Exhibit 10.4
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of December 23, 1998 by and
between American Real Estate Investment Corporation, a Maryland corporation (the
"REIT"), and AEW Targeted Securities Fund, L.P. (the "Purchaser"). Unless
otherwise defined, capitalized terms used in this Agreement are defined in
Section 7; references to an "Exhibit" are, unless otherwise specified, to an
Exhibit attached to this Agreement; references to a "Section" are, unless
otherwise specified, to a section of this Agreement.
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the REIT and the Purchaser
respectively agree, as follows:
1. AGREEMENT TO SELL AND PURCHASE THE SHARES.
1.1. At the Closing provided for in Section 2, subject to the
terms and conditions of this Agreement, the REIT will issue and sell to the
Purchaser and the Purchaser will purchase from the REIT, 800,000 shares (the
"Shares") of the REIT's Series A Convertible Preferred Stock, par value $.001
per share (the "Preferred Stock"), having the rights, restrictions, privileges
and preferences set forth in the form of Articles Supplementary attached as
EXHIBIT A hereto.
1.2. The cash purchase price (the "Purchase Price") for the Shares
is set forth on the signature page hereto.
2. CLOSING OF SALE OF SHARES. The purchase and delivery of the Shares
to be purchased by the Purchaser shall take place at the offices of ▇▇▇▇▇▇▇,
Procter & ▇▇▇▇ LLP, Exchange Place, Boston, Massachusetts, at a closing (the
"Closing") on December __, 1998 or at such other place or on such other date as
the Purchaser and the REIT may mutually agree (such date on which the Closing
shall have actually occurred, the "Closing Date"). At the Closing, the REIT will
deliver or cause to be delivered to the Purchaser the Shares to be purchased by
it against payment of the Purchase Price. Payment of the Purchase Price by the
Purchaser shall be by wire transfer of immediately available funds to such
account(s) designated by the REIT to the Purchaser in writing at least one
business day prior to the Closing. If at the Closing (i) the REIT fails to
tender to the Purchaser any of the Shares to be purchased as provided in this
Section 2 or (ii) the Purchaser fails to tender the cash Purchase Price for the
Shares to the REIT, the Purchaser or the REIT, as the case may be, shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights each may have by reason of such failure or such
non-fulfillment.
3. CONDITIONS TO CLOSING.
3.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER ON
THE CLOSING DATE. The Purchaser's obligation to purchase and pay for the Shares
to be sold to it at the Closing is subject to the fulfillment prior to or at the
Closing of the following conditions, any or all of which may be waived in
writing at the option of the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the REIT contained in Section 4 hereof (other than those that
relate to a particular date or period earlier than the Closing Date) shall be
correct in all material respects when made and at the time of the Closing, after
giving effect to the sale of the Shares and the other transactions contemplated
to be consummated at the Closing by this Agreement and the other Transaction
Documents, except that any representation or warranty that relates to a
particular date or period earlier than the Closing Date shall have been true in
all material respects as of such date or period.
(b) PERFORMANCE. The REIT shall have performed and
complied with, in all material respects, all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing.
(c) CLOSING CERTIFICATES. The REIT shall have delivered
to the Purchaser an Officer's Certificate, dated the Closing Date, certifying
that the conditions specified in Section 3.1(a) and (b) have been fulfilled.
(d) OPINIONS OF COUNSEL. The Purchaser shall have
received from REIT Counsel their opinions substantially in the forms set forth
in EXHIBIT B, addressed to the Purchaser, dated the Closing Date.
(e) INTENTIONALLY OMITTED.
(f) LEGAL INVESTMENT. On the Closing Date, the
Purchaser's purchase of the Shares shall be permitted by the laws and
regulations of the jurisdiction to which the Purchaser is subject (including,
without limitation, Section 5 of the Securities Act) and shall not be enjoined
(temporarily or permanently) under, prohibited by or contrary to any injunction,
order or decree applicable to the Purchaser.
(g) PROCEEDINGS AND DOCUMENTS. All corporate,
partnership and other proceedings contemplated by this Agreement and the other
Transaction Documents shall be reasonably satisfactory to the Purchaser in form
and substance, and the Purchaser shall have received all such counterpart
originals or certified or other copies of such documents as the Purchaser may
reasonably request.
(h) REGISTRATION RIGHTS AGREEMENT. Simultaneously with
or prior to the issuance and sale to the Purchaser of the Shares to be purchased
by the Purchaser at the Closing, the REIT and the Purchaser shall have duly
entered into the Registration Rights Agreement substantially in the form of
EXHIBIT D, the Purchaser shall have received a fully-executed counterpart of the
Registration Rights Agreement and such agreement shall be in full force and
effect.
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(i) MANAGEMENT RIGHTS LETTER. Simultaneously with or
prior to the issuance and sale to the Purchaser of the Shares to be purchased by
the Purchaser at the Closing, the REIT and the Purchaser shall have duly entered
into the Management Rights Letter substantially in the form of EXHIBIT E, the
Purchaser shall have received a fully-executed counterpart of the Management
Rights Letter and such agreement shall be in full force and effect.
(j) RELATED MATTERS. As of the Closing, none of the
REIT's Charter Documents shall have been modified or amended since the date such
documents were delivered to the Purchaser by the REIT except for any such
amendment to the REIT's Articles of Incorporation as is contemplated or
necessitated by this transaction, substantially in the form of EXHIBIT A. The
REIT shall have executed and delivered to the Purchaser the Ownership Limit
Waiver Letter substantially in the form of EXHIBIT H.
(k) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any decision of any court of competent jurisdiction within the
United States have been rendered which, in the Purchaser's reasonable judgment,
could have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis. There shall be no action, suit, investigation or proceeding
pending or threatened, against or affecting the Purchaser, any of its properties
or rights, or any of its Affiliates, associates, officers or directors, before
any court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions, and there shall be no valid basis for any such action, proceeding
or investigation.
