EXHIBIT 4.2
[EXECUTION COPY]
HRE PROPERTIES, INC.
8.99% SERIES B SENIOR CUMULATIVE PREFERRED STOCK
350,000 SHARES
----------------
SUBSCRIPTION AGREEMENT
January 8, 1998
Cobalt Capital LLC
c/o CGA Investment Management, Inc.,
as Asset Manager
00 Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Xxxxx Fargo & Company
000 Xxxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Retirement Plan of The Bank of New York
Company, Inc.
x/x Xxx Xxxx xx Xxx Xxxx, as
Trustee for the Retirement
Plan of The Bank of New York Company, Inc.
0 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
HRE Properties Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the purchasers named in Schedule A hereto
(collectively, the "Initial Purchasers" and individually, an "Initial
Purchaser") in the respective amounts set forth on Schedule A hereto, an
aggregate of 350,000 shares of 8.99% Series B Senior Cumulative Preferred Stock,
$.01 par value, of the Company (the "Preferred Stock").
The sale of the Preferred Stock to the Initial Purchasers will
be made without registration of the Preferred Stock under the Securities Act of
1933, as amended (the "Securities Act"), in reliance upon exemptions from the
registration requirements of the Securities Act.
1. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchasers that:
(a) A preliminary offering memorandum dated July 14,
1997 (the "Preliminary Offering Memorandum") and a final offering
memorandum dated January 6, 1998 (the "Final Offering Memorandum," and
together with the Preliminary Offering Memorandum, the "Offering
Memoranda"), in respect of the Preferred Stock have been prepared in
connection with the offering of the Preferred Stock. Any reference
herein to the Offering Memoranda shall be deemed to refer to and
include (i) the Company's Proxy Statement/Prospectus, dated January 28,
1997 (the "Proxy Statement"), (ii) the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1996 (the "Annual Report"),
(iii) its Quarterly Reports on Form 10-Q for each of the quarters ended
January 31, 1997, April 30, 1997 and July 31, 1997, (iv) its Current
Report on Form 8-K, dated March 12, 1997 and (v) the Company's audited
financial statements as at, and for the fiscal years ended, October 31,
1996, 1995, 1994, 1993 and 1992, including the notes thereto, each as
attached to and made a part of the Offering Memoranda. The documents
referred to in (i), (ii), (iii) and (iv) above are hereinafter called
the "Exchange Act Reports." The Exchange Act Reports, when they were
filed with the United States Securities and Exchange Commission (the
"Commission"), conformed in all material respects to the applicable
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the applicable rules and regulations of the
Commission thereunder. The Exchange Act Reports, when they were so
filed, did not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made when
such documents were so filed, not misleading. The Offering Memoranda
and any amendments or supplements thereto did not and will not, at and
as of their respective dates, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with any written information furnished
to the Company by Deutsche Xxxxxx Xxxxxxxx Inc., as Placement Agent for
the Preferred Stock (the "Placement Agent"), or any of its affiliates
expressly for use therein. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Final
Offering Memorandum, and any amendment or supplement thereto, in
connection with the offering of the Preferred Stock to the Initial
Purchasers. Unless stated to the contrary, all references herein to the
Final Offering Memorandum are to the Final Offering Memorandum at the
date hereof and are not meant to include any amendment or supplement,
or any information incorporated by reference therein, subsequent to the
date hereof and any references herein to the terms "amended",
"amendment" or "supplement" with respect to the Final Offering
Memorandum shall be deemed to refer to and include any information
filed under the Exchange Act subsequent to the date hereof which is
incorporated by reference therein.
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(b) Pursuant to a Plan of Reorganization, dated as of
December 30, 1996 (attached as Exhibit A to the Proxy Statement), the
Company was organized on December 30, 1996 by HRE Properties, the
predecessor of the Company, an unincorporated business trust under the
laws of the Commonwealth of Massachusetts (the "Trust"), to acquire and
succeed to, and to continue the business of, the Trust upon the
consummation of a merger of the Trust with and into the Company
pursuant to the Plan of Reorganization. On March 12, 1997, the Trust
was merged with and into the Company (the "Merger"), the separate
existence of the Trust ceased, the Company was the surviving entity of
the Merger and each issued and outstanding common share of beneficial
interest of the Trust was converted into one share of Common Stock, par
value $.01 per share, of the Company. Pursuant to the Merger, all
properties, assets, liabilities and obligations of the Trust became the
properties, assets, liabilities and obligations of the Company. All
financial data, reports, filings and other documents and transactions
of the Company prior to March 12, 1997 were reported, made or
consummated by the Trust, the Company's predecessor in interest, to
whose assets, liabilities and obligations the Company succeeded
pursuant to the Merger.
