EXHIBIT 10.1
HOME PROPERTIES OF NEW YORK, INC.,
HOME PROPERTIES OF NEW YORK, L.P.,
AND
PACIFIC LIFE INSURANCE COMPANY, PACIFIC LIFE AND ANNUITY COMPANY
AND
AEW TARGETED SECURITIES FUND II, L.P.
SERIES C CONVERTIBLE CUMULATIVE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of June 13, 2000
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of June 13, 2000, by and among HOME PROPERTIES OF
NEW YORK, INC., a Maryland corporation (the "COMPANY"), HOME PROPERTIES OF NEW
YORK, L.P., a New York limited partnership (the "OPERATING PARTNERSHIP"), and
Pacific Life Insurance Company ("PLI"), Pacific Life and Annuity Company
("PLA") and AEW Targeted Securities Fund II, L.P. ("AEW") (each of PLI, PLA and
AEW, a "Purchaser", and, collectively, the "Purchasers").
W I T N E S S E T H :
WHEREAS, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to severally purchase from the Company, 200,000 shares of
Series C Convertible Cumulative Preferred Stock, par value $0.01 per share (the
"SHARES"), of the Company, having the terms and conditions set forth in the
Articles Supplementary to the Amended and Restated Articles of Incorporation
(the "ARTICLES") of the Company, in the form set forth in EXHIBIT A hereto (the
"SERIES C ARTICLES SUPPLEMENTARY"), in accordance with and subject to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
Section 1.
SALE AND PURCHASE. In reliance upon the representations and warranties
contained herein and subject to the terms and conditions hereof, on the Closing
Date (which is the date hereof), the Company agrees to sell to the Purchasers,
and each Purchaser severally agrees to purchase, the Shares, in the amount of
90,000 shares for PLI, 10,000 shares for PLA and 100,000 shares for AEW . The
Company has adopted and filed with the State Department of Assessments and
Taxation of Maryland (the "SDAT"), and the SDAT has accepted for filing, on or
before the Closing the Series C Articles Supplementary.
Section 2. CLOSING.
2.01 PLACE AND DATE. The closing of the sale and purchase of the Shares
(the "CLOSING" or the "Closing Date") is taking place on the 19th day of June,
2000 at the offices of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
2.02. PURCHASE OF SHARES; PAYMENT OF PURCHASE PRICE. At the Closing, the
Purchasers will severally purchase, and the Company will sell to the
Purchasers, the Shares, at a per Share cash price of $100.00, resulting in an
aggregate cash purchase price of $20,000,000 (the "PURCHASE PRICE"). At the
Closing, each Purchaser will deliver cash for the shares purchased by them by
wire transfer in immediately available funds in full payment for the Shares
being purchased by such Purchaser, and the Company will deliver to each such
Purchaser certificates representing the Shares in the names and in the
denominations requested by each Purchaser. The obligation of each Purchaser to
purchase Shares under this Agreement is several and not joint, and no Purchaser
shall have any obligation or liability under this Agreement for any other
Purchaser or for the performance or non-performance by any other Purchaser
under this Agreement.
2.03. CLOSING DELIVERIES. At the Closing the following conditions are to
be performed to the satisfaction of each Purchaser (unless waived by each
Purchaser in its sole and absolute discretion) prior to the Purchasers becoming
severally obligated hereunder to fund their allocable portion of the Purchase
Price:
(a) the Company will deliver Shares which have been fully registered
under the Securities Act of 1933 (the "Securities Act") and under such state
securities laws which require such registration (together with the Securities
Act, "Securities Laws"), and which will be convertible into shares of Common
Stock which have been fully registered under the Securities Laws, which Shares
and Common Stock will be freely transferable upon acquisition by any Holder;
(b) ▇▇▇▇▇ Peabody, LLP, counsel for the Company, will deliver to each
of the Purchasers an opinion with respect to the Company's status as a real
estate investment trust and as a real estate operating company in the forms of
Exhibit B-1 and B-2 hereto;
(c) ▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, counsel for the Company, will deliver to
each of the Purchasers an opinion in the form of Exhibit C hereto;
(d) the general counsel of the Company will deliver to each of the
Purchasers an opinion in the form of Exhibit D hereto;
(e) the Company will deliver to each of the Purchasers a waiver of
the ownership limitations set forth in the Articles in the form of Exhibit E
hereto; (the "Ownership Waiver"); and
(f) the Operating Partnership will deliver to the Company an
amendment to the Operating Partnership's Second Amended and Restated Agreement
of Limited Partnership (the "L.P. Agreement") establishing a series of
preferred units (the "Units") of the Operating Partnership in the form of
Exhibit F hereto (the "OP Amendment");
(g) The Company will cause to be delivered to the Purchasers a letter
from Duff & ▇▇▇▇▇▇ Credit Rating Co. confirming the rating of the Shares as
not less than BBB- (the "Rating Letter") in the form of Exhibit G hereto;
(h) The Company will deliver to each of the Purchasers an officers'
certificate in the form of Exhibit H hereto with appropriate schedules
(the "Officers' Certificate") and such other documents, certificates and
opinions as the Purchasers may reasonably request;
(i) The Company will deliver warrants in the form of Exhibit I hereto
to purchase 67,340 shares of the Company's Common Stock to Prudential
Investment Management Services LLC ("PIMS") and warrants to purchase 1,660
shares of the Company's Common Stock to Teachers Insurance and Annuity
Association of America;
(j) The Company will deliver warrants in the form of Exhibit I to
purchase shares of the Company's Common Stock to each of PLI (4,950 shares),
PLA (550 shares) and AEW (5,500 shares) (together with the warrants described
in subparagraph (i) above the "Warrants"); and
(k) On the date of the Closing, the purchase of the Shares by each
Purchaser shall: (i) be permitted by the laws and regulations of each
jurisdiction to which the applicable Purchaser is subject, without recourse
to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction
as to the character of the particular investment; (ii) not violate any
applicable law or regulation; and (iii) not subject the applicable
Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in
effect prior to the date hereof. If requested by the Purchasers, the
Purchasers shall have received an Officer's Certificate certifying as to
such matters of fact as the Purchasers may reasonably specify to enable
the Purchasers to determine whether such purchase is so permitted.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING
PARTNERSHIP. The Company and the Operating Partnership, jointly and severally,
represent, warrant and covenant to each Purchaser as of the date hereof and
as of the Closing Date as follows:
3.01 Status; Power and Authority.
(a) Each of the Company and the Operating Partnership is a
corporation or partnership duly organized, validly existing and (in the
case of the Company) in good standing under the laws of its state of
organization and has all requisite power and authority to enter into and
perform its obligations under each of the Transaction Documents
(as defined below) to which it is a party and to consummate the
transactions contemplated hereby and thereby, including the issuance of
the Shares, and to own, lease and operate its properties and conduct its
business as now being conducted or proposed to be conducted as
described in the Exchange Act Reports (as defined below), and is
duly qualified or registered to transact business and is in good standing
under the laws of each other jurisdiction in which its owns or leases
properties, or conducts any business, so as to require such qualification
or registration, except where the failure to do so would not reasonably
be expected to have a Material Adverse Effect (as defined below).
(b) The Subsidiaries (as defined below) are listed on Schedule
3.1(b) and have each been duly organized and are validly existing and in
good standing under the laws of their respective jurisdictions of
incorporation or formation and have all requisite power and authority to
own, lease and operate their properties and to conduct their businesses as
now being conducted or proposed to be conducted as described in the Exchange
Act Reports, and each Subsidiary is duly qualified or registered to transact
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
require such qualification or registration, except where the failure to be
in good standing or to so qualify or register would not reasonably be
expected to have a Material Adverse Effect.
