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Exhibit 10.11
TOWER REALTY TRUST, INC.
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PURCHASE AGREEMENT
Dated as of March 31, 1997
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$6,000,000
Senior Secured Convertible Notes
and
$20,000,000
Common Stock
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TABLE OF CONTENTS
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SECTION 1 AUTHORIZATION OF SECURITIES..................................... 1
1.1 Authorization of Notes....................................... 1
1.2 Authorization of Common Stock................................ 2
SECTION 2 ISSUANCE OF NOTES............................................... 2
2.1 Purchase and Sale of Notes................................... 2
2.2 Registration, Transfer or Exchange of Notes.................. 2
2.3 Loss, Theft, Destruction or Mutilation of Notes.............. 3
2.4 Place of Payment............................................. 3
2.5 Additional Payment........................................... 3
SECTION 3 ISSUANCE OF COMMON STOCK........................................ 4
3.1 Purchase and Sale of Common Stock............................ 4
3.2 Purchase Price............................................... 4
3.3 Transfer Taxes............................................... 4
3.4 Rights of Holders............................................ 4
3.5 Lock-up...................................................... 4
SECTION 4 THE CLOSINGS.................................................... 5
4.1 The First Note Closing....................................... 5
4.2 The Second Note Closing...................................... 5
4.3 Subsequent Note Closing...................................... 6
4.4 The Stock Closing............................................ 6
SECTION 5 REPRESENTATIONS OF THE COMPANY.................................. 7
5.1 Organization................................................. 7
5.2 Authorization................................................ 7
5.3 No Conflicts or Consents..................................... 7
5.4 Enforceable Obligations...................................... 7
5.5 Capitalization............................................... 8
5.6 Shareholders and Agreements.................................. 8
5.7 Issuance of Securities....................................... 8
5.8 Subsidiaries................................................. 9
5.9 Government Regulation........................................ 9
5.10 Litigation................................................... 9
5.11 Financial Condition.......................................... 9
5.12 Title to Assets.............................................. 9
5.13 Material Contracts and Obligations........................... 9
5.14 Compliance with Laws......................................... 10
5.15 Real Property................................................ 10
5.16 Tenant Leases................................................ 11
5.17 Full Disclosure.............................................. 12
5.18 Dividends.................................................... 12
5.19 Security Interests........................................... 12
5.20 No Termination Event......................................... 13
5.21 Tax Matters.................................................. 13
5.22 Insurance.................................................... 13
5.23 Burdensome Contracts......................................... 13
5.24 Environmental Matters........................................ 13
5.25 Books and Records............................................ 14
5.26 Certain Payments............................................. 14
5.27 Labor Agreements and Actions................................. 14
5.28 ERISA........................................................ 15
5.29 Use of Proceeds; Margin Stock................................ 15
5.30 Solvency..................................................... 15
5.31 Principal Office, Etc........................................ 15
5.32 Domestically-Controlled REIT................................. 15
5.33 Pension-Held REIT............................................ 15
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SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................. 16
6.1 Authorization................................................ 16
6.2 Purchase Entirely for Own Account............................ 16
6.3 Accredited Investor.......................................... 16
6.4 Other Representations and Warranties......................... 16
SECTION 7 CONDITIONS TO THE OBLIGATIONS OF EACH INVESTOR.................. 17
7.1 Conditions to All Closings................................... 17
7.2 Additional Conditions to First Note Closing.................. 18
7.3 Conditions to Subsequent Note Closings....................... 20
7.4 Additional Conditions to the Second Note Closing............. 22
7.5 Conditions to the Stock Closing.............................. 23
SECTION 8 CONDITION TO THE OBLIGATIONS OF THE COMPANY..................... 25
SECTION 9 AFFIRMATIVE COVENANTS........................................... 25
9.1 Payment of Principal and Interest............................ 25
9.2 Maintenance of Existence and Rights; Conduct of Business..... 25
9.3 Financial Statements, Reports and Documents.................. 26
9.4 Notices...................................................... 27
9.5 Other Notices................................................ 27
9.6 Books and Records; Access.................................... 27
9.7 Compliance with Material Agreements.......................... 27
9.8 Compliance with Law.......................................... 28
9.9 Payment of Taxes and Other Indebtedness...................... 28
9.10 Insurance.................................................... 28
9.11 Board of Directors........................................... 28
9.12 Additional Capital........................................... 29
9.13 Use of Proceeds.............................................. 29
9.14 Further Assurances........................................... 29
9.15 Additional Collateral........................................ 29
9.16 REIT Qualification........................................... 30
9.17 Partnership Qualification.................................... 30
9.18 Domestically-Controlled REIT................................. 30
9.19 Pension-Held REIT............................................ 30
9.20 Management Company........................................... 30
9.21 Additional Capital........................................... 30
9.22 Good Faith................................................... 31
SECTION 10 NEGATIVE COVENANTS............................................. 31
10.1 Limitation on Indebtedness................................... 31
10.2 Negative Pledge.............................................. 31
10.3 Prohibition on Dividends..................................... 31
10.4 Material Agreements.......................................... 32
10.5 Certain Transactions......................................... 32
10.6 Issuance of Interests........................................ 32
10.7 Mergers and Sales of Assets.................................. 32
10.8 No Amendments................................................ 33
10.9 ERISA........................................................ 33
10.10 Contribution Agreements...................................... 33
10.11 Reference to Investors or MSAM............................... 33
SECTION 11 TERMINATION OF COVENANTS....................................... 33
SECTION 12 TERMINATION EVENTS............................................. 33
SECTION 13 REDEMPTION OF THE NOTES........................................ 36
13.1 Optional Redemption.......................................... 36
13.2 Mandatory Redemption......................................... 36
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13.3 Maturity; Surrender.......................................... 36
13.4 Remedies for Failure to Redeem............................... 37
13.5 Major Capital Events......................................... 37
SECTION 14 CONVERSION..................................................... 37
14.1 Conversion................................................... 37
14.2 Surrender of Notes; Delivery of Shares....................... 37
14.3 Effect of Conversion......................................... 38
14.4 Fractional Shares............................................ 38
14.5 Taxes on Conversion.......................................... 38
14.6 Anti-Dilution................................................ 38
SECTION 15 GUARANTEE...................................................... 38
15.1 Guarantee of Obligations..................................... 38
15.2 Costs and Expenses........................................... 39
15.3 Guarantee Absolute........................................... 39
15.4 Waivers...................................................... 39
15.5 Guarantee Not Affected by Changes............................ 39
15.6 Payments..................................................... 40
15.7 Subrogation.................................................. 40
SECTION 16 TRANSFERS...................................................... 41
16.1 Limitations on Transfer...................................... 41
16.2 Legends...................................................... 41
16.3 Rule 144A Information........................................ 41
SECTION 17 MISCELLANEOUS.................................................. 42
17.1 Indemnification.............................................. 42
17.2 Survival of the Representations and Warranties............... 43
17.3 Confidentiality.............................................. 43
17.4 Brokers...................................................... 43
17.5 Entire Agreement............................................. 44
17.6 Amendments and Waivers....................................... 44
17.7 Inaccuracy of Representations................................ 44
17.8 Time......................................................... 44
17.9 Section Headings............................................. 44
17.10 Notices...................................................... 44
17.11 Counterparts................................................. 44
17.12 Governing Law................................................ 44
17.13 Consent to Jurisdiction...................................... 44
17.14 Expenses; Documentary Taxes.................................. 45
17.15 Definitions.................................................. 45
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INDEX OF EXHIBITS
Exhibit A Form of Note
Exhibit B Certificate of Incorporation of Tower Realty Trust, Inc.
Exhibit C Form of Registration Rights Agreement
Exhibit D Exceptions to Representations of the Company
Exhibit E-1 Form of Opinion of Counsel to be delivered at the First Note
Closing
Exhibit E-2 Form of Opinion of Counsel to be delivered at the Subsequent
Note Closings
Exhibit E-3 Form of Opinion of Counsel to be delivered at the Stock Closing
Exhibit F Budget
Exhibit G Form of Shareholder Pledge Agreement
Exhibit H Form of Company Pledge Agreement
Exhibit I Form of Operating Partnership Pledge Agreement
Exhibit J Form of Operating Partnership Collateral Assignment
Exhibit K Conversion Rate Formula
Exhibit L REIT Sponsors
Exhibit M Form of Company Account Pledge Agreement
Exhibit N Form of Operating Partnership Account Pledge Agreement
Exhibit O Schedule of Contribution Agreements
Exhibit P Schedule of Subsidiaries with 1995 Audited Financial Statements
Exhibit Q Form of Management Company Stock Option Agreement
Exhibit R Form of Certificate of the Chief Executive Officer of the
Company
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PURCHASE AGREEMENT (this "Agreement") made as of March 31, 1997 among TOWER
REALTY TRUST, INC., a Maryland corporation with its principal place of business
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), as
issuer, TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
with its principal place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating Partnership"), as guarantor (the Operating
Partnership and the Company are sometimes hereinafter collectively referred to
as the "Credit Parties"), and each of the investors signatory hereto
(collectively the "Investors"). The definitions of certain capitalized terms
used herein are set forth in Section 17.15.
In consideration of the mutual promises and agreements contained herein,
the parties hereto agree as follows:
SECTION 1 AUTHORIZATION OF SECURITIES.
1.1 Authorization of Notes. The Company has duly authorized the sale and
issuance of its senior secured convertible notes in the aggregate principal
amount of $6,000,000, in substantially the form attached hereto as Exhibit A
(each note delivered pursuant to this Agreement and each note delivered in
substitution or exchange for any such note, being hereinafter referred to as the
"Notes"). The Notes shall (i) be dated the date of issuance, (ii) bear interest
(computed on the basis of a 365-day year and the actual number of days elapsed)
from the date of issuance until the earlier of (A) maturity, (B) the date such
Notes are repaid in full or (C) the occurrence of a Termination Event at the
rate of 15% per annum payable quarterly, in arrears, on the last day of each
March, June, September and December, commencing June 30, 1997, and at maturity
(each such date being hereinafter referred to as an "Interest Payment Date"),
(iii) bear interest (computed as provided in clause (ii) above) from the earlier
of (A) maturity or (B) the occurrence of a Termination Event until the date such
Notes are repaid in full at the rate of 20% per annum payable on demand (the
"Default Rate") and (iv) mature on the Maturity Date. Until the earlier of
maturity or the occurrence of a Termination Event, the Company may at its
option, elect to add up to 50% of the amount of interest payable on any Interest
Payment Date to the then outstanding principal amount of the Notes; provided
that, if the conditions to the Second Note Closing do not occur on or prior to
June 30, 1997 but, in accordance with the definition of the term "Maturity
Date", the maturity of the Notes has been extended to December 27, 1997, the
Company shall not have the option during the period such conditions remain
unsatisfied of electing to add any portion of the interest payable on the Notes
to the principal thereof. Any such interest added to principal shall thereafter
bear interest as provided above. The Notes shall be guaranteed by the Operating
Partnership as provided in Section 15 of this Agreement and shall be secured by
the Collateral. The Notes shall be convertible into shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), as provided in
Section 14 of this Agreement and shall be redeemable as provided in Section 13
of this Agreement.
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1.2 Authorization of Common Stock. On or prior to the Stock Closing Date,
the Company will have amended its certificate of incorporation, a copy of which
is attached as Exhibit B (the "Certificate of Incorporation"), to increase its
authorized capitalization from 1,000 shares of Common Stock to such number of
shares as will be required in order for the Company to (i) make the Initial
Public Offering, (ii) issue the shares of Common Stock required to be issued
upon a conversion of the Notes and (iii) issue and sell to the Investors the
number of shares of Common Stock to be purchased by the Investors pursuant to
Section 3.1 hereof. At least 10 days prior to filing any amendment to the
Certificate of Incorporation increasing the authorized capital of the Company,
the Company shall deliver a copy thereof to MSAM for its review and the Company
shall not file any amendment to the Certificate of Incorporation to which MSAM
shall reasonably object.
SECTION 2 ISSUANCE OF NOTES.
2.1 Purchase and Sale of Notes. Subject to the terms and conditions of
this Agreement, the Company will issue and sell to each Investor, and each
Investor will purchase, Notes in an aggregate principal amount not to exceed the
amount set opposite its name under the heading "Total Commitment" on the
signature pages hereto. The obligations of each Investor are several and not
joint, and no Investor shall be liable for the acts and omissions of any other
Investor. The Investors shall not be deemed to be Affiliated shareholders or
Affiliated purchasers.
2.2 Registration, Transfer or Exchange of Notes. The Notes are issuable
only as registered Notes. The Company will keep at its principal place of
business a register in which the Company shall provide for the registration and
registration of transfer of the Notes.
Subject to Section 16.1 to this Agreement, the holder of a Note may, at
its option and either in person or by duly authorized attorney, surrender the
same at the principal place of business of the Company for registration of
transfer or exchange, accompanied, if surrendered for transfer, by a written
instrument of transfer duly executed by such holder or attorney. In case such
holder shall request a transfer or exchange of a Note, the Company shall, at its
expense, deliver to or upon such holder's order one or more Notes in the same
aggregate unpaid principal amount as the Note surrendered for transfer, each
dated the date of, or, if later, the date to which interest has been paid on,
the Note, and registered in such name or names as shall be specified by such
holder. Notes may not be transferred in denominations of less than $100,000, or
increments of $1,000 in excess thereof (provided that if the aggregate unpaid
principal amount of a Note is less than $100,000, the Company will deliver one
Note in exchange for such Note).
Prior to due presentation for registration of transfer of a Note, the
Company may deem and treat the registered holder thereof as the absolute owner
for the purpose of any notice, waiver or consent thereunder, and payment of the
Note shall be made only to or upon the order of such holder.
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2.3 Loss, Theft, Destruction or Mutilation of Notes. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of a Note, and, in the case of any such loss, theft or destruction,
upon receipt of a bond of indemnity reasonably satisfactory to the Company or,
in the case of any such mutilation, upon surrender and cancellation of the Note,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Note, a new Note of like tenor and unpaid principal amount and dated
the date of, or, if later, the date to which interest has been paid on, the
lost, stolen, destroyed or mutilated Note. In the case of a holder of the Notes
which is an institutional investor, its own unsecured agreement of indemnity
shall be deemed satisfactory to the Company.
2.4 Place of Payment. Payments of principal, premium, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at the
principal place of business of the Company in such jurisdiction. The Company may
at any time, by notice to each holder of a Note, change the place of payment of
the Notes so long as such place of payment shall be in New York, New York at
either the principal place of business of the Company in such jurisdiction or at
the office of a bank or trust company in such jurisdiction. The foregoing
notwithstanding, so long as any Investor or any nominee of such Investor shall
be the holder of any Note, the Company will pay all sums becoming due on such
Note for principal, premium, if any, and interest by the method and at the
address specified for such purpose below such Investor's name on the signature
pages hereto or by such other method or at such other address as such Investor
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment in full of any Note, such
Investor shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal place of business or at the
place of payment most recently designated by the Company as provided above. The
Company will afford the benefits of this Section 2.4 to any institutional
investor that is the direct or indirect transferee of any Note purchased by any
Investor.
