STANDBY PURCHASE AGREEMENT
THIS
STANDBY PURCHASE AGREEMENT (this "Agreement"), dated as
of ________, 2008, is made by and among (i) Winthrop Realty Trust, an
unincorporated association in the form of a real estate investment trust
organized and existing under the laws of Ohio (the "Company"), (ii)
Fairholme Capital Management, LLC, a Delaware limited liability Company (“FCM”), and (iii)
Fairholme Associates L.P., a Delaware limited partnership (“Fairholme
Associates”), Fairholme Partners L.P., a Delaware limited partnership
(“Fairholme
Partners”), Fairholme Ventures II LLC, a Delaware limited liability
company (“Fairholme
Ventures”) and Fairholme Holdings Ltd., a Bermuda corporation (“Fairholme Holdings”
and collectively with Fairholme Associates, Fairholme Partners, Fairholme
Ventures, “Fairholme”), and FUR
Investors LLC, a Delaware limited liability company (“FUR” and collectively with
Fairholme, the “Purchasers”, each a
“Purchaser”).
The Company and the Purchasers are sometimes referred to individually as a
"Party" and,
collectively, as the "Parties."
W
I T N E S S E T H:
WHEREAS, the Company intends
to undertake a rights offering (the "Rights Offering")
pursuant to which the Company will offer to all of the holders of common shares
of beneficial interest, par value $1.00 per share (the “Common Shares”) and
holders of the Series B-1 Cumulative Redeemable Preferred Shares (the “Preferred Shares”)
(the "Shareholders") rights
(the "Rights")
to purchase non transferable subscription rights to purchase up to 8,845,036
Common Shares (the "Offered Shares") for
$____ per share (the “Per Share Purchase
Price”);
WHEREAS, each Shareholder will
receive one Right for every 10 Common Shares (including Common Shares underlying
Preferred Shares) owned by such Shareholder;
WHEREAS, Shareholders that
exercise all of the Rights distributed to them (the “Basic Subscription
Right”) will be entitled to purchase additional Common Shares not
subscribed for by other Shareholders pursuant to an oversubscription right that
is more fully described in the Registration Statement (as defined below) (the
“Oversubscription
Right”);
WHEREAS, on January 23, 2008,
the Company filed a registration statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") covering the
offering and sale of the Offered Shares to the Shareholders;
WHEREAS, the Company wishes to
provide for the purchase and sale of the Standby Shares (as defined below) and
to establish certain rights and obligations in connection therewith;
and
WHEREAS, FCM is either general
partner, the managing member or investment manager of each of Fairholme
Associates, Fairholme Partners, Fairholme Ventures and Fairholme
Holdings.
NOW,
THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, and for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and each of the Purchasers agree as
follows:
ARTICLE
I
ISSUANCE
AND SALE OF SHARES
1.1 Issuance,
Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to FUR, and FUR agrees to purchase from the Company, at the Per
Share Purchase Price, a number of newly issued Common Shares equal to 25% of the
first 5,800,000 Common Shares not otherwise subscribed for by Shareholders
pursuant to the Basic Subscription Right and the Oversubscription Right (the
“Split
Shortfall Shares”) plus all Common Shares in excess of the Split
Shortfall Shares (if any) not otherwise subscribed for by Shareholders pursuant
to the Basic Subscription Right and the Oversubscription Right.
(b)
Subject to the terms and conditions and in reliance upon the representations and
warranties set forth, the Company agrees to sell to Fairholme, and Fairholme
agrees to purchase from the Company, at the Per Share Purchase Price, a number
of newly issued Common Shares equal to 75% of the Split Shortfall
Shares.
1.2 Closing.
Upon the terms and subject to the satisfaction of the conditions contained in
Article V of this Agreement, the closing of the purchase and sale of the Standby
Shares (the "Closing")
shall take place simultaneously with the closing of the sale of the Common
Shares pursuant to the Rights Offering.
1.3 Deliveries.
At the Closing (i) the Company shall deliver to the Purchasers (A) certificates
registered in the name of the Purchasers, representing the Standby Shares
purchased by the Purchasers hereunder and (B) the Standby Commitment Fee (as
defined below in Section 1.4 hereof) and (ii) each Purchaser shall deliver to
the Company the aggregate purchase price for the Standby Shares equal to the
product of (A) the number of Standby Shares to be acquired by such Purchaser and
(B) the Per Share Purchase Price, which shall be paid by such Purchaser to the
Company via wire transfer of immediately available funds to an account
designated in writing by the Company at least two Business Days prior to the
Closing Date. Certificates for the Standby Shares shall be registered in such
names and in such denominations as each Purchaser may request not less than two
Business Days prior to the Closing Date.