(c) As used in this Agreement, "Subsidiaries" means any entities
that would be treated as consolidated subsidiaries of the Company or the
Operating Partnership for financial accounting purposes under generally
accepted accounting principles ("GAAP") as applied in the United States
including, without limitation, the entities listed on Schedule 3.1(b).
(d) As used in this Agreement, "Material Adverse Effect" means
any event, circumstance or condition that has or is reasonably expected to
have a material adverse effect on the business, assets, liabilities, results
of operations, condition (financial or otherwise) or prospects of the Company,
the Operating Partnership and the Subsidiaries taken as a whole or that would
materially impair the Company's or the Operating Partnership's ability to
perform its obligations under, or otherwise affect the enforceability or
validity of, the Transaction Documents.
(e) As used in this Agreement, "Transaction Documents" means each
of this Agreement, the Series C Articles Supplementary, the OP Amendment,
the Warrants and the Ownership Waiver.
3.02. NO MATERIAL VIOLATION OR CONFLICT. The execution and delivery
by the Company and the Operating Partnership of each of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated herein and therein (including the sale and delivery of the
Shares and the issuance of the Warrants) will not conflict with or result
in a breach or violation by the Company or the Operating Partnership of,
or constitute a default, or an event which with notice or passage of time
or both could become a default, by the Company or the Operating Partnership
under or result in the creation of any lien, security interest or encumbrance
upon the stock or assets of the Company, the Operating Partnership or any of
the Subsidiaries or, as to clause (ii) below, impose any additional monetary
obligations on the Company, the Operating Partnership, or any Subsidiary
under, or modify the contractual obligations of any party under, or give rise
to any right of termination, amendment, acceleration or cancellation under,
(i) the Articles or the by-laws of the Company or the L.P. Agreement, (ii)
any contract, agreement or instrument to which the Company, the Operating
Partnership or any of the Subsidiaries is a party or by which the Company,
the Operating Partnership or any of the Subsidiaries is bound or to which
any of their properties are subject or (iii) any existing applicable law,
rule, published regulation, judgment, order or decree of any government,
governmental instrumentality or court having jurisdiction over the Company,
the Operating Partnership or any of the Subsidiaries or any of their
properties or assets, except, in the case of clauses (ii) and (iii), for
such conflicts, breaches, defaults, liens, security interests or
encumbrances upon the stock or assets of the Company, the Operating
Partnership or any of the Subsidiaries, or imposition of additional
monetary obligations which, in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
3.03. NO MATERIAL DEFAULT. (a) None of the Company, the Operating
Partnership or the Subsidiaries is in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained in any
agreement, contract, commitment, instrument, plan or undertaking (including,
without limitation, any and all leases, mortgages, and other contractual
arrangements with respect to real property) material to the business of the
Company, the Operating Partnership and the Subsidiaries taken as a whole
(collectively, the "Contracts") and (b) no event has occurred which, with or
without the giving of notice or lapse of time or both, would constitute or
result in a default thereunder except, in the case of each of (a) and (b),
for such defaults or events as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each of the
Contracts is valid and enforceable in accordance with its terms except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and except for those failures
of Contracts (or provisions thereof) to be valid or enforceable which would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
None of the Company's bonds, debentures, notes or other evidences of
indebtedness are in default as to principal or interest, as of the date hereof.
3.04. SHARES. The Company has all requisite corporate right, power and
authority to issue, sell, and deliver the Shares and the Warrants as
contemplated by this Agreement; the Shares and the issuance of the Warrants
have been duly authorized, and upon such issuance, sale and delivery, and
payment of the Purchase Price therefor as contemplated by this Agreement and
the Warrants, the Purchasers will receive good and valid title to the Shares
and the recipients of Warrants will receive good title to the Warrants, free
and clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind and such Shares and the Warrants will be fully paid
and non-assessable, not subject to any preemptive rights and will have been
issued and sold in compliance with all applicable Federal, State and local
laws. The shares of Common Stock, par value $.01, of the Company (the "Common
Stock") issuable upon conversion of the Shares and the exercise of the
Warrants have been duly authorized and have been reserved for such purpose.
Upon such conversion or exercise, the Purchasers, with respect to the Shares,
and recipients of the Warrants, with respect to the Warrants, will receive
the appropriate number of shares of Common Stock free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind
created or permitted to exist by the Company and such shares of Common Stock
will be fully paid and nonassessable, not subject to any preemptive rights
and will have been issued and sold in compliance with all applicable Federal,
State and local laws. The form of certificates evidencing the Shares and the
Warrants, and upon conversion or exercise thereof, the Common Stock, will
comply with all applicable legal requirements and the rules of the New York
Stock Exchange ("NYSE") and with all applicable requirements of the Articles
and By-laws of the Company (the "Bylaws").
3.05. OBLIGATIONS BINDING. The execution and delivery of each of the
Transaction Documents by the Company and the Operating Partnership, the
issuance of the Shares and the Warrants, and the issuance of the Common Stock
upon the conversion or exercise thereof and the consummation of the
transactions contemplated thereby have been duly authorized by the Company's
Board of Directors, and no further consent or authorization of the Company,
its Board of Directors, Shareholders, the Operating Partnership, its limited
partners, any governmental authority (except with respect to the filing of
the Series C Articles Supplementary) or any other third party is required
for such execution, delivery, issuance or consummation. Each of the
Transaction Documents to which it is a party has been duly executed and
delivered by the Company or the Operating Partnership, as the case may be,
and constitutes the legal, valid and binding obligation of the Company or
the Operating Partnership, as the case may be, enforceable against it in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally,
and (ii) equitable principles of general applicability relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
3.06. INVESTMENT COMPANY. Neither the Company nor the Operating
Partnership is required to register as an "investment company" and, to the
knowledge of the Company and the Operating Partnership, neither is directly
nor indirectly controlled by any person which is required to register as an
"investment company," within the meaning of and under the Investment Company
Act of 1940 as amended, (the "1940 Act"), and the transactions contemplated
by the Transaction Documents will not cause the Company or the Operating
Partnership to become an "investment company" subject to registration under
the 1940 Act.
3.07 REIT STATUS. The Company is and has been, commencing with the
Company's taxable year ended 1994, and upon the sale of the Shares and Warrants
will continue to be, organized and operated in conformity with the requirements
for qualification and taxation as a real estate investment trust ("REIT") under
Sections 856 through 860 of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), and the present and contemplated method of operation, assets and
income of the Company, the Operating Partnership and the Subsidiaries do and
will enable the Company to meet the requirements for qualification and taxation
as a REIT under the Code for the taxable year ending December 31, 2000, and in
the future. The Company is not currently a "pension -held REIT" within the
meaning of Code Section 856(h)(3)(D) and the Treasury Regulations promulgated
thereunder.