(l) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
The REIT shall have duly applied for and obtained all approvals, orders,
licenses, consents and other authorizations (collectively, the "Approvals") from
each federal, state and local government and governmental agency, department or
body, or pursuant to any agreement to which the REIT is a party or to which it
or any of its assets is subject, which may be required in connection with this
Agreement and the other Transaction Documents.
(m) AMERICAN STOCK EXCHANGE LISTING. As of the Closing,
the listing of shares of the Common Stock on the American Stock Exchange shall
not have been terminated, nor shall the REIT have been notified that such
listing may be terminated or that any termination is contemplated.
(n) ADDITIONAL CERTIFICATES. The Purchaser shall have
received a certificate, dated the Closing Date, from the Secretary (or Assistant
Secretary) of the REIT, substantially in the form of EXHIBIT F.
3.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE REIT ON THE
CLOSING DATE. The REIT's obligation to issue the Shares at the Closing is
subject to the fulfillment prior to or at
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the Closing of the following conditions, any or all of which may be waived in
writing at the option of the REIT:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Purchaser in Section 5 hereof (other than those that
relate to a particular date or period earlier than the Closing Date) shall be
correct in all material respects on the Closing Date and any representations or
warranty that relates to a particular date or period earlier than the Closing
Date shall have been true in all material respects as of such earlier date or
period.
(b) PERFORMANCE. The Purchaser shall have performed and
complied with, in all material respects, all agreements and conditions contained
in this Agreement required to be performed or complied with prior to or at the
Closing.
(c) CLOSING CERTIFICATE. The Purchaser shall have
delivered to the REIT a General Partner's Certificate, dated the Closing Date,
certifying that the conditions specified in Section 3.2(a) and (b) have been
fulfilled.
(d) RELATED MATTERS. At the Closing, the REIT shall have
received payment in full for the Shares issued pursuant to this Agreement.
(e) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any decision of any court of competent jurisdiction within the
United States have been rendered which, in the REIT's reasonable judgment, could
have a Material Adverse Effect on the REIT and its Subsidiaries on a
consolidated basis. There shall be no action, suit, investigation or proceeding
pending or threatened against or affecting the REIT, any of its properties or
rights, or any of its Affiliates, associates, officers or directors, before any
court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the Other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions, and there shall be no valid basis for any such action, proceeding
or investigation.
(f) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
The Purchaser shall have duly applied for and obtained all Approvals from each
federal, state and local government and governmental agency, department or body,
or pursuant to any agreement to which the Purchaser is a party or to which it or
any of its assets is subject, which are be required in connection with this
Agreement and the other Transaction Documents.
(g) PROCEEDING AND DOCUMENTS. All corporate, partnership
and other proceedings contemplated by this Agreement and the other Transaction
Documents shall be reasonably satisfactory in form and substance to the REIT and
the REIT shall have received all such counterpart originals or certified or
other copies of such documents as the REIT may reasonably request.
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(h) ADDITIONAL CERTIFICATES. The REIT shall have
received a certificate, dated the Closing Date, from the Secretary (or Assistant
Secretary) of the General Partner of the Purchaser, substantially in the form of
EXHIBIT G.
(i) LEGAL INVESTMENT. On the Closing Date, the
Purchaser's purchase of the Shares shall be permitted by the laws and regulation
of the jurisdiction to which Purchaser is subject (including, without
limitation, Section 5 of the Securities Act) and shall not be enjoined
(temporarily or permanently) under, prohibited by or contrary to any injunction,
order or decree applicable to the Purchaser.
(j) AMERICAN STOCK EXCHANGE LISTING. As of the Closing,
the listing of shares of Common Stock on the American Stock Exchange shall not
have been terminated, nor shall the REIT have been notified that such listing
may be terminated or that any termination is contemplated.
4. REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE REIT. In
order to induce the Purchaser to purchase the Shares, the REIT hereby represents
and warrants that, with such exceptions as are specifically set forth in a
letter delivered by the REIT to the Purchaser prior to the execution of this
Agreement (the "Disclosure Letter," which Disclosure Letter shall be deemed to
be part of this Agreement):
4.1. ORGANIZATION AND QUALIFICATION; AUTHORITY. Each of the
REIT and the Subsidiaries, whether wholly or indirectly owned, (i) is a
corporation duly incorporated, or a partnership, limited partnership or limited
liability company duly formed, and is validly existing and in good standing
under the laws of its jurisdiction of its incorporation or formation; (ii) has
full corporate, partnership or limited liability company power and authority to
own and lease its respective properties and carry on its respective business as
presently conducted; and (iii) is duly qualified, registered or licensed as a
foreign corporation, partnership, limited partnership or limited liability
company to do business and is in good standing in each jurisdiction in which the
ownership or leasing of its respective properties or the character of its
present operations makes such qualification, registration or licensing
necessary, except where the failure so to qualify or be in good standing would
not reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), assets, business or results of operations (a "Material
Adverse Effect") of the REIT and the Subsidiaries on a consolidated basis. The
REIT has heretofore made available to Purchaser's Counsel complete and correct
copies of the Articles of Incorporation, the Articles Supplementary, and the
by-laws or equivalent document of the REIT, each as amended and restated to date
and as presently in effect (collectively, the "Charter Documents").
4.2. LICENSES. Each of the REIT and the Subsidiaries holds
all licenses, franchises, permits, consents, registrations, certificates and
other approvals (individually, a "License" and collectively, "Licenses")
required for the conduct of its business as presently conducted, and operates in
substantial compliance therewith, except where the failure to hold any such
License or to operate in compliance therewith would not reasonably be expected
to have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis. Each of the REIT and each of the Subsidiaries are in
compliance with all applicable laws, regulations, orders
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and decrees, except in each case where the failure so to comply would not
reasonably be expected to have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis, or a Material Adverse Effect on the
ability of the REIT to perform on a timely basis any obligation that the REIT
has or will have under any Transaction Document to which it is a party.