2.5 Additional Payment. In the event the Maturity Date is extended under
circumstances that require the Company to make an additional $600,000 payment to
the Investors, such payment shall be made to the Investors by issuing to such
Investors recourse promissory notes (the "Maturity Date Extension Notes") in a
principal amount equal to their respective pro rata share (determined according
to the principal amount of the Notes held by such Investor) of such $600,000
payment. The Maturity Date Extension Notes shall be in substantially the form of
this Note except that they shall reflect the following terms: (i) such Maturity
Date Extension Notes shall bear interest (computed on the same basis as the
Notes) at the rate of 15% per annum (20% per annum following the occurrence of a
Termination Event) payable on each Interest Payment Date; (ii) such Maturity
Date Extension Notes shall mature on the same day as the Notes, (iii) such
Maturity Date Extension Notes shall be guaranteed by the Operating Partnership
and shall be secured by the Collateral, and (iv) if the Initial Public Offering
occurs, the outstanding principal amount of such Maturity Date Extension Notes
shall be repayable by issuing to the holders thereof such number of shares of
Common Stock determined by dividing (A) the aggregate principal amount of such
Maturity Date Extension
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Notes plus all accrued but unpaid interest thereon to the date of repayment (to
the extent such interest has not been added to principal) by (B) the Mid-Point
Purchase Price. If, prior to the maturity of the Maturity Date Extension Notes,
the conditions set forth in Section 7.4 are satisfied, the Company may at its
option elect to add up to 50% of the amount of interest payable on any Interest
Payment Date to the outstanding principal amount on the Maturity Date Extension
Notes.
SECTION 3 ISSUANCE OF COMMON STOCK.
3.1 Purchase and Sale of Common Stock. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to each Investor, and each
Investor will purchase at the Stock Closing, the number of shares of Common
Stock determined by multiplying (i) a fraction the numerator of which is the
aggregate principal amount of Notes purchased by such Investor and the
denominator of which is the total aggregate principal amount of Notes purchased
by all Investors and (ii) the amount obtained by dividing $20,000,000 by the
mid-point of the price range set forth in the last preliminary prospectus
circulated to the public in connection with the Initial Public Offering,
provided that the Investors may, by delivering a notice signed on their behalf
by MSAM at least three (3) days prior to the date of the Company's initial
Preliminary Prospectus, increase the amount in clause (ii) above from
$20,000,000 up to $25,000,000 (the amount determined pursuant to this clause
(ii) being hereinafter referred to as the "Aggregate Share Amount"). The
obligations of each Investor are several and not joint and no Investor shall be
liable for the acts and omissions of any other Investor. The Investors shall not
be deemed to be Affiliated shareholders or Affiliated purchasers.
3.2 Purchase Price. The purchase price for each share of Common Stock to
be purchased by the Investors shall be equal to the price per share at which
shares of the Company's Common Stock are offered to the public in the Initial
Public Offering (the "Per Share Purchase Price").
3.3 Transfer Taxes. The Company shall pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
any of the shares of Common Stock to be acquired by the Investors.
3.4 Rights of Holders. The Common Stock to be acquired by the Investors
shall have the rights, restrictions, privileges and preferences set forth in the
Certificate of Incorporation, as the same may be amended by any amendment
thereto. In addition, holders of the shares of Common Stock to be issued to the
Investors pursuant to the terms of this Agreement (or any transferee of the
Investors) will have the registration rights set forth in the Registration
Rights Agreement.
3.5 Lock-up. If required by the underwriters for the Initial Public
Offering, each of the Investors will enter into an agreement with such
underwriters agreeing not to sell or transfer
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any shares of Common Stock acquired by such Investor (subject to certain
exceptions to be negotiated with the underwriters) for a period (the "Lock-up
Period") not to exceed the lesser of (i) one year or (ii) one-half the shortest
period of time the Shareholder or any other REIT Sponsor (other than ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇) has agreed not to sell its shares of Common Stock.
SECTION 4 THE CLOSINGS.
4.1 The First Note Closing. The first closing of the purchase and sale of
the Notes under this Agreement shall take place at the offices of Battle ▇▇▇▇▇▇,
LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (the
"First Note Closing"), at 10:00 A.M. on March 27, 1997, or at such other time,
date and place as are mutually agreeable to the Company and the Investors. The
date of the First Note Closing is hereinafter referred to as the "First Note
Closing Date." At the First Note Closing, the Company shall deliver to each
Investor Notes in an aggregate principal amount set forth opposite its name
under the heading "First Note Closing Commitment" on the signature pages hereto,
issued in the name of the Investor or its nominee and in such authorized
denominations as MSAM on behalf of the Investor shall request, against payment
to the Company of the purchase price therefor, by wire transfer, check, or other
method acceptable to the Company. If on the First Note Closing Date any of the
conditions specified in Sections 7.1 or 7.2 shall not have been fulfilled, each
Investor shall, at its election, be relieved of all of its obligations under
this Agreement without thereby waiving any other rights it may have by reason of
such failure or such nonfulfillment.
4.2 The Second Note Closing. The second closing (the "Second Note
Closing") of the purchase and sale of the Notes shall take place at the offices
of Battle ▇▇▇▇▇▇, LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (or such other time and place as are mutually agreeable
to the Company and the Investors) on such date as is specified in a written
notice delivered by the Company to MSAM at least ten (10) Business Days before
the date on which such Closing is to occur. The date of the Second Note Closing
(hereinafter referred to as the "Second Note Closing Date") must be a Business
Day occurring not later than June 15, 1997. In addition to stating the date of
the Second Note Closing, any notice delivered pursuant to this Section 4.2 must
specify the aggregate principal amount of the Notes to be issued at such Closing
(which shall be not less than $1,000,000 and in increments of $100,000 in excess
thereof) and the pro rata portion (determined according to each Investor's total
relative commitment) of such principal amount to be purchased by each Investor
at such Closing. At the Second Note Closing, the Company shall deliver to each
Investor the Notes being purchased by such Investor, issued in the name of the
Investor or its nominee and in such authorized denominations as MSAM on behalf
of the Investor shall request, against payment to the Company of the purchase
price therefor, by wire transfer, check, or other method acceptable to the
Company. If the Second Note Closing Date does not occur by June 15, 1997 or on
the Second Note Closing Date any of the conditions specified in Sections 7.1,
7.3 or 7.4 shall not have been fulfilled, each Investor shall, at its election,
be relieved of all of its obligations under
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this Agreement to purchase the Notes to be purchased at the Second Note Closing
without thereby waiving any other rights it may have by reason of such failure
or such nonfulfillment.
4.3 Subsequent Note Closing. Each subsequent Closing (each such Closing,
including the Second Note Closing, being hereinafter referred to as a
"Subsequent Note Closing") of the purchase and sale of the Notes after the
Second Note Closing shall take place at the offices of Battle ▇▇▇▇▇▇, LLP, Park
Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (or
such other time and place as are mutually agreeable to the Company and the
Investors) on such date as is specified in a written notice delivered by the
Company to MSAM at least ten (10) Business Days before the date on which such
Closing is to occur. The date of any Subsequent Closing (each such date,
including the Second Note Closing Date, being hereinafter referred to as a
"Subsequent Note Closing Date") must be a Business Day. In addition to stating
the date of a Subsequent Note Closing, any notice delivered pursuant to this
Section 4.3 must specify the aggregate principal amount of the Notes to be
issued at such Closing (which shall be not less than $1,000,000 and in
increments of $100,000 in excess thereof) and the pro rata portion (determined
according to each Investor's relative total commitment) of such principal amount
to be purchased by each Investor at such Closing. At each such Subsequent Note
Closing, the Company shall deliver to each Investor the Notes being purchased by
such Investor, issued in the name of the Investor or its nominee in such
authorized denominations as MSAM on behalf of such Investor shall request,
against payment to the Company of the purchase price therefor, by wire transfer,
check or other method acceptable to the Company. If on any such Subsequent Note
Closing Date any of the conditions specified in Sections 7.1 or 7.3 shall have
not been fulfilled, each Investor shall, at its election, be relieved of all of
the obligations under this Agreement to purchase the Notes to be purchased at
such Closing without thereby waiving any other rights it may have by reason of
such failure or nonfulfillment.
4.4 The Stock Closing. The closing (the "Stock Closing") of the purchase
and sale of the Common Stock contemplated under Sections 3.1 shall take place at
the same location, on the same date and at the same time as the closing of the
Initial Public Offering. The Company will deliver to MSAM at least three (3)
Business Days prior to the date of the closing of the Initial Public Offering a
notice specifying the place, date, and time of such closing. The date of the
Stock Closing is hereinafter referred to as the "Stock Closing Date". At the
Stock Closing, the Company shall deliver to each Investor certificates
representing the number of shares of Common Stock being purchased by such
Investor registered in the name of such Investor as its nominee, against payment
to the Company of the purchase price therefor, by wire transfer, check or other
method acceptable to the Company. In addition, the Company shall deliver to each
Investor certificates representing the number of shares of Common Stock into
which the Notes held by such Investor have been automatically converted as
provided in Section 14.2, registered in the name of such Investor or its
nominee, together with any cash payment required under Section 14.2, against the
surrender for cancellation of such Investor's Notes. The Company and the
Shareholder agree to make available to MSAM for inspection not less than two (2)
Business Days prior to the Stock Closing, the certificates representing the
shares of Common Stock to be acquired by the Investors. If on the Stock Closing
Date any of the
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conditions specified in Sections 7.1 or 7.5 shall have not been fulfilled, each
Investor shall, at its election, be relieved of all of its obligations under
this Agreement to purchase the Common Stock without thereby waiving any other
rights it may have by reason of such failure or such nonfulfillment.
SECTION 5 REPRESENTATIONS OF THE COMPANY.
Subject to and except as disclosed in Exhibit D hereto, the Credit
Parties, jointly and severally, represent and warrant to each Investor as
follows:
5.1 Organization. Each Credit Party and each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation with all requisite power and authority, and all necessary licenses and
permits, to own and lease its properties and assets and to conduct its business
as presently conducted and as proposed to be conducted by it. Each Credit Party
and each Subsidiary is duly qualified to do business and is in good standing in
all states where the conduct of its business or the ownership or leasing of
property requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect.
5.2 Authorization. Each Credit Party has the right, power and authority to
execute, deliver and perform this Agreement and the Related Documents to which
it is a party. Each Credit Party has taken all corporate or partnership action
necessary to authorize the execution and delivery of this Agreement and the
Related Documents to which it is a party and to perform its obligations
contemplated hereunder and thereunder.
5.3 No Conflicts or Consents. Neither the execution, delivery or
performance of this Agreement or the Related Documents to which any Credit Party
is a party nor the consummation of the transactions contemplated hereby or
thereby, nor the compliance with the terms and provisions hereof or thereof,
will contravene or conflict with any provision of any constitution, law or
regulation to which any Credit Party or Subsidiary is subject, or any judgment,
license, order or permit applicable to any Credit Party or Subsidiary or any
indenture, loan agreement, mortgage, deed of trust, or other material agreement
or instrument to which any Credit Party or Subsidiary is a party or by which any
of his or its assets may be bound or subject, or violate any provision of the
organizational documents of any Credit Party or Subsidiary. No consent,
approval, authorization or order of any court or Governmental Authority or third
party is required in connection with the execution, delivery and performance by
any of the Credit Parties of this Agreement or any of the Related Documents to
which it is a party or for the consummation of the transactions contemplated
hereby or thereby, except those that have been obtained and are in full force
and effect.
5.4 Enforceable Obligations. This Agreement and each of the Related
Documents to which any of the Credit Parties is a party have been duly executed
and delivered by it and are its legal, valid and binding obligations,
enforceable against it in accordance with their terms
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except as such enforceability may be limited under (i) applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the rights of
creditors generally, and (ii) general principles of equity.
5.5 Capitalization. The authorized capital stock of the Company consists
of 1000 shares of Common Stock, of which 1000 shares are issued and outstanding.
All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
provided in this Agreement or contemplated in the Budget, (i) no subscription,
warrant, option, convertible security or other rights (contingent or otherwise)
or commitments of any character to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness or assets of the
Company, and (iii) the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. All of the issued and outstanding shares of capital stock of
the Company have been offered, issued and sold by the Company in compliance with
applicable federal and state securities laws.
5.6 Shareholders and Agreements. All of the issued and outstanding shares
of Common Stock are owned beneficially and of record by the Shareholder. Except
(i) for the Initial Public Offering, (ii) as contemplated in the Budget or (iii)
as provided in this Agreement, there are no agreements, written or oral, between
the Company and the Shareholder or, to the best of the Company's knowledge,
between the Shareholder and any other Person relating to the acquisition
(including without limitation rights of first refusal or pre-emptive rights),
disposition, registration under the Securities Act of 1933, as amended (the
"Securities Act"), or voting of the capital stock of the Company.
5.7 Issuance of Securities. The issuance and delivery of the Notes and the
shares of Common Stock issuable to the Investors on the applicable Closing Date,
including, without limitation, those shares issuable upon conversion of the
Notes, have been duly authorized by all necessary corporate action on the part
of the Company, except for the filing of the amendment to the Certificate of
Incorporation contemplated under Section 1.2. The Notes, when issued, will have
been duly and validly authorized and issued and will constitute legal, valid and
binding obligations of the Company entitled to all the rights and benefits
provided under this Agreement and shall be enforceable against the Company in
accordance with their terms except as such enforceability may be limited under
(i) applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally, and (ii) general principles of
equity. Payment of the Notes is not, and will not, be subordinate to any other
Indebtedness or obligations of the Credit Parties. The shares of Common Stock
issuable to the Investors on the Stock Closing Date, including, without
limitation, those shares issuable upon conversion of the Notes, when issued as
contemplated hereunder, will be duly and validly authorized and issued, and
fully paid and non-assessable.
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5.8 Subsidiaries. Set forth in Exhibit D is (a) the name of each entity in
which any Credit Party directly or indirectly owns an interest (collectively,
the "Subsidiaries"), and (b) each Subsidiary's jurisdiction of organization and
the percentage of equity interests owned by the applicable Credit Party (or any
Subsidiary of such Credit Party). Each Credit Party has good and marketable
title to all of the equity interests it purports to own of each Subsidiary, free
and clear in each case of any Lien (other than Permitted Liens), and all such
interests have been duly issued and are fully paid and nonassessable except as
contemplated in the organizational documents of the issuer thereof. Except as
set forth in this Agreement or contemplated in the Budget, there are no
outstanding warrants, options, or other rights or commitments of any character
to subscribe for or purchase from any Credit Party or any of their Subsidiaries,
or obligating any Subsidiary to issue, any additional equity interests or any
securities convertible into or exchangeable for such equity interests.