3.08. CAPITALIZATION.
(a) The authorized capital stock of the Company as of June 9, 2000 consists
of 80,000,000 shares of Common Stock, of which, as of the date of this
Agreement, 20,503,054 shares were issued and outstanding, 10,000,000 shares of
excess stock, par value $0.01 per share, none of which is outstanding, and
10,000,000 shares of Preferred Stock, par value $0.01 per share, 1,666,667
shares of which are issued and outstanding as the Company's Series A Senior
Convertible Preferred Stock and 2,000,000 of which are issued and outstanding
as the Company's Series B Convertible Cumulative Preferred Stock 400,000 of
which are issued and outstanding as the Company's Series C Convertible
Cumulative Preferred Stock and 250,000 of which are outstanding as the
Company's Series D Convertible Cumulative Preferred Stock. All of the issued
and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and nonassessable and are free
from preemptive rights assessable, and have been issued and sold in compliance
with all applicable Federal, State and local laws.
(b) As of March 31, 2000, the outstanding partnership interests in the
Operating Partnership consist of a general partnership interest held by the
Company representing a 1.00% interest in the Operating Partnership, 19,679,433
common units held by Home Properties Trust, a Maryland real estate investment
trust and a wholly owned subsidiary of the Company, representing in the
aggregate a 50.2% interest in the Operating Partnership, 15,461,880 common
units representing in the aggregate a 39.4% interest in the Operating
Partnership, one Class A Limited Partnership Interest with a stated value of
$35,000,000 (the "Class A Interest") and 2,000,000 units of Class B limited
partnership interests (the "Class B Interest").
(c) Except as set forth on Schedule 3.8, there are no outstanding options,
warrants, rights or other securities exercisable for, exchangeable for or
convertible into equity securities of the Company or the Operating Partnership.
(d) There are no antidilution or price adjustment provisions contained in
any security issued by the Company or the Operating Partnership (or in any
agreement providing rights to any security holder of the Company or Operating
Partnership) that will be triggered by the issuance of the Shares or the
Warrants or the exercise of any conversion privilege in respect thereto. The
Company and the Operating Partnership are not parties to and do not have any
knowledge of, any agreement with respect to voting of either of their
securities.
3.09. REGISTRATION. The Shares, the Warrants and the shares of Common
Stock issuable upon the conversion or exercise of the foregoing have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and any applicable state securities and local law, and are freely tradable.
No further registration or qualification of such Shares, Warrants or shares
of Common Stock under any securities laws is required in connection with the
offer, sale and delivery of the Shares, Warrants or shares of Common Stock
in the manner contemplated in this Agreement.
3.10. FINANCIAL STATEMENTS.
The financial statements and supporting schedules
included in the Company's periodic filings filed pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are complete and correct
in all material respects, are materially consistent with the books and records
of the Company, the Operating Partnership and the Subsidiaries, comply as to
form in all material respects with applicable accounting requirements and to
the rules and regulations of the Securities and Exchange Commission with
respect thereto, and present fairly in all material respects the consolidated
financial position of the Company, the Operating Partnership and the
Subsidiaries as of the dates specified (subject to normal year-end audit
adjustments in the case of unaudited interim financial statements) and the
consolidated results of their operations and cash flows for the periods
specified (subject to normal year-end audit adjustments in the case of
unaudited interim financial statements); such financial statements, including
the related schedules and notes thereto, were prepared in conformity with GAAP
on a consistent basis during the periods involved, except as indicated therein
or in the notes thereto. The historical financial information and property
information provided by the Company to the Purchasers and the information
contained in the Company's press release, dated April 27, 2000 with respect to
its first quarter financial results is true and correct, in all material
respects, and accurately sets forth the financial results of the properties set
forth therein. Such information, together with the Company's and the Operating
Partnership's periodic filings pursuant to the Exchange Act, which filings
include but are not limited to the Company's Annual Report on Form 10-K filed
on March 30, 2000, Registration Statement on Form S-3 filed on January 18,
2000, Current Report on Form 8-K dated April 5, 2000, and Proxy Statement on
form DEF 14A dated March 29, 2000 (collectively, the "Exchange Act Reports"),
do not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. Neither the
Company, the Operating Partnership nor any of the Subsidiaries has any material
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due), other than: (i) liabilities disclosed in the
Exchange Act Reports , (ii) liabilities which have arisen after the date of the
last Exchange Act Report in the ordinary course of business, including those
set forth on Schedule 3.10, and (iii) liabilities which could not reasonably be
expected to have a Material Adverse Effect. The Prospectus Supplement filed
by the Company to effect the registration of the Shares and Warrants and the
Common Stock issuable upon the exercise or conversion thereof does not contain
an untrue statement of fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they
were made, not misleading.
3.11. EXCHANGE ACT COMPLIANCE.
The Company has timely filed all documents required
to be filed with the Securities and Exchange Commission pursuant to the
Exchange Act and the rules and regulations thereunder. All such documents,
when so filed, complied in form and substance in all material respects with the
Exchange Act and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.12. NO MATERIAL ADVERSE CHANGES.
Since December 31, 1999, except as or as
disclosed herein pursuant to Schedule 3.10 to the Disclosure Schedule:
(i) there has been no event, circumstance or condition relating to or affecting
the business, assets, liabilities, results of operations, condition (financial
or otherwise) of the Company, the Operating Partnership and the Subsidiaries
taken as a whole, or the earnings or the ability to continue to conduct
business in the usual and ordinary course of the Company, the Operating
Partnership and the Subsidiaries taken as a whole, whether or not arising in
the ordinary course of business, which would reasonably be expected to have a
Material Adverse Effect; and (ii) except for the transactions contemplated by
the Transaction Documents or as set forth in the Exchange Act Reports, there
has been no material transaction entered into by the Company, the Operating
Partnership or any of the Subsidiaries other than (a) transactions in the
ordinary course of business or (b) transactions which would not reasonably be
expected to have a Material Adverse Effect; and (iii) there have not been any
changes in the capital stock or any material increases in the Indebtedness of
the Company, the Operating Partnership or any of the Subsidiaries or any
increase in the regular dividend or the declaration or payment of a special
dividend on any security or interest of the Company, the Operating Partnership
or any of the Subsidiaries.
3.13. LITIGATION.
There is no action, suit, investigation or proceeding (whether or
not purportedly on behalf of the Company, the Operating Partnership or any of
the Subsidiaries) before or by any court or governmental agency or body,
domestic or foreign, now pending or, to the best knowledge of the Company or
the Operating Partnership, threatened against or affecting the Company, the
Operating Partnership or any of the Subsidiaries, which in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Schedule 3.13 to the
Disclosure Schedule hereto contains a complete list of each action presently
pending against the Company, the Operating Partnership or any Subsidiary that
is not covered by insurance procured by the Company, the Operating Partnership
or any Subsidiary, and a list of any judgment or settlement made on behalf of
any of the foregoing during the preceding 12 months other than under such
insurance policies.
