and keep in
full force and effect its existence as an unincorporated business trust and the
corporate existence of each Company Subsidiary (unless merged into the Company)
and all rights and franchises of the Company and the Company Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve or keep in full force and effect such existence of a subsidiary,
right or franchise could not individually or in the aggregate reasonably have a
Material Adverse Effect.
Section 5.03. Compliance with Law. The Company will, and will cause each
Company Subsidiary to, comply, in all material respects, with all Laws which are
applicable with respect to the conduct of their respective businesses and the
ownership of their respective properties and will maintain in effect all
government authorizations, provided that the Company shall not be deemed to be
in violation of this Section 5.04 as a result of any failure to comply with any
provisions of such Laws or failure to maintain in effect, the noncompliance with
which and the failure to maintain which would not result in enforceable fines,
penalties, injunctive relief or other civil or criminal liabilities which, in
the aggregate, could reasonably have a Material Adverse Effect.
Section 5.04. Maintain Listing. The Company will use commercially
reasonable efforts to (x) maintain the listing and trading of its Common Stock
on the NYSE, for so long as the Company qualifies for such listing under the
rules and regulations of the NYSE and (y) comply in all material respects with
the Company's reporting, filing, and other obligations, under the rules and
17
regulations of the NYSE. In the event that the Common Stock is no longer
eligible for listing and trading on the NYSE, the Company will use commercially
reasonable efforts to secure the listing or quotation of the Common Stock on the
Nasdaq National Market, the Nasdaq SmallCap Market or the American Stock
Exchange (if such listing is permitted by the bylaws, rules or regulations of
any of the foregoing) and to comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such
exchanges or the National Association of Securities Dealers, Inc., as
applicable. The Company will promptly provide to the Initial Purchaser and each
of the Investors copies of any notices it receives from the NYSE and any other
exchange or quotation system on which the Common Stock is then listed regarding
the continued eligibility of the Common Stock for listing on such exchanges or
quotation systems.
Section 5.05. Secure Listing. The shares of Common Stock issuable upon
conversion of the Series B-1 Stock shall be duly listed, pending notice of
issuance, on the NYSE prior to the Closing and the Company shall maintain such
listing in accordance with Section 5.04.
Section 5.06. Exempt Persons. The provisions of the Company's By-Laws
annexed hereto as Schedule 5.06 will remain in effect.
ARTICLE VI
ACTIONS PRIOR TO AND AFTER CLOSING
Section 6.01. Access to Information. Until the Closing Date or the earlier
termination of this Agreement, the Company will permit the Investors and
representatives of the Investors to visit and inspect any of the properties of
the Company or any of the Company Subsidiaries, to examine the corporate books,
records, agreements and files of the Company and make copies or extracts
therefrom and to request information at reasonable times and intervals
concerning the general status of the Company's financial condition and
operations, all upon reasonable notice and at such reasonable times and as often
as such Investors may reasonably request. Notwithstanding the foregoing, the
Company will not provide Grandview, LLC and/or its affiliates, including
Millennium Partners, L.P. (collectively, "Grandview") with any material
non-public information without first obtaining Grandview's prior written
consent.
Section 6.02. Consent. Until the Closing Date, each of the parties hereto
will use its reasonable best efforts and shall fully cooperate with each other
party to make promptly all registrations, filings and applications, give all
notices and obtain all Consents in connection with the transactions contemplated
hereby.
Section 6.03. Publicity. Until the Closing Date, the parties agree not to
issue any announcement, press release, public statement or other information to
the press or any third party with respect to this Agreement or the Contemplated
Transactions without obtaining the prior written approval of the other parties
hereto (which approval shall not be unreasonably withheld); provided, however,
that nothing contained herein shall prevent any party hereto, at any time, from
furnishing any required information to any Governmental Body or from issuing any
announcement, press release, public statement or other information to the press
18
or any third party with respect to this Agreement or the Contemplated
Transactions if required by Law, although, the parties agree to consult with
each other as to the content of any release so required and consider in good
faith the comments of the other thereon. In addition, the Company shall, on or
prior to 8:30 a.m., New York City time, of the second Business Day following the
Closing Date, issue a press release (the "Press Release") substantially in the
form attached as Schedule 6.03, disclosing all material terms of the transaction
contemplated hereby. On or before 8:30 a.m., New York City time, on the fourth
Business Day the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act, and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules and exhibits
to this Agreement)) as exhibits to such filing (including all attachments, the
"8-K Filing"). The Company shall use its best efforts not to, and shall use its
best efforts to cause each of its Subsidiaries and each of their respective
officers, directors, employees and agents, not to, provide Grandview with any
material non-public information regarding the Company or any of its Subsidiaries
from and after the filing of the Press Release without the express written
consent of Grandview.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01. Conditions to Obligations of the Investors. The obligation
of the Investors to consummate the transactions contemplated hereby shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any or all of which may be waived by the the Investors, as
applicable, in whole or in part to the extent permitted by applicable Law:
(a) Consents. The Company shall have obtained the consents set forth
in Schedule 3.05, in form and substance reasonably satisfactory to the
Investors.