1.4 Standby
Commitment Fee. As compensation to Fairholme for agreeing and satisfying
its commitment to purchase the Standby Shares, the Company agrees to pay FCM a
cash fee of $_______, payable at Closing (the “Standby
Commitment Fee”).
1.5 Ownership
Limitation Waiver. The Company shall, prior to the Closing, take all
actions necessary to waive its ownership limitation set forth in Article VI,
Section 6 of the Company’s by-laws to the extent necessary to allow each
Purchaser to purchase the Standby Shares (the “Ownership
Waiver”).
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1.6 Registration
of Standby Shares. The Standby Shares shall be registered for issuance by
the Company under the Securities Act under the Registration Statement. If
Fairholme shall at any time after acquiring Standby Shares become or is deemed
to be an “affiliate” of the Company as such term is used in Rule 144 under the
Securities Act (an “Affiliate”), the Company shall as soon as practicable, upon
request, register such shares for resale by Fairholme and any assignee thereof
(a “Reseller”). The Company shall make a prospectus available for use by any
Reseller and shall keep the related registration statement effective for at
least three months following the time that Fairholme shall thereafter cease to
be such an Affiliate of the Company. All fees, costs and expenses (including
legal and accounting fees and expenses and printing expenses) shall be borne
solely by the Company. The Company and each selling shareholder named in any
such prospectus shall each give representations, warranties and covenants, and
indemnities, to each other as are customary in connection with such
registration.
1.7 Capitalized
Terms. Capitalized terms not otherwise defined in this Agreement shall
have the meanings ascribed to such terms in Section 8.1 hereof.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to each of the Purchasers that the statements
contained in this Article II are true and correct as of the date hereof and will
be true and correct as of the Closing as though made as of the
Closing.
2.1 Organization.
The Company is duly organized, validly existing and in good standing under the
laws of the State of Ohio and has the requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now being conducted. The Company is duly qualified to conduct business and
is in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned, operated or leased by it
makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, would not, individually or in the
aggregate, have a Material Adverse Effect.
2.2 Due
Authorization. The Company has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this
Agreement, the issuance, sale and delivery of the Standby Shares and the
consummation by the Company of the transactions contemplated hereby (a) are
within the corporate power and authority of the Company and (b) have been duly
authorized by all necessary corporate action of the Company. This Agreement has
been duly and validly executed and delivered by the Company. Assuming the due
authorization, execution and delivery by the each of the Purchasers of this
Agreement, this Agreement constitutes valid and binding obligation of the
Company enforceable against it in accordance with its respective terms, except
(x) as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium, or other laws affecting the
enforcement of creditors' rights in general, and except that the enforceability
of this Agreement is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
and (y) as rights to indemnity and contribution hereunder may be limited by
Federal or state securities law and/or public policy. The Standby Shares, when
issued and delivered in accordance with the terms hereof, shall be validly
issued, fully paid and non-assessable.
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2.3 SEC
Reports. The Company has filed all registration statements, forms,
reports and other documents required to be filed by the Company with the SEC
since January 1, 2007. All such registration statements, forms, reports and
other documents (including those that the Company may file after the date hereof
until the Closing Date) are referred to herein as the "SEC Reports." The SEC
Reports (i) were or will be filed on a timely basis, (ii) at the time filed,
complied, or will comply when filed, as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such SEC Reports, and (iii) did not or will not at the time they were or are
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such SEC Reports or necessary in order to
make the statements in such SEC Reports, in the light of the circumstances under
which they were made, not misleading. No subsidiary of the Company is subject to
the reporting requirements of Section 13(a) or Section 15(d) of the Exchange
Act.
2.4 Financial
Statements. Each of the financial statements (including, in each case,
any related notes and schedules) included or to be included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements have been or will be
prepared in accordance with United States generally accepted accounting
principles ("GAAP")
applied on a consistent basis throughout the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited interim financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited interim financial statements, to normal
and recurring year-end audit adjustments.