3.14. TITLE TO PROPERTIES; LEASEHOLD INTERESTS.
(a) Except for matters which individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect: (i) the Company, the
Operating Partnership or one or more of the Subsidiaries, has good and
marketable title to all real properties it owns free from easements, liens,
pledges, claims, charges, options, defects, preferential purchase rights,
rights of first refusal or other encumbrances and has good title or an
enforceable leasehold interest, license or other lawful right to use all other
assets that are used in the Company's, the Operating Partnership's or one or
more of the Subsidiaries' business substantially in the manner in which they
currently are operated, in each case, subject only to Permitted Exceptions (as
herein defined) and no notice has been issued alleging any default in
compliance with the terms and provisions of any of the covenants, conditions,
restrictions, rights-of-way or easements constituting one or more of the
Permitted Exceptions or alleging a violation of any zoning, building, fire,
health code or other applicable laws or regulations with respect to the
properties; (ii) all leases under which the Company, the Operating Partnership
or any of the Subsidiaries leases any property are in full force and effect,
and neither the Company, the Operating Partnership nor any such Subsidiary is
in default in any material respect of any of the terms or provisions of any of
such leases and to the Company's and the Operating Partnership's knowledge no
claim has been asserted by anyone adverse to any such entity's rights as lessee
under any of such leases, or affecting or questioning any such entity's right
to the continued possession or use of the properties under any such leases or
asserting a default under any such leases, (iii) all liens, charges or
encumbrances on or affecting any of the property and assets of the Company, the
Operating Partnership and the Subsidiaries which are required to be disclosed
in the Company's Exchange Act Reports are disclosed therein; and (iv) there is
no judicial, municipal or administrative action, suit, arbitration, proceeding
or investigation pending or threatened against, relating to or affecting the
Company, the Operating Partnership or any Subsidiary, their assets or
properties, before any court or Governmental Authority (as defined below),
including, without limitation, proceedings for or involving collections, ,
alleged building code or environmental or zoning violation, alleged to have
occurred at any of the properties or by reason of the condition, use of, or
operations on any of the properties. While there may be actions, suits and
other proceedings pending or threatened against, relating to or affecting the
Company, the Operating Partnership or any Subsidiary involving condemnation,
eminent domain, personal injuries or property damage, such matters are not
reasonably expected to have a Material Adverse Effect.
(b) As used in this Agreement, "Permitted Exceptions" means: (i) real
estate taxes and assessments not yet due and payable; (ii) covenants,
restrictions, easements and other similar agreements, provided that the same
are not violated by existing improvements or the current or proposed use and
operation of the Company's, the Operating Partnership's or any Subsidiary's
property; (iii) zoning laws, ordinances and regulations, building codes,
rules and other governmental laws, regulations, rules and orders affecting
any of the Company's, the Operating Partnership's or any Subsidiary's property,
provided that the same are not violated by existing improvements or the current
or proposed use and operation of such property; (iv) any imperfection of title
which does not materially and adversely affect the current or proposed use,
operation or enjoyment of any of the Company's, the Operating Partnership's or
any Subsidiary's real property and does not render title to such real property
unmarketable or uninsurable and does not materially impair the value of such
property; and (v) mortgage financings which are disclosed in the Exchange Act
Reports or on Schedule 3.10 to the Disclosure Schedule.
3.15. ENVIRONMENTAL COMPLIANCE.
(a) Except for such matters which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect, the Company, the
Operating Partnership and each of the Subsidiaries has complied and is in
compliance with all Environmental Laws (as hereinafter defined).
(b) Except for such notices relating to matters which individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect, notice of violation or other written communication has been received
by the Company, the Operating Partnership or any of their Subsidiaries from any
Governmental Authority or any other entity or person, alleging or suggesting
an Environmental Law violation in respect of any property owned by any of them.
(c) Neither the Company, the Operating Partnership nor any of the
Subsidiaries, nor any of their agents, licensees, invitees, tenants or any
other person or entity has used, will use or will permit to be used any real
property owned, leased or occupied by any such party for the purpose of
handling, storing, burying, retaining, refining, transporting, processing,
manufacturing, generating, producing, spilling, seeping, leaking, escaping,
leaching, pumping, pouring, emitting, emptying, discharging, injecting,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials. Neither the Company, the Operating Partnership nor any of the
Subsidiaries will be deemed to be in breach of the foregoing with respect to
(i) maintenance and use of underground heating fuel oil tanks, provided such
maintenance and use is in full compliance with all applicable Environmental
Laws, and (ii) storage and use of cleaning solvents and other chemicals used
in the routine maintenance of the properties, provided such storage and use
is in full compliance with all applicable Environmental Laws.
(d) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, neither the Company, the
Operating Partnership nor any of the Subsidiaries is aware of (i) any
seepage, leak, escape, ▇▇▇▇▇, discharge, injection, release, emission,
spill, pumping, pouring, emptying or dumping of Hazardous Materials into
waters on or adjacent to any real property owned, leased or occupied by any
such party, or onto lands from which Hazardous Materials might seep, flow or
drain into such waters; or (ii) the use of any nearby or adjacent property
which would likely create any liability on the part of the Company, the
Operating Partnership or any of their Subsidiaries under the Environmental
Laws or that would require reporting to or notification by the Company, the
Operating Partnership, or any of their Subsidiaries to any Governmental
Authority
(e) Except as disclosed on Schedule 3.13 to the Disclosure Schedule,
and such matters as would not reasonably be expected to have a Material
Adverse Effect, the Company and the Operating Partnership and the Subsidiaries
have no knowledge of any occurrence or circumstance that, with notice or
passage of time or both, would be likely to give rise to a claim under or
pursuant to any federal, state or local Environmental Law pertaining to
Hazardous Materials on or originating from any real property owned or occupied
by the Company, the Operating Partnership or any of the Subsidiaries.
(f) No land owned by the Company, the Operating Partnership or any of the
Subsidiaries is included or, to the actual knowledge of the Company, proposed
for inclusion on the National Priorities List issued pursuant to CERCLA (as
hereinafter defined) by the United States Environmental Protection Agency (the
"EPA") or on the inventory of other potential "Problem" sites issued by the EPA
and has not otherwise been publicly identified by the EPA as a potential CERCLA
site or included or proposed for inclusion on any list or inventory issued
pursuant to any other Environmental Law or issued by any other Governmental
Authority .
(g) As used herein, "Hazardous Materials" shall include without
limitation any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, toxic substances or related materials,
asbestos or any hazardous material as defined by any federal, state or local
environmental law, ordinance, rule or regulation, including without limitation
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. section 9601 et seq. ("CERCLA"), the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. section 1801 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 9601 et seq., the Emergency Planning and Community Right-to-
Know Act of 1986, 42 U.S.C. Section 11001 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et
seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean
Water Act (Federal Water Pollution Control Act), 33 U.S.C.
Section 1251 et seq., the Safe Drinking Water Act, 42 U.S.C.
29 U.S.C. Section 651 et seq., as any of the above statutes may be
amended from time to time, and in the regulations adopted and publications
promulgated pursuant to each of the foregoing and any other rules, ordinances,
codes, licenses, statutes, regulations, permits, orders, approvals, plans,
authorizations, concessions and similar items of all Governmental Authorities
and all applicable, judicial, administrative and regulatory decrees, judgments
and orders, any of which relate to the protection of human health or the
environment from the effects of Hazardous Materials (collectively,
"Environmental Laws") or by any federal, state or local governmental authority
having or claiming jurisdiction over the properties and assets of the Company,
the Operating Partnership and the Subsidiaries (a "Governmental Authority").