5.9 Government Regulation. No Credit Party or Subsidiary is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other law (other than
Regulation X of the Board of Governors of the Federal Reserve) which would
regulate the incurring by such Credit Party or Subsidiary of any Indebtedness,
including but not limited to laws relating to common contract carriers or the
sale of electricity, gas, steam, water, or other public utility services.
5.10 Litigation. There are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending or, to the best of any Credit
Party's knowledge, threatened against the Credit Parties or any of their
Subsidiaries which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.11 Financial Condition. The audited financial statements (including the
related notes and supporting schedules) for each Subsidiary listed on Exhibit P
for the 1995 fiscal year end and the unaudited financial statements (including
the related notes and supporting schedules) for each Subsidiary that owns
properties that will be contributed to the Operating Partnership in connection
with the Initial Public Offering as contemplated in the Budget for the 1996
fiscal year end present fairly in all material respects the financial condition
and results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. Since the dates set forth in such financial
statements for the 1996 fiscal year, no event, act, condition or change has
occurred that could reasonably be expected to have a Material Adverse Effect.
5.12 Title to Assets. Each Credit Party and each Subsidiary has good and
marketable title to all of its assets free and clear of all Liens and other
encumbrances and adverse claims of any nature, except Permitted Liens and other
Liens permitted pursuant to Section 10.2.
5.13 Material Contracts and Obligations. Exhibit D sets forth a list of
all material agreements or commitments of any nature to which the Company, the
Operating Partnership or
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the Management Company is a party or by which the Company, the Operating
Partnership or the Management Company is bound, including without limitation (a)
each agreement which requires future expenditures by the Company, the Operating
Partnership or the Management Company in excess of $50,000 or which might result
in payments to the Company, the Operating Partnership or the Management Company
in excess of $50,000, (b) all employment and consulting agreements, employee
benefit, bonus, pension, profit-sharing, stock option, stock purchase and
similar plans and arrangements, and (c) any agreement with any Affiliate of the
Company, the Operating Partnership, the Management Company or the Shareholder,
including without limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity. The Credit Parties
have delivered to the Investors copies of such of the foregoing agreements as
have been requested. All of such agreements and contracts are valid, binding and
in full force and effect. Neither the Management Company nor any Credit Party is
in default in any respect under contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its properties is bound.
5.14 Compliance with Laws. Each Credit Party and each Subsidiary is in
compliance in all material respects with all laws, ordinances, rules and
regulations of governmental authorities (including, without limitation, the
Americans with Disabilities Act of 1990) and requirements of insurance bodies
applicable to the ownership, leasing, use and operation of its properties and
has obtained and fully paid for all material licenses, permits, certificates,
entitlements, grants of right and any other items and documents required by
applicable law to be obtained by him or it for the completion, ownership,
leasing, use and occupancy of his or its properties, except where the failure to
so comply or obtain would not have a Material Adverse Effect. Such licenses,
permits, certificates, entitlements, grants of right and other items and
documents are in full force and effect. No Credit Party or any Subsidiary of a
Credit Party has taken any action that would (or failed to take any action, the
omission of which would) result in the revocation or suspension of such
licenses, permits, certificates, entitlements, grants of right and other items
and documents, and no Credit Party or any Subsidiary of a Credit Party has
received any notice of any material violation from any federal, state or
municipal entity or notice of an intent by any such governmental entity to
revoke any material certificate, license, permit, entitlement or grant of right
issued by it in connection with the ownership, use and occupancy of any of its
properties, that in each case has not been cured or otherwise resolved to the
satisfaction of such governmental entity.
5.15 Real Property.
(a) Set forth in Exhibit D is a list of all real properties owned by
the Credit Parties and each Subsidiary.
(b) No eminent domain, condemnation, incorporation, annexation or
moratorium or similar proceeding has been commenced or, to the best of the
Credit Parties' knowledge, threatened by an authority having the power of
eminent domain to condemn any part
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of the properties owned by the Credit Parties or any Subsidiary. To the best of
the Credit Parties' knowledge, there are no pending or threatened governmental
rules, regulations, plans, studies or efforts, or court orders or decisions,
which do or could adversely affect the use or value of such properties for their
present use.
(c) The improvements at all properties owned by the Credit Parties
and each of the Subsidiaries are in reasonably good condition and repair,
ordinary wear and tear excepted, and have not suffered any casualty or other
material damage which has not been repaired in all material respects. To the
best of the Credit Parties' knowledge, there is no material latent or patent
structural, mechanical or other significant defect, soil condition or deficiency
in the improvements included in such properties.
(d) Each of the properties owned by the Credit Parties or any
Subsidiary has been fully assessed and is not subject to abatement. To the best
of the Credit Parties' knowledge, there are no proposed reassessments of any of
such properties by any taxing authority and there are no threatened or pending
special assessments or other actions or proceedings (other than county-wide
reassessments and/or the usual increases in millage rates that may be under
consideration by the taxing authorities in the jurisdiction where such
properties are located) that could give rise to an increase in real property
taxes or assessments against any of such properties.
(e) There are no "Significant Agreements" relating to the properties
owned by the Credit Parties or any Subsidiary, or the operations of such
properties, other than as set forth in Exhibit D. For purposes hereof,
"Significant Agreement" means and includes any of the following by which any of
such properties may otherwise be subject or bound, in each such case as amended
and currently in effect, inclusive of any waivers relating thereto:
(i) all agreements, instruments, mortgages and documents
evidencing, securing or pertaining to any Indebtedness;
(ii) all ground leases;
(iii) all management agreements; and
(iv) any other agreement, instrument or document that is
material to the property or the operations thereof.
5.16 Tenant Leases.
(a) The Credit Parties have delivered to MSAM, on behalf of the
Investors, rent rolls, certified to be true, correct and complete, for each of
the properties owned by the Credit Parties or any Subsidiary.
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(b) Each of the current leases with respect to the properties owned
by the Credit Parties or any Subsidiary (as the same have been amended or
modified to date, the "Leases") are in full force and effect and, to the
knowledge of the Credit Parties, no material uncured "event of default" (as
defined in any such Lease) has occurred and is continuing under any such Lease.
With respect to any Lease of 20,000 square feet or more: (i) no tenant has
asserted a defense to, offset or claim against its rent or the performance of
its obligations under any such Lease, (ii) no tenant has asserted a default on
the part of the landlord which would give it the right to terminate any such
Lease, (iii) there are no rights of first refusal on, or options to purchase,
any of the properties leased under any such Lease in favor of any tenant, and
(iv) no written modifications to, or agreements in principal with respect to,
any such Lease that would reduce (A) the space leased to any tenant, (B) the
amount of any tenant's rent or (C) the term of such Lease.
(c) Except for (i) security deposits or (ii) the first full month's
rent, whether or not the term of a Lease has commenced, no prepayments of rent
more than thirty (30) days in advance have been made under the Leases. No rent
or security deposits under the Leases have been assigned or encumbered, except
as security for the mortgages notes listed in Exhibit D, and there are no
agreements or understandings, written or oral, with any of the tenants other
than as set forth in the Leases. All brokerage commissions and other
compensation and fees payable by reason of the Leases have been paid in full or
will be paid in the ordinary course of business as and when due.
5.17 Full Disclosure. With respect to the representations and warranties
contained in this Agreement or in any of the Related Documents or in any
financial statements, certificates or other documents delivered in connection
herewith or therewith, there is no material fact that the Credit Parties have
not disclosed to the Investors. Neither this Agreement, the Related Documents,
the financial information referenced in Section 5.11 hereof, nor any agreement,
document, certificate or written statement delivered herewith or heretofore by
the Credit Parties to the Investors in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact or omits
to state any material fact necessary to keep the statements contained herein or
therein from being misleading in light of the circumstances under which they are
made.
5.18 Dividends. Except as otherwise permitted hereunder, the Credit
Parties have not declared, set aside, or made any payment of a Dividend.
5.19 Security Interests. Each of the Security Documents creates or will
create, as security for the obligations described therein, a valid, exclusive
and perfected first security interest in and Lien on all of the Collateral
described in such agreements in favor of the Collateral Agent, acting on behalf
of the Investors, superior and prior to the rights of all third Persons and
subject to no other Liens except Permitted Liens. No filings or recordings are
required in order to perfect the security interests created under the Security
Documents except for the filing of UCC-1 financing statements in the filing
offices listed in Exhibit D.
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5.20 No Termination Event. No Termination Event or Potential Termination
Event has occurred and is continuing, nor will the execution, delivery and
performance of this Agreement or any of the Related Documents cause any
Termination Event or Potential Termination Event to occur.
5.21 Tax Matters. The Company will at such time as it files its tax return
for its fiscal year ending December 31, 1997 properly elect to be taxed as a
real estate investment trust within the meaning of Sections 856-860 of the
Internal Revenue Code of 1986, as amended (the "Code"), and will have satisfied
all of the requirements set forth in those provisions and the regulations
thereunder to be taxed as a real estate investment trust within the meaning of
those provisions. Each Credit Party and each Subsidiary has filed all U.S.
federal, state, local, foreign and other tax returns which were required to be
filed on or before the date hereof and has paid all taxes which have become due
and payable. All such reports and returns were materially accurate and complete
when filed and reflect all taxes required to be paid for the periods reported
therein. No additional material assessments, deficiencies or penalties in
respect of taxes have been made or claimed against the Credit Parties or any
Subsidiary which remain unpaid. No tax returns or reports of the Credit Parties
or any Subsidiary are or ever have been under audit.
5.22 Insurance. Each Credit Party and Subsidiary maintains in effect with
reputable and financially sound insurers, insurance in such amounts and covering
such risks as is customarily maintained by companies engaged in similar
businesses and owning similar types of properties in the same areas as the
Credit Parties or the Subsidiaries. All such policies are in full force and
effect and all premiums thereunder have been paid to the extent due, and no
notice of cancellation has been received with respect thereto and, to the best
knowledge of the Credit Parties, no cancellation is threatened.
5.23 Burdensome Contracts. No Credit Party or Subsidiary is party to any
agreement or instrument or subject to any legislative or charter or other
corporate restriction or any judgment, order, writ, injunction, decree, rule or
regulation which could reasonably be expected to have a Material Adverse Effect.
5.24 Environmental Matters. No Credit Party or any Subsidiary has (a)
caused any substance or waste that is listed or defined as hazardous or toxic
under applicable environmental laws or petroleum products (collectively
"Hazardous Materials") to be improperly maintained or disposed of on, under or
at any of its or their properties, or any part thereof, or elsewhere in a manner
which violates, or could give rise to liability under, applicable environmental
laws, or (b) failed to remediate, alter, mitigate or ▇▇▇▇▇ any condition
required to be remediated, altered, mitigated or abated under such environmental
laws. Except as set forth in any environmental site assessments provided by the
Credit Parties to the Investors, (i) to the knowledge of the Credit Parties,
each of their properties, and the properties of their Subsidiaries, is in
compliance, and has heretofore complied, with all environmental laws in all
material respects, (ii) to the knowledge of the Credit Parties, there has been
no discharge of Hazardous Materials by any tenant of any property owned by any
Credit Party of any of their Subsidiaries
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in quantities requiring response, remediation or removal, and (iii) no Credit
Party has received any written notice from any governmental unit or other person
or entity that it or any Subsidiary, or any of its properties or operations
conducted thereon, are not or have not been in compliance with all environmental
laws.
5.25 Books and Records. The books and records of the Credit Parties and of
the Subsidiaries accurately and fairly reflect their respective income,
expenses, assets and liabilities, and the Credit Parties and each of the
Subsidiaries maintain internal accounting controls which provide reasonable
assurance that: (a) transactions are executed in accordance with management's
authorization; (b) transactions are recorded as necessary to permit preparation
of reliable financial statements and to maintain accountability for earnings and
assets; (c) access to assets is permitted only in accordance with management's
authorization; (d) the recorded accountability of all assets is compared with
existing assets at reasonable intervals; and (e) all intercompany transactions,
charges and expenses among and between them or any of their other Affiliates are
accurately reflected in all financial statements.
5.26 Certain Payments. No Credit Party, no Subsidiary or, to the knowledge
of any Credit Party, any director, officer, agent or employee of any such
entity, or any other person or entity associated with or acting for or on behalf
of any Credit Party or any Subsidiary, including any REIT Sponsor, has directly
or indirectly (a) made any unlawful contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person or entity, private
or public, regardless of form, whether in money, property or services, (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or pay
for special concessions already obtained or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the Credit
Parties and the Subsidiaries, or (c) taken any other action in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
5.27 Labor Agreements and Actions. No Credit Party or any Subsidiary is
bound by or subject to, any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of any Credit Party, has sought to represent any of the
employees, representatives or agents of any Credit Party or any Subsidiary.
There is no strike or other labor dispute involving any Credit Party or any
Subsidiary pending, or to the knowledge of any Credit Party, threatened, nor is
any Credit Party aware of any labor organization activity involving any of the
employees of any Credit Party or any Subsidiary. No Credit Party is aware that
any officer or key employee, or that any group of key employees, intends to
terminate his, her or their employment with any Credit Party or any Subsidiary,
nor does any Credit Party or Subsidiary have a present intention to terminate
the employment of any of the foregoing. The employment of each employee of any
Credit Party or any Subsidiary is terminable at the will of the applicable
employer without further liability of such employer to such employee except for
the payment of such employee's normal salary accrued but not paid through the
date of such termination.
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5.28 ERISA. None of the Credit Parties or any of the Subsidiaries has or
otherwise contributes to or participates in any employee benefit plan subject to
ERISA.
5.29 Use of Proceeds; Margin Stock. None of the proceeds of the sale of
the Notes will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulations U, T, X, or G of the Board of Governors of the
Federal Reserve, or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry "margin stock," or for any
other purpose which might constitute this transaction a "purpose credit" within
the meaning of Regulations U, T, X or G. No Credit Party is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stocks. No Credit Party or any Person acting on behalf of any Credit Party has
taken or will take any action which might cause any violation of Regulations U,
T, X, G or any other regulations of the Board of Governors of the Federal
Reserve System or any violation of Section 7 of the Securities Exchange Act of
1934, as amended ("the "Exchange Act") or any rule or regulation promulgated
thereunder, in each case as now in effect or as the same may hereinafter be in
effect.
5.30 Solvency. Each Credit Party and each Subsidiary is, and after
consummation of the transactions contemplated hereby, will be Solvent.