2.5 Rights
Offering Registration Statement. The Registration Statement and the
prospectus including within the Registration Statement (the “Prospectus”)
(and any amendment thereof or supplement thereto, including any documents
incorporated therein by reference) will comply, in all material respects, with
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations of the SEC thereunder. The Registration Statement (and any
amendment thereto, including any documents incorporated therein by reference)
will not 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 not misleading; and the Prospectus (and any supplement
thereto) will not 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 light of the circumstances under which they were
made, not misleading.
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2.6 No
Conflicts. The execution and delivery of this Agreement, the issuance and
delivery of the Standby Shares and the consummation by the Company of the
transactions contemplated by this Agreement and the compliance by the Company
with terms of this Agreement do not and will not result in any violation of the
Amended and Restated Declaration of Trust or by-laws or other organizational
documents of the Company or any of its subsidiaries, and do not and will not
conflict with, or result in a breach of any of the terms or provisions of, or
constitute a default (or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any material benefit)
under, require a consent or waiver under, constitute a change of control under,
require the payment of a penalty or increase fees under, or result in the
creation or imposition of any mortgage, right of first refusal, claim, license,
limitation in voting rights, security interest, pledge, lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries under (A) any indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of its subsidiaries may be bound or to which any
of its or their properties may be subject or (B) any existing applicable Law or
Order to which the Company or any of its subsidiaries is subject, except, in the
case of (A) and (B) above, where such conflicts, breaches or defaults or liens,
charges or encumbrances, individually and in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
2.7 No
Consents. No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign (other
than under the Securities Act and the securities or blue sky laws of the various
states), is required for the consummation by the Company of the transactions
contemplated by this Agreement.
2.8 No
Litigation. Except as disclosed in the SEC Reports, there is no action,
suit, proceeding, claim, arbitration or investigation pending or, to the
knowledge of the Company, threatened against the Company, any of its
subsidiaries, any Company employee benefit plan or any of their assets,
properties or rights that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect. There are no material
judgments, orders, settlements or decrees outstanding against the Company or any
of its subsidiaries. Except as disclosed in the SEC Reports, no officer or
director of the Company is a defendant in any action, suit, proceeding, claim or
arbitration or, to the knowledge of the Company, the subject of any
investigation commenced by any Governmental Entity, with respect to the
performance of his or her duties as an officer and/or director of the
Company.
2.9 No
Undisclosed Liabilities. Except as disclosed in the SEC Reports, the
Company and its subsidiaries do not have any liabilities (whether accrued,
absolute, contingent or otherwise), except for liabilities (i) incurred in the
ordinary course of business consistent with past practice or (ii) that,
individually or in the aggregate, are not reasonably likely to result in a
Material Adverse Effect.
2.10
Material
Non-Public Information. To the Company’s knowledge, neither Purchaser is
in possession of any material non-public information that has not, or will not,
be disclosed in the Company’s SEC Reports or the Prospectus.
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2.11
Certain
Fees. No fees or commissions, other than the Standby Commitment Fee, are
or will be payable by the Company or any of its Affiliates to brokers, finders,
or investment bankers with respect to the sale of any of the Standby Shares or
the consummation of the transaction contemplated by this Agreement. The Company
agrees that it will indemnify and hold harmless each Purchaser from and against
any and all claims, demands, or liabilities for broker’s, finder’s, placement,
or other similar fees or commissions incurred by Company or any of its
Affiliates or alleged to have been incurred by Company or any of its Affiliates,
in connection with the sale of the Standby Shares or the consummation of the
transactions contemplated by this Agreement.
2.12
REIT
Status. The Company has, for each taxable year during which the Company
was in existence, met all the requirements of the Internal Revenue Code of 1986,
as amended, to qualify as a real estate investment trust.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS
Each
Purchaser, as to itself only, represents and warrants to the Company that the
statements contained in this Article III are true and correct as of the date
hereof and will be true and correct as of the Closing as though made as of the
Closing:
3.1 Organization.
Such Purchaser is a limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation and has the requisite limited liability or limited
partnership power and authority to carry on its business as it is now being
conducted.