(b) Material Adverse Effect. Between the date hereof and the Closing
Date, neither the Company nor any Company Subsidiary shall have suffered or
experienced a Material Adverse Effect.
(c) No Governmental Order or Other Proceeding or Litigation. No
Order of any Governmental Body shall be in effect that restrains or prohibits
the Contemplated Transactions.
(d) Legal Opinion. The Investors shall have received, dated the
Closing Date and addressed to each of the Investors, an opinion of Xxxxxx Xxxxxx
Xxxxxxxx, counsel to the Company, substantially in the form attached hereto as
Exhibit B.
(e) Certificate of Designations. The Certificate of Designations
shall have been adopted by the Board of Trustees and shall be in full force and
effect.
(f) Registration Rights Agreement. An Amended and Restated
Registration Rights Agreement, which amends and supersedes that certain
Registration Rights Agreement, dated February 28, 2005, between and among the
Company and the investors named therein, shall have been executed and delivered
by the Investors and the other parties thereto and shall be in full force and
effect, in substantially the form attached hereto as Exhibit C (the
"Registration Rights Agreement").
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(g) Investors' Rights Agreement. An Amended and Restated
Registration Rights Agreement, which amends and supersedes that certain
Investors' Rights Agreement, dated February 28, 2005, between and among the
Company and the investors named therein, shall have been executed and delivered
by the parties thereto and shall be in full force and effect, in substantially
the form attached hereto as Exhibit D (the "Investors' Rights Agreement").
(h) Stock Certificates.
(i) The Company shall have delivered to the Investors
certificates representing the Series B-1 Shares in the amounts specified on
Schedule 2.01, duly registered by the Company in the respective names of the
Investors as set forth in Schedule 2.01.
(i) Company Certificates. The Company shall have delivered to the
Investors:
(i) a certificate, dated the Closing Date, executed by the
Secretary of the Company which certifies that (A) attached to such certificate
is a complete and correct copy of the Declaration of Trust and all amendments
thereto of the Company, and (B) attached to such certificate is a complete and
correct copy of the By-Laws of the Company (including the amendments referred to
in paragraph (j)) and the Certificate of Designations, each as in full force and
effect at the Closing Date; and
(ii) a certificate, dated the Closing Date, executed by the
Secretary of the Company, which certifies as complete and correct resolutions of
the Board of Trustees authorizing the execution, delivery and performance of
this Agreement and each of the other Transaction Documents, the issuance and
sale of the Series B-1 Shares and the issuance of the shares of Common Stock
issuable upon conversion of the Series B-1 Shares, the reservation of such
shares of Common Stock and the performance of the transactions contemplated by
this Agreement and the other Transaction Documents.
(j) By-Law Amendment. The By-Laws of the Company shall have been
amended as provided in Schedule 5.06 hereto.
(k) The representations and warranties contained in this Agreement
shall be accurate on the Closing Date as if made on the Closing Date and the
Company shall have performed all of its covenants and agreements as set forth in
this Agreement on or before the Closing Date. The Company shall not have taken
any action since the date of this Agreement that would have required a vote or
waiver of the Investors or the holders of the Series B-1 Shares under any
Transaction Document.
(l) The Investors shall have received a certificate executed by the
President of the Company stating that the conditions set forth in paragraphs
(a), (b), (k) and (o) have been satisfied.
20
(m) The Investors shall have received from the Company such other
certificates and documents as they shall reasonably request, and all proceedings
taken by the Company in connection with the Transaction Documents and all
documents and papers relating to such Primary Documents shall be satisfactory to
the Purchasers.
(n) The consummation of the Transaction shall not be prohibited by
applicable Law.
(o) The shares of Common Stock issuable upon conversion of the
Series B-1 Shares shall have been listed on the NYSE, pending notice of
issuance.