4.3. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the REIT of the
Transaction Documents and all other instruments or agreements to be executed in
connection herewith or therewith and the issuance and sale to (and the purchase
hereunder by) the Purchaser of the Shares pursuant to this Agreement (a) are
within the REIT's corporate powers; (b) have been duly authorized by all
necessary corporate action on the part of the REIT; (c) do not require any
License or Approval (except such as have been obtained), except where the
failure to obtain any such License or Approval would not reasonably be expected
to have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis; (d) do not contravene or constitute a default under or
violation of or do not or will not result in the creation or imposition of any
Lien on any asset of the REIT or any of its Subsidiaries (i) any provision of
applicable law or regulation of any Governmental Authority, (ii) the Charter
Documents or similar documents of any Subsidiary, (iii) any agreement (or
require the consent of any Person under any agreement that has not been made or
obtained) to which the REIT or any of the Subsidiaries are a party, or (iv) any
judgment, injunction, order, decree or other instrument binding upon the REIT,
any of the Subsidiaries or any of their respective properties, except where such
contravention, default or violation or creation or imposition of Liens in this
Section 4.3(d) would not reasonably be expected to have a Material Adverse
Effect on the REIT and the Subsidiaries on a consolidated basis. The REIT does
not have any shareholder rights plan or other "poison pill." The REIT has opted
out of Subtitle 7 of Title 3 of the Maryland General Corporation Law and its
Board of Directors has duly adopted a resolution exempting the Purchaser and
certain other persons from the applicability of Subtitle 6 thereof in the form
attached to the Disclosure Letter.
4.4. VALIDITY AND BINDING EFFECT. Each of the Transaction
Documents, when executed and delivered in accordance with this Agreement, will
be duly executed and delivered by the REIT and will be a valid and binding
agreement of the REIT, enforceable against the REIT in accordance with its
terms.
4.5. CAPITALIZATION.
(a) As of December 18, 1998, the REIT had authorized
65,000,000 shares of capital stock, all of which were designated as Common
Stock, and 7,354,523 shares of Common Stock were issued and outstanding. As of
the Closing, the Shares will be duly authorized and validly issued and, upon
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable and free of any preemptive or similar rights or of
any encumbrances, equities or claims of any nature whatsoever except as created
in favor of the Purchaser.
(b) Except as disclosed in the SEC Filings, as of the
Closing Date, there are no outstanding subscriptions, options, warrants, rights,
convertible or exchangeable securities or other agreements or commitments of any
character obligating the REIT or the
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Subsidiaries to issue any securities. As of the Closing Date, there are no
voting trusts or other agreements or understandings in favor of any person other
than the REIT or the Subsidiaries to which the REIT or the Subsidiaries are a
party with respect to the voting of the Capital Stock or partnership interests
of the REIT or the Subsidiaries, as the case may be.
4.6. LITIGATION; DEFAULTS. There is no action, suit,
proceeding or investigation pending or, to the knowledge of the REIT, threatened
against or affecting the REIT or any of the Subsidiaries, or any properties of
any of the foregoing, before or by any court or arbitrator or any governmental
body, agency or official which (individually or in the aggregate) could
reasonably be expected to (i) have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis, or (ii) impair the ability of the REIT, to
perform fully any material obligation which the REIT, has or will have under any
Transaction Document. Neither the REIT nor any Subsidiary is in violation of, or
in default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), any
term of its Charter Documents or similar documents of any Subsidiary or of any
term of any agreement, instrument, judgment, decree, order, statute, injunction,
governmental regulation, rule or ordinance (including without limitation, those
relating to zoning, city planning or similar matters) applicable to the REIT or
any Subsidiary or to which the REIT or any Subsidiary is bound, or to any
properties of the REIT and any Subsidiary, except in each case to the extent
that such violations or defaults, individually or in the aggregate, would not
reasonably be expected to (a) affect the validity of any Transaction Document,
(b) have a Material Adverse Effect on the REIT and any Subsidiary on a
consolidated basis, or (c) impair the ability of the REIT to perform fully any
material obligation which the REIT has or will have under any Transaction
Document.
4.7. PUBLIC REPORTS; NO MATERIAL ADVERSE CHANGE. As of their
respective dates, each SEC Filing filed since December 31, 1997 complied as to
form in all material respects with the requirements of the Securities Act and
the 1934 Act and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein, in light of the
circumstances under which they were made, or necessary to make the statements
therein not misleading. The Company has made all of the SEC Filings required to
be made by it since December 31, 1997. Except as disclosed in the SEC Filings or
any press releases issued by the REIT and attached to the Disclosure Letter,
there has been since December 31, 1997 no adverse change in the condition
(financial or other), assets, business, or results of operations of the REIT or
any of the Subsidiaries which could reasonably be expected to have a Material
Adverse Effect on the REIT and the Subsidiaries on a consolidated basis, other
than those occurring as a result of general economic or financial conditions or
other developments which are not unique to the REIT or any Subsidiary but also
generally affect other Persons who participate or are engaged on the lines of
business in which the REIT or any Subsidiary participate or are engaged. Except
as for matters reflected or reserved against in the balance sheet included in
the REIT's most recent 10-Q as filed with the Commission, and except as
disclosed in the SEC Filings or any press release issued by the REIT and
attached to the Disclosure Letter (in each case as filed with the Commission or
as issued since the date of filing of the REIT's most recent 10-Q), since the
date of such balance sheet there has been no obligation or liability (contingent
or otherwise) incurred by the REIT or any of the Subsidiaries, except
liabilities or obligations (i) which were incurred in the ordinary course of
business consistent with past practice or (ii) which could not have been, and
could not be, reasonably
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expected to have a Material Adverse Effect on the REIT and its Subsidiaries on a
consolidated basis.