5.31 Principal Office, Etc. The residence or the principal office, chief
executive office and principal place of business of each of the Credit Parties
is as set forth in the preamble to this Agreement. Each of the Credit Parties
maintains its records and books at such address and does not maintain any assets
at any other location, that, individually or in the aggregate, are material to
the operation of its business except for the real property in which such Credit
Party has an interest.
5.32 Domestically-Controlled REIT. For purposes of Section 897(h) of the
Code, at all times during the period in which the Company was in existence less
than 25% in value of its capital stock has been held, directly or indirectly, by
foreign persons.
5.33 Pension-Held REIT. For purposes of Section 856(h)(3) of the Code, at
all times during the period in which the Company was in existence, no "qualified
trust" has held, directly or indirectly, more than 10% of the interests in the
Company.
5.34 Commercial Real Property. All direct and indirect interests held by
the Shareholder, the Credit Parties or any Subsidiary in any commercial real
property with a fair market value (net of Indebtedness secured by a mortgage in
the fee or leasehold asset underlying any such interest) in excess of $500,000
has been contributed to the Operating Partnership to the extent not prohibited
(and if prohibited, not capable of being waived) under the constituent documents
of the entity or entities holding or owning such interests in such commercial
real property except that no representation or warranty is made with respect to
the Scheduled Assets and Retail Properties.
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5.35 Pledgeable Equity. Pursuant to the Initial Contribution Agreements,
all the pledgeable equity (as set forth in the Budget) has been contributed to
the Operating Partnership.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
Each Investor severally, and not jointly, hereby represents and warrants
that:
6.1 Authorization. The Investor has full power and authority to enter into
this Agreement and this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms except as such
enforceability may be limited under (i) applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the rights of creditors
generally, and (ii) general principles of equity.
6.2 Purchase Entirely for Own Account. The Notes and the Common Stock to
be acquired by such Investor will be acquired for investment for Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same.
6.3 Accredited Investor. The Investor is an "accredited investor" within
the meaning of Rule 501 of Regulation D, under the Securities Act, as presently
in effect.
6.4 Other Representations and Warranties.
(a) The Investor, by reason of its business and financial
experience, together with the business and financial experience of MSAM, which
is its investment adviser,
(i) has such knowledge sophistication and experience in
financial and business matters and in making investment decisions of this
type that it is capable of evaluating the merits and risks of and of
making an informed investment decision with respect to an investment in
the Notes and Common Stock,
(ii) is capable of protecting its own interest or has engaged
representatives or advisors to assist it in protecting its interests and
(iii) is capable of bearing the economic risk of such
investment.
(b) (i) The Investor understands that an investment in the Company
involves substantial risks.
(ii) The Investor has been given the opportunity to make an
investigation of the proposed activities of the Company.
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(iii) The Investor has been afforded the opportunity to obtain
any additional information requested by it.
(iv) The Investor has had an opportunity to ask questions of
and receive answers from representatives of the Company concerning the Company
and its proposed activities and the terms and conditions of an investment in the
Notes and Common Stock.
(c) The Investor was not formed for the specific purpose of
acquiring an interest in the Company.
(d) The Investor acknowledges that:
(i) the Notes and Common Stock to be issued to such Investor
have not been registered under the Securities Act or state securities laws
by reason of a specific exemption or exemptions from registration under
the Securities Act and applicable state securities laws and such Notes and
Common Stock will bear a legend to such effect,
(ii) the Company's reliance on such exemptions is predicated
in part on the accuracy and completeness of the representations and
warranties of such Investor contained herein,
(iii) the Notes and Common Stock to be issued to such Investor
may not be resold or otherwise distributed unless registered under the
Securities Act and applicable state securities laws, or unless an
exemption from registration is available,
(iv) there is no public market for the Notes and Common Stock;
and
(v) other than as set forth in this Agreement and the Related
Documents, the Company has no obligation or intention to register such
Notes and Common Stock under the Securities Act or any state securities
laws or to take any action that would make available any exemption from
the registration requirements of such laws.
SECTION 7 CONDITIONS TO THE OBLIGATIONS OF EACH INVESTOR.
7.1 Conditions to All Closings. The obligation of each Investor to
purchase the securities to be purchased by it at any Closing are subject to the
satisfaction of each of the following conditions on or before the Closing Date
for such Closing:
(a) Accuracy of Representations and Warranties. Each representation
and warranty contained in Section 5 shall be true and correct in all material
respects on and as of such Closing Date with the same effect as though such
representation and warranty had been
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made on and as of such date (after giving full effect to any supplement or
amendment to Exhibit D delivered pursuant to Section 7.3(a)(x)) except that at
the Stock Closing the representations and warranties set forth in Sections 5.32
and 5.33 shall be deemed to have been made immediately prior to the closing of
the Initial Public Offering.
(b) Performance. The Credit Parties shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by the Credit Parties prior to or at such
Closing.
(c) No Termination Event. No Termination Event or Potential
Termination Event shall have occurred and be continuing or result from the
transactions contemplated to be consummated on such Closing Date.
(d) No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.
(e) No Material Adverse Change. No event shall have occurred or
conditions shall exist that could reasonably be expected to have a Material
Adverse Effect.
(f) Compliance with Laws; Consents and Approvals. The Company shall
have complied with all applicable requirements of federal and state securities
or "blue sky" laws with respect to the issuance and sale of the securities to be
sold at the Closings and each of the Credit Parties shall have received all
consents, permits and other authorizations, and made all such filings and
declarations as may be required under any applicable law or regulation or
pursuant to any other agreement, order or decree to which any of them is a party
or subject in connection with the transactions to be consummated on or prior to
such Closing Date.
(g) Purchase Permitted. Each Investor's purchase of the securities
to be purchased by it at such Closing shall be permitted under all applicable
laws and regulations governing the activities of such Investor.
(h) Expenses. The Investors shall have received all amounts payable
pursuant to Section 17.13 on or prior to such Closing Date.
7.2 Additional Conditions to First Note Closing. In addition to the
conditions specified in Section 7.1, the obligations of each Investor to
purchase Notes at the First Note Closing are subject to the satisfaction of the
following conditions precedent on or before the First Note Closing Date:
(a) Documents. The Credit Parties shall have delivered to each of
the Investors the following, each of which shall be in form and substance
reasonably satisfactory to MSAM:
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(i) The following agreements, duly executed by each of the parties
thereto:
(A) this Agreement;
(B) the Notes being purchased by such Investor at such
Closing, registered in such names and in such denominations as MSAM, on
behalf of such Investor, shall have requested;
(C) the Registration Rights Agreement;
(D) the Shareholder Pledge Agreement;
(E) the Company Pledge Agreement;
(F) the Operating Partnership Pledge Agreement;
(G) the Operating Partnership Collateral Assignment;
(H) the Company Account Pledge Agreement;
(I) the Operating Partnership Account Pledge
Agreement; and
(J) the Management Company Stock Option Agreement.
(ii) A certificate duly executed on behalf of the Company by
its Secretary or an Assistant Secretary, certifying as to the incumbency
and signatures of each officer of the Company executing this Agreement and
each of the Related Documents to which the Company is a party and to which
is attached copies, certified to be true, correct, complete and in full
force and effect of (A) the Company's Articles of Incorporation, (B) the
Company's by-laws and (C) resolutions of the Company's Board of Directors
authorizing the execution, delivery and performance by the Company of this
Agreement and the Related Documents to which the Company is a party, the
issuance and sale of the Notes and the authorization, issuance and sale of
the Common Stock;
(iii) A certificate, duly executed on behalf of the Operating
Partnership, by the Secretary or an Assistant Secretary of the Company, in
its capacity as the sole general partner of the Operating Partnership,
certifying as to the incumbency and signatures of the officers of the
Company executing this Agreement and each of the Related Documents to
which the Operating Partnership is a party and to which is attached
copies, certified to be true, correct, complete and in full force and
effect of (A) the Operating Partnership's certificate of limited
partnership, (B) the partnership agreement of the Operating Partnership
and (C) resolutions of the Board of Directors of the Company authorizing
the execution, delivery and performance by the Operating Partnership of
this Agreement and the Related Documents to which it is a party;
(iv) A certificate, duly executed on behalf of the Company by
its Secretary or an Assistant Secretary, certifying as to the Management
Company's charter and by-laws;
(v) A certificate duly executed by the Chief Executive Officer
of the Company certifying as to each of the matters set forth in Sections
7.1(a), (b) and (c);
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(vi) Good standing certificates for each of the Company, the
Operating Partnership and the Management Company from the Secretary of
State of their respective jurisdictions of formation and each other
jurisdiction in which they are required to be qualified to do business;
(vii) the Budget;
(viii) An opinion of Battle ▇▇▇▇▇▇, LLP, counsel for each of
the Credit Parties, dated the First Note Closing Date, addressed to the
Investors, substantially in form set forth in Exhibit E-1;
(ix) All certificates or other instruments representing any
interests or other securities pledged as Collateral at the First Note
Closing, together with executed and undated stock powers or assignments in
blank, and evidence that all filings and other actions necessary to
perfect the Collateral Agent's security interest in the Collateral
delivered at the First Note Closing, have been made or taken and that the
Collateral Agent's Lien on the Collateral has priority over any other
Liens, other than Permitted Liens;
(x) Copies, certified to be true, correct and complete by the
Credit Parties, of consents and approvals of any Governmental Authority or
third party required in connection with the transactions to be consummated
on the First Note Closing Date (including, without limitation, any
consents of any partners and lenders required in order to pledge the
interests to be pledged under the Security Documents); and
(xi) Copies of the Initial Contribution Agreements, duly
executed by each of the parties thereto.
(b) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the Related Documents
and all other documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to MSAM and MSAM shall have
received all such counterpart originals or certified or other copies of such
additional documents, instruments or opinions as it may request.
7.3 Conditions to Subsequent Note Closings. In addition to the conditions
set forth in Section 7.1, the obligations of each Investor to purchase Notes at
a Subsequent Note Closing are subject to the satisfaction of the following
conditions precedent on or before such Subsequent Note Closing Date.
(a) Documents. The Credit Parties shall have delivered to each of
the Investors the following, each of which shall be in form and substance
satisfactory to MSAM:
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(i) The Notes (duly executed by the Company) being purchased
by such Investor at such Closing, registered in such names and in such
denominations as MSAM, on behalf of such Investor shall have requested;
(ii) A certificate duly executed on behalf of the Company by
its Secretary or an Assistant Secretary, certifying as to the incumbency
and signatures of each officer of the Company executing this Agreement and
each of the Related Documents to which the Company is a party and to which
is attached copies, certified to be true, correct, complete and in full
force and effect of (A) the Company's Articles of Incorporation, (B) the
Company's by-laws and (C) resolutions of the Company's Board of Directors
authorizing the execution, delivery and performance by the Company of this
Agreement and the Related Documents to which the Company is a party, the
issuance and sale of the Notes and the authorization, issuance and sale of
the Common Stock;
(iii) A certificate, duly executed on behalf of the Operating
Partnership, by the Secretary or an Assistant Secretary of the Company, in
its capacity as the sole general partner of the Operating partnership,
certifying that there had been no change in the incumbency of the officers
or the organizational documents or authorizing resolutions of such entity
delivered at the First Note Closing (and that such documents and
resolutions remain in full force and effect) or, if there has been a
change, certifying as to the change and, if applicable, attaching a true,
correct and complete copy of any amendment or superseding document;
(iv) A certificate of the Secretary or an Assistant Secretary
of the Company certifying that there has been no change in the
organizational documents of the Management Company;
(v) A certificate duly executed by the Chief Executive Officer
of the Company certifying as of such Subsequent Note Closing Date as to
each of the matters set forth in Sections 7.1(a), (b) and (c);
(vi) Good Standing Certificates for each of the Company, the
Operating Partnership and the Management Company from the Secretary of
State of their respective jurisdictions of formation and each other
jurisdiction in which they are required to be qualified to conduct
business;
(vii) An opinion of Battle ▇▇▇▇▇▇, LLP, counsel for each of
the Credit Parties, dated such Subsequent Note Closing Date, addressed to
the Investors, substantially in the form set forth in Exhibit E-2;
(viii) Copies, certified to be true, correct and complete by
the Credit Parties, of all consents and approvals of any Governmental
Authority or third party
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required in connection with the transactions to be consummated on such
Subsequent Note Closing Date; and
(ix) The notice required pursuant to Section 4.2 or 4.3;
(x) Amendments to Exhibit D to reflect material modifications
to the representations and warranties in Section 5 since the prior
Closing; provided however that such modifications shall be consistent with
the Budget.
(b) Initial Public Offering. MSAM shall continue to be reasonably
satisfied that each of the Credit Parties are using their reasonable best
efforts to accomplish the Initial Public Offering at the soonest possible time.
(c) Second Note Closing Date. The Second Note Closing shall have
occurred on or prior to June 15, 1997.
(d) Redemption of Notes. The Notes shall not have been redeemed
pursuant to Section 13 of this Agreement.
(e) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the Related Documents
and all other documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to MSAM and MSAM shall have
received all such counterpart originals or certified or other copies of such
additional documents, instruments or opinions as it may reasonably request.
7.4 Additional Conditions to the Second Note Closing. In addition to the
conditions set forth in Section 7.1 and 7.3, the obligations of each Investor to
purchase Notes at the Second Note Closing are subject to the satisfaction of the
following conditions precedent on or before the Second Note Closing Date:
(a) DRA Contribution Agreement. A copy of the Contribution
Agreement, duly executed by each of the parties thereto, pursuant to which
Dreyfus Realty Advisors or its Affiliates has agreed to contribute partnership
interests to the Operating Partnership as contemplated in the Budget.
(b) Financial Information. The Company shall have delivered to MSAM
a Pro Forma Statement of Operations in the form to be included in the Company's
Registration Statement on Form S-11 in connection with its Initial Public
Offering, together with a certificate duly executed by the Chief Executive
Officer of the Company certifying that the Pro Forma Statement of Operations
presents fairly in all material respects, on a pro forma basis, the financial
condition and results of operations of the Company purported to be shown
thereby, at the dates and for the periods indicated.
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(c) Retail Properties. Each of the Credit Parties shall, to the
extent permitted by the organizational documents pursuant to which such
interests were issued, have caused to be contributed to the Operating
Partnership and pledged as collateral to the Collateral Agent the direct or
indirect interests in the Retail Properties that are held directly or indirectly
by the REIT Sponsors.