3.2 Due
Authorization. Such Purchaser has the requisite limited liability company
or limited partnership power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby and the execution and delivery
by such Purchaser of this Agreement, the purchase of the Standby Shares and the
consummation of the transactions contemplated hereby (a) are within the limited
liability company or limited partnership power and authority of such Purchaser
and (b) have been duly authorized by all necessary limited liability company
action of such Purchaser. This Agreement has been duly and validly executed and
delivered by such Purchaser. Assuming the due authorization, execution and
delivery by the Company of this Agreement, this Agreement constitutes a valid
and binding obligation of such Purchaser enforceable against it in accordance
with its terms, except (x) as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, or other laws
affecting the enforcement of creditors' rights in general, and except that the
enforceability of this Agreement is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and (y) as rights to indemnity and contribution hereunder may
be limited by Federal or state securities law and/or public policy.
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3.3 No
Conflicts. The execution, delivery and performance of this Agreement by
such Purchaser, the purchase of the Standby Shares and the consummation by such
Purchaser of the other transactions contemplated by this Agreement and the
compliance by such Purchaser with the terms of this Agreement do not and will
not result in any violation of the operating agreement or limited liability
company or limited partnership agreement, as applicable, or other applicable
organizational documents of such Purchaser, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of such Purchaser under (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
such Purchaser is a party or by which it may be bound or to which any of its
properties may be subject or (B) any existing applicable Law or Order to which
such Purchaser is subject, except, in the case of (A) and (B) above, where such
conflicts, breaches or defaults or liens, charges or encumbrances, individually
and in the aggregate, would not have or reasonably be expected to result in a
material adverse effect on such Purchaser's ability to consummate the
transactions contemplated by this Agreement.
3.4 Non-reliance
Regarding Tax Consequences. Such Purchaser understands that such
Purchaser shall be responsible for its own tax liability that may arise as a
result of this investment or the transactions contemplated by this
Agreement.
3.5 No
Consent. No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign (other
than under the Securities Act and the securities or blue sky laws of the various
states) is required for the purchase of the Standby Shares to be purchased by
such Purchaser hereunder and the consummation by such Purchaser of the
transactions contemplated by this Agreement.
ARTICLE
IV
COVENANTS
4.1 Consents,
Approvals and Filings. Subject to the terms of this Agreement, the
Company and each Purchaser shall use their commercially reasonable efforts to
take, or cause to be taken, all actions, and do, or cause to be done, and to
assist and cooperate with the other Parties in doing, all things necessary,
proper, desirable or advisable to obtain and make all consents, approvals and
filings required to be obtained or made by the Company or such Purchaser, as the
case may be, in connection with the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
4.2 Further
Assurances. At any time or from time to time after the date of this
Agreement, the Company, on the one hand, and each Purchaser, as to itself, on
the other hand, agree to cooperate with each other, and at the request of the
other Party, to execute and deliver any further instruments or documents and to
take all such further action as the other Party may reasonably request in order
to evidence or effectuate the consummation of the transactions contemplated by
this Agreement and to otherwise carry out the intent of the Parties
hereunder.
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4.3 Basic
Subscription Right. Each Purchaser agrees to exercise its respective
Basic Subscription Right in full in the Rights Offering and each Purchaser
agrees that it shall not revoke such exercise and election unless it shall also
have the right to terminate this Agreement pursuant to Article VI
hereof.
4.4 Listing.
The Company shall take all necessary actions such that all of the Standby Shares
will be duly listed and admitted for trading on the New York Stock Exchange no
later than the Closing.
4.5 Rights
Offering. Subject to the right of the Company to terminate the Rights
Offering and this Agreement in accordance with Section 6.1(d) hereof, the
Company shall use commercially reasonable efforts to take, or cause to be taken,
all actions, and do, or cause to be done, all things necessary, proper,
desirable or advisable to consummate the Rights Offering.
ARTICLE
V
CONDITIONS
5.1 Conditions
to Obligations of the Purchasers and the Company at the Closing. The
obligations of each of the Purchasers to purchase from the Company, and the
Company to sell to each of the Purchasers, the Standby Shares and to consummate
the other transactions contemplated hereby are subject to the satisfaction (or
waiver by each of the Purchasers and the Company) at or prior to the Closing
Date of each of the following conditions:
(a) no
preliminary or permanent injunction or other Order by any Governmental Authority
which prevents the consummation of the transactions contemplated hereby shall
have been issued and remain in effect;
(b) no
statute, rule, regulation or other Law shall have been enacted by any
Governmental Authority which would prevent or make illegal the consummation of
the transactions contemplated by this Agreement;
(c) any
consents, filings and approvals that are necessary for the consummation of the
transactions contemplated by this Agreement shall have been made or obtained
except where (i) the Company's failure to make or obtain such consents, filings
and approvals would not have a Material Adverse Effect on the Company's ability
to perform its obligations under this Agreement or (ii) any Purchaser's failure
to obtain such consents, filings and approvals would not have a material adverse
effect on such Purchaser's ability to perform its obligations under this
Agreement; and
(d) the
Rights Offering shall have been consummated.