(c) Neither the Company nor any of its subsidiaries
has sustained, since the date of the latest audited consolidated
financial statements of the Company included in the Offering Memoranda,
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Final Offering Memorandum; and, since the respective dates as of which
information is given in the Final Offering Memorandum, there has not
been any change in the capital stock (other than upon the exercise of
options pursuant to the Company's stock option plans and stock awards
granted pursuant to the Company's stock award plan) or long-term debt
of the Company or any of its subsidiaries or any material adverse
change in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Final Offering Memorandum. Except as set forth in
the Final Offering Memorandum, there have been no transactions entered
into by the Company or its subsidiaries, since the date of the latest
audited financial statements of the Company included in the Offering
Memoranda, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries taken as
a whole.
(d) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with
requisite power and authority (corporate and other) to own its
properties and conduct its business, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to
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require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction.
(e) The Company has an authorized capitalization as
set forth in the Final Offering Memorandum, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; and all of
the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and the shares of each such subsidiary owned by the
Company are owned directly or indirectly, free and clear of all liens,
encumbrances, equities or claims.
(f) The Preferred Stock has been duly authorized by
the Company and, when issued and delivered in accordance with this
Agreement against payment of the consideration described herein and
therein, will have been duly issued and fully paid and non-assessable
shares of capital stock of the Company, will be entitled to the
benefits of the Amended and Restated Articles of Incorporation of the
Company (the "Articles") and the Articles Supplementary relating to the
Preferred Stock (the "Articles Supplementary", and together with the
Articles, the "Charter"), will conform to all statements relating
thereto contained in the Final Offering Memorandum and will not be
subject to preemptive or other similar rights.
(g) The execution and delivery of, and the
performance by the Company of its obligations under, each of this
Agreement and that certain Registration Rights Agreement, dated January
8, 1998, by and among the Company and the Initial Purchasers (the
"Registration Rights Agreement", and together with this Agreement, the
"Company Agreements") have been duly and validly authorized and,
assuming due authorization, execution and delivery by each of the other
parties thereto, each of the Company Agreements is a legal, valid,
binding and enforceable instrument of the Company, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and, with respect to rights to
indemnity and contribution, to federal or state securities laws or the
public policy underlying such laws.
(h) The issue and sale of the Preferred Stock, and
the compliance by the Company with all of the provisions of the
Preferred Stock and the Company Agreements and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument (after giving effect to
any amendment or waiver of the terms thereof) to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
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the Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Articles or By-laws of
the Company (the "By-laws") or any statute or, to the best knowledge of
the Company, any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and to the best knowledge of
the Company, no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issuance and sale of the Preferred Stock or
the consummation by the Company of the transactions contemplated by the
Company Agreements, including the issuance, sale and delivery of the
Preferred Stock, except such consents, approvals, authorizations,
registrations or qualifications (i) as may be required under state
securities or "Blue Sky" laws in connection with the distribution of
the Preferred Stock by the Placement Agent and any Form D that may be
filed pursuant to Regulation D under the Securities Act, (ii) which
shall have been obtained or made on or prior to the Closing Date, (iii)
the failure to obtain which would not have a material adverse effect on
the ability of the Company to perform its obligations under the
Preferred Stock or the Company Agreements and (iv) as may be required
to be obtained or made under the Securities Act and applicable state
securities laws as provided in the Registration Rights Agreement.
(i) Other than as set forth in the Final Offering
Memorandum, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or by others.
(j) When the Preferred Stock is issued and delivered
as contemplated in the Final Offering Memorandum, such Preferred Stock
will not be of the same class (within the meaning of Rule 144A under
the Securities Act) as securities which are listed on a national
securities exchange registered under Section 6 of the Exchange Act, or
quoted in an automated interdealer quotation system.