4.8. PRIVATE OFFERING. No form of general solicitation or
general advertising, including, but not limited to, advertisements, articles,
notices or other communications, published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising,
was used by the REIT or any of the REIT's representatives, or, to the knowledge
of the REIT, any other Person acting on behalf of the REIT in connection with
the offering of the Shares. The REIT further represents to the Purchaser that,
assuming the accuracy of the representations of the Purchaser as set forth in
Section 5 hereof, neither the REIT nor any Person acting on the REIT's behalf
has knowingly taken or will take any action which would subject the issue and
sale of the Shares to the provisions of Section 5 of the Securities Act, except
as contemplated by the Registration Rights Agreement.
4.9. BROKER'S OR FINDER'S COMMISSIONS. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by the REIT directly with the Purchaser without the intervention of
any person on behalf of the REIT in such manner as to give rise to any valid
claim by any Person against the Purchaser for a finder's fee, brokerage
commission or similar payment.
4.10. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY;
U.S. ENTITY. The REIT (i) is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), (ii) is not an
"investment company" for purposes of ▇▇▇▇▇▇▇ ▇▇(▇)(▇) ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇, (▇▇▇) is
not and will not become a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, (iv) is
not and will not be headquartered or organized in any jurisdiction outside the
United States of America or (v) does not directly or indirectly conduct
activities or own assets in any foreign jurisdiction.
4.11. ERISA REQUIREMENTS. At or promptly following the Closing
and annually thereafter within 30 days of the end of the REIT's fiscal year, but
only if requested by the Purchaser with respect to such fiscal year, the
Purchaser shall receive from the REIT a certificate substantially in the form of
EXHIBIT C certifying certain information which the Purchaser reasonably
determines to be necessary to conclude whether the REIT is a "real estate
operating company" within the meaning of 29 C.F.R. Section 2510.3-101(e) (the
"Plan Assets Regulation") and otherwise satisfactory in substance and form to
the Purchaser to enable the Purchaser to make such a conclusion.
4.12. TAX MATTERS.
(a) The REIT has been, for each year ending on or after
December 31, 1993, organized and operated in conformity with the requirements
for qualification and taxation as a "real estate investment trust" under the
Code and the Treasury Regulations promulgated thereunder.
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(b) To the best knowledge of the REIT, the REIT is not
currently a "pension-held REIT" within the meaning of Code Section 856(h)(3)(D)
and the Treasury Regulations promulgated thereunder.
(c) American Real Estate Investment, L.P., a Delaware
limited partnership (the "Operating Partnership"), and each of the REIT's
Subsidiaries that is eligible to be classified as a partnership for federal
income tax purposes is so classified and taxed.
(d) The REIT will use reasonable efforts not to take any
action or not to permit any action to be taken (to the extent the action is
within the control of the REIT) that would cause any of the representations set
forth in this Section 4.12 to be incorrect or incomplete if made as of any date
following the Closing. In the event of the taking or proposed taking of any
action that would cause the representation set forth in Section 4.12(b) to be
incorrect if made as of any date following the Closing, the REIT shall use
reasonable efforts to notify the Purchaser prior to the taking of such action.
4.13. BOARD OF DIRECTORS MATTERS; CERTAIN APPROVAL RIGHTS.
(a) On or before December 31, 2000, the REIT will
nominate, or will cause to be nominated, for election to the Board of Directors
of the REIT, one individual who shall (i) be independent of the REIT and its
investors and affiliates, (ii) have served in the management or been a director
of a publicly held real estate investment trust or other public real estate
operating company, and (iii) be reasonably acceptable to the Purchaser; and the
REIT will use reasonable efforts to obtain stockholder approval of such
individual's election to the Board of Directors of the REIT.
(b) None of the REIT or any Subsidiary shall enter into
any capital-raising transaction or financing, including any merger or
acquisition, without the consent of holders of a majority in interest of the
Shares; provided, however, that such consent shall not be required if, in each
case, (i) such capital raising transaction or financing represents a
replacement, renewal, refinancing or extension of outstanding indebtedness or
any portion thereof of the REIT or of any Subsidiary; PROVIDED that any such
replacement, renewal, refinancing or extension shall not exceed the sum of the
principal amount of such indebtedness being replaced, renewed, refinanced or
extended plus the amount of accrued interest thereon and the amount of any
reasonably determined prepayment premium necessary to accomplish such
replacement, renewal refinancing or extension and such reasonable fees and
expenses incurred in connection therewith; or (ii) the Fixed Charge Ratio for
the REIT's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
capital-raising transaction or financing is entered into would have been more
than 1.5 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if such capital-raising
transaction or financing had been entered into at the beginning of such
four-quarter period.
4.14. NO OTHER REPRESENTATIONS. The REIT shall not be deemed
to have made to the Purchaser any representation or warranty other than as
expressly made by the REIT in this Agreement and in the other Transaction
Documents. Without limiting the generality of the foregoing, and notwithstanding
any otherwise express representations and warranties made by
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the REIT in this Section 4, the REIT makes no representation or warranty to the
Purchaser with respect to any projections, estimates or budgets heretofore
delivered to or made available to the undersigned of future revenues, expenses
or expenditures or future results of operations.
50 REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE PURCHASER.
In order to induce the REIT to sell the Shares, the Purchaser hereby represents
and warrants that:
5.1. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS.
(a) The Purchaser is an accredited investor as defined
in Regulation D under the Securities Act and that it is purchasing the Shares
for its own account or for one or more separate accounts maintained by it or for
the account of one or more institutional investors on whose behalf the Purchaser
has authority to make this representation for investment and not with a view to
the distribution thereof or with any present intention or plan of distributing
or selling any of the Shares except in compliance with the Securities Act
provided that the disposition of the Purchaser's Property shall at all times be
within its control.