(p) The Company shall have paid the reasonable legal expenses of the
Investors incurred in connection with the Transaction pursuant to Article X
below.
(q) The Investors shall not be subject as of the Closing Date to any
penalties or liabilities under the Code or other Laws as the result of the
consummation of the transactions contemplated under this Agreement that were not
applicable as of the date of execution of this Agreement.
(r) It shall be a condition to each Investor's obligations under
this Agreement that all other Investors tender payment for the Series B-1 Shares
as set forth on Schedule 2.01; provided , however, that the release of any such
Investor as the result of such noncompliance by any other Investor shall not
affect any remedy the Company may have against such noncomplying Investor.
Section 7.02. Conditions to Obligations of the Company. The obligation of
the Company to consummate the transactions contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following conditions,
any or all of which may be waived by the Company:
(a) No Governmental Order or Other Proceeding or Litigation. No
Order of any Governmental Body shall be in effect that restrains or prohibits
the Contemplated Transactions.
(b) NYSE Listing. The shares of Common Stock issuable upon
conversion of the Series B-1 Stock shall have been listed on the NYSE, pending
notice of issuance.
(c) Registration Rights Agreement. The Registration Rights Agreement
shall have been executed and delivered by the other parties thereto and shall be
in full force and effect.
(d) Investors' Rights Agreement. The Investors Rights Agreement
shall have been executed and delivered by the other parties thereto and shall be
in full force and effect.
(e) It shall be a condition to the Company's obligations under this
Agreement that all Investors tender payment for the Series B-1 Shares as set
forth on Schedule 2.01.
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ARTICLE VIII
SURVIVAL
Section 8.01. Survival. The representations, warranties and covenants to
be performed at or prior to Closing of the parties set forth in this Agreement
shall survive for a period of 24 months following the execution and delivery of
this Agreement and thereafter shall be of no further force or effect, provided
that the representations and warranties set forth in Sections 3.11 (Taxes) and
4.02(f)(Ownership and Transfer Limitations), shall survive for the applicable
period of the statute of limitations and the representations and warranties set
forth in Sections 3.01 (Organization), 3.02 (Authorization) and 3.04
(Capitalization) shall survive indefinitely (or if indefinite survival is not
permitted by Law, then for the maximum period permitted by applicable Law).
Following the expiration of the periods set forth above with respect to any
particular representation or warranty, no party hereto shall have any further
liability with respect to such representation or warranty. Except as set forth
herein, all of the covenants, agreements and obligations of the parties hereto
shall survive the Closing indefinitely (or if indefinite survival is not
permitted by Law, then for the maximum period permitted by applicable Law).
Anything herein to the contrary notwithstanding, any claim for indemnification
that is asserted by written notice which notice specifies in reasonable detail
the facts upon which such claim is made as provided in this Section 8.01 within
the survival period shall survive until resolved pursuant to a final
non-appealable judicial determination or otherwise.
ARTICLE IX
INDEMNIFICATION
Section 9.01. Generally. Subject to the limitations and other provisions
of this Article IX, the Company covenants and agrees to indemnify, defend and
hold harmless the Investor Related Party Members from and against (but only to
the extent of) any and all Losses resulting from, incurred in connection with or
arising out of (but only to the extent of) (a) any breach of any representation,
warranty or covenant of the Company contained herein, (b) the failure of the
Company to perform any of the agreements, covenants or obligations contained
herein (other than if any such claim was caused by a breach by the Investors
under this Agreement) and (c) claims by third parties (other than investors in,
or securityholders, members, partners or Affiliates of, any Investor, or any
party to an agreement with an Investor which agreement is breached or is subject
to a claim that it has been breached as a result of the Company's performance
under this Agreement) resulting solely from the purchase of the Series B-1
Shares or the use by the Company of the proceeds thereof. Subject to the
limitations and other provisions of this Article IX, each Investor, severally
and not jointly, covenants and agrees to indemnify, defend and hold harmless the
Company Group Members from and against (but only to the extent of) any and all
Losses resulting from, incurred in connection with or arising out of (but only
to the extent of) (a) any breach of any representation, warranty, covenant or
agreement of such Investor contained herein or (b) the failure of such Investor
to perform any of the agreements, covenants or obligations of such Investor
contained herein. The term "Loss" or any similar term shall mean any and all
damages, reduction in value actually realized or incurred of the original
investment in the Series B-1 Shares, deficiencies, costs, claims, fines,
judgments, amounts paid in settlement, expenses of investigation, interest,
penalties, assessments, out-of-pocket expenses (including reasonable attorneys'
and auditors' fees and disbursements, witness fees and court costs). The party
or parties being indemnified are referred to herein as the "Indemnitee" and the
indemnifying party is referred to herein as the "Indemnitor."