(k) None of the Company or any of its affiliates (as
such term is defined in Rule 501(b) under the Securities Act) or any
person (other than the Placement Agent, as to which no representation
is made) acting on the Company's behalf has engaged, in connection with
the offering of the Preferred Stock, (A) in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act, (B) in any action involving a public offering
within the meaning of Section 4(2) of the Securities Act or (C) in any
action which would require the
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registration of the offering and sale of the Preferred Stock pursuant
to this Agreement or which would violate applicable state "blue sky"
laws.
(l) Neither the Company nor any of its subsidiaries
is in violation of its charter or, except for such claims and
litigation as may be disclosed in the Final Offering Memorandum, in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, which default would have a material
adverse effect on the consolidated fiscal position, stockholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole.
(m) The Company is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
(n) The Company is subject to and in compliance in
all material respects with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act.
(o) The Company has not paid or agreed to pay to any
person any compensation for soliciting another to purchase any
securities of the Company (except for the fees of the Placement Agent
as disclosed in the Offering Memoranda).
(p) The Company has determined that the purchase of
shares of Preferred Stock by the Initial Purchasers in the amounts set
forth opposite their respective names in Schedule A hereto would not,
directly or indirectly, or by virtue of the attribution provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), result in
the disqualification of the Company as a REIT; provided, however, that
the foregoing shall not in any way be deemed to limit the Company's
rights under the relevant provisions of its Charter to redeem all or
any of such shares if the Company should determine that the Company
shall be in risk of losing its REIT status due to a concentration of
ownership among its shareholders.
2. Representations and Warranties of the Initial Purchasers.
Each of the Initial Purchasers represents and warrants to and agrees
with the Company that:
(a) It (or if it is an employee benefit plan governed
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the fiduciary signing on its behalf) has been duly organized
and is validly existing as a corporation or limited liability company,
as the case may be, in good standing under the laws of its
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jurisdiction of organization, with requisite power and authority
(corporate and other) to own its properties and conduct its business.
(b) (Check appropriate box.)
[ ] It is not, nor are any of the underlying assets
with respect to which the purchase is being made, a "benefit plan
investor" (as defined below).
[ ] It, or any of the underlying assets with respect
to which the purchase is being made, is a "benefit plan investor," and
Schedule B attached hereto sets forth in detail the criteria according
to which it is a "benefit plan investor."
As used herein, "benefit plan investor" shall mean
any (i) employee benefit plan (as defined in Section 3(3) of ERISA,
whether or not such plan is subject to the provision of Title I of
ERISA, (ii) any plan described in Section 4975(e)(1) of the Code, or
(iii) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity.
(c) The execution and delivery of, and the
performance by such Initial Purchaser of its obligations under, this
Agreement have been duly and validly authorized, and, assuming due
authorization, execution and delivery by each of the other parties
hereto, this Agreement is a legal, valid, binding and enforceable
instrument of such Initial Purchaser, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
(d) The purchase of the Preferred Stock, and the
compliance by such Initial Purchaser with this Agreement and the
consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument (after
giving effect to any amendment or waiver of the terms thereof) to which
such Initial Purchaser is a party or by which such Initial Purchaser is
bound or to which any of the property or assets of such Initial
Purchaser is subject, nor will such action result in any violation of
the provisions of the Articles or By-laws of such Initial Purchaser or
any statute or, to the best knowledge of such Initial Purchaser, any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Initial Purchaser or any of its
properties; and to the best knowledge of such Initial Purchaser, no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the purchase by such Initial Purchaser of the Preferred Stock or
the consummation by such Initial Purchaser of the transactions
contemplated by this Agreement.
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(e) It (i) is a qualified institutional buyer (as
such term is defined in Rule 144A under the Securities Act) ("Qualified
Institutional Buyer") or an "accredited investor" (as such term is
defined in Regulation D under the Securities Act), (ii) is aware that
the sale of Preferred Stock to it is being made in reliance on the
exemption from the registration requirements provided by Section 4(2)
of the Securities Act and the regulations promulgated thereunder and
(iii) is acquiring such Preferred Stock for its own account or the
account of an "accredited investor" or a Qualified Institutional Buyer,
as the case may be.
(f) Neither it nor any person acting on its behalf
has made or will make offers of shares of Preferred Stock by means of
any form of general solicitation or general advertising (within the
meaning of Regulation D).