(b) The Purchaser has full power and authority and has
taken all action necessary to authorize it to enter into and perform its
obligations under the Transaction Documents and all other documents or
instruments contemplated hereby. The Transaction Documents are legal, valid and
binding obligations of the Purchaser and are enforceable in accordance with
their terms.
5.2. ERISA MATTERS. None of the funds proposed to be used by
the Purchaser to purchase the Shares constitutes assets of an employee benefit
plan within the meaning of ERISA.
5.3. NO ADVERTISEMENT OR SOLICITATION. The Purchaser
acknowledges that the offer and sale of the Shares to it has not been
accomplished by any form of general solicitation or general advertising,
including, but not limited to, (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media, or
broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
5.4. RESTRICTIONS ON TRANSFER. The Purchaser understands and
acknowledges that, except as provided for by the Registration Rights Agreement,
none of the Shares or the Common Stock issuable on conversion of the Shares have
been registered under the Securities Act or registered or qualified under the
securities laws of any state by reason of a specific exemption from the
registration provisions thereof which exemption depends upon, among other
things, the bona fide nature of the investment intent of the Purchaser as
expressed herein and the accuracy and completeness of the other representations
of the Purchaser set forth herein. The Purchaser understands and acknowledges
that the Shares may not be sold, assigned or transferred absent effective
registration thereof under the Securities Act and applicable state securities
laws, or (ii) absent compliance with Section 6.2 and that it must bear the
economic risks of this investment resulting from such limitations. The Purchaser
understands and acknowledges that it must comply with the provisions of Section
6.2.9 of the Articles of Incorporation and Section 7.1
10
of the REIT's bylaws, as amended on December 12, 1997. The REIT acknowledges,
however, that the Shares will be subject to a pledge to the Purchaser's lender
and agrees to cooperate reasonably with the Purchaser and the lender in
effecting such pledge and any transfer thereunder.
5.5. DISCLOSURE OF INFORMATION. The Purchaser:
(i) has been furnished with and has carefully read and
reviewed the SEC Filings, and has been afforded access to all
information necessary to evaluate the merits and risks of the
acquisition of the Securities, and has relied solely (except as
indicated in subsections (ii) and (iii) below) on such materials
or documents and on the representations, warranties, covenants and
other agreements of the REIT contained in the Transaction
Documents;
(ii) has been provided an opportunity to obtain any
additional information requested concerning the Shares, the Common
Stock, the REIT and the Subsidiaries;
(iii) has been given the opportunity to ask questions
of, and receive answers from, the REIT and the Subsidiaries, or a
person or persons acting on the behalf of the REIT and the
Subsidiaries, concerning the terms and conditions of the
Transaction Documents and other matters pertaining to this
investment, and has been given the opportunity to obtain such
additional information necessary to verify the accuracy of the
materials or documents that were provided in order for it to
evaluate the merits and risks of an investment in the REIT to the
extent the REIT or the Subsidiaries, as the case may be, possess
such information or can acquire it without unreasonable effort or
expense, and has not been furnished any other offering literature
or prospectus on which it is entitled to rely except as mentioned
herein; and
(iv) has determined that the Shares and the Common Stock
are a suitable investment for it and that at this time it can bear
the economic risk of the investment.
5.6. INVESTMENT EXPERIENCE. The Purchaser represents that it
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Shares and
the Common Stock and protecting its own interests in connection with the
investment and has obtained sufficient information from the REIT and the
Subsidiaries to evaluate the merits and risks of an investment in the Shares and
the Common Stock. The undersigned has not utilized any person as its purchaser
representative or professional advisor in connection with evaluating such risks
and merits. The Purchaser has not been organized solely for the purpose of
acquiring the Shares and the Common Stock.
5.7. INVESTOR AWARENESS. The Purchaser acknowledges, agrees
and is aware that:
11
(i) no federal or state agency has passed upon the
Shares or the Common Stock or made any finding or determination as
to the fairness of this investment nor any recommendation or
endorsement of the investment;
(ii) there are substantial risks of loss of investment
incidental to the purchase of the Shares and the Common Stock; and
(iii) neither the REIT, the Subsidiaries nor any of
their affiliates or representatives has provided the Purchaser
with any investment, tax, legal, regulatory or accounting advice
with respect to the investment in or ownership of the Shares and
the Common Stock; provided, however that the REIT confirms the
representations, warranties, covenants and other agreements of the
REIT contained in the Transaction Documents.
5.8. BROKER'S OR FINDER'S COMMISSIONS. All negotiations relative
to this Agreement and the transactions contemplated hereby have been carried out
by Purchaser directly with the REIT without the intervention of any person on
behalf of Purchaser in such manner as to give rise to any valid claim by any
Person against the REIT for a finder's fee, brokerage commission or similar
payment.
60 RESTRICTIONS ON TRANSFER.
6.1. RESTRICTIVE LEGENDS. In addition to the legend required
by Section 6.2.9 of the Articles of Incorporation and the statements required by
Section 7.1 of the REIT's by-laws, as amended on December 12, 1997, to the
extent applicable, any certificate or other document issued in respect of any
Shares shall be endorsed with the legend set forth below, as appropriate:
(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED (1) ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT (2) ABSENT AN OPINION OF
COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE REIT AND ITS COUNSEL, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR SUCH STATES OR THAT
SUCH TRANSACTION COMPLIES WITH THE RULES PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION UNDER SAID ACT OR SUCH STATES
OR, (3) EXCEPT IN A TRANSACTION IN COMPLIANCE WITH RULE 144 UNDER
THE SECURITIES ACT"
and
12
(ii) any legend required by any applicable state
securities law.