3.16. TAXES.
The Company, the Operating Partnership and the Subsidiaries have timely
filed or filed for extensions of the filing period and filed within such
extended period all federal, state, local, foreign and other tax returns,
reports, information returns and statements (except for returns, reports,
information returns and statements the failure of which to timely file would
not reasonably be expected to result in any Material Adverse Effect) required
to be filed by them. The Company, the Operating Partnership and the
Subsidiaries have paid or caused to be paid all material taxes (including
interest and penalties) that are due and payable by the Company, the Operating
Partnership and the Subsidiaries (whether or not shown on such tax returns),
except those taxes which are being contested by the Company, the Operating
Partnership and the Subsidiaries in good faith by appropriate proceedings and
in respect of which adequate reserves are being maintained on the Company's,
the Operating Partnership's and the Subsidiaries' books in accordance with GAAP
consistently applied. The Company, the Operating Partnership and the
Subsidiaries do not have any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which adequate
reserves are being maintained by the Company, the Operating Partnership and the
Subsidiaries in accordance with GAAP consistently applied. Except as set forth
on Schedule 3.16 hereto, no federal, state, foreign, local or other tax
returns for the Company, the Operating Partnership and the Subsidiaries have
been audited by the Internal Revenue Service or other taxing authority. No
deficiency or assessment with respect to, or proposed adjustment of, the
Company's, the Operating Partnership's or any of the Subsidiaries' federal,
state, local, foreign or other tax returns is pending or, to the best of the
Company's and the Operating Partnership's knowledge, threatened. There is no
tax lien, whether imposed by any federal, state, local or other tax authority,
outstanding against the assets, properties or business of the Company, the
Operating Partnership, or any Subsidiary. There are no applicable taxes, fees
or other governmental charges payable by the Company, the Operating Partnership
or any of the Subsidiaries in connection with the execution and delivery of
Transaction Documents or the issuance to the Purchasers by the Company of the
Shares, the Warrants, or the shares of Common Stock issuable upon conversion or
exercise thereof other than filing fees and/or taxes related to the filing of
the Series C Articles Supplementary and any fees and charges in connection with
the registration of the Shares, the Warrants and the Common Stock.
3.17. Insurance.
The Company, the Operating Partnership and the Subsidiaries each
carry or are entitled to the benefits of insurance from financially sound and
reputable insurers in such amounts and covering such risks as is reasonably
sufficient under the circumstances or is customary in the industry and all such
insurance is in full force and effect. Schedule 3.17 to the Disclosed Schedule
sets forth a summary of all such insurance coverage.
3.18. Employees, ERISA.
The Company, the Operating Partnership and the Subsidiaries
have good relationships with their employees and have not had any substantial
labor problems that would reasonably be expected to have a Material Adverse
Effect. There is no strike or work stoppage existing or, to the knowledge of
the Company and the Operating Partnership, threatened against the Company, the
Operating Partnership or the Subsidiaries. The Company and the Operating
Partnership do not have any knowledge as to any intentions of any key employee
or any group of employees to leave the employ of the Company, the Operating
Partnership or any Subsidiary where such departure would reasonably be expected
to have a Material Adverse Effect. Other than as disclosed in any Exchange Act
Report and on Schedule 3.18 to the Disclosure Schedule, the Company, the
Operating Partnership and the Subsidiaries have not established, sponsored,
maintained, made any contributions to or been obligated by law to establish,
maintain, sponsor or make any contributions to any "employee pension benefit
plan" or any material "employee welfare benefit plan" (as such terms are
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, without limitation, any "multi-employer plan," or any
other program, plan, or policy which provided payouts, benefits or
reimbursements to employees (collectively, "Benefit Plans") except where the
liabilities associated with such Benefit Plan or Plans would not reasonably be
expected to have a Material Adverse Effect. The Company, the Operating
Partnership, the Subsidiaries and each Benefit Plan are in compliance with all
applicable laws relating to the employment of labor, including bargaining and
the payment of social security and other taxes, and with ERISA, except where
the failure to so comply would not reasonably be expected to have a Material
Adverse Effect. There is no material suit, action, dispute, claim,
arbitration, or legal, administrative or other proceeding or governmental
investigation pending, or threatened, alleging any breach of the terms of any
Benefit Plan or of any fiduciary duties thereunder or violation of any
applicable statute, law, rule or regulation with respect to any Benefit Plan.
No Benefit Plan is or has ever been subject to Title IV of ERISA or Section 412
of the Code.
3.19. GOVERNMENTAL AND OTHER CONSENTS.
Other than such consents as have been
obtained and filings under applicable federal and state securities laws , which
the Company has obtained, and the filing of the Series C Articles
Supplementary, no consent, approval or authorization of, or declaration or
filing with, any Governmental Authority or third party on the part of the
Company or the Operating Partnership is required for the valid execution,
delivery or performance of any of the Transaction Documents or the valid offer,
issuance, sale and delivery of the Shares and the Warrants (or shares of Common
Stock issuable upon conversion or exercise thereof).
3.20. Legal Compliance.
Except as disclosed in any Exchange Act Reports, the
Company, the Operating Partnership and the Subsidiaries are in compliance with
all applicable laws, rules, regulations, orders, licenses, judgments, writs,
injunctions, decrees or demands, except to the extent that failure to comply
would not reasonably be expected to have a Material Adverse Effect. The
properties are being used (and the improvements thereon have been constructed)
in accordance with all applicable zoning and building codes and ordinances.
The Company, the Operating Partnership and the Subsidiaries have all necessary
permits, licenses and other authorizations required to conduct their businesses
as currently conducted, and as proposed to be conducted, except where a failure
to have such permits, licenses or other authorizations would not reasonably be
expected to have a Material Adverse Effect. Neither the Company, the Operating
Partnership nor any Subsidiary has violated any domestic or foreign law or any
regulation or requirement, which violation has or could be reasonably likely to
have a Material Adverse Effect, and neither the Company, the Operating
Partnership nor any Subsidiary has received notice of any such violation.
There are no adverse orders, judgments, writs, injunctions, decrees or demands
of any court or administrative body, domestic or foreign, or of any other
governmental agency or instrumentality, domestic or foreign, outstanding
against the Company, the Operating Partnership or the Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
3.21. BROKERS FEES; EXPENSES.
Other than PIMS and Mercury Partners, the Company has
not dealt with any broker, finder, commission agent or other person in
connection with the placement of the Shares or the Warrants, and is not
obligated to pay any broker's fee or commission in connection therewith, except
as set forth in the Agency Fee and Warrant Agreement. Except for Mercury
Partners and PIMS, the Company is not obligated to pay any fees or reimburse
any expenses to any other party.
3.22. AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 3.22 to the Disclosure
Schedule or as disclosed in the Exchange Act Reports, neither the Company nor
the Operating Partnership has any transactions required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated by the Securities and
Exchange Commission with any director or executive officers of the Company.
3.23. DISCLOSURE.
The Company has provided the Purchasers with the information
attached hereto as Schedule 3.23 to the Disclosure Schedule (the "Investment
Summary"). Neither this Agreement, the Transaction Documents, the Investment
Summary, or any exhibit or schedule hereto or thereto nor any other statements
made or certificates delivered in connection with the issuance of the Shares or
the Warrants, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading, provided
that any forward looking information contained in the Investment Summary is
based on the reasonable assumptions of the Company's management and the Company
is not hereby making any representation that its expectations will be achieved.
3.24. DIVIDENDS.
Other than the dividend payment priorities established in
connection with the issuance of the Company's Series A Senior Convertible
Preferred Stock, the Series B Cumulative Preferred Stock and as set forth in
the Series C Articles Supplementary and in the Credit Agreement between the
Operating Partnership and Manufacturers and Traders Trust Company, there are no
agreements that restrict the right of the Company to declare and pay dividends
on its capital stock.
Section 4. Representations and Warranties of the Purchaser.
Each Purchaser represents, warrants and covenants to the Company and the
Operating Partnership as of the date hereof and as of the Closing Date as
follows:
4.01. Ownership Limitations.
Such Purchaser has received a copy of the Articles, and
understands and is and will be in compliance with the restrictions on transfer
and ownership of the Company's capital stock included therein as modified by
the Ownership Waiver.