5.2 Additional
Conditions to Obligations of Each of the Purchasers at the Closing. The
obligation of each Purchaser to purchase the Standby Shares and consummate the
other transactions contemplated hereby shall be subject to the satisfaction or
waiver by each of the Purchasers at or prior to the Closing Date of each of the
following additional conditions:
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(a) the
representations and warranties of the Company set forth in this Agreement shall
be true and correct as of the Closing, as though made on and as of the Closing
(except to the extent such representations and warranties relate to an earlier
date, in which case such representations and warranties shall be true and
correct, on and as of such earlier date, except for such failures to be true and
correct which, individually or in the aggregate, have not had and are not
reasonably likely to result in a Material Adverse Effect;
(b) the
Company shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by it on or prior to the Closing Date;
(c) from
the date hereof through the Closing Date, there shall not have occurred, and be
continuing, a Material Adverse Effect;
(d) the
Company shall have delivered the certificates for the Standby Shares to the
Purchasers;
(e) the
Company shall have delivered to the Purchasers an officer's certificate
certifying as to its compliance with the conditions set forth in clauses (a) and
(b) of this Section 5.2;
(f) the
Company shall have approved the Ownership Waiver, if applicable, and shall have
delivered the Ownership Waiver Agreement to such Purchaser, duly executed by the
Company;
(g) the
Standby Shares shall have been registered for issuance under the Securities Act
under the Registration Statement, which registration statement shall have been
declared effective by the SEC and with respect to which there shall not have
been any stop order issued by the SEC or other action enjoining the Company
issuing and selling any securities thereunder.
(h) the
Company shall have obtained approval for listing the Standby Shares on the New
York Stock Exchange, subject to issuance, and the Company has not received any
notice of delisting.
5.3 Additional
Conditions to Obligations of the Company at the Closing. The obligations
of the Company to issue and sell the Standby Shares and to consummate the other
transactions contemplated hereby shall be subject to the satisfaction (or waiver
by the Company) at or prior to the Closing Date of each of the following
additional conditions:
(a) the
representations and warranties of each Purchaser set forth in this Agreement
shall be true and correct as of the Closing, as though made on and as of the
Closing [(except to the extent such representations and warranties relate to an
earlier date, in which case such representations and warranties shall be true
and correct, on and as of such earlier date], except for such failures to be
true and correct which, individually or in the aggregate, have not had and are
not reasonably likely result in a material adverse effect on such Purchaser's
ability to consummate the transactions contemplated by this Agreement;
and
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(b) each
Purchaser shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by it on or prior to the Closing Date;
(c) each
Purchaser shall have delivered the following to the Company:
(i) the
purchase price payable for the Standby Shares which such Purchaser is
acquiring;
(ii) an
officer's certificate certifying as to such Purchaser's compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.3;
and
(iii) the
Ownership Waiver Agreement, duly executed by such Purchaser.
ARTICLE
VI
TERMINATION
6.1 Termination.
This Agreement may be terminated at any time:
(a) by
the Company with the consent of the Purchasers;
(b) by
the Company (i) upon a breach of any covenant or agreement on the part of the
Purchasers set forth in this Agreement or if any representation or warranty of
the Purchasers set forth in this Agreement shall not be true and correct, in
either case such that the conditions set forth in Section 5.3(a) or 5.3(b) would
not be satisfied; or (ii) if any condition to the Company's obligations to close
at the Closing set forth in Article V has not been satisfied as of the Closing
or satisfaction of such a condition is or becomes impossible (other than because
of the failure of the Company to comply with its obligations under this
Agreement), and the Company has not waived such condition;
(c) by
any Purchaser: (i) upon a breach of any covenant or agreement on the part of the
Company set forth in this Agreement or if any representation or warranty of the
Company set forth in this Agreement shall not be true and correct, in either
case such that the conditions set forth in Section 5.2(a) or 5.2(b) would not be
satisfied (a "Terminating Company Breach"); provided, that such Terminating
Company Breach shall not have been cured by the earlier of (x) the Closing Date
or, (y) within 10 days after written notice of such Terminating Company Breach
is given to the Company by the Purchasers; or (ii) if any condition to the
Purchasers’ obligation to close set forth in Article V has not been satisfied as
of the Closing, or satisfaction of such a condition is or becomes impossible
(other than because of the failure of any Purchaser to comply with its
obligations under this Agreement), and, in each case, the Purchasers have not
waived such breach or condition;
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(d) by
the Company at any time if the Board of Trustees of the Company elects to
withdraw the Rights Offering for any reason; and
(e)
without action on the part of any party, in the event the Closing has not
occurred by June 30, 2008.