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Section 9.02. Indemnification Procedure.
(a) Any party who receives notice of a potential claim that may, in
the judgment of such party, result in a Loss shall use all reasonable efforts to
provide the parties hereto notice thereof, provided that failure or delay or
alleged delay in providing such notice shall not adversely affect such party's
right to indemnification hereunder, unless and then only to the extent that such
failure or delay or alleged delay has resulted in actual prejudice to the
Indemnitor, including, without limitation, by the expiration of a statute of
limitations. In the event that any party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party hereunder, the
Indemnitee shall assert a claim for indemnification by written notice (a
"Notice") to the Indemnitor stating the nature and basis of such claim. In the
case of Losses arising by reason of any third party claim, the Notice shall be
given within thirty (30) days of the filing or other written assertion of any
such claim against the Indemnitee, but the failure of the Indemnitee to give the
Notice within such time period shall not relieve the Indemnitor of any liability
that the Indemnitor may have to the Indemnitee, except to the extent that the
Indemnitor demonstrates that the defense of such action has been materially
prejudiced by the Indemnitee's failure to timely give such Notice.
(b) In the case of third party claims for which indemnification is
sought, the Indemnitor shall, if necessary, retain counsel reasonably
satisfactory to the Indemnitee, and have the option (i) to diligently conduct
any proceedings or negotiations in connection therewith, (ii) to take all other
steps to settle or defend any such claim (provided that the Indemnitor shall not
settle any such claim without the consent of the Indemnitee which consent shall
not be unreasonably withheld or delayed, provided, that it shall not be deemed
unreasonable to withhold consent if such settlement involves a finding or
admission of violation of laws or rights, or relief other than monetary damages
that will be paid by the Indemnitor) and (iii) to employ counsel to contest any
such claim or liability in the name of the Indemnitee or otherwise. In any
event, the Indemnitee shall be entitled to participate at its own expense and by
its own counsel in any proceedings relating to any third party claim. The
Indemnitor shall, within 15 Business Days of receipt of the Notice, notify the
Indemnitee of its intention to assume the defense of such claim (in which case
the Indemnitor will be deemed to have waived any right to dispute its liability
under Section 9.01 with respect to such claim and its outcome). If (i) the
Indemnitor shall decline to assume the defense of any such claim, (ii) the
Indemnitor shall fail to notify the Indemnitee within 15 Business Days after
receipt of the Notice of the Indemnitor's election to defend such claim, (iii)
the Indemnitee shall have reasonably concluded that there may be defenses
available to it which are different from or in addition to those available to
the Indemnitor (in which case the Indemnitor shall not have the right to direct
the defense of such action on behalf of the Indemnitee), or (iv) a conflict
exists between the Indemnitor and the Indemnitee which the Indemnitee has
reasonably concluded would prejudice the Indemnitor's defense of such action,
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then in each such case the Indemnitor shall not have the right to direct the
defense of such action on behalf of the Indemnitee and the Indemnitee shall, at
the sole expense of the Indemnitor, defend against such claim and (x) in the
event of a circumstance described in clause (i) and (ii), the Indemnitee may
settle such claim without the consent of the Indemnitor (and the Indemnitor may
not challenge the reasonableness of any such settlement) and (y) in the event of
a circumstance described in clause (iii) and (iv), the Indemnitee may not settle
such claim without the consent of the Indemnitor (which consent will not be
unreasonably withheld or delayed, provided, that it shall not be deemed
unreasonable to withhold consent if such settlement involves a finding or
admission of violation of laws or rights, or relief other than monetary damages
that will be paid by the Indemnitor). The reasonable expenses of all
proceedings, contests or lawsuits in respect of such claims shall be borne and
paid by the Indemnitor if the Indemnitee is entitled to indemnification
hereunder and the Indemnitor shall pay the Indemnitee, in immediately available
funds, the amount of any Losses, promptly after the incurrence of such Losses.
Regardless of which party shall assume the defense or negotiation of the
settlement of the claim, the parties agree, without limiting the Indemnitor's
obligations hereunder, to cooperate fully with one another in connection
therewith. In the event that any Losses incurred by the Indemnitee do not
involve payment by the Indemnitee of a third party claim, then, the Indemnitor
shall, within 20 days after written notice from the Indemnitee specifying the
amount of Losses, pay to the Indemnitee, in immediately available funds, the
amount of such Losses. Anything in this Article X to the contrary
notwithstanding, the Indemnitor shall not, without the Indemnitee's prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
Indemnitee or which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnitee, a release from all
liability in respect of such claim.