(g) It understands that the Preferred Stock is being
offered in a transaction not involving any public offering within the
meaning of the Securities Act, that such Preferred Stock has not been
registered under the Securities Act and that (A) if in the future it
decides to resell, pledge or otherwise transfer any such Preferred
Stock, such Preferred Stock may, absent an effective registration
statement under the Securities Act, be resold, pledged or transferred
only (i) to a person who the seller reasonably believes is a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule
144A, (ii) in an offshore transaction complying with the provisions of
Regulation S, or (iii) pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder (if available), and
in each of cases (i) through (iii) in accordance with any applicable
securities laws of the States and other jurisdictions of the United
States, and that (B) it will, and each subsequent holder of such
Preferred Stock is required to, notify any purchaser of such Preferred
Stock from it of the resale restrictions referred to in (A) above.
(h) It understands that the Preferred Stock will bear
a legend to the following effect unless the Company determines
otherwise in compliance with applicable law:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS SECURITY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER.
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THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF HRE
PROPERTIES, INC. THAT (A) THIS SECURITY MAY, ABSENT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (ii) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, OR (iii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE), AND IN EACH OF CASES
(i) THROUGH (iii) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED
STATES, AND THAT (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
(i) Its purchase of Preferred Stock will not to the
best of its knowledge result in any of the following types of persons
owning, or being considered to own under the constructive ownership
rules of the Code, Section 544 (as modified by Code Sections
856(h)(1)(B) and 856(h)(3)(A)), a direct or indirect beneficial
interest of 10 percent or more in the Preferred Stock (as a class): (i)
an individual; (ii) an organization described in Code Section
501(c)(17) or Code Section 509(a); (iii) a trust described in Code
Section 401(a), exempt from tax under Code Section 501(a) and described
in Code Section 856(h)(3)(A)(ii); or (iv) a trust any portion of which
is permanently set aside or is to be used exclusively for the purposes
described in Code Section 642(c) or a corresponding provision of prior
income tax law. Each Initial Purchaser shall disclose to the Company to
the best of its knowledge, from time to time upon request of the
Company, the identity of and number of Preferred Stock directly or
indirectly beneficially owned by, actually or constructively under such
Code rules, any trust described in Code Section 401(a) and exempt from
tax under Code Section 501(a).
3. Purchase and Sale; Payment and Delivery. Subject to the
terms and conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to the Initial Purchasers, and each
of the Initial Purchasers agree, severally and not jointly, to purchase from the
Company, at purchase price of $100 per share, the number of shares of Preferred
Stock set forth opposite the name of such Initial Purchasers on Schedule A
hereto.
Subject to the terms and conditions set forth herein, delivery
of the Preferred Stock and payment of the purchase price for the shares of
Preferred Stock shall be made at
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the offices of Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or at such other location as may be mutually acceptable. Such delivery and
payment shall be made at 10:00 A.M., New York time, on January 8, 1998. The time
and date of such delivery and payment are herein called the "Closing Date" or
the "Closing." Delivery of certificates for the shares of the Preferred Stock
being purchased shall be made to the Initial Purchasers or for the account of
the Initial Purchasers against receipt of payment of the purchase price of such
Preferred Stock. Such certificates of shares of Preferred Stock shall be in such
denominations and registered in such names as the Initial Purchasers may
request.
If the Initial Purchasers so request, shares of Preferred
Stock will be delivered by the Company to the Initial Purchasers in the form of
a temporary global certificate which will be deposited on behalf of the Initial
Purchasers with The Bank of New York as custodian for, and registered in the
name of a nominee of, The Depository Trust Company in New York, New York, for
credit to the respective accounts of the Initial Purchasers.
4. Covenants. The Company agrees with the Initial Purchasers:
(a) To furnish each Initial Purchaser, without
charge, such number of copies of the Offering Memoranda and any
amendments or supplements thereto as the Placement Agent may reasonably
request;
(b) Not to solicit any offer to buy or offer to sell
the Preferred Stock by means of any form of general solicitation or
general advertising (as such 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;
(c) Not to offer, sell or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the
Preferred Stock in a manner that would require the registration of the
Preferred Stock under the Securities Act;
(d) Subject to Section 4(i), to place upon each share
of Preferred Stock the legend set forth in Section 2(h) hereof and the
following legend until such legends shall no longer be necessary or
advisable:
IN ORDER TO ENSURE THAT THE COMPANY WILL CONTINUE TO MEET THE
REQUIREMENTS FOR QUALIFICATION AS A "REAL ESTATE INVESTMENT
TRUST" UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), THE COMPANY HAS THE RIGHT TO REDEEM ALL OR ANY
PORTION OF THIS SECURITY FROM THE HOLDER AT ANY TIME SUBJECT
TO THE TERMS AND CONDITIONS OF THE COMPANY'S CHARTER.