7.5 Conditions to the Stock Closing. In addition to the conditions set
forth in Section 7.1, the obligation of each Investor to purchase the shares of
Common Stock to be purchased by such Investor pursuant to Section 3.1 are
subject to the satisfaction of each of the following conditions on or before the
Stock Closing Date:
(a) Documents. The Credit Parties shall have delivered to each of
the Investors the following, each of which shall be in form and substance
satisfactory to MSAM:
(i) Certificates representing the number of shares of Common
Stock to be purchased by such Investor at such Closing pursuant to Section
3.1, and the number of shares of Common Stock issuable on conversion of
such Investor's Notes , registered in the names and in such denominations
as MSAM, on behalf of such Investor, shall instruct;
(ii) A copy of the Certificate of Incorporation, together with
all amendments thereto, of the Company certified by the Secretary of State
of the State of Maryland;
(iii) A certificate duly executed on behalf of the Company by
its Secretary or an Assistant Secretary certifying as to the incumbency
and signatures of the each officer of the Company authorized to execute
and deliver the documents and instruments required to be delivered by the
Company in connection with this Agreement and the Related Documents and to
which is attached copies, certified to be true, correct and complete and
in full force and effect of (A) the by-laws of the Company and (B) the
resolutions of the Board of Directors of the Company delivered in
connection with the First Note Closing, together with any amendments or
additional resolutions relating to the matters authorized thereby
subsequently adopted by the Board, as well as all resolutions of the Board
and the Shareholder adopted in connection with the Initial Public
Offering, including, without limitation, those resolutions authorizing an
amendment to the Certificate of Incorporation to increase the authorized
capital stock of the Company;
(iv) A certificate, duly executed on behalf of the Operating
Partnership, by the Secretary or an Assistant Secretary of the Company, in
its capacity as the sole general partner of the Operating Partnership,
certifying that there had been no change in the incumbency of the officers
or the organizational documents or authorizing resolutions of such entity
delivered at the First Note Closing (and that such documents and
resolutions remain in full force and effect) or, if there has been a
change, certifying as
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to the change and, if applicable, attaching a true, correct and complete
copy of any amended or superseding document;
(v) A certificate of the Secretary or Assistant or Assistant
Secretary of the Company certifying that there has been no change in the
organizational documents of the Management company;
(vi) A certificate duly executed by the Chief Executive
Officer of each of the Company certifying as of the Stock Closing Date as
to each of the matters set forth in Sections 7.1(a), (b) and (c);
(vii) Good Standing Certificates for each of the Company, the
Operating Partnership and the Management Company from the Secretary of
State of their respective jurisdictions of formation and each other
jurisdiction in which they are required to be qualified to conduct
business;
(viii) A copy of the Company's registration statement on Form
S-11, as declared effective by the Securities and Exchange Commission (the
"Commission"), a copy of the Company's final prospectus used in connection
with the Initial Public Offering, a fully executed copy of the
underwriting agreement entered into by the Company with the underwriters
for the Initial Public Offering, and a copy of all closing documents
delivered under such underwriting agreement at the closing of the Initial
Public Offering;
(ix) A certificate of the Chief Financial Officer of the
Company certifying as to the calculation of the number of shares of Common
Stock into which the Notes were converted;
(x) An opinion of Battle ▇▇▇▇▇▇, LLP, counsel for each of the
Credit Parties, dated the Stock Closing Date, addressed to each of the
Investors, substantially in the form set forth in Exhibit E-3;
(xi) Copies, certified to be true, correct and complete by the
Credit Parties, of all consents and approvals of Governmental Authorities
and third parties required in connection with the transactions to be
consummated on the Stock Closing Date;
(xii) The notice required pursuant to Section 4.4;
(xiii) A certificate of the Chief Executive Officer of the
Company certifying that the representations and warranties of the Credit
Parties set forth in the Underwriting Agreement are true and correct in
all material respects; and
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(xiv) A copy of the opinion of Battle ▇▇▇▇▇▇, LLP, delivered
to the Company and the underwriters pursuant to the terms of the
Underwriting Agreement, together with a letter from Battle ▇▇▇▇▇▇, LLP, to
the Investors expressly providing that the Investors may rely on such
opinion.
(b) Initial Public Offering. The closing of the Initial Public
Offering shall have occurred.
(c) Redemption of Notes. The Notes shall not have been redeemed
pursuant to Section 13 of this Agreement.
(d) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the Related Documents
and all other documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to MSAM and MSAM shall have
received all such counterpart originals or certified or other copies of such
additional documents, instruments or opinions as it may reasonably request.
SECTION 8 CONDITION TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company under Section 4.1, 4.2, 4.3 and 4.4
of this Agreement as to each Investor are subject to the condition that the
representations and warranties of the Investor contained in Section 6 shall be
true and correct in all material respects on and as of the applicable Closing
Date with the same effect as though such representations and warranties had been
made on and as of that date.
SECTION 9 AFFIRMATIVE COVENANTS.
9.1 Payment of Principal and Interest. The Company covenants and agrees
that it will duly and promptly pay or cause to be paid the principal of and
interest on each of the Notes at the place or places, at the respective times
and in the manner provided in this Agreement and the Notes. Unless otherwise
provided in this Agreement, all payments shall be made by electronic wire
transfer of immediately available United States funds.
9.2 Maintenance of Existence and Rights; Conduct of Business. The Company
and the Operating Partnership shall, and shall cause each of their Controlled
Subsidiaries to preserve and maintain their existence and all rights, privileges
and franchises necessary or desirable in the normal conduct of their businesses,
and conduct, and cause each of their Controlled Subsidiaries to conduct, their
businesses in an orderly and efficient manner consistent with good business
practices and in accordance with all applicable laws and regulations. In
addition, each Credit Party will use its reasonable best efforts to cause each
Subsidiary that is not a Controlled Subsidiary to comply with the foregoing.
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9.3 Financial Statements, Reports and Documents. (a) Commencing after the
Initial Public Offering, the Credit Parties shall deliver to MSAM, with
sufficient copies for each of the Investors, the following:
(i) Quarterly Statements. As soon as available and in
any event within forty-five (45) days after the end of each fiscal
quarter, (A) copies of the consolidated and consolidating balance sheet of
the Company and its consolidated Subsidiaries, including, without
limitation, the Operating Partnership and Management Company as of the end
of each such period, and the related consolidated and consolidating
statements of operations, shareholders' equity and cash flows of the
Company and its consolidated Subsidiaries for each such period and for the
portion of the fiscal year ending with such period, in each case setting
forth in comparative form the figures for the corresponding period of the
preceding fiscal year and (B) a schedule of the contingent liabilities of
the Company, all in reasonable detail, and certified on behalf of the
Company and its consolidated Subsidiaries by its Chief Financial Officer
to fairly represent the financial position and results of operations of
the Company and its consolidated Subsidiaries as of such date and for the
period then ended, and to have been prepared in accordance with GAAP
applied on a consistent basis, subject to normal year-end audit
adjustments and the absence of full footnote disclosures; and
(ii) Annual Statements. As soon as available and in any
event within ninety (90) days after the close of each fiscal year, copies
of the consolidated and consolidating balance sheet of the Company and its
consolidated Subsidiaries, including, without limitation, the Operating
Partnership and the Management Company, as of the close of such fiscal
year and the related consolidated and consolidating statements of
operations, shareholders' equity and cash flows of the Company and its
consolidated Subsidiaries for such fiscal year, in each case setting forth
in comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon (which shall not
be qualified by reason of any limitation imposed by the Company) of
independent accountants of recognized national standing selected by the
Company to the effect that such financial statements have been prepared in
accordance with GAAP and fairly represent the financial position and
results of operations of the Company and its consolidated Subsidiaries as
of such date and for the period then ended, and that the examination of
such accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards.
(b) The Credit Parties shall deliver to MSAM, with sufficient copies
for each of the Investors, the following:
(i) Registration Statement and Correspondence. All
drafts of the Company's registration statement relating to the Initial
Public Offering which are distributed to parties other than the Company,
its Affiliates and its counsel, together with all correspondence sent by
the Company or its counsel to, or received by Company or its counsel from,
the Commission or any securities exchange;
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(ii) SEC Filings. Promptly upon the filing thereof,
copies of each registration statement and prospectus, any such amendments
or supplements and all documents incorporated by reference therein and any
other document filed by the Company with any securities exchange or the
Commission or any successor agency; and
(iii) Other Information. Such other information
concerning the business, properties or financial condition of the Credit
Parties as MSAM shall reasonably request.
9.4 Notices. Immediately upon becoming aware of the existence of any
condition or event which constitutes a Termination Event or Potential
Termination Event, the Credit Parties shall furnish to MSAM written notice
specifying the nature and period of existence thereof and the action which the
Credit Parties are taking or propose to take with respect thereto.
9.5 Other Notices. The Credit Parties shall promptly notify MSAM of (i)
any change which could reasonably be expected to have a Material Adverse Effect;
(ii) the commencement of, or any material determination in, any litigation with
any third party or any proceeding before any Governmental Authority affecting
any Credit Party or Subsidiary which could reasonably be expected to have a
Material Adverse Effect; and (iii) any material adverse claim against or
affecting any Credit Party or Subsidiary or any of their respective properties.
9.6 Books and Records; Access. Each of the Credit Parties, shall, and
shall cause each of its Controlled Subsidiaries to, give representatives and
agents of MSAM, on behalf of the Investors, reasonable access upon reasonable
notice and during business hours to, and permit such representative or agent to
examine, copy or make excerpts from, any and all books, records and documents in
the possession of such Credit Party of Controlled Subsidiary and relating to its
business affairs and to inspect any of the properties of any such Credit Party
or Controlled Subsidiary and to discuss the business and operations of such
Credit Party or Controlled Subsidiary with its officers and employees. Each
Credit Party shall, and shall cause each of their Controlled Subsidiaries to,
maintain complete and accurate books and records of its business transactions in
accordance with good accounting practices. In addition, each Credit Party will
use its reasonable best efforts to cause each Subsidiary that is not a
Controlled Subsidiary to comply with the foregoing.
9.7 Compliance with Material Agreements. (a) Each Credit Party shall, and
shall cause each of its Controlled Subsidiaries to, comply in all material
respects with all material agreements indentures, mortgages or documents binding
on it or affecting its properties or business. In addition, each Credit Party
will use its reasonable best efforts to cause each Subsidiary that is not a
Controlled Subsidiary to comply with the foregoing.
(b) Commencing April 1, 1997, the Company upon request of MSAM
(which request will not be made more frequently than once during any calendar
month) will provide, on behalf of all the Credit Parties, to MSAM within three
(3) Business Days a true, correct and complete certificate (a "Section 9.7(b)
Certificate") in the form of Exhibit R, with appropriate
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insertions, or in such other form as MSAM may reasonably request in order to
ascertain regularly, the use by the Credit Parties of proceeds of the Notes.
9.8 Compliance with Law. Each Credit Party shall and shall cause each of
their Controlled Subsidiaries to, comply with all applicable constitutions,
laws, rules, regulations, judgments, orders, decisions, rulings and decrees of
any Governmental Authority applicable to it or to any of its properties,
business operations or transactions, a violation of which would have a Material
Adverse Effect. In addition, each Credit Party will use its reasonable best
efforts to cause each Subsidiary that is not a Controlled Subsidiary to comply
with the foregoing.
9.9 Payment of Taxes and Other Indebtedness. Each of the Credit Parties
shall, and shall cause each of the Controlled Subsidiaries to, pay and
discharge: (i) all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any property belonging to it,
before delinquent, (ii) all lawful claims (including claims for labor, materials
and supplies) and (iii) all of its Indebtedness as and when due; provided,
however, that no Credit Party or Subsidiary shall be required to pay any such
tax, assessment, charge, claim or levy, if and so long as the amount,
applicability or validity thereof is at the time being contested in good faith
by appropriate proceedings and appropriate accruals and reserves therefor have
been established in accordance with GAAP. In addition, each Credit Party will
use its reasonable best efforts to cause each Subsidiary that is not a
Controlled Subsidiary to comply with the foregoing.
9.10 Insurance. Each of the Credit Parties shall, and shall cause each of
their Controlled Subsidiaries to, apply for and continue in force, or cause to
be applied for and continued in force, adequate insurance covering risks of such
types and in such amounts and with such deductibles as are customary for other
companies engaged in similar lines of business and with good and responsible
insurance companies. In addition, each Credit Party will use its reasonable best
efforts to cause each Subsidiary that is not a Controlled Subsidiary to comply
with the foregoing.
9.11 Board of Directors. Effective on and for each year after the Initial
Public Offering, until the Investors shall determine otherwise or the aggregate
amount of the Common Stock held by the Investors is less than 60% of the Common
Stock held by the Investors immediately following the Initial Public Offering,
the Company will afford one person selected by MSAM full board observation
rights, including full and timely notice of all meetings of the Board of
Directors and each of its committees, copies of all written and other materials
disseminated to members of the Board or its committees, and the right to attend
in person or by telephone all meetings of the Board or its committees. Effective
on and for each year after the completion of the Initial Public Offering, the
Company will nominate such persons as is necessary to ensure the majority of the
directors of the Company are independent directors unaffiliated with the
Company.
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9.12 Additional Capital. Each of the Credit Parties agrees to use its
reasonable best efforts to complete the Initial Public Offering in a minimum
amount of $200 million as soon as practicable, but in any event prior to
December 31, 1997.
9.13 Use of Proceeds. The Company shall use the proceeds received by it
from the sale of Notes solely as provided in the Budget.
9.14 Further Assurances. The Credit Parties shall, and shall cause each of
their Controlled Subsidiaries to, make, execute or endorse, and acknowledge and
deliver or file or cause the same to be done, all such notices, certificates and
additional agreements, undertakings, conveyances, transfers, assignments or
other assurances, and take any and all such other action, as the Investors may,
from time to time, deem reasonably necessary or proper in connection with this
Agreement or any of the Related Documents, or the obligations of the Credit
Parties or their Subsidiaries hereunder or thereunder.
9.15 Additional Collateral. Upon the request of the Collateral Agent and
at the expense of the Company, (i) within five (5) days after such request, to
furnish the Collateral Agent a description of the real and personal properties
of the Credit Parties and the Subsidiaries, including partnership interests,
stocks, securities, contract rights and other property that the Credit Parties
obtain, directly or indirectly, after the First Note Closing Date and
specifically including the option of the Company to repurchase Tower 45 from
Itochu Corporation, when and if the Company has such option, in detail
reasonably satisfactory to the Collateral Agent, (ii) within ten (10) business
days after such request, duly execute and deliver to the Collateral Agent
mortgages, pledges, assignments and other security agreements, as specified by
and in form and substance reasonably satisfactory to the Collateral Agent,
securing payment of all the Obligations under this Agreement and the Related
Documents and constituting Liens on all such properties held by the Credit
Parties, (iii) within thirty (30) days after such request, take whatever
reasonable action (including, without limitation, the recording of mortgages,
the filing of Uniform Commercial Code financing statements, the giving of
notices and the endorsement of notices on title documents) as may be necessary
or advisable in the reasonable opinion of the Investors to vest in the
Collateral Agent (or in any representative of the Collateral Agent designated by
it) valid and subsisting Liens on the assets purported to be subject to the
security agreements delivered pursuant to this Section 9.15, enforceable against
all third parties in accordance with their terms, and (iv) within forty-five
(45) days after such request, deliver to the Collateral Agent a signed copy of a
favorable opinion of counsel for the Company, addressed to the Collateral Agent
and the Investors and acceptable to the Investors, as to the matters contained
in clause (iii) above, as to such security agreements being legal, valid and
binding obligations of the Credit Parties enforceable in accordance with their
terms and as to such other matters as the Investors may reasonably request. Not
by way of limitation of any other provisions hereof (including without
limitation Section 7.4(c)), each of the Credit Parties shall use reasonable
efforts to cause all direct or indirect interests in the Retail Properties that
are held directly or indirectly by the REIT Sponsors which are not subject to
restrictions on transfer under the organizational documents pursuant to which
such interests were issued to be
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contributed to the Operating Partnership and pledged as collateral to the
Collateral Agent no later than the Second Note Closing Date.