4.02 Agreement. This Agreement has been duly authorized by all necessary
action on the part of such Purchaser, and this Agreement has been duly executed
and delivered by such Purchaser and constitute the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except as such enforceability may be limited by: (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws now or hereafter in effect relating to creditors' rights
generally; and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
Section 5. Covenants of the Company.
5.01. Filing of Exchange Act Reports.
After the date of this Agreement, the Company
will timely file all documents required to be filed with the Securities and
Exchange Commission pursuant to Section 13 or 15 of the Exchange Act and will
use its best efforts to maintain its eligibility to use Form S-3 under the
Securities Act.
5.02. Maintenance of REIT Status.
The Company will use its best efforts to continue
to qualify and be taxed as a real estate investment trust pursuant to Sections
856 through 860 of the Code. The Company (i) will not voluntarily terminate
its status as a real estate investment trust, and (ii) will promptly provide to
each Purchaser all notices, correspondence or other written communications
received by the Company from the Internal Revenue Service relating to the
Company's and the Operating Partnership's status as a real estate investment
trust, subject to appropriate confidentiality agreements.
5.03. No Public Disclosure.
Neither the Company, the Operating Partnership nor any
affiliate of the Company or the Operating Partnership will make any public
disclosure concerning the transactions contemplated by this Agreement unless
such disclosure has been provided to each Purchaser at least two (2) business
days prior to such disclosure. Unless in the reasonable opinion of counsel to
the Company such disclosure is required by applicable law, neither the Company,
the Operating Partnership nor any affiliate of the Company or the Operating
Partnership will make any such public disclosure without the prior written
consent of each of the Purchasers. Once the Purchasers' prior consent has been
obtained with respect to a public disclosure, the same (or substantially
identical) disclosure may subsequently be disclosed by the Company or the
Operating Partnership without further approval by the Purchasers.
5.04. Subsequent Opinions of Independent Public Accountants or
Independent Counsel.
So long as any of the Shares remain issued and outstanding, the Company shall
provide the Purchasers with any opinions regarding the Company's status as a
real estate investment trust received from the Company's independent public
accountants or a nationally recognized law firm in connection with any
subsequent financings.
5.05. Common Stock.
The Company covenants and agrees that it shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued shares of Common Stock solely for the purpose of
effecting conversion of the Shares or exercise of the Warrants, the full number
of shares of Common Stock as shall then be deliverable upon the conversion of
all outstanding Shares or exercise of all Warrants not theretofore converted or
exercised into Common Stock. Such shares of Common Stock shall, when issued or
delivered, be validly issued and fully paid and non-assessable, registered
under the Securities Act, not be subject to any preemptive rights, be free and
clear of all pledges, liens, security interests charges, claims or other
encumbrances of any kind and will have been issued in compliance with all
applicable laws.
5.06. Listing.
The Company covenants and agrees that it shall cause the shares of
Common Stock deliverable upon the conversion of the Shares or exercise of the
Warrants to be listed on the NYSE.
5.07. Limitations on Indebtedness.
The Company covenants and agrees that, so long as
any Shares remain outstanding, neither the Company, the Operating Partnership
nor any Subsidiary shall incur or suffer to exist any Indebtedness that would
result in the Company's ratio of consolidated Indebtedness to Total Market
Capitalization exceeding 70%. The Company will provide each of the Purchasers
with a certificate of its Chief Financial Officer certifying the Company's, the
Operating Partnership's and the Subsidiaries' compliance with this Section 5.07
within forty-five (45) days after each calendar quarter.
For the purposes of this Agreement:
(a) "Indebtedness" shall mean, without duplication on a consolidated
basis (i) all obligations of the Company, the Operating Partnership or any
Subsidiary for borrowed money, (ii) all obligations of the Company, the
Operating Partnership or any Subsidiary evidenced by bonds, debentures, notes
or similar instruments, (iii) all obligations of the Company, the Operating
Partnership or any Subsidiary under conditional sale or other title retention
agreements relating to property purchased by the Company, the Operating
Partnership or any Subsidiary, (iv) all obligations of the Company, the
Operating Partnership or any Subsidiary issued or assumed as the deferred
purchase price of property or services (other than accounts payable to
suppliers and similar accrued liabilities incurred in the ordinary course of
business and paid in a manner consistent with industry practice), (v) all
other obligations, contingent or otherwise, which, in accordance with GAAP,
should be classified on the Company's, the Operating Partnership's or any
Subsidiary's balance sheets as liabilities, whether or not so classified,
(vi) all liabilities secured by any mortgage, pledge, security interest,
lien charge or other encumbrance existing on any property or asset now owned
by, or acquired by, the Company, the Operating Partnership, or any Subsidiary,
(vii) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by the Company,
the Operating Partnership or any
Subsidiary whether or not the obligations secured thereby have been assumed,
(viii) all Capitalized Lease Obligations of the Company, the Operating
Partnership or any Subsidiary, (ix) all Guarantees of the Company, the
Operating Partnership or any Subsidiary, (x) all obligations (including but not
limited to reimbursement obligations) relating to the issuance of letters of
credit for the account of the Company, the Operating Partnership or any
Subsidiary, (xi) all obligations arising out of foreign exchange contracts, and
(xii) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance, currency
spot and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates,
as valued in accordance with GAAP consistently applied.
(b) "Guarantees" of the Company, the Operating
Partnership or any Subsidiary shall
mean (without duplication on a consolidated basis) all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of the Company, the Operating Partnership or any
Subsidiary guaranteeing, any Indebtedness, dividend or other obligation of any
other person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by the Company, the Operating Partnership
or any Subsidiary : (i) to purchase such Indebtedness or obligation or any
property or assets constituting security therefor, (ii) to advance or supply
funds: (x) for the purchase or payment of such Indebtedness or obligation,
(y) to maintain working capital or other balance sheet condition or otherwise
to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase securities
or other property or services primarily for the purpose of assuring the owner
of such Indebtedness or obligation of the ability of the primary obligor to
make payment of such Indebtedness or obligation, or (iv) otherwise to assure
the owner of the Indebtedness or obligation of the primary obligor against loss
in respect thereof, provided, however, that the term "Guarantees" shall not
include (y) guarantees of completion unless and until a claim for payment has
been made thereunder, at which time such completion guarantee shall be deemed
Indebtedness to the extent of the claim, and (z) Low Income Housing Credit
Guarantees, unless and until a claim for payment is made thereunder. For the
purposes of any computations made under this Agreement, a Guarantee in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of the Indebtedness for borrowed money which has been
guaranteed, and a Guarantee in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
(c) "Capitalized Lease Obligations" shall mean all obligations of the
Company, the Operating Partnership or any Subsidiary under any capital lease
which under GAAP are required to be reflected as a liability on a consolidated
balance sheet of the Company.
(d) "Low Income Housing Credit Guarantees" means
assurances by the Company or the Operating Partnership to limited partners of
certain affiliates of the Company that the properties developed and operated
by such affiliates will be kept in compliance with applicable provisions of
the Code to avoid loss or recapture of low income housing tax credits.
(e) "Current Market Price" of the Common Stock as of any date shall
mean the average, for the 20 consecutive Trading Days preceding the date of
determination, of the last reported sales price, regular way on such day, or,
if no sale takes place on such day, the average of the reported closing bid and
asked prices on such day, regular way, in either case as reported on the NYSE
or, if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the NASDAQ Stock Market ("NASDAQ") National Market
System or, if such security is not quoted on such National Market System, the
average of the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid
and asked prices on such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purpose by the Board of
Directors.