Section 9.03. Limitations on Indemnification. Notwithstanding anything to
the contrary contained herein, the liability of (i) the Company under this
Article IX shall be limited to an amount equal to the Purchase Price; and (ii)
each Investor under this Article IX shall be limited to an amount equal to the
Purchase Price paid by such Investor.
ARTICLE X
FEES, EXPENSES AND COSTS
Section 10.01. The Company agrees to pay at the Closing (or in the event
the transactions contemplated hereunder are not consummated other than as the
result of noncompliance by the Investors) and hold the Investors harmless
against liability for the payment of reasonable legal fees and expenses owed by
such Investors to Milbank, Tweed, Xxxxxx & XxXxxx LLP incurred in connection
with this Agreement, up to a maximum of $25,000. In the event the Company
requests that the Transaction Documents be amended, or if the Company files for
bankruptcy or is declared bankrupt, the Company shall pay the reasonable legal
fees incurred by the Investors in connection therewith.
ARTICLE XI
TERMINATION
Section 11.01. Termination. This Agreement may be terminated on or any
time prior to the Closing by the mutual written consent of each of the Investors
and the Company. Section 11.02. Effect of Termination. In the event of the
termination of this Agreement as provided in Section 11.01, all obligations and
agreements of the parties set forth in this Agreement shall forthwith become
void except for the obligations set forth in: (i) Section 6.03 (Publicity), (ii)
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Article IX (Indemnification) and (iii) Article X (Fees, Expenses and Costs), and
there shall be no liability or obligation on the part of the parties hereto
except as otherwise provided in this Agreement. Notwithstanding the foregoing,
the termination of this Agreement under Section 11.01 shall not relieve either
party of any liability for breach of this Agreement prior to the date of
termination.
ARTICLE XII
MISCELLANEOUS
Section 12.01. 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
with a copy to:
Xxxxxx Xxxxxx Xxxxxxxx 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 Investor, to the address set forth on such Investor'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
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Section 12.02. Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement.
Section 12.03. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing. Any of the covenants or agreements contained in this Agreement may
be waived only by the written consent of the Investors.
Section 12.04. 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 12.05. Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to its subject matter, is
intended (with the documents referred to herein) as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto
and cannot be changed or terminated except by a written instrument executed by
the party or parties against whom enforcement thereof is sought.
Section 12.06. Limitation on Assignment; Parties in Interest.
(a) No assignment of this Agreement or of any rights or obligations
hereunder may be made by the Company or the Investors (by operation of Law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void.
(b) This Agreement shall be binding upon, and shall inure to the
benefit of, and be enforceable by, the parties and their respective successors,
transferees and assigns.
Section 12.07. Obligations of Investors Several. The obligations of the
Investors hereunder shall be several and not joint. No Investor shall be
responsible for the breach of any provision of this Agreement by any other
Investor.
Section 12.08. 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 12.09. 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, (b) hereby waives
the right to jury trial and (c) 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
26
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 12.10. No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX; provided, however, that
Credit Suisse First Boston and its Affiliates shall be entitled to the benefits
of, and to rely on, the representation set forth in Section 4.03.
Section 12.11. Injunctive Relief. In the event that any party threatens to
take any action prohibited by this Agreement, the parties agree that there may
not be an adequate remedy at law. Accordingly, in such an event, a party may
seek and obtain preliminary and permanent injunctive relief (without the
necessity of posting any bond or undertaking). Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
Section 12.12. 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 12.13. Actions Simultaneous. All actions to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed to have been taken and executed and delivered simultaneously and no
actions shall be deemed to have been taken nor shall any documents be deemed to
have been executed and delivered until all actions have been taken and all
documents have been executed and delivered.
Section 12.14. Home Office Payment. So long as any Investor or its nominee
shall be the holder of any Shares, and notwithstanding anything contained in the
Certificate of Designations to the contrary, the Company will pay all sums
becoming due with respect to such Shares, other than with respect to redemption,
by direct deposit of automated clearinghouse funds into such account as the
Investor shall provide by written notice to the Company, subject to execution of
such documentation as the Company's transfer agent shall reasonably require.
[Signature Pages Follow]
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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