9.16 REIT Qualification. The Company shall use its reasonable best efforts
to ensure that at such time as it files its tax return for its fiscal year
ending December 31, 1997 that it will have satisfied all of the requirements
necessary to be taxed as a real estate investment trust within the meaning of
Sections 856-860 of the Code, and shall elect to be taxed as such and make all
necessary filings required in connection therewith.
9.17 Partnership Qualification. The Credit Parties shall use their
reasonable best efforts to ensure that the Operating Partnership and each
non-corporate Subsidiary thereof is taxed as a partnership for U.S. Federal
income tax purposes.
9.18 Domestically-Controlled REIT. The Company covenants and agrees that
(i) the percentage in value of its stock that is held (or is reasonably expected
to be held) directly or indirectly by foreign persons will not equal or exceed
25% and (ii) it will provide the Investors such information and/or verification
as the Investors shall reasonably request in order to verify whether the Company
constitutes a "domestically-controlled REIT" as defined under Section
897(h)(4)(B) of the Code.
9.19 Pension-Held REIT. The Company covenants and agrees that (i) no
"qualified trust" holds or will hold, directly or indirectly, more than 10% of
the interests in the Company, and (ii) it will provide MSAM such information
and/or verification as MSAM shall reasonably request in order to verify whether
the Company constitutes a "pension-held REIT" as defined under Section
856(h)(3)(C) of the Code.
9.20 Management Company. If the Management Company shall fail to fully
comply with its charter, each Credit Party shall use its reasonable best efforts
to enforce its rights under the Management Company's charter.
9.21 Additional Capital. Each of the Credit Parties agrees that in the
event that it or any Controlled Subsidiary requires additional capital to
acquire any properties or interests in properties (an "Acquisition Event"), it
shall first seek such additional capital from the Investors, which shall have
the right (but shall not be obligated) to provide such additional capital in the
form of convertible notes on the same terms as set forth herein, except that
such notes shall be convertible into the number of shares of Common Stock
(computed on the basis of an assumed price per share equal to the Mid-Point
Purchase Price) equal in value to the product of (i) 1.5 (1.25 with respect to
an Acquisition Event relating to CXX Mineola Limited Partnership) times (ii) the
principal amount of notes issued to finance any such acquisitions. In the event
a Credit Party or one of its Controlled Subsidiaries requires additional capital
in respect of a proposed Acquisition Event, it shall provide written notice of
the proposed Acquisition Event to MSAM (which notice shall set forth reasonable
detail regarding the acquisition terms and background information of the
underlying property) and MSAM shall have five Business Days from receipt of such
notice to commit in writing (a "Commitment Notice") to fund 100% of the expenses
and
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costs relating to the proposed Acquisition Event on the terms set forth in
this Section 9.21. If MSAM delivers a Commitment Notice to a Credit Party as set
forth above, the Investors shall be required to close the purchase in respect of
the Acquisition Event within fifteen Business Days after delivery of the
Commitment Notice. If MSAM does not deliver a Commitment Notice within the time
period set forth above, the Credit Parties and/or their Controlled Subsidiaries
will be permitted to obtain alternative financing for the purchase relating to
the Acquisition Event free and clear of the restrictions set forth in this
Section 9.21.
9.22 Good Faith. In conducting negotiations with third parties which
directly or indirectly affect the conversion rate of the Notes, the Credit
Parties shall, and shall cause the Controlled Subsidiaries to, conduct all such
negotiations in good faith.
SECTION 10 NEGATIVE COVENANTS.
10.1 Limitation on Indebtedness. No Credit Party shall, and no Credit
Party shall permit any Controlled Subsidiary to, directly or indirectly, incur,
create, contract, assume, have outstanding, Guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness, except for (i)
the Notes, (ii) any Indebtedness of such Person existing on the date
hereof, (iii) any Indebtedness expressly contemplated to be incurred under the
Budget and (iv) Indebtedness incurred by any Controlled Subsidiary in the
operation of the real properties owned by such Controlled Subsidiary in the
ordinary course of business. If as a result of the incurrence by any Subsidiary
other than a Controlled Subsidiary of any additional Indebtedness or the
refinancing of any existing Indebtedness, any amounts are distributed or
available for distribution to the Shareholder, any Credit Party or any
Controlled Subsidiary, the Credit Parties shall, or cause the appropriate
Persons to, have such amounts reserved or placed into an escrow (in either case,
under arrangements reasonably satisfactory to MSAM) and pledged as additional
Collateral (unless such amounts are used exclusively to finance transactions or
expenses contemplated in the Budget).
10.2 Negative Pledge. No Credit Party shall, and no Credit Party shall
permit any Controlled Subsidiary to, directly or indirectly, create, incur or
permit or suffer to exist any Lien upon any of its properties or assets, now
owned or hereafter acquired, except for (i) Liens in favor of the Collateral
Agent under the Security Documents, (ii) Liens securing Indebtedness permitted
under clauses (ii) and (iii) of Section 10.1, (iii) Permitted Liens and (iv)
Liens disclosed in the title reports listed on Exhibit D on the date hereof. In
addition, each Credit Party will use its reasonable best efforts to cause each
Subsidiary that is not a Controlled Subsidiary to comply with the foregoing.
10.3 Prohibition on Dividends. The Credit Parties shall not make or
declare any Dividend, either directly or indirectly, whether in cash, property
or obligations; provided that (i) so long as (A) no Potential Termination Event
has occurred and is continuing, (B) no notice has been delivered pursuant to
Section 13.2(c) or (C) the Company has not failed to redeem the Notes as
required under Section 13, and (ii) the Company has cash on deposit or is
entitled to receive cash distributions previously declared by the Operating
Partnership (which has cash on
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deposit in an amount sufficient to pay such distributions) in an amount
sufficient to pay the cash portion of any interest on the Notes due on the next
Interest Payment Date following the date such Dividend is declared, the Credit
Parties may declare and pay Dividends to the extent of funds legally available
therefor, provided the proceeds of such Dividend are used exclusively to finance
transactions or expenses contemplated in the Budget or otherwise required for
the Company to maintain its tax status as a real estate investment trust under
the Code.
10.4 Material Agreements. No Credit Party shall, or permit any Controlled
Subsidiary to, consent to or permit any alteration, amendment, modification,
release, waiver or termination of any provision of any agreement to which it is
a party, including, without limitation, any agreement governing or relating to
any Collateral, if such action could adversely affect the interests of the
Investors or could reasonably be expected to have a Material Adverse Effect. In
addition, each Credit Party will use its reasonable best efforts to cause each
Subsidiary that is not a Controlled Subsidiary to comply with the foregoing.
10.5 Certain Transactions. Except as contemplated in the Budget, no Credit
Party shall, or permit any Controlled Subsidiary to, enter into any transaction
with an Affiliate upon terms less favorable to such Person than those which it
could obtain in arm's-length dealings with Persons other than Affiliates. In
addition, each Credit Party will use its reasonable best efforts to cause each
Subsidiary that is not a Controlled Subsidiary to comply with the foregoing.
10.6 Issuance of Interests. No Credit Party shall, or permit any
Controlled Subsidiary to, issue, sell or otherwise dispose of its equity
interests or other securities, or rights, warrants or options to purchase or
acquire any such interests or other securities, except as expressly contemplated
hereunder and under the Budget. In addition, each Credit Party will use its
reasonable best efforts to cause each Subsidiary that is not a Controlled
Subsidiary to comply with the foregoing. If as a result of the issuance, sale or
disposition of an equity interest or other securities, or rights, warrants or
options to purchase or acquire any such interests or other securities, by a
Subsidiary other than a Controlled Subsidiary, any amounts are distributed to
the Shareholder, any Credit Party or any Controlled Subsidiary, the Credit
Parties shall, or shall cause the appropriate Persons to, have such amounts
reserved or placed into escrow (in either case, under arrangements reasonably
satisfactory to MSAM) and pledged as additional collateral (unless such amounts
are used exclusively to finance transactions as expenses contemplated in the
Budget).
10.7 Mergers and Sales of Assets. No Credit Party shall, or permit any
Controlled Subsidiary to, dissolve or liquidate, or become a party to any merger
or consolidation or sell, transfer, lease or otherwise dispose of any of its
property, assets or business, except (i) as contemplated under the Budget, (ii)
the leasing by any Controlled Subsidiary of any real property owned by it in the
ordinary course of business (iii) the sale of personal property for cash for an
amount not less than the fair value thereof, in the ordinary course of business,
provided the aggregate amount of all such sales shall not exceed $250,000 and
(iv) the disposition by the Operating Partnership immediately prior to the
closing of the Initial Public Offering of any direct or indirect interests owned
by it in the Retail Properties. In addition, each Credit Party will use
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its reasonable best efforts to cause each Subsidiary that is not a Controlled
Subsidiary to comply with the foregoing. If as a result of any dissolution,
liquidation, merger, consolidation, sale, transfer, lease or other disposition
of assets by a Subsidiary other than a Controlled Subsidiary, any amounts are
distributed to the Shareholder, any Credit Party or any Controlled Subsidiary
the Credit Parties shall, or shall cause the appropriate Persons to, have such
amounts reserved or placed into escrow (in either case, under arrangements
reasonably satisfactory to MSAM) and pledged as additional collateral (unless
such amounts are used exclusively to finance transactions as expenses
contemplated the Budget).
10.8 No Amendments. No Credit Party shall, or permit any Controlled
Subsidiary to, amend its organizational documents, except (i) as expressly
contemplated under the Budget and (ii) any amendment to the Company's
Certificate of Incorporation increasing its authorized capital stock approved by
MSAM. In addition, each Credit Party will use its reasonable best efforts to
cause each Subsidiary that is not a Controlled Subsidiary to comply with the
foregoing.
10.9 ERISA. No Credit Party shall, or permit any Controlled Subsidiary to,
establish, participate in or otherwise contribute to any employee benefit plan
subject to ERISA. In addition, each Credit Party will use its reasonable best
efforts to cause each Subsidiary that is not a Controlled Subsidiary to comply
with the foregoing.
10.10 Contribution Agreements. No Credit Party shall, or permit any
Controlled Subsidiary to, enter into any Contribution Agreement unless such
agreement has been previously approved by MSAM which approval shall not be
unreasonably withheld or delayed.
10.11 Reference to Investors or MSAM. No Credit Party shall, or permit any
Controlled Subsidiary to, make reference to any Investor or MSAM in any public
document without in each case the prior written consent of MSAM, which consent
shall not be unreasonably withheld or delayed.
SECTION 11 TERMINATION OF COVENANTS.
Each of the covenants set forth in Sections 9 and 10 of this
Agreement shall terminate on the date the Notes and all of the Obligations are
repaid in full or on the date of the closing of the Initial Public Offering,
except that, if the Initial Public Offering is consummated, the covenants set
forth in Sections 9.3(a) and (b), 9.6 and 9.11 shall continue and full force in
effect for so long as any Investor shall hold greater than 10% of any
Registrable Securities received by it in connection with the Initial Public
Offering or, if earlier, such time as is specified in such covenant.
SECTION 12 TERMINATION EVENTS.
The occurrence of any of the following shall constitute a Termination
Event:
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(a) the Company defaults in the payment of the principal of any of
the Notes, when the same shall become due and payable, whether at maturity, upon
any optional or mandatory redemption or otherwise;
(b) the Company defaults in the payment of any interest on any of
the Notes or any other amount due hereunder, when the same becomes due and
payable, and such default is not cured within five (5) Business Days;
(c) the Company fails to use the proceeds from the sale of the Notes
as provided in the Budget;
(d) any Credit Party fails duly to observe or perform any of its
covenants or agreements contained in this Agreement or any of the Related
Documents to which it is a party (other than as set forth in (a), (b) and (c)
above), and, if such failure is capable of cure, such failure continues uncured
for a period of 10 days, provided, however, that, if such failure is not capable
of cure within 10 days, such 10 day period shall be extended to 30 days,
provided the breaching Credit Party is making a good faith and diligent attempt
to cure; or
(e) ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇") has advised MSAM that the Initial Public Offering cannot in its view be
completed or fails to advise MSAM within two days (upon MSAM making a request)
that the Initial Public Offering can in its view be completed, provided that the
foregoing shall not constitute a Termination Event for a period of 180 days
after the date such notice is delivered by MSAM to the Company; provided
further, that, if after advising MSAM as aforesaid ▇▇▇▇▇▇▇ ▇▇▇▇▇ reverses its
position, no Termination Event shall be deemed to have occurred, except that, if
▇▇▇▇▇▇▇ ▇▇▇▇▇ reverses its position again, it shall constitute a Termination
Event on the expiration of the number of days remaining in the 180-day period at
the time ▇▇▇▇▇▇▇ ▇▇▇▇▇ first reversed its position (and no further tolling of
such period shall be permitted); or
(f) any Credit Party or any Subsidiary shall:
(i) commence a voluntary case under any applicable Bankruptcy
Law;
(ii) consent to the entry of an order for relief against it in
any involuntary case under any applicable Bankruptcy Law;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) generally not pay its debts as they become due or admit in
writing its inability to pay its debts;
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provided, however, that if any of the foregoing occur with respect to a
Subsidiary other than a Controlled Subsidiary, it shall not constitute a
Termination Event unless it would have a Material Adverse Effect;
(g) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against any Credit Party, or any Subsidiary
in an involuntary case;
(ii) appoints a Custodian of any Credit Party or any
Subsidiary or for any substantial part of his or its property; or
(iii) orders the winding up or liquidation of any Credit Party
or Subsidiary;
provided, however, that if any of the foregoing occur with respect to a
Subsidiary other than a Controlled Subsidiary, it shall not constitute a
Termination Event unless it would have a Material Adverse Effect;
(h) Any involuntary case, proceeding or other action is commenced
against any Credit Party or Subsidiary under any Bankruptcy Law and such case,
proceeding or other action remains undismissed for a period of 60 days;
provided, however, that if any of the foregoing occur with respect to a
Subsidiary other than a Controlled Subsidiary, it shall not constitute a
Termination Event unless it would have a Material Adverse Effect;
(i) Any Credit Party or Subsidiary shall fail to pay any
Indebtedness (other than the Notes) when due or shall default in the performance
of any other obligations relating to such indebtedness if the effect of such
defaults is to accelerate the maturity of such Indebtedness or to permit the
holders thereof to cause such Indebtedness to become due prior to its stated due
date, and such failure to default shall continue unremediated for a period of 60
days; provided, however, that if any of the foregoing occur with respect to a
Subsidiary other than a Controlled Subsidiary, it shall not constitute a
Termination Event unless it would have a Material Adverse Effect;
(j) any judgment or decree for the payment of money in excess of
$250,000 (to the extent not covered by insurance or a bond) shall be rendered
against any Credit Party or any Subsidiary and shall not be paid or discharged,
waived or the execution thereof stayed on appeal within 30 days following the
entry of such judgment or decree or (ii) any judgment or decree;
(k) If the Shareholder resigns as the Chief Executive Officer of the
Company;
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(l) If the Company unintentionally breaches a representation or
warranty contained in this Agreement that has a Material Adverse Effect, and
such breaches continue for a period of 30 days without being cured if capable of
being cured; or
(m) If the Company intentionally breaches a representation or
warranty contained in this Agreement.