(f) "Total Market Capitalization"
as of any date shall mean the sum of (1)(x)
the Current Market Price multiplied by (y) the sum of (i) the aggregate number
of shares of Common Stock outstanding as of such date, plus (ii) the aggregate
number of common units of the Operating Partnership outstanding as of such date
not owned by the Company or any of its Subsidiaries, plus (2)(x) the aggregate
liquidation preference of all shares of preferred stock of the Company
outstanding as of such date, plus (y) the aggregate liquidation preference of
any preferred units of the Operating Partnership outstanding as of such date
not owned by the Company or any of its Subsidiaries, plus (3) the aggregate of
the items of outstanding indebtedness of the Company set forth in items (i)
through (iv), and (vi) of the definition of "Indebtedness" above.
5.08. Incurrence Covenant.
The Company covenants and agrees that, so long as any
Shares remain outstanding, the ratio of EBITDA to Fixed Charges in each
calendar quarter shall be greater than 1.75 to 1.0. The Company will provide
each Purchaser with a certificate of its Chief Financial Officer certifying the
Company's compliance with this Section 5.08 within thirty (30) days after each
calendar quarter.
For the purpose of this Agreement:
(a) "EBITDA" means, for any period, the Consolidated Businesses'
earnings before giving effect to expenses for interest, taxes, depreciation
and amortization.
(b) "Fixed Charges" means with respect to any fixed period, the sum of
(1) Total Interest Expense; and (2) the aggregate of all dividends paid or
accrued on the Company's preferred stock.
(c) "Consolidated Businesses" means the Company, the Operating
Partnership, and their Subsidiaries.
(d) "Total Interest Expense" means, for any period, the sum of:
(i) interest expense of the Consolidated Businesses paid during such period;
and (ii) interest expense of the Consolidated Businesses accrued and/or
capitalized for such period in each case including participating interest
expense, the amortization of loan fees, original issue discount, non-cash
interest payment, the interest component of Capitalized Lease Obligations and
hedging costs but excluding extraordinary interest expense, and net of
amortization of deferred costs associated with new financings or refinancings
of existing Indebtedness.
5.09. Operating Partnership Securities.
Concurrent with the Closing, the Company
shall cause the Operating Partnership to issue to the Company or one of its
wholly owned Subsidiaries 200,000 Units with the designations, preferences and
other rights, terms and provisions set forth in the OP Amendment attached as
Exhibit F hereto, and the Company shall cause the Operating Partnership to keep
such Units outstanding and the Company (or its Subsidiaries) shall continue to
own such Units, for so long as the Shares are outstanding, subject to
redemption or conversion as provided for in the OP Amendment. So long as any
Units are outstanding, the Company shall not permit the Operating Partnership
to authorize, reclassify or create any securities of any class or series or any
security convertible into securities of any class or series ranking prior to
the Units in the distribution of assets upon any liquidation, dissolution or
winding up of the Operating Partnership or in the payment of distributions
except for the Class A Interest.
5.10. Company Transactions.
Except as otherwise provided in paragraph (b) of Section
6, the Company agrees that it shall not repurchase any of the Shares except
pursuant to an offer made on the same terms to the holders of all outstanding
Shares.
5.11 Compliance with Laws.
The Company shall comply and shall cause each
Subsidiary to comply with all applicable laws, rules, regulations and orders,
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA, the Americans with Disabilities Act of 1990, as amended, and
all Environmental Laws, noncompliance with which could reasonably be expected
to have a Material Adverse Effect.
5.12 Restrictive Agreements Prohibited.
(a) Except as described in Section
3.24, the Company will not enter into, become a party to, allow to exist or
adopt any contract, indenture, agreement or instrument, or any note, debenture,
bond or other security or enter into any amendment of any provision of the
Articles or Bylaws, containing provisions which would by its terms restrict or
limit the ability of the Company to pay the full amount of the dividends on the
Shares at the rates and on the dates fixed in the Series C Articles
Supplementary or which otherwise restrict the Company's performance of this
Agreement, the terms of the Shares or the Warrants; provided that covenants or
other provisions requiring the maintenance of reasonable minimum levels of
shareholders' equity or net worth, cash flow, current assets and similar items
and agreements relating to the future issuance of preferred stock on a parity
with the Shares shall not be deemed to limit, impair or otherwise modify the
obligations of the Company to declare and pay dividends on the Shares as and
when the same are due and payable.
(b) Except as could not be reasonably expected to have a Material Adverse
Effect, the Company will not permit any Subsidiary to be a party to or bound by
any contract, indenture, agreement, instrument or any note, debenture, bond or
other security under the terms of which such Subsidiary's right to declare and
pay dividends or make other distributions on or in respect of its capital stock
is restricted; provided that covenants or other provisions requiring the
maintenance of reasonable minimum levels of shareholders' equity or net worth,
cash flow, current assets and similar items shall not be deemed to limit,
impair or otherwise modify the obligations of the Subsidiaries to declare and
pay dividends on capital stock as and when the same are due and payable or to
redeem shares of capital stock.
5.13 Maintenance of Rating of the Shares.
The Company covenants and agrees
that, so long as any Shares remain outstanding, the Company shall maintain a
rating on the Shares by at least one nationally recognized statistical rating
organization, including but not limited to Duff & ▇▇▇▇▇▇ Credit Rating Co.
5.14 Investment Company Status.
The Company covenants and agrees that it will
take no action which would require it to be registered as an "investment
company" within the meaning of the 1940 Act.
5.15 Notices.
The Company agrees that it shall promptly notify each of the
Purchasers of: (i) the occurrence of any event or condition that could
reasonably be expected to have a Material Adverse Effect; (ii) any material
default under any material debt instrument or other material document; and
(iii) any additional rating or removal, cancellation or termination of the
rating on the Shares obtained by the Company.
Section 6. Restrictions on Transfer.
(a) The Purchasers agrees not to transfer, convey, assign, pledge or
hypothecate any of the Shares or the shares of Common Stock obtained upon
conversion of the Shares except in a transaction in compliance with
applicable securities laws.
(b) The Purchasers agrees that they, together with the other holders of
the Shares, shall not sell more than 200,000 of the Shares to any
purchaser or group of affiliated purchasers (excluding sales to persons who
are Purchasers or affiliates of the Purchasers) without first offering to
sell such Shares to the Company. Such offer (the "Offer") shall: (i)
be in writing (the "Offer Notice"); (ii) specify the number of Shares
proposed to be transferred; and (iii) specify the proposed sale price for the
Shares proposed to be sold. Within ten (10) business days after the Company
receives the Offer Notice from the Purchaser(s), the Company shall
notify the Purchaser(s) in writing whether
it irrevocably elects to purchase all, but not less than all, such Shares on
the terms of the Offer. If the Company shall have exercised its right to
purchase such Shares pursuant to this paragraph, then, within ten (10) business
days after delivery of notice of acceptance of the Offer by the Company, at the
offices of the Company or such other place as may be mutually agreed upon, the
Company shall pay the aggregate purchase price for the Shares by wire transfer
of immediately available funds to the account designated by the Purchaser(s)
and the Purchaser(s) shall deliver to the Company the certificates representing
such Shares free and clear of any liens, charges and encumbrances, duly
endorsed in blank, or accompanied by stock powers duly executed in blank. If
the Company does not give the Purchaser(s) such notice of acceptance within
such ten (10) business day period, then the Offer shall be deemed to be
rejected. If the Company rejects (or is deemed to reject) the Offer, then
during the next 90 days the Purchaser(s) shall be free to consummate the
transaction described in the Offer Notice at 95% of the price set forth therein
or a higher price; provided that if the Purchaser(s) do not consummate such
transaction within 90 days after the Company has (or is deemed to have)
rejected the Offer, then the provisions of this Section 6(b) shall again apply
to any sale, transfer or other disposition of any Shares.
