Exhibit 10.5
STOCK SUBSCRIPTION AGREEMENT
AGREEMENT made this 16th day of May, 1997, by and between Chelsea GCA
Realty, Inc., a Maryland corporation (the "Company"), and Xxxxx XxXxxxxxx Group,
L.P. (the "Buyer").
W I T N E S S E T H :
WHEREAS, concurrently herewith Buyer and Chelsea GCA Realty
Partnership, L.P. are entering into a Limited Liability Company Agreement of
Simon/Chelsea Development Co., L.L.C. (the "Venture Agreement"); and
WHEREAS, the Company, the general partner of Chelsea GCA Realty
Partnership, L.P., desires to issue and sell to Buyer shares (the "Shares") of
Common Stock of the Company, $.01 par value per share (the "Common Stock"), and
the Buyer desires to purchase the Shares from the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Purchase of the Shares. The Company hereby agrees to issue and sell
to Buyer, and Buyer hereby agrees to purchase from the Company, an aggregate of
1,408,450 Shares of the Company. The purchase price to be paid by Buyer for the
Shares is $35.50 per share, or an aggregate of $49,999,975. The purchase price
will be paid by the delivery by Buyer to the Company of a certified or bank
cashier's check in such amount payable to the order of the Company or by wire
transfer to an account designated by the Company. The purchase price will be
payable concurrently with the delivery of the Shares to Buyer, which delivery
shall occur as promptly as practicable after such Shares have been listed on the
New York Stock Exchange.
2. Representations and Warranties of the Company. The Company
represents and warrants to Buyer as follows:
2.1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland.
2.2. All corporate and other proceedings required to be taken by or on
the part of the Company to authorize it to carry out this Agreement have been
duly and properly taken.
2.3. This Agreement has been duly and validly executed and delivered
by the Company and constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
2.4. The Shares, when delivered pursuant to Section 1 hereof, will be
validly issued and outstanding, fully paid and nonassessable. The Company agrees
to cause the Shares to be issued promptly after such Shares have been listed or
approved for listing on the New York Stock Exchange, together with evidence of
such listing to Buyer. Promptly after the date hereof, the Company shall apply
for listing of the Shares on the New York Stock Exchange.
2.5. Neither the execution and delivery of this Agreement nor the
carrying out of the transactions contemplated hereby will result in violation
of, or be in conflict with, the Articles of Incorporation or By-Laws of the
Company or any agreement or indenture of any kind binding upon the Company.
2.6. The Company has filed with the Securities and Exchange Commission
and made available to Buyer its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and its Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 (collectively, the "SEC Documents"). The SEC
Documents, when filed (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (b) complied in all material respects
with the applicable requirements of the Securities Exchange Act of 1934. Since
March 31, 1997, there has not been any material adverse change in the financial
condition or operations of the Company.
2.7. The Company has qualified as a Real Estate Investment Trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), for
its taxable year ended December 31, 1996, and the Company is organized and
operates in a manner that will enable it to continue to qualify to be taxed as a
REIT under the Code.
2.8. Without the Buyer's consent, the Company will not take any action
to reduce the number of outstanding shares of Common Stock if such reduction
would cause Buyer's ownership of Common Stock to constitute 10% or more of the
outstanding Common Stock of the Company.
3. Representations and Warranties of the Buyer. Buyer hereby
represents and warrants to the Company as follows:
3.1. All proceedings required to be taken by or on the part of the
Buyer to authorize it to carry out this Agreement have been duly and properly
taken.
3.2. This Agreement has been duly and validly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms.
3.3. Neither the execution and delivery of this Agreement nor the
carrying out of the transactions contemplated hereby will result in violation
of, or be in conflict with, the Agreement of Limited Partnership of Buyer or any
agreement or indenture of any kind binding upon the Buyer.
Buyer is acquiring the Shares for its own account for investment
without any intention of distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"); Buyer will not sell,
transfer, assign or pledge any Shares (but may pledge dividends or distributions
thereon) except pursuant to an effective registration statement or an exemption
from registration under the Securities Act and the rules and regulations
thereunder and understands that the certificates for the Shares will bear a
legend to such effect. Buyer acknowledges that it is aware that the Shares must
be held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available; that although the Company now
makes publicly available the information required by Rule 144 under the
Securities Act, it may not be under an obligation to do so in the future and
that any routine sales of any of the Shares made in reliance upon Rule 144 under
the Securities Act may be made only in limited quantities in accordance with the
terms and conditions of Rule 144.
3.5. Buyer has knowledge and experience in financial and business
matters, is capable of evaluating the merits and risks of the investment in the
Company and is able to bear the economic risk of such investment. Buyer is an
accredited investor as defined under the Securities Act.
4. Investigation by Buyer. Buyer has had and has availed itself of the
opportunity to conduct such examination of the business and financial condition
of the Company as Buyer has deemed necessary in connection with Buyer's
investment in the Company and has had the opportunity to acquire such additional
information about the business and financial condition of the Company as Buyer
deems appropriate.