6.2 Effect
of Termination. If this Agreement is terminated pursuant to the
provisions of Section 6.1, this Agreement shall forthwith become void and there
shall be no further obligations on the part of the Company or any Purchaser or
their respective directors, officers, employees, agents or representatives;
provided, that in the case of a termination of this agreement that results from
a Terminating Company Breach, the Company shall pay the Commitment Fee to
Fairholme.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification.
(a) The
Company shall indemnify and hold harmless each of the Purchasers and each of
their respective directors, officers, employees, partners, limited partners,
members, agents, representatives, affiliates and controlling Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
against any and all losses, claims, demands, damages, liabilities, costs and
expenses (including reasonable attorneys' and accountants' fees, disbursements
and expenses, as incurred) (collectively, "Losses")
incurred or suffered by such party arising out of or based upon (i) any breach
of a representation or warranty or breach of or failure to perform any covenant
or agreement on the part of the Company contained in this Agreement, or any
other agreement or instrument furnished by the Company to a Purchaser pursuant
to this Agreement or (ii) third party claims or demands relating to the fact
that a Purchaser is a party to this Agreement; provided that the Company shall
not be required to indemnify a Purchaser to the extent that the Losses arise
from the gross negligence or willful misconduct of such Purchaser or any of its
affiliates.
(b)
Fairholme, on the one hand, and FUR, on the other hand, severally and not
jointly, shall indemnify and hold harmless the Company and its directors,
officers, employees, agents, representatives, affiliates and controlling Persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against any and all Losses incurred or suffered by such party
arising out of or based upon any breach of a representation or warranty or
breach of or failure to perform any covenant or agreement on the part of such
Purchaser contained in this Agreement; provided that the Purchasers shall not be
required to indemnify the Company to the extent the Losses arise from the gross
negligence or willful misconduct of the Company or any of its
affiliates.
11
7.2 Indemnification
Procedures. All claims or demands for indemnification under this Article
VII shall be asserted and resolved as follows:
(a) In
the event that any claim or demand for which a Party (the "Indemnifying
Party") would be liable to the other Party (the "Indemnified
Party") hereunder is asserted against an Indemnified Party by a third
party, the Indemnified Party shall with reasonable promptness notify the
Indemnifying Party of such claim or demand (the "Claim
Notice"), specifying the nature of such claim or demand and the amount or
the estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such claim or demand). The Indemnifying
Party shall have fifteen (15) days from the receipt of the Claim Notice (the
"Notice
Period") to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes the Indemnifying Party's liability to the
Indemnified Party hereunder with respect to such claim or demand and (ii) if the
Indemnifying Party does not dispute such liability, whether or not the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend against such claim or demand, provided that the Indemnified
Party is hereby authorized (but not obligated) prior to and during the Notice
Period to file any motion, answer or other pleading and to take such action
which the Indemnified Party shall reasonably deem necessary or appropriate to
protect the Indemnified Party's interests. In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that the
Indemnifying Party does not dispute the Indemnifying Party's obligation to
indemnify hereunder and desires to defend the Indemnified Party against such
claim or demand and except as hereinafter provided, the Indemnifying Party shall
have the right to defend (with counsel reasonably satisfactory to the
Indemnified Party) by appropriate proceedings.
(b) An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such proceeding and to employ counsel reasonably satisfactory to the
Indemnified Party in any such proceeding; or (3) the named parties to any such
proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel, and one local
counsel in each applicable jurisdiction, shall be at the expense of the
Indemnifying Party).