As a condition to any sale, transfer or other disposition pursuant to this
Section 6, the Purchasers will obtain: (i) a representation from the
transferee that such transfer will not cause the transferee to exceed the
Company's Ownership Limit, as defined in the Articles; and (ii) an
acknowledgment by the transferee that such transferee acknowledges and agrees
to be subject to the agreement set forth in Section 19 of this Agreement..
Company Requests for an Increase in Series C Shares. The Company may at any
time request that the Purchasers approve an increase in the number of Shares
for purposes of selling such additional Shares to third parties; provided,
however, that the Purchasers shall have no obligation, express or implied, to
approve such request.
Section 7. Company Requests for an Increase in Series C Shares.
The Company may at any time request that the Purchasers approve an increase
in the number of Shares for purposes of selling such additional Shares
to third parties; provided however, that the Purchasers shall have no
obligation, express or implied to approve such request.
Section 8. Survival of Representations and Warranties.
The representations and warranties of the parties hereto contained in
this Agreement or otherwise made in writing in connection with the
transactions contemplated herein shall survive the making of this
Agreement and sale of the Shares, through and until the expiration
of the applicable statute of limitations with respect thereto.
Section 9. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by hand or
overnight courier or sent by first-class
mail, postage pre-paid, or by telecopy, as follows:
If to the Purchaser(s):
Pacific Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Securities Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Pacific Life and Annuity Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Securities Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
AEW Targeted Securities Fund, II, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
Exchange Place
Boston, MA 02109-2881
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇, P.C.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, at:
Home Properties of New York, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇, Executive Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Home Properties of New York, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or, in each case, at such address and to the attention of such person as either
party shall have furnished to the other by notice.
Section 10. Entire Agreement; Amendments.
This Agreement and the other Transaction Documents constitute the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings of the parties,
whether oral or written. This Agreement may be modified or terminated only by
an instrument in writing signed by the Company and the Purchasers holding 70%
of the Shares then outstanding.
Section 11. Successors and Assigns .
This Agreement shall be binding on and shall inure to the benefit of the
successors and assigns of the parties hereto and any assign and/or successor of
each Purchaser shall succeed to (and have the right to enforce) all of such
Purchaser's rights hereunder, except for the Ownership Waiver. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
Section 12. Headings.
The headings of the sections of this Agreement are solely for convenience of
reference and shall not affect the meaning of any of the provisions hereof.
Section 13. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, including, without limitation, Section 5-1401 of the
New York General Obligations Law, without giving effect to the principles of
conflicts of law; provided, however, that matters relating to the issuance of
the Shares, the terms of the Shares and other internal corporate matters
relating to the Company shall be governed by the laws of the State of Maryland.
Each of the parties hereto irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of New York and of the
United States of America, in each case located in the County of New York, for
any action, proceeding or investigation in any court or before any governmental
authority ("Litigation") arising out of or relating to the Transaction
Documents and the transactions contemplated hereby and thereby, and further
agrees that service of any process, summons, notice or document by U.S.
Registered Mail to its respective address set forth in the Transaction
Documents shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any
Litigation arising out of the Transaction Documents or the transactions
contemplated hereby and thereby in the courts of the State of New York or the
United States of America, in each case located in the County of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum. Each of the parties irrevocably and
unconditionally waives, to the fullest extent permitted by applicable law, any
and all rights to trial by jury in connection with any Litigation arising out
of or relating to the Transaction Documents or the transactions contemplated
hereby and thereby.
Section 14. Counterparts.
This Agreement may be executed in one or more separate counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
Section 15. Issuance and Other Taxes.
The Company shall pay or cause to be paid all stamp, stamp duty, stamp duty
reserve, documentary, registration, transfer or similar taxes required to be
paid in connection with the issuance and sale to the Purchasers of the Shares
and the issuance of the Warrants, and shall cause all appropriate stock
transfer tax stamps to be affixed to the certificates representing the Shares
and Warrants so sold and delivered. The Company shall file, independently or
jointly with each Purchaser, as the law requires, all transfer tax filings
required to be filed by it in connection with the sale and delivery to such
Purchaser of the Shares and Warrants.
Section 16. No Delay, Waiver.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any waiver on the part of
any party of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. Any
waiver or consent by the Purchasers that can be given hereunder shall require
the consent of the Purchasers holding 70% of the Shares then outstanding.
Section 17. Severability.
If any provision of this Agreement, or the application of any such provision to
any person or circumstance, shall be held invalid by a court of competent
jurisdiction, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
Section 18. Lost, etc. Certificates.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of any certificate representing any of the Shares
and, in case of any such loss, theft or destruction, upon delivery of indemnity
satisfactory to the Company, or in case of any such mutilation, upon surrender
and cancellation of such certificate, the Company will at its expense make and
deliver a new certificate, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated certificate. Upon surrender of any certificate
representing any of the Shares to the Company at its principal office, the
Company at its expense will issue in exchange therefor and deliver to the
holder of the surrendered certificate a new certificate or certificates, in
such denomination or denominations as may be requested by such holder.
Section 19. Issue Date.
The Company and the Purchasers agree that, notwithstanding anything to the
contrary contained in the Articles;
(a) the fifth anniversary of the Issue Date as described in Section 5(a) of the
Articles shall be May 22, 2005;
(b) the first anniversary of the Issue Date as described in Section 5(b) of the
Articles shall be May 22, 2001; and
(c) the period beginning subsequent to five (5) years following the Issue Date
as described in Section 6(a)(i) shall commence on May 23, 2005.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first above-written.
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.,
its General Partner
/s/ ▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
PACIFIC LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
PACIFIC LIFE AND ANNUITY COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
AEW TARGETED SECURITIES FUND II, L.P.
By: AEW Targeted Securities Fund II, L.L.C.,
Its general partner
By: AEW Targeted Securities Fund, Inc.,
its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Exhibits
Exhibit A Form of Series C Articles Supplementary
Exhibit B-1 Form of Tax Counsel Opinion
Exhibit B-2 REOC Opinion
Exhibit C Form of Legal Counsel Opinion
Exhibit D Form of General Counsel Opinion
Exhibit E Form of Ownership Waiver
Exhibit F Form of Amendment to the Second Amended and Restated Agreement of
Limited Partnership
Exhibit G Form of Duff & ▇▇▇▇▇▇ Rating Letter
Exhibit H Form of Officers Certificate
Exhibit I Form of Warrants
Schedules
Schedule 3.1(b) Schedule of Subsidiaries
Schedule 3.8 Schedule of Outstanding Options, Warrants, Rights or Other
Securities of the Company or the Operating Partnership
Schedule 3.10 Schedule of Certain Liabilities
Schedule 3.13 Schedule of Litigation
Schedule 3.16 Schedule of Federal and State Income Tax Audits
Schedule 3.17 Schedule of Insurance
Schedule 3.18 Schedule of Benefit Plans
Schedule 3.22 Schedule of Affiliate Transactions
Schedule 3.23 Schedule of Disclosure Documents