5. Subsequent Shares. If at any time and from time to time while the
Venture Agreement remains in full force and effect, the Company sells for cash
any equity securities (or securities convertible into or exercisable or
exchangeable for equity securities) (the "Offered Shares") in a public or
private offering either registered pursuant to the Securities Act or exempt from
registration under the Securities Act (the "Offering"), then Buyer shall have
the right to purchase concurrently with the closing of, and on the same terms
as, the Offering a number of Offered Shares equal to the number of Offered
Shares multiplied by a fraction, the numerator of which is the number of shares
of Common Stock then owned by Buyer and the denominator of which is the total
number of issued and outstanding shares of Common Stock of the Company prior to
the Offering. The Company shall notify the Buyer of the proposed terms of the
Offered Shares (which may consist of the mechanism for establishing the offering
price) not less than 30 days prior to the anticipated date of closing of the
Offering. If the Buyer desires to purchase any of the Offered Shares, it shall
notify the Company within 20 days after receipt of the notice from the Company
how many Offered Shares it wishes to purchase. If the Buyer does not so notify
the Company, the Company may sell the Offered Shares free from the Buyer's
rights under this Section. If at any time Buyer does not elect to purchase
Offered Shares in two consecutive Offerings or in a total of three Offerings,
the provisions of this Section shall be terminated and of no further force or
effect and Buyer shall no longer have rights under this Section 5 to purchase
any equity securities in the future. The rights granted to Buyer pursuant to
this Section 5 shall not apply to any equity securities (or securities
convertible into or exercisable or exchangeable for equity securities) (a)
issued pro rata to all holders of Common Stock; (b) upon the conversion or
exercise of options, warrants or convertible securities; (c) issued to
employees, officers or directors of the Company pursuant to stock option plans
or other plans approved by the Board of Directors of the Company; or (d) issued
in connection with the acquisition of any property or acquisition (by merger,
consolidation, purchase, reorganization or otherwise) of all of the stock or
other equity securities of a company or all or substantially all the assets of a
business.
6. Restrictions on Certain Actions. During the earlier of (a) five
years from the date of this Agreement or (b) two years after the termination of
the Venture Agreement, except as permitted pursuant to Section 5 hereof, Buyer,
without the prior consent of the Company's Board of Directors will not, nor will
it permit any affiliate (as such term is defined in Rule 12b-2 of Regulation 12B
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
Buyer to:
(a) acquire (other than through stock splits or
stock dividends), directly or indirectly or in conjunction with or through any
other person, by purchase or otherwise, beneficial ownership of any additional
shares of Common Stock or any other securities of the Company entitled to vote
generally for the election of directors ("Voting Securities");
(b) directly or indirectly or through any other
person, solicit proxies with respect to Voting Securities under any
circumstance; or become a "participant" in any "election contest" relating to
the election of directors of the Company (as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act); provided, however, that the foregoing
shall not prohibit Buyer from soliciting proxies for the purpose of opposing any
increase in the ownership limitation currently contained in the Company's
Articles of Incorporation.
(c) deposit any Voting Securities in a voting
trust, or subject any Voting Securities to a voting or similar agreement;
(d) directly or indirectly or through or in
conjunction with any other person, engage in a tender or exchange offer for the
Company's Voting Securities made by any other person or entity without the prior
written approval of the Company, or engage in any proxy solicitation with any
person or entity relating to the Company;
(e) take any action alone or in concert with any
other person to acquire or change the control of the Company or, directly or
indirectly, participate in any group seeking to obtain or take control of the
Company; or
(f) sell, transfer, pledge or otherwise dispose
of or encumber any Voting Securities except (i) as set forth in Section 7
hereof, (ii) to an affiliate of the Buyer, provided that the transferee agrees
to be bound by all the provisions of this Agreement, or (iii) pursuant to a
public offering of the Shares registered under the Securities Act.
7. Sale of Voting Securities. Except as otherwise provided in Section
6(f) hereof, if, during the period set forth in Section 6, Buyer desires to sell
all or part of its holdings of Voting Securities, such sale shall be made only
as follows. Buyer may sell all or part of its holdings of Common Stock: (i) in a
public offering registered under the Securities Act or (ii) in accordance with
the volume limitations of Rule 144 under the Securities Act or any successor
rule. Buyer shall give the Company at least five days' prior written notice of
any such proposed sale.