12
(c) All
Losses (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) will be paid to
the Indemnified Party, as incurred, within ten (10) Business Days of written
notice thereof to the Indemnifying Party upon receipt of an undertaking to repay
such amount if it is ultimately determined that an Indemnified Party is not
entitled to indemnification hereunder. The Indemnifying Party will not consent
to entry of any judgment or enter into any settlement or otherwise seek to
terminate any action or proceeding in which any Indemnified Party is or could be
a party and as to which indemnification or contribution could be sought by such
Indemnified Party under this Section 7.2, unless such judgment, settlement or
other termination includes, as an unconditional term thereof, the giving by the
claimant or plaintiff to such Indemnified Party of a release, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect of such claim or litigation for which such Indemnified Party would be
entitled to indemnification hereunder and such judgment or consent does not
include a statement as to the admission of fault or culpability on behalf of any
Indemnified Party.
(d) In
the event the Indemnified Party has a claim against the Indemnifying Party
hereunder which does not involve a claim or demand being asserted against or
sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party does not notify the Indemnified
Party within the Notice Period that the Indemnifying Party disputes such claim,
the amount of such claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
(e) The
Indemnified Party's failure to give reasonably prompt notice to the Indemnifying
Party of any actual, threatened or possible claim or demand which may give rise
to a right of indemnification hereunder shall not relieve the Indemnifying Party
of any liability which the Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and adversely prejudices the
Indemnifying Party.
7.3 Investigation.
The respective representations, warranties, and agreements made herein by or on
behalf of the Parties hereto shall remain in full force and effect, regardless
of any investigation made by or on behalf of any other Party to this Agreement
or any officer, director or employee of, or Person controlling or under common
control with, such Party.
7.4 Other.
(a)
Neither the Company nor any Purchaser shall have any obligation under this
Article VII to indemnify any Person for lost profits or for consequential,
incidental, punitive or exemplary damages.
(b) Any
and all remedies set forth in this Agreement: (i) shall be in addition to any
and all other remedies the Purchasers or the Company may have at law or in
equity, (ii) shall be cumulative, and (iii) may be pursued successively or
concurrently as each of the Purchasers and the Company may elect. The exercise
of any remedy by any Purchaser or the Company shall not be deemed an election of
remedies or preclude any Purchaser or the Company, respectively, from exercising
any other remedies in the future.
13
ARTICLE
VIII
MISCELLANEOUS
8.1 Definitions.
The following terms, as used in this Agreement, shall have the following
meanings:
"Business
Day" shall mean any day other than Saturday, Sunday and any day on which
banking institutions in the State of New York are authorized by Law or other
governmental action to close.
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended, or any
successor federal statute, in each case as the same shall be in effect at the
time.
"Form
S-3" means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the
SEC.
"Governmental
Authority" shall mean any federal, state or local U.S. or foreign
governmental, regulatory, legislative, executive or administrative agency,
commission, body, department, board, or other governmental subdivision, court,
tribunal, arbitrating body or other governmental authority.
"Laws"
shall mean all federal, state and local U.S. or foreign laws, statutes,
ordinances, rules, regulations, orders and decrees.
"Material
Adverse Effect" shall mean any material adverse change, event,
circumstance or development that is materially adverse to the operations,
business, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole, or any event that would
reasonably be expected to prevent the consummation of the transactions
consummated hereby; provided, however, that none of the following, to the extent
occurring after the date hereof, shall constitute a Material Adverse Effect: (i)
the consummation of the transactions contemplated by this Agreement, including
the Rights Offering, (ii) changes in generally accepted accounting principles;
(iii) changes that are the result of economic factors affecting the national
economy, except to the extent that such changes have a materially
disproportionate effect on the Company and its subsidiaries, taken as a whole,
relative to other similarly situated participants in the industries or markets
in which they operate; or (iv) a decline in the price of the Common Shares on
the New York Stock Exchange (it being understood that the facts and
circumstances giving rise to such decline may be deemed to constitute and shall
be taken into account in determining whether there has been a Material Adverse
Effect).
"Order"
shall mean any judgment, rule, decree, writ, injunction, order or decision of
any Governmental Authority that is binding on any person or its property under
applicable Law.
14
"Person"
shall mean any individual, firm, corporation, limited liability company,
partnership, company or other entity, and shall include any successor (by merger
or otherwise) of such entity.
"Securities
Act" shall mean the Securities Act of 1933, as amended, or any successor
federal statute, in each case as the same shall be in effect at the
time.