The REIT shall maintain a copy of this Agreement and any amendments
thereto on file in its principal offices, and will make such copy available
during normal business hours for inspection to any party thereto or will provide
such copy to the Purchaser or any transferee upon its or their request.
Whenever the legend requirements imposed by this Section 6.1 shall
terminate, as provided in Section 6.2, the respective holders of Shares for
which such legend requirements have terminated shall be entitled to receive from
the REIT, at the REIT's expense, certificates representing the Shares without
such legend.
6.2. NOTICE OF TRANSFER; OPINIONS OF COUNSEL. Each holder of
the Shares bearing the restrictive legend set forth in Section 6.1 above (a
"Restricted Security"), agrees with respect to any transfer of such Restricted
Security to give to the REIT (a) written notice describing the transferee and
the circumstances, if any, necessary to establish the availability of an
exemption from the registration requirements of the Securities Act or any state
law and (b) upon reasonable request by the REIT to such transferring holder, an
opinion of counsel (at the expense of such holder), which is knowledgeable in
securities law matters (including in-house counsel), in form and substance
reasonably satisfactory to the REIT to the effect that the proposed transfer of
such Restricted Security may be effected without registration of such Restricted
Security under the Securities Act or any state law. If for any reason the REIT
(after having been furnished with the opinion required to be furnished pursuant
to this Section 6.2), shall fail to notify such holder within ten business days
after such holder shall have delivered such notice of opinion to the REIT that,
in its or its counsel's opinion, the transfer may not be legally effective (the
"Illegal Transfer Notice"), such holders shall thereupon be entitled to transfer
the Restricted Security as proposed. If the holder of the Restricted Security
delivers to the REIT an opinion of counsel (including in-house counsel or
regular counsel to such Purchaser or its investment adviser) which is in form
and substance reasonably satisfactory to the REIT that subsequent transfers of
such Restricted Security will not require registration under the Securities Act
or any state law, and the REIT does not provide the holders with an Illegal
Transfer Notice as set forth above, the REIT will within a reasonable period
after such contemplated transfer, at the expense of such holder, deliver new
certificates for such Restricted Security which do not bear the Securities Act
legend set forth in Section 6.1(i) above. The restrictions imposed by this
Section 6 upon the transferability of any particular Restricted Security shall
cease and terminate when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 promulgated under the Securities Act. The holder of any
Restricted Security as to which such restrictions shall have terminated shall be
entitled to receive from the REIT at the expense of such holder, a new security
of the same type but not bearing the restrictive Securities Act legend set forth
in Section 6.1 and not containing any other reference to the restrictions
imposed by this Section 6. Notwithstanding any of the foregoing, no opinion of
counsel will be required to be rendered pursuant to this Section 6.2 with
respect to the transfer of any securities on which the restrictive legend has
been removed in accordance with this Section 6.2. As used in this Section 6.2,
the term "transfer" encompasses any sale, transfer or other disposition of any
securities referred to herein.
13
70 DEFINITIONS. As used herein the following terms have the following
respective meanings:
"1934 ACT," means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder, as from time to
time amended.
"AFFILIATE," except as otherwise defined in this Agreement, means
with respect to any Person any other Person directly or indirectly controlling
or controlled by or under common control with such first Person or any of its
Subsidiaries; PROVIDED, HOWEVER, that, for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"AGREEMENT" means this Agreement, as amended, modified or
supplemented from time to time, together with any exhibits, schedules,
appendices or other attachments thereto.
"APPROVALS" has the meaning ascribed thereto in Section 3.1(l)
hereof.
"ARTICLES OF INCORPORATION" means the Articles of Incorporation of
the REIT, as amended to date and presently in effect.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participation, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrant or options exchangeable for
or convertible into such capital stock.
"CHARTER DOCUMENTS" has the meaning ascribed thereto in Section
4.1 hereof.
"CLOSING" has the meaning ascribed thereto in Section 2 hereof.
"CLOSING DATE" has the meaning ascribed thereto in Section 2
hereof.
"COMMISSION" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the common stock, par value $.001 per share,
of the REIT.
"DISCLOSURE LETTER" has the meaning ascribed thereto in Section 4
hereof.
"EBITDA" means earnings before interest, taxes, depreciation, and
amortization, determined in accordance with Generally Accepted Accounting
Principles ("GAAP").
14
"ERISA" means the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, as amended from time to time.
"FIXED CHARGE COVERAGE RATIO" means the ratio of EBITDA to the
Fixed Charges of the Company for a given period. In the event that the REIT
incurs, issues, assumes or retires any indebtedness or preferred stock prior to
the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such transaction, as if the such transaction had
occurred at the beginning of the given period for which the Fixed Charge
Coverage Ratio is calculated.
"FIXED CHARGES" means the sum of (i) the consolidated interest
expense of the REIT and the Subsidiaries for a given period, determined in
accordance with GAAP, and (ii) all accrued dividend payments on any series of
preferred equity of the REIT and the Subsidiaries. Fixed Charges shall not
include intercompany interest or dividends.
"GENERAL PARTNER'S CERTIFICATE" means a certificate executed on
behalf of the Purchaser by its general partner.
"GOVERNMENTAL AUTHORITY" means any governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"ILLEGAL TRANSFER NOTICE" has the meaning ascribed thereto in
Section 6.2 hereof.
"INDEMNIFIED PARTY" means either a REIT Indemnified Party or a
Purchaser Indemnified Party, as the context requires.
"INDEMNIFYING PARTY" has the meaning ascribed thereto in Section
8.1(c) hereof.
"LICENSE" or "LICENSES" has the meaning ascribed thereto in
Section 4.2 hereof.