8. Termination of Restrictions. The restrictions contained in Sections
6 and 7 hereof shall terminate in any of the following events:
(a) the Company enters into an agreement calling
for the merger or consolidation of the Company with or into any other
corporation (other than a wholly-owned subsidiary of the Company) in which the
Company shall not be the survivor or in which the Company's outstanding capital
stock shall be converted into cash or other property or if the Company enters
into an agreement to sell all or substantially all of its assets to another
corporation (other than a wholly-owned subsidiary of the Company); provided,
however, that this provision shall not apply to a merger, consolidation or sale
in which the securities received by the holders of Voting Securities of the
Company in such consolidation, merger or sale constitute a majority of such
other corporation's Voting Securities immediately after the merger,
consolidation or sale (in which event the provisions of this Agreement shall
apply to the Voting Securities of such other corporation); provided, further,
however, that during the period set forth in Section 6 the Company agrees to
notify the Buyer of any of the events described in this subparagraph (a) or
subparagraph (c) at least two business days prior to entering into any such
agreement;
(b) a person or group of persons unaffiliated
with the Buyer shall make an offer to purchase a number of shares of Common
Stock of the Company or other Voting Securities which would entitle such person
or persons to vote a majority of the Voting Securities of the Company and a
majority of the members of the board of directors of the Company does not oppose
such offer or recommend against acceptance thereof by the shareholders of the
Company; or
(c) the Company shall enter into an agreement
with any party providing for an offer to be made to purchase at least a majority
of the shares of Common Stock of the Company and a majority of the Board of
Directors approves or recommends acceptance of such tender offer.
9. Right to Appoint Director. If during the period set forth in
Section 6 Buyer acquires at any time or from time to time equity securities (or
securities convertible into or exercisable or exchangeable for equity
securities) of the Company for an aggregate purchase price of $100 million or
more, then the Company shall use its best efforts to cause a designee of Buyer
to be elected as a director of the Company and shall use its best efforts to
cause its officers and directors to enter into an agreement promptly after the
date hereof agreeing to vote for Buyer's designee as a director.
10. Legends and Stop Transfer Order.
(a) Buyer agrees:
(i) to the placement of the following
legends on each certificate representing Voting Securities
owned by Buyer or any affiliate:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT
TO, AND MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF ONLY UPON COMPLIANCE WITH THE TERMS AND THE
PROVISIONS OF A CERTAIN AGREEMENT DATED MAY, __ 1997
BETWEEN CHELSEA GCA REALTY, INC. AND XXXXX XXXXXXXXX
GROUP, L.P., A COPY OF WHICH AGREEMENT IS ON FILE AND
MAY BE EXAMINED AT THE OFFICE OF THE SECRETARY OF
CHELSEA GCA REALTY, INC.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION
STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH RESPECT
THERETO, (ii) A WRITTEN OPINION FROM COUNSEL FOR THE
ISSUER, MESSRS. STROOCK & STROOCK & XXXXX LLP, OR
COUNSEL FOR THE HOLDER REASONABLY ACCEPTABLE TO THE
ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED OR (iii) A 'NO ACTION' LETTER
OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION."
(ii) that the Company may give stop transfer
orders to its transfer agent with respect to the Shares.
(b) The transfer of any Voting Securities which
are sold in contravention of the provisions of this Agreement shall not be
registered on the books of the Company, and no person to whom any such sale is
made shall be recognized as the holder of such Voting Securities or acquire any
voting, dividend or other rights in respect thereof.
11. Specific Enforcement. The parties hereto recognize and agree that
, in the event that any of the terms of Sections 5, 6, 7 or 9 hereof were not
performed in accordance with their specific terms or were otherwise breached,
immediate irreparable injury would be caused, for which there is no adequate
remedy at law. It is accordingly agreed that in the event of a failure by any
party to perform its obligations thereunder, any other party shall be entitled
to specific performance through injunctive relief to prevent breaches of the
terms of such sections and to specifically enforce such sections and the terms
and provisions thereof in any action instituted in any court of the United
States or any state thereof having subject matter jurisdiction, in addition to
any other remedy to which the party may be entitled, at law or in equity.
12. Miscellaneous.
12.1. Buyer, on the one hand, and the Company, on the other hand,
represent and warrant to each other that no brokerage commission or finder's
fees have been incurred in connection with the sale of the Shares to the Buyer.
Buyer shall be responsible for, and shall hold the Company harmless from and
against, any fees or expenses which Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated may allege to be due and owing to it in connection with this
Agreement or the Venture Agreement or the transactions contemplated by such
agreements.
12.2. All fees and expenses incurred by any party in connection with
this Agreement will borne by such party.
12.3. This Agreement will be binding upon, inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto;
provided, however, that without the consent of the other, neither Buyer nor the
Company shall assign its rights or delegate its obligations hereunder to any
other person.
12.4. This Agreement contains the entire understanding of the parties
and supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended only by a written
instrument duly executed by both parties.
12.5. This Agreement may be executed simultaneously in counterparts,
each of which will be deemed to be an original, but all of which together will
constitute one and the same instrument.
12.6. All notices hereunder shall be given as provided in the Venture
Agreement.
12.7. This Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CHELSEA GCA REALTY, INC.
By:_________________________
XXXXX XXXXXXXXX GROUP, L.P.
By: Xxxxx XxXxxxxxx Group, Inc.,
its General Partner
By:__________________________