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THIS SECURITY IS SUBJECT TO THE TERMS AND CONDITIONS OF (I) A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF JANUARY 8, 1998, BY
AND AMONG THE COMPANY AND CERTAIN OTHER PARTIES THERETO AND
(II) A SUBSCRIPTION AGREEMENT, DATED AS OF JANUARY 8, 1998, BY
AND AMONG THE COMPANY AND CERTAIN OTHER PARTIES THERETO. THE
REGISTRATION RIGHTS AGREEMENT AND THE SUBSCRIPTION AGREEMENT
PROVIDE, AMONG OTHER THINGS, THAT ANY TRANSFER OR ASSIGNMENT
OF ALL OR ANY PORTION OF THIS SECURITY IS SUBJECT TO THE
CONDITION THAT THE TRANSFEREE OR ASSIGNEE AGREE IN WRITING TO
BE BOUND BY CERTAIN OF THE TERMS AND CONDITIONS CONTAINED IN
THE REGISTRATION RIGHTS AGREEMENT AND THE SUBSCRIPTION
AGREEMENT. IN ADDITION, THE SUBSCRIPTION AGREEMENT PROVIDES
THAT THIS SECURITY IS SUBJECT TO THE RIGHT OF THE COMPANY TO
REPURCHASE THE SHARES REPRESENTED HEREBY UNDER THE
CIRCUMSTANCES SET FORTH IN THE SUBSCRIPTION AGREEMENT. COPIES
OF THE SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT ARE ON FILE AND AVAILABLE FROM THE COMPANY.
(e) To use the net proceeds received from the sale of
the Preferred Stock pursuant to this Agreement in the manner specified
in the Final Offering Memorandum under the caption "Use of Proceeds";
(f) At any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, for the benefit of holders
from time to time of the Preferred Stock, to furnish at its expense,
upon request, to holders of Preferred Stock, and prospective purchasers
designated by such holders, information satisfying the requirement of
subsection (d)(4)(i) of Rule 144A;
(g) To use its best efforts to cause the Preferred
Stock to be eligible for the Private Offerings, Resales and Trading
Through Automated Linkages ("PORTAL") trading system of the National
Association of Securities Dealers, Inc.;
(h) To cooperate with the Placement Agent and use its
best efforts to permit the Preferred Stock to be eligible for clearance
and settlement through The Depository Trust Company;
(i) In connection with any disposition of Preferred
Stock pursuant to a transaction made in compliance with applicable
State securities laws and (A) satisfying the requirements of Rule
144(k) under the Securities Act, (B) made pursuant to an effective
registration statement under the Securities Act or (C) disposed of in
any other
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transaction that does not require registration under the Securities Act
(and the Company has received an opinion of counsel or other
documentation satisfactory to it to such effect), to reissue
certificates evidencing such Preferred Stock without the legend
referred to in Section 4(d) (provided, in the case of a transaction
specified in clause (C) above, that the legal opinion referred to
therein so permits);
(j) To furnish to each Investor within 15 days after
the filing with the Commission of each of the Company's annual report
on Form 10-K and the Company's quarterly reports on Form 10-Q a
certificate of an appropriate officer of the Company setting forth in
reasonable detail the calculations required to establish whether the
Company is in compliance with any financial covenants contained in the
Articles Supplementary; and
(k) To comply, to the extent applicable, with
Sections 13 and 14 of the Exchange Act and the provisions of Regulation
14E promulgated thereunder and any other securities laws and
regulations applicable to a repurchase of the Preferred Stock pursuant
to a Change of Control (as defined in the Articles Supplementary).