"LIEN" means any mortgage, lien (statutory or otherwise), charge,
pledge, hypothecation, conditional sales agreement, adverse claim, title
retention agreement or other security interest, encumbrance or other title
defect in or on any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale, trust receipt or
other title retention agreement with respect to any Property or asset of such
Person.
"LOSSES" has the meaning ascribed thereto in Section 8.1(a)
hereof.
"MANAGEMENT RIGHTS LETTER" mean the Management Rights Letter by
and between the Purchaser and the REIT.
"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in
Section 4.1(a) hereof.
15
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of
the REIT by the Chief Financial Officer of the REIT.
"PERSON" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"PLAN ASSETS REGULATION" has the meaning set forth in Section 4.11
hereof.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PURCHASER" has the meaning ascribed thereto in the introduction
hereof.
"PURCHASER'S COUNSEL" means ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP.
"PURCHASER INDEMNIFIED PARTY" or "PURCHASER INDEMNIFIED PARTIES"
has the meaning ascribed thereto in Section 8.1(a) hereof.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement by and between the REIT and the Purchaser, as amended or supplemented
from time to time in accordance with the terms thereof.
"REIT" has the meaning ascribed thereto in the introduction
hereof.
"REIT COUNSEL" means ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP and Piper & Marbury L.L.P.
"REIT INDEMNIFIED PARTY" has the meaning ascribed thereto in
Section 8.1(b) hereof.
"RESTRICTED SECURITY" has the meaning ascribed thereto in Section
6.2 hereof.
"RULE 144" means Rule 144 as promulgated by the Commission under
the Securities Act, and any successor rule or regulation thereto.
"RULE 144A" means Rule 144A as promulgated by the Commission under
the Securities Act, and any successor rule or regulation thereto.
"SEC FILINGS" means official filings made by the REIT filed with
the Commission in accordance with the Securities Act and the 1934 Act with
respect to events occurring, or periods ending on or after December 31, 1996.
"SECURITIES ACT" means the Securities Act of 1933, and the rules
and regulations of the Commission promulgated thereunder, as from time to time
amended.
"SHARES" has the meaning ascribed thereto in Section 1 hereof.
16
"SUBSIDIARIES" means subsidiary corporations, partnerships,
limited partnerships, joint ventures and limited liability companies which are
directly or indirectly and wholly or majority owned by the REIT, including,
unless the context requires otherwise, the Operating Partnership.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Articles Supplementary, the Registration Rights Agreement, the Ownership Limit
Waiver Letter, the Management Rights Letter and any and all agreements,
certificates, instruments and other documents of the REIT required thereby or
executed and delivered pursuant hereto.
80 MISCELLANEOUS.
8.1. INDEMNIFICATION; EXPENSES, ETC.
(a) In addition to any and all obligations of the REIT
to indemnify the Purchaser hereunder or under the other Transaction Documents,
the REIT agrees, without limitation as to time, to indemnify and hold harmless
the Purchaser, its Affiliates and the employees, officers, directors, trustees,
direct and indirect partners, members, agents and investment advisors of the
Purchaser and its Affiliates (individually, a "Purchaser Indemnified Party" and,
collectively the "Purchaser Indemnified Parties") from and against any and all
losses, claims, damages, liabilities, costs (including the costs of preparation
and reasonable attorneys' fees) and reasonable expenses (including expenses of
investigation) (collectively, "Losses") incurred or suffered by a Purchaser
Indemnified Party in connection with or arising out of any material breach by
the REIT of any warranty or representation made by the REIT in this Agreement;
PROVIDED, HOWEVER, that the REIT shall not be liable for any Losses resulting
from action on the part of any Purchaser Indemnified Party which is finally
determined in such proceeding to be wrongful or which is an act of gross
negligence, recklessness or willful misconduct by such Purchaser Indemnified
Party. The REIT agrees as promptly as practicable to reimburse any Purchaser
Indemnified Party for all such Losses as they are incurred or suffered by such
Purchaser Indemnified Party following the receipt of a reasonably detailed
invoice setting forth the amount of such Losses.
Except as otherwise provided herein, the REIT agrees (for the
benefit of each Purchaser) to pay, and to hold the Purchaser harmless from and
against, all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees, expenses and disbursements), if any, in connection
with the enforcement against the REIT or the Subsidiaries, as the case may be,
of this Agreement or any other Transaction Document in connection herewith or
therewith in any action in which the Purchaser attempts to enforce any of the
foregoing, PROVIDED, that the Purchaser shall prevail in such action.
(b) In addition to any and all obligations of the
Purchaser to indemnify the REIT hereunder or under the other Transaction
Documents, the Purchaser agrees, without limitation as to time, to indemnify and
hold harmless the REIT, its Affiliates, and the employees, officers, directors,
trustees, direct and indirect partners, members and agents of the REIT and its
Affiliates (individually, a "REIT Indemnified Party" and collectively the "REIT
Indemnified
17
Parties") from and against any and all Losses, incurred or suffered by a REIT
Indemnified Party in connection with or arising out of any material breach by
the Purchaser of any warranty or representation made by the Purchaser in this
Agreement; PROVIDED, HOWEVER, that the Purchaser shall not be liable for any
Losses resulting from action on the part of any REIT Indemnified Party which is
determined in such proceeding to be wrongful or which is an act of gross
negligence, recklessness, or willful misconduct by such REIT Indemnified Party.
The Purchaser agrees as promptly as practicable to reimburse any REIT
Indemnified Party for all such Losses as they are incurred or suffered by such
REIT Indemnified Party following the receipt of a reasonably detailed invoice
setting forth the amount of such Losses.
Except as otherwise provided herein, the Purchaser agrees (for the
benefit of the REIT) to pay, and to hold the REIT harmless from and against, all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, expenses and disbursements), if any, in connection with the
enforcement against the Purchaser of this Agreement or any other Transaction
Document in any action in which the REIT attempts to enforce any of the
foregoing, PROVIDED, that the REIT shall prevail in such action.