SECTION 13 REDEMPTION OF THE NOTES.
13.1 Optional Redemption. The Notes shall be redeemable, in whole but not
in part, at any time prior to the occurrence of any event giving rise to a
mandatory redemption at the option of the Company at a redemption price equal to
100% of the outstanding principal amount of the Notes plus all accrued and
unpaid interest thereon to the date of redemption plus a premium equal to 5% of
the weighted average outstanding principal amount of the Notes computed over the
period from the First Note Closing Date to but not including the date of
redemption (the "Optional Redemption Price"). The Company shall give each holder
of the Notes written notice of any redemption pursuant to this Section 13.1 at
least ten (10) Business Days prior to the date of redemption. The notice shall
identify the Notes to be redeemed and shall state the redemption date, the
Optional Redemption Price (and include a reasonably detailed calculation
thereof) and, in accordance with Section 2.4, the manner and place of payment.
Any notice of redemption given by the Company pursuant to this Section 13.1
shall be irrevocable and shall obligate the Company to pay the Optional
Redemption Price on the date specified in such notice.
13.2 Mandatory Redemption. Upon the occurrence of any of the following
events the Company shall immediately redeem the Notes at a price equal to the
Optional Redemption Price:
(a) Any Termination Event;
(b) The Maturity Date; and
(c) 180 days after the date of delivery by MSAM, on behalf of the
Investors, of a written notice requiring the Company to redeem the Notes,
provided that no such notice may be delivered to the Company prior to September
1, 1997.
13.3 Maturity; Surrender. In the case of any redemption of Notes pursuant
to this Section 13, the principal amount of the Notes shall, without any further
action, notice or demand by any party hereto or any other Person, mature and
become due and payable on the redemption date therefor, together with interest
on such principal amount accrued to such date, plus the applicable premium. From
and after such date, unless the Company shall fail to pay such principal amount
when so due and payable together with all accrued and unpaid interest and any
applicable premium, interest on such principal amount shall cease to accrue. Any
Note
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redeemed in full shall be surrendered to the Company and cancelled and shall not
be reissued, and no Note shall be issued in lieu of any redeemed Note.
13.4 Remedies for Failure to Redeem. If the Company fails to redeem the
Notes as and when required pursuant to Sections 13.1 and 13.2, the redemption
price payable on the Notes automatically shall be increased from the Optional
Redemption Price to an amount equal to the sum of (i) 200% of the sum of (A) the
principal amount of the Notes that were not redeemed as required plus (B) all
accrued and unpaid interest thereon to the date such Notes were supposed to be
redeemed (to the extent such interest has not been added to principal), plus
(ii) all accrued and unpaid interest of the Notes, computed at the Default Rate,
from the date the Notes were supposed to be redeemed to the date the redemption
price payable on the Notes pursuant to this Section 13.4 is paid in full. In
addition, the Investors and the Collateral Agent, on behalf of the Investors,
shall be entitled to exercise all rights and remedies available to them, or take
any other action to which they are entitled, under this Agreement, any of the
Related Documents, at law or otherwise, provided however, that in any action or
proceeding brought to enforce the Notes, the Credit Parties shall not be liable
for any punitive damages or for any consequential damages in excess of the
redemption price payable pursuant to this Section 13.4, any costs of
enforcement, including reasonable attorneys fees and disbursements, and any
amounts payable pursuant to Section 17.
13.5 Major Capital Events. In the event that at any time during the two
year period following any redemption of the Notes, optional or mandatory (other
than a mandatory redemption pursuant to Section 13.2(c)), the Company or any
other Affiliate of the Shareholder shall consummate a Major Capital Event, each
Investor shall be entitled to receive an additional amount of cash or other
consideration, less the principal amount of the Notes previously redeemed,
sufficient to provide such Investor with the same economic results to which it
would have been entitled had such Investor fully participated in such event
(assuming the Notes had been converted as contemplated under Section 14.1 of
this Agreement).
SECTION 14 CONVERSION.
14.1 Conversion. Upon the closing of the Initial Public Offering each Note
shall, without any action on the part of any holder thereof, automatically be
converted into fully paid and nonassessable shares of Common Stock at the
conversion rate set forth in Exhibit K hereto.
14.2 Surrender of Notes; Delivery of Shares. At the Stock Closing, the
Company shall issue and deliver, against surrender of the Notes, to each
Investor, (a) a certificate or certificates for the number of full shares of
Common Stock or other securities issuable upon the conversion of such Investor's
Notes as provided in Section 14.1, in accordance with the instructions provided
by MSAM pursuant to Section 4.4, (b) the amount of cash required to be paid for
any fractional interest in respect of a share of Common Stock or other security
arising upon the conversion as provided in Section 14.3 and (c) cash (or, if
interest on the Notes is to be paid
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in Common Stock, then Common Stock) in the amount of all accrued and unpaid
interest on the Notes surrendered up to and including the date of the closing of
the Initial Public Offering.
14.3 Effect of Conversion. Each person in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
conversion of the Notes shall be deemed to have become the holder or holders of
record of the shares of Common Stock represented by those certificates at the
time of the closing of the Initial Public Offering. All shares of Common Stock
delivered upon conversion of the Notes will upon delivery be duly and validly
issued and fully paid and nonassessable, free of all Liens and charges and not
subject to any preemptive rights. Upon conversion, the Notes shall no longer be
deemed to be outstanding and all rights of a holder with respect to the Notes
shall immediately terminate except the right to receive the Common Stock or
other securities, cash or other assets as herein provided.
14.4 Fractional Shares. No fractional shares or securities representing
fractional shares of Common Stock shall be issued upon conversion of Notes. Any
fractional interest in a share of Common Stock resulting from conversion of a
Note shall be paid in cash (computed to the nearest cent) based on the principal
amount of the Notes represented by the fractional share.
14.5 Taxes on Conversion. The Company will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue of
delivery of shares of Common Stock on conversion of the Notes pursuant hereto.
14.6 Anti-Dilution. In the event that at any time prior to the Initial
Public Offering the Company issues any shares of Common Stock or securities
exchangeable or convertible into Common Stock or any options, warrants or rights
to acquire any shares of Common Stock or securities exchangeable or convertible
into Common Stock to any Person other than a Person contributing assets to the
Company or the Operating Partnership in connection with the Initial Public
Offering (the "Dilutive Securities"), the conversion rate formula in Exhibit K
shall be adjusted to increase the number of shares of Common Stock into which
the Notes are convertible so that, after such adjustment, the Investors will
have, in the aggregate, on conversion of the Notes, the same percentage
ownership interest in the Company as they would have had the Dilutive Securities
not been issued.
SECTION 15 GUARANTEE.
15.1 Guarantee of Obligations. The Operating Partnership hereby
unconditionally and irrevocably guarantees (as primary obligor and not merely as
surety) to each holder of the Notes the full payment and performance by the
Company, when due (whether at stated maturity, on redemption or otherwise), of
the principal of, premium and interest on the Notes and all other obligations of
the Company under this Agreement, the Notes and the other Related Documents,
whether now existing or hereafter arising, voluntary or involuntary, direct and
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred (collectively, the
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"Obligations"). The Operating Partnership hereby agrees that it will forthwith
pay and perform when due the Obligations immediately upon demand by any holder
of the Notes.
15.2 Costs and Expenses. The Operating Partnership further
irrevocably and unconditionally agrees to pay any and all reasonable costs and
expenses (including, without limitation, attorneys' fees and disbursements)
incurred by any holder of the Notes (or any agent acting on behalf of such
holders), in enforcing its rights or remedies under the Notes, this Agreement or
under any of the other Related Documents.
15.3 Guarantee Absolute. This Guarantee is an unconditional and
absolute guaranty of payment (and not merely of collection) and shall apply to
all of the Obligations. The Obligations shall be conclusively presumed to have
been created in reliance on this Guarantee. This Guarantee shall be enforceable
against the Operating Partnership its successors and assigns. The Operating
Partnership guarantees that the Obligations will be paid strictly in accordance
with the terms of the Notes, this Agreement and the other Related Documents,
regardless of any law, regulation or order, now or hereafter in effect in any
jurisdiction, affecting any of the terms or the rights of any holder of the
Notes with respect thereto and notwithstanding any claim, defense or right of
set-off the Credit Parties or any other Person may have against any holder of
the Notes.
15.4 Waivers. The Operating Partnership hereby waives (i) the right
to have any holder of the Notes pursue any other remedy or enforce any other
rights, (ii) the right to receive notice of acceptance of this Guarantee or
notice of the incurrence, existence or non-payment of any of the Obligations and
(iii) presentment, demand, notice of dishonor, protest or any other notice or
demand to which the Operating Partnership might otherwise be entitled. The
Operating Partnership shall not be exonerated or discharged from liability
hereunder by any time or grace period given to the Company or by any other
indulgence or concession granted to the Company, including, without limitation,
any such period, indulgence or concession whatsoever affecting or preventing a
recovery of the Obligations which, but for this provision, might operate to
exonerate or discharge the Operating Partnership from its obligations hereunder.
If the Company or the Operating Partnership merges or consolidates with or into
another entity, loses its separate legal identity or ceases to exist, the
Operating Partnership shall nonetheless continue to be liable for the payment
and performance of the Obligations.
15.5 Guarantee Not Affected by Changes. This Guarantee shall be a
continuing guarantee, and the obligations and liability of the Operating
Partnership hereunder shall in no way be affected, impaired, released, reduced
or discharged by reason of the occurrence of any of the following (regardless of
whether notice has been given to, or consent has been given by, the Operating
Partnership):
(1) the amendment, modification, supplement, extension or
restatement (whether material or otherwise) of any of the Obligations, the
Notes, this Agreement or any of the other Related Documents;
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(2) the assertion of any of the rights or remedies of the holders of
the Notes, or the Collateral Agent under the Notes, this Agreement or any
of the other Related Documents;
(3) the failure, omission or delay on the part of any holder of the
Notes or the Collateral Agent to enforce, assert or exercise any right,
power or remedy conferred on or available to it under the Notes, this
Agreement or any of the other Related Documents;
(4) any bankruptcy, insolvency, reorganization, arrangement,
assignment for the benefit of creditors, receivership or trusteeship
affecting the Company;
(5) any lack of validity or enforceability of any of the
Obligations, this Agreement, the Notes, any of the other Related Documents
or any other agreement or instrument relating thereto;
(6) any release or amendment or waiver of or consent to or departure
from any other guarantee or security for all or any of the Obligations; or
(7) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Company or the Operating
Partnership.
This Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment of any amounts payable by the
Company is rescinded or must otherwise be returned by the holder of any Note
upon the insolvency, bankruptcy or reorganization of the Company, the Operating
Partnership or otherwise, all as though such payment had not been made. If an
event permitting the redemption of the Notes shall at any time have occurred and
be continuing and such redemption shall at such time be prevented by reason of
the pendency against the Company or the Operating Partnership of a case or
proceeding under any bankruptcy or insolvency law, the Operating Partnership
agrees that, for purposes of this Guarantee and its obligations hereunder, the
Operating Partnership shall forthwith pay the redemption price payable in
respect of the Notes, and the other Obligations hereunder, without any further
notice or demand (including interest which, but for the filing of a petition in
bankruptcy, would accrue on the Obligations).
15.6 Payments. Each payment to be made by the Operating Partnership
under this Guarantee or in connection herewith to any Person shall be made
without set-off or deduction of any kind whatsoever and also shall be made free
and clear of, and without deduction or withholding for or on account of, any
tax, reserve, levy or duty of, or imposed by, any governmental or taxing
authority in any jurisdiction.
15.7 Subrogation. The Operating Partnership hereby waives any and
all rights of subrogation, reimbursement, contribution, exoneration and
indemnity (contractual, statutory or otherwise) arising from the existence or
performance of this Guarantee and, further, waives
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any right to enforce any remedy which any holder of the Notes or the Collateral
Agent now has or may hereafter have against the Company or any other Person, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by the holder of the Notes, or the Collateral Agent, in each
case, until such time as the Obligations have been finally and indefeasibly paid
in full in cash to the holders of the Notes.
SECTION 16 TRANSFERS.
16.1 Limitations on Transfer. Except for transfers to designees which are
investment advisory clients of MSAM and without in any way limiting the
representations set forth above, each Investor agrees (i) not to transfer all or
any portion of the Notes that may be acquired by it until the earlier to occur
of a Termination Event or the Maturity Date, and will transfer such Notes
thereafter, only if such securities shall have first been registered under the
Securities Act or such transfer is made pursuant to an available exemption from
such registration and (ii) not to transfer all or a portion of the Common Stock
acquired pursuant to the terms of this Agreement until after the Lock-up Period,
and will transfer such Common Stock thereafter, only if such Common Stock has
first been registered under the Securities Act or such transfer is made pursuant
to an available exemption from such registration.
16.2 Legends. It is understood that the certificates evidencing the Notes
and the Common Stock acquired by each Investor under the terms of this Agreement
shall bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the securities
laws of any state, and neither the securities nor any interest therein may
be sold, transferred, pledged or otherwise disposed of in the absence of
such registration or an exemption therefrom."
The foregoing legend shall be removed from the certificates representing
any Notes or Common Stock, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities Act
or have been registered under the Securities Act.