5. Revocation of Exemption from Certain Provisions of the
Charter. (a) No earlier than 30 days prior to, and no later than the day prior
to, any revocation by the Company of the exemption from the ownership
restrictions set forth in Section 9.2 of the Charter (the "Ownership Limit")
granted to Cobalt Capital LLC ("Cobalt") pursuant to Section 9.6.1 of the
Charter, the Company shall purchase from Cobalt, and Cobalt shall sell to the
Company (the "Cobalt Repurchase"), all such shares of Preferred Stock held by
Cobalt, beneficially or of record, which constitute shares of Preferred Stock in
excess of the Ownership Limit at the Make-Whole Price (as defined in the
Articles Supplementary), pursuant to the procedures applicable to redemptions of
Preferred Stock as set forth in Section 7 of the Articles Supplementary;
provided, however, that the Company shall have no such obligation to purchase
such shares of Preferred Stock from Cobalt, and Cobalt shall have no such
obligation to sell such shares of Preferred Stock to the Company, on or
subsequent to the Listing Date (as defined in the Registration Rights
Agreement).
(b) Simultaneous with any Cobalt Repurchase, the Company shall
purchase from each Initial Purchaser other than Cobalt, and each such Initial
Purchaser shall sell to the Company, such number of shares of Preferred Stock as
may be proportionately (as a percentage of the total number of shares owned by
such Initial Purchaser) equal to the number of shares purchased by the Company
from Cobalt in connection with the Cobalt Repurchase (as a percentage of the
total number of shares owned by Cobalt prior to the Cobalt Repurchase), in each
case at the Make-Whole Price and pursuant to the same procedures applicable to
the Cobalt Repurchase; provided, however, that the Company shall have no such
obligation to purchase such shares of Preferred Stock from such Initial
Purchasers, and such Initial Purchasers shall
-12-
have no such obligation to sell such shares of Preferred Stock to the Company,
on or subsequent to the Listing Date.
(c) Until the Listing Date, each Initial Purchaser (i) may
transfer or assign all or any portion of its shares of Preferred Stock only
subject to the condition that the transferee or assignee agrees in writing with
the Company to be bound by this Section 5 as if it were an Initial Purchaser,
and (ii) agrees that the Company shall have the right to refuse to register a
proposed transfer or assignment of shares of Preferred Stock unless and until
the transferee or assignee satisfies the foregoing condition in clause (i).
(d) Any purchase obligation of the Company pursuant to this
Section 5 is subject to any applicable provisions of the Maryland General
Corporation Law.
6. (a) Until the first anniversary of the issuance of the
Preferred Stock, each Initial Purchaser shall (i) cause any proposed transferee
or assignee of such Initial Purchaser's shares of Preferred Stock to provide to
the Company a written representation, at least 20 days prior to any proposed
transfer or assignment, as to whether such transferee or assignee is a "benefit
plan investor" (as defined in Section 2(b)), in substantially the form set forth
in Section 2(b) and (ii) otherwise provide notice in writing to the Company of
any such transfer or assignment, at least 20 days prior thereto, regarding the
amount of shares of Preferred Stock to be sold, the price therefor, and the
expected closing date.
(b) Until the first anniversary of the issuance of the
Preferred Stock, each Initial Purchaser (i) may transfer or assign all or any
portion of its shares of Preferred Stock only subject to the condition that the
transferee or assignee agrees in writing with the Company to be bound by this
Section 6 as if it were an Initial Purchaser, and (ii) agrees that the Company
shall have the right to refuse to register a proposed transfer or assignment of
shares of Preferred Stock unless and until the transferee or assignee satisfies
the foregoing condition in clause (i).
7. The several obligation of each Initial Purchaser to
purchase shares of Preferred Stock, and the obligation of the Company to issue
shares of Preferred Stock, shall be subject to the condition that (i) all
representations and warranties and other statements herein of the Company or the
Initial Purchasers, as the case may be, are, at and as of the Closing Date, true
and correct, and (ii) that the Company or the Initial Purchasers, as the case
may be, shall have performed all of its/their obligations hereunder theretofore
to be performed. The obligations of the Initial Purchasers to purchase shares of
Preferred Stock are further subject to the condition that counsel for the
Company shall have furnished to the Initial Purchasers their written opinion or
opinions, dated the Closing Date, in such form and as to such matters as may be
agreed upon between the Initial Purchasers, the Company and counsel to the
Company. The obligations of the Company to issue any shares of Preferred Stock
to any Initial Purchaser are further subject to the condition that each of the
Initial Purchasers shall have purchased and paid for the number of shares of
Preferred Stock set forth opposite its name on Schedule A hereto.