(c) If any Indemnified Party is entitled to
indemnification hereunder, such Indemnified Party or its representative shall
give prompt notice to the REIT or the Purchaser, as the case may be (each, for
purposes of this Section 8.1(c), an "Indemnifying Party") of any claim or of the
commencement of any proceeding against such Indemnified Party brought by any
third party with respect to which such Indemnified Party seeks indemnification
pursuant hereto; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent the Indemnifying Party is prejudiced by such
failure. The Indemnifying Party shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such claim or proceeding, to assume, at
the expense of the Indemnifying Party, the defense of any such claim or
proceeding with counsel reasonably satisfactory to such Indemnified Party. The
Indemnified Party or Parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). The Indemnifying Party shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by claimant or plaintiff to such Indemnified Party or
Parties of a release, in form and substance satisfactory to the Indemnified
Party or Parties, from all liability in respect of such claim, litigation or
proceeding.
8.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
SEVERABILITY. All representations and warranties contained in this Agreement or
the Transaction Documents or made in writing by or on behalf of the REIT or the
Purchaser in connection with the transactions contemplated by this Agreement or
the Transaction Documents shall survive, for the duration of any statutes of
limitation applicable thereto, the execution and delivery of this Agreement, any
investigation at any time made by the REIT, the Purchaser or on such party's
behalf, the purchase of the Shares by the Purchaser under this Agreement and any
disposition of or payment on the Shares. All statements contained in any
certificate or other instrument delivered to the Purchaser by or on behalf of
the REIT or delivered to the REIT by or on behalf of the Purchaser pursuant to
this Agreement or the other Transaction Documents shall be deemed
representations
18
and warranties of the REIT or the Purchaser, as applicable, under this
Agreement. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
8.3. EXCLUSIVITY. After the Closing, to the extent permitted
by law, the indemnities set forth in Section 8.1 shall be the exclusive remedies
of the Purchaser Indemnified Parties and the REIT Indemnified Parties for any
Losses incurred or suffered for which indemnification may be sought pursuant to
Section 8.1 and the parties shall not be entitled to a rescission of this
Agreement or to any further indemnification rights or claims of any nature
whatsoever in respect of such Losses for which indemnification may be sought
pursuant to Section 8.1, all of which the parties hereto hereby waive.
8.4. AMENDMENT AND WAIVER. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing and signed
by the Purchaser and the REIT.
8.5. NOTICES, ETC. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be sent by facsimile, with receipt confirmed, or delivered or
mailed by registered or certified mail, return receipt requested, or by a
nationally recognized overnight courier, postage prepaid, addressed, (a) if to
the Purchaser, at the address set forth on the Purchaser's signature page hereto
or such other address as the Purchaser shall have furnished to the REIT in
writing, or (b) if to any other holder of any Shares, at such address as such
other holder shall have furnished to the REIT in writing, or, until any such
other holder so furnishes to the REIT an address, then to and at the address of
the last holder of such Shares who has furnished an address to the REIT, or (c)
if to the REIT, at the address set forth at the beginning of this Agreement, to
the attention of President, or at such other address, or to the attention of
such other officer, as the REIT shall have furnished to the Purchaser and each
such other holder in writing. This Agreement and the other Transaction Documents
and all documents delivered in connection herewith or therewith embody the
entire agreement and understanding between the Purchaser and the REIT and
supersede all prior agreements and understandings relating to the subject matter
hereof, including the confidentiality agreement embodied in a letter dated
August 28, 1998 by and between the REIT and AEW Capital Management, L.P., which
agreement shall be terminated effective as of the Closing.
8.6. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto are referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the respective parties which are contained in this
Agreement shall bind and inure to the benefit of the successors and assigns of
all other parties. Except as otherwise provided herein, the terms and provisions
of this Agreement and the other Transaction Documents shall inure to the benefit
of and shall be binding upon any assignee or transferee of the Purchaser, and in
the event of such transfer or assignment, the rights and privileges herein
conferred upon the Purchaser shall automatically extend to and be vested in, and
become an obligation of, such transferee or assignee, all subject to the terms
and conditions hereof.
19
8.7. DESCRIPTIVE HEADINGS. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
8.8. SATISFACTION REQUIREMENT. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to a particular party, the determination
of such satisfaction shall be made by such party, as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
8.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAW.
8.10. EXPENSES. The REIT will pay at the Closing (or on such
later date as one or more invoices may be submitted to the REIT) the reasonable
legal fees of Purchaser's Counsel incurred in connection with this Agreement and
consummation of the transactions contemplated hereby; provided, that in no event
shall such legal fees exceed $75,000.
8.11. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
8.12. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable 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, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) 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 (d) 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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20
SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date first set forth above.
AMERICAN REAL ESTATE
INVESTMENT CORPORATION, a
Maryland corporation
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
COPIES OF NOTICES TO:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
21
SECURITIES PURCHASE AGREEMENT PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Number and Manner of Payment
date first written above: of Purchase Price of Shares to be
Purchased:
800,000 Shares of Series A
Convertible Preferred Stock of
American Real Estate Investment
Corporation
AEW TARGETED SECURITIES FUND, L.P.
By: AEW TSF, L.L.C., its General Partner
Purchase Price: $20,000,000
By: AEW TSF, INC., its Managing Member
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address: AEW Targeted Securities Fund, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: AEW TSF, L.L.C.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Nominee (name in which the Shares are to be
registered, if different than name
of Purchaser):
-------------------------------------------
(Nominee's Name)
COPIES OF NOTICES TO:
Tax I.D. Number: ▇▇-▇▇▇▇▇▇▇ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(if acquired in the name of a General Counsel
nominee, the taxpayer I.D. AEW Capital Management, Inc.
number of such nominee) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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