“Standby
Shares” shall mean the shares issuable to each Purchaser pursuant to
Section 1.1 hereof.
8.2 Assignment;
Successors and Assigns. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and permitted assigns of the Parties and, with respect to Section 7.1
hereof, shall inure to the benefit of their respective officers, directors,
employees, partners, limited partners, members, agents, representatives,
affiliates and controlling Persons, and no other Person shall have any right or
obligation hereunder. The Company may not assign this Agreement without the
consent of the Purchasers. No Purchaser may assign its rights under this
Agreement without prior written consent of the Company.
8.3 Entire
Agreement. This Agreement sets forth the entire agreement of the Parties
with respect to the subject matter hereof. Any prior agreements or
understandings among the Parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement.
8.4 Notices.
Any notice, request, claim, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed received on the day delivered personally or sent by facsimile
(with confirmation of receipt), on the third Business Day after posted by
registered or certified mail, postage prepaid, or on the next Business Day after
sent by recognized overnight courier service, as follows:
(i) if to
the Company, to:
0
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxxxxx 00000
Facsimile
No. 000-000-0000
Attention:
Xxxxxx Xxxxxxx
with a
copy to:
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No. (000) 000-0000
Attention:
Xxxx X. Xxxxxx, Esq.
Elliot
Press, Esq.
15
(ii) if
to Fairholme or FCM, to:
Fairholme
Capital Management, LLC
0000
Xxxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxxx,
Xxxxxxx 00000
Facsimile
No. (000) 000-0000
Attention:
Xxxxx Xxxxxxx
with a
copy to:
Xxxxxx
Xxxxxx
Xxx
Xxxxxxx Xxxx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxx, Esq.
(iii) if
to FUR, to:
FUR
Investors LLC
Two
Jericho Plaza
Suite
111, Wing A
Xxxxxxx,
Xxx Xxxx 00000
Facsimile
No. (000) 000-0000
Attention:
Xxxxxxx X. Xxxxxx
or to
such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein.
8.5 Amendments;
Waivers. Except as otherwise expressly permitted herein, no amendment or
waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the Purchasers and the Company
8.6 Counterparts.
This Agreement may be executed in any number of counterparts and any Party may
execute any such counterpart, each of which when executed and delivered (which
deliveries may be made by facsimile) shall be deemed to be an original, and all
of which counterparts taken together shall constitute but one and the same
instrument.
8.7 Governing
Law. This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the Laws of the State of New York, without giving
effect to any of the conflicts of laws provisions thereof that would require the
application of the substantive Laws of any other jurisdiction.
8.8 Exclusive
Jurisdiction; Venue. Each of the Company and the Purchasers hereby
irrevocably submits in any suit, action or proceeding arising out of or relating
to this Agreement or any of the transactions contemplated hereby to the
exclusive jurisdiction and venue of the federal and state courts located in the
City and State of New York, Borough of Manhattan and irrevocably waives any and
all objections to exclusive jurisdiction or review of venue that any such Party
may have under the laws of the State of New York or of the United States.
Without limiting the other remedies, this Agreement shall be enforceable by
specific performance.
16
8.9 Severability.
If any provision of this Agreement or the application thereof to any Person or
circumstance is held illegal, invalid or unenforceable in any jurisdiction under
any present or future law, and if the rights or obligations of any party hereto
under this Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and mutually acceptable to the parties herein.
[Signature
Pages to Follow]
17
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the day and year first written above.
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By:
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| Name: | |||
| Title: | |||
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FAIRHOLME
ASSOCIATES L.P.
|
||||
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By:
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Fairholme
Capital Management, LLC
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General
Partner
|
||||
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By:
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| Name: | ||||
| Title: | ||||
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FAIRHOLME
PARTNERS L.P.
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By:
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Fairholme
Capital Management, LLC
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|||
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General
Partner
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||||
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By:
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| Name: | ||||
| Title: | ||||
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FAIRHOLME
VENTURES II LLC
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By:
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Fairholme
Capital Management, LLC
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Managing
Member
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By:
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| Name: | ||||
| Title: | ||||
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FAIRHOLME
HOLDINGS LTD.
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By:
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Fairholme
Capital Management, LLC
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Investment
Manager
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||||
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By:
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| Name: | ||||
| Title: | ||||
[Signatures
continued on following page]
18
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FUR
INVESTORS LLC
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By:
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| Name: | |||
| Title: | |||
19