-13-
8. (a) The Company will indemnify and hold harmless the
Initial Purchasers and the officers and directors of, and each person who
controls, the Initial Purchasers against any losses, claims, damages or
liabilities, joint or several, to which the Initial Purchasers may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Offering Memoranda, or any
amendment or supplement thereto, at and as of their respective dates, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading (at and as of their
respective dates).
(b) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
the Initial Purchasers within the meaning of the Securities Act.
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Initial Purchasers, as
set forth in this Agreement or made by or on behalf of them, respectively, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of the Initial
Purchasers or any controlling person of the Initial Purchasers or the Company or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Preferred Stock.
10. (a) Each Initial Purchaser hereby consents, pursuant to
Section 9(c)(ii) of the Articles Supplementary, to the issuance by the Company
of up to 100 shares of Preferred Stock to be issued at the sole discretion of
the Company subsequent to the original issuance of the Preferred Stock.
(b) Until the Listing Date, each Initial Purchaser (i) may
transfer or assign all or any portion of its shares of Preferred Stock only
subject to the condition that the transferee or assignee agrees in writing with
the Company to be bound by this Section 10 as if it were an nitial Purchaser,
and (ii) agrees that the Company shall have the right to refuse to register a
proposed transfer or assignment of shares of Preferred Stock unless and until
the transferee or assignee satisfies the foregoing condition in clause (i).
-14-
11. All statements, requests, notices and agreements hereunder
shall be in writing, and shall be delivered or sent by mail, telex or facsimile
transmission to the Initial Purchasers at
Cobalt Capital LLC
c/o CGA Investment Management,
as Asset Manager
00 Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx, Vice President
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP
Washington Harbor
0000 X Xxxxxx, X.X., 0xx Xx.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx Xxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxx Fargo & Company
555 Xxxxxxxxxx, 10th Fl.
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Vice President
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Sheppard, Mullin, Xxxxxxx & Hampton
333 South Hope, 48th Fl.
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx XxXxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
-15-
Retirement Plan of The Bank of New York Company, Inc.
x/x Xxx Xxxx xx Xxx Xxxx, as Trustee for the Retirement Plan
of the Bank of New York Company, Inc.
0 Xxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Executive Vice President, Fixed Income
Management
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
The Bank of New York, as Trustee for the Retirement Plan of
the Bank of New York
0 Xxxx Xxxxxx, 00xx Xx.
New York, N.Y. 10286
Attn: Chief Legal Officer
Tel: 000-000-0000
Fax: 000-000-0000
and to the Company at
HRE Properties, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Chief Financial Officer, Executive Vice
President,
Secretary and Treasurer
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Coudert Brothers
1114 Avenue of the Americas.
New York, N.Y. 10036
Attn: Xxxxxx X. Xxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
-16-
12. This Agreement shall be binding upon, and inure solely to
the benefit of, the Initial Purchasers and the Company and, to the extent
provided in Sections 8 and 9 hereof, the officers and directors of, and each
person who controls, the Initial Purchasers, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement, except as may
otherwise be specifically provided for herein. No purchaser of any of the
Preferred Stock from the Initial Purchasers shall be deemed a successor or
assign by reason merely of such purchase.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law.
-17-
14. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HRE PROPERTIES, INC.
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof
at New York, New York:
COBALT CAPITAL LLC
By: CGA Investment Management, Inc., as Manager
By:
-------------------------------
Name:
Title:
XXXXX FARGO & COMPANY
By:
-------------------------------
Name:
Title:
RETIREMENT PLAN OF THE BANK OF
NEW YORK COMPANY, INC.
By: The Bank of New York, as Trustee
By:
-------------------------------
Name:
Title:
-18-
SCHEDULE A
Number of Shares of
Preferred Stock to be
Initial Purchasers Purchased
------------------ ---------------------
Cobalt Capital LLC............................................................ 200,000
Xxxxx Fargo & Company......................................................... 87,500
Retirement Plan of The Bank of New York Company, Inc. 62,500
-------
Total............................................................... 350,000
-19
SCHEDULE B
Benefit Plan Investor Criteria
The Retirement Plan of The Bank of New York Company, Inc. is
an "employee benefit plan," as defined in Section 3(3) of ERISA.
-20-