16.3 Rule 144A Information. The Company shall, at all times during which
it is neither subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) under the
Exchange Act, upon the written request of any Investor, provide in writing to
such Investor and to any prospective transferee of any Notes or Common Stock
held by such Investor, the information concerning the Company described in Rule
144A(d)(4) under the Securities Act.
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SECTION 17 MISCELLANEOUS.
17.1 Indemnification. Each of the Credit Parties agrees to indemnify each
Investor, MSAM and their respective shareholders, partners, directors, officers,
employees, Affiliates and agents (collectively, "Indemnified Persons") against,
and agree to hold each such Indemnified Person harmless from, any and all
losses, claims, damages and liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by such Indemnified Person
arising out of, in any way in connection with, or as a result of (i) the
consummation of the transactions contemplated by this Agreement or the Notes,
(ii) the use of any of the proceeds of the Notes by the Credit Parties or the
consummation of the transactions contemplated by this Agreement, (iii) the
performance by the parties hereto of their respective obligations hereunder or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Investor or any such person is a party thereto;
provided, however, that such indemnity shall not apply to any such losses,
claims, damages, liabilities or related expenses finally determined by a court
of competent jurisdiction to have arisen from the gross negligence or wilful
misconduct of such Indemnified Person. If any litigation or proceeding is
brought against any Indemnified Person in respect of which indemnity may be
sought against the Credit Parties pursuant to this Section 17.1, such
Indemnified Person shall promptly notify the Credit Parties in writing of the
commencement of such litigation or proceeding, but the omission so to notify the
Credit Parties shall not relieve the Credit Parties from any other obligation or
liability which it may have to any Indemnified Person under this Section 17.1
unless the Credit Parties are materially prejudiced thereby. In case any such
litigation or proceeding shall be brought against any Indemnified Person and
such Indemnified Person shall notify the Credit Parties of the commencement of
such litigation or proceedings, the Credit Parties shall be entitled to
participate in such proceedings, and, after written notice to such Indemnified
Person, will have the right to assume control of any litigation for which
indemnification is sought and no settlement of any claim may be agreed to
without the prior written consent of the Credit Parties. However, any
Indemnified Person shall have the right to hire its own counsel for any reason;
provided, however, that the fees and expenses of such counsel shall be at the
Indemnified Person's own expense unless (a) the Credit Parties have agreed to
pay such fees and expenses or (b) the Credit Parties shall have failed properly
to assume the defense in such action or proceeding and employ counsel reasonably
satisfactory to such Indemnified Person in any such action or proceeding or (c)
either (x) the named parties to such action or proceeding include such
Indemnified Person and one or more of the Credit Parties or such Indemnified
Person shall have been advised in writing by counsel that there may be one or
more legal defenses available to such Indemnified Person which are different
from or in addition to those available to such Credit Parties or (y) such
Indemnified Person concludes that taking into account the position of such
Indemnified Person (or any Affiliate) as a lender to the Company such
Indemnified Person reasonably believes that it is advisable for such Indemnified
Person to employ separate counsel on its behalf, recognizing that in such case
the Credit Parties and their counsel shall remain primarily responsible for the
overall strategy, control and direction of such action or proceeding. In any
case referred to in (b) or (c) above, if such Indemnified Person notifies the
Credit Parties in writing that it elects to employ separate counsel at the
expense of the Credit Parties, the Credit Parties shall not have the right to
assume the defense of such action or proceeding on
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behalf of such Indemnified Person, it being understood, however, that the Credit
Parties shall not in connection with any one such action or proceeding, or
separate but substantially similar proceedings or related actions or proceedings
arising out of the same general allegations or circumstances be liable for the
fees and expenses of more than one separate firm of attorneys, together with
appropriate local counsel (but not more than one separate firm of attorneys per
state), at a time for all Indemnified Persons. The foregoing indemnity shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated by
this Agreement, the repayment of any of the Notes, the invalidity or
unenforceability of any term or provision of this Agreement or the Notes or any
investigation made by or on behalf of any Indemnified Person or the Credit
Parties and the content or accuracy of any representation or warranty made under
this Agreement. All amounts due under this Section 17.1 shall be payable as
incurred upon written demand therefor.
17.2 Survival of the Representations and Warranties. The representations
and warranties of the Credit Parties made herein shall survive the consummation
of the transactions contemplated hereby but shall terminate eighteen (18) months
after the last closing to occur under the terms of this Agreement.
17.3 Confidentiality. (a) Each Investor agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information, including the Company's plan to conduct an Initial Public
Offering, which the Investor may obtain from the Credit Parties pursuant to
financial statements, reports and other materials submitted by the Credit
Parties in connection with this Agreement, or pursuant to visitation or
inspection rights granted to the Investors, unless such information is known, or
until such information becomes known, to the public; provided, however, that an
Investor may disclose such information (i) to its directors, officers,
attorneys, accountants, consultants, and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (ii) to any prospective purchaser of any Notes from the Investor as
long as such prospective purchaser agrees in writing to be bound by the
provisions of this Section, (iii) to any Affiliate of the Investor or (iv) as
required by applicable law or regulation, court or administrative order, or any
listing or trading agreement concerning the Company.
(b) Each of the Credit Parties agrees that it will, and will cause
each of its Controlled Subsidiaries to, keep confidential and not disclose or
divulge the terms of this Agreement and the Related Documents to any other
Person; provided, however, that each of the Credit Parties may disclose such
terms (i) to the officers and directors of the Company, or its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with this Agreement or the Initial Public
Offering or (ii) as required by applicable law or regulation, court or
administrative order, or any listing or trading agreement concerning the
Company, including in connection with the Initial Public Offering.
17.4 Brokers. Each of the Credit Parties and each Investor (i) represents
and warrants to the other party hereto that it has retained no finder or broker
in connection with the transactions contemplated by this Agreement, and (ii)
will indemnify and save the other party
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harmless from and against any and all claims, liabilities or obligations with
respect to brokerage or finders' fees or commissions, or consulting fees in
connection with the transactions contemplated by this Agreement asserted by any
person on the basis of any statement or representation alleged to have been made
by such indemnifying party.
17.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
17.6 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Credit Parties and each Investor. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
17.7 Inaccuracy of Representations. Each Investor will cause MSAM to use
its reasonable efforts to inform the Credit Parties of any inaccuracy in the
representations and warranties set forth in Section 5, provided however the
failure of MSAM to so inform the Credit Parties shall not limit any right of the
Investors or the Collateral Agent under this Agreement or any of the Related
Documents. For purposes of this Section 17.7, the knowledge of MSAM shall be
limited to the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
17.8 Time. Time shall be of the essence in this Agreement.
17.9 Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
17.10 Notices. All notices or other communications given or made hereunder
shall be in writing and shall be deemed effectively given on the date of
delivery or refusal, if delivered personally or delivered by certified mail
return receipt requested, to the parties at the addresses set forth on the
signature pages of this Agreement, or at such other place as the parties may
designate by written notice from time to time.
17.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one Agreement.
17.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17.13 Consent to Jurisdiction. Each of the Credit Parties and Investors
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York located
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in New York County, City of New York and (ii) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding relating to this Agreement, the Notes and the other Related
Documents or any of the transactions contemplated hereby or thereby. Each of the
Credit Parties and Investors agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York or, if such suit, action or proceeding may not be brought
in such court for jurisdictional reasons, in the Supreme Court of the State of
New York located in New York County, City of New York. Each of the Credit
Parties further agrees that service of process, summons, notice or document by
hand delivery or U.S. registered certified mail return receipt requested in care
of Battle ▇▇▇▇▇▇ LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., shall be effective service of
process for any action, suit or proceeding brought against such Credit Party in
any such court. Each of the Credit Parties and Investors irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding relating to this Agreement, the Notes and the other Related
Documents and any of the transactions contemplated hereby or thereby in (i) the
Supreme Court of the State of New York located in New York County, City of New
York or (ii) the United States District Court for the Southern District of New
York and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
17.14 Expenses; Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors up to a maximum of the sum
of (i) 100% of the first $150,000 and (ii) 50% of the next $50,000, in
connection with the negotiation and preparation of this Agreement, (b) all
reasonable out-of-pocket expenses of the Investors, for the Investors in
connection with all additional and subsequent documentation contemplated hereby,
any waiver or consent hereunder or thereunder or any amendment hereof or thereof
and (c) if a default occurs, all reasonable out-of-pocket expenses incurred by
the Investors, including fees and disbursements of counsel, in connection with
such default and collection and other enforcement proceedings resulting
therefrom, including, without limitation, costs and expenses incurred in a
bankruptcy case; provided, however, that the Credit Parties shall not be
responsible for fees and disbursements of counsel in excess of $175,000. The
Credit Parties shall indemnify the Investors against any transfer taxes,
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or the Notes. The
obligations of the Credit Parties under this Section 17.14 shall survive
transfer by any Investor of the Notes.
17.15 Definitions.
(a) As used in this Agreement, the following terms shall have the
meaning specified below:
"Acquisition Event" is defined in Section 9.21.
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"Affiliate" of any Person means (i) any person that, directly or
indirectly, is in Control of, is Controlled by, or is under common Control with
such person or (ii) any person who is a director or officer (A) of such person,
(B) of any subsidiary of such person or (C) of any person described in clause
(i) above.
"Aggregate Share Amount" is defined in Section 3.1.
"Agreement" is defined in the preamble.
"Bankruptcy Law" means Title 11, of the United States Code, or any similar
federal or state law for the relief of debtors.
"Budget" is an operating plan and budget a copy of which is attached as
Exhibit E hereto.
"Business Day" means each day other than a Saturday, a Sunday or any other
day on which banking institutions in the State of New York (or such other
location as the Company shall notify the Investors is its principal place of
business) are authorized or obligated by law or executive order to be closed.
"Capitalized Leases" of a Person means (a) any lease of property, real or
personal, if the then present value of the minimum rental commitment thereunder
should, in accordance with GAAP, be capitalized on a balance sheet of the
lessee, and (b) any other such lease the obligations under which are capitalized
on the balance sheet of the Company.
"Certificate of Incorporation" is defined in Section 1.2.
"Closing" means the First Note Closing, any Subsequent Note Closing and/or
the Stock Closing, as the context requires.
"Closing Date" means the First Note Closing Date, any Subsequent Note
Closing Date and/or the Stock Closing Date, as the context requires.
"Code" is defined in Section 5.21.
"Collateral" means any property or assets in which the Collateral Agent
has been granted a security interest for the benefit of the Investors.
"Collateral Agent" means MSAM, in its capacity as Collateral Agent on
behalf of the Investors.
"Commission" is defined in Section 7.5(a).
"Common Stock" is defined in Section 1.1.
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"Company" is defined in the preamble.
"Company Account Pledge Agreement" means the Account Pledge Agreement,
substantially in the form of Exhibit M, to be executed by the Company in favor
of the Collateral Agent.
"Company Collateral Assignment" means the Collateral Assignment,
substantially in the form of Exhibit J, to be executed by the Company in favor
of the Collateral Agent.
"Company Pledge Agreement" means the Pledge Agreement, substantially in
the form of Exhibit H, to be executed by the Company in favor of the Collateral
Agent.
"Contribution Agreements" means the Initial Contribution Agreements and
any other contribution or similar agreement entered into after the date hereof.
"Control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a Person whether by contract or
otherwise; and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.
"Controlled Subsidiaries" means Subsidiaries which are exclusively
Controlled by the Company, the Operating Partnership, or the Shareholder.
"Credit Parties" is defined in the preamble.
"Custodian" means any receiver, trustee, assignee, liquidator, custodian
or similar official under any Bankruptcy Law.
"Dilutive Securities" is defined in Section 14.6.
"Dividends" means, with respect to any Person, (i) any dividends,
payments, return of capital or distributions (cash or otherwise) made or
declared on or in respect of any class of equity interests or securities of such
Person, except for distributions made solely in equity interests or securities
of the same class of such Person, and (ii) any and all funds, cash or other
payments made in respect of, or set aside or apart for a sinking or other
analogous fund for, the redemption, repurchase or acquisition of equity
interests or securities of such Person.
"Default Rate" is defined in Section 1.1
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" is defined in Section 5.29.
"First Note Closing" is defined in Section 4.1.
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"First Note Closing Date" is defined in Section 4.1
"GAAP" means U.S. generally accepted accounting principles.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive
legislative, judicial regulatory or administrative functions of or pertaining to
government.
"Guarantee" means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other person and any obligation, direct or indirect, contingent or otherwise of
such person (i) to purchase or pay (or advance or supply funds for the purpose
of payment of) such Indebtedness or other obligation of such other person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" is defined in Section 5.24.
"Indebtedness" means as to any Person, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business (provided such accounts are promptly paid and discharged when
due), (iv) all obligations of such Person under Capitalized Leases, (v) all
contingent or non-contingent obligations of such Person to reimburse any bank or
other Person in respect of amounts paid or payable (currently or in the future,
on a contingent or non-contingent basis) under a letter of credit or similar
instrument, (vi) all Indebtedness of others secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person, (vii)
all obligations of such Person under interest rate swaps, caps or collars or
under any other financial hedging arrangement net of any amounts receivable by
such Person under such arrangements and (viii) all Indebtedness of others
Guaranteed by such Person; provided however, that Indebtedness shall not include
the fees and expenses of the Initial Public Offering and related formation
expenses specified in the Company's Registration Statement on Form S-11.
"Indemnified Person" is defined in Section 17.1.
"Initial Contribution Agreements" means each contribution agreement, in
form and substance satisfactory to MSAM, listed on Exhibit ▇.
-▇▇-
▇▇
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇" means the initial public offering of Common
Stock by the Company proposed to be lead managed by ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
"Investor" is defined in the preamble.
"Interest Payment Date" is defined in Section 1.1.
"Lease" is defined in Section 5.16(a).
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind whatsoever (including any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of any
financing statement under the Uniform Commercial Code in any jurisdiction in
connection with the creation of a security interest).
"Lock-up Period" is defined in Section 3.6.
"Major Capital Event" means any public offering by any Person acquiring
all or a substantial part of the Scheduled Assets or a sale of all or a majority
of the Scheduled Assets in one or more transactions or a combination of the
foregoing.
"Management Company" means Tower Equities Management, Inc., a Delaware
corporation, or any successor.
"Management Company Stock Option Agreement" means the Stock Option
Agreement, in substantially the form of Exhibit Q, to be entered into among the
Shareholder and the Collateral Agent.
"Material Adverse Effect" means any (i) adverse effect whatsoever upon the
validity or enforceability of this Agreement or any of the Related Documents or
any of the transactions contemplated hereby or thereby, (ii) material adverse
effect upon the properties, business, prospects or condition (financial or
otherwise) of any Credit Party or (iii) material adverse effect upon the ability
of the Credit Parties to fulfill any of their obligations under this Agreement
or any of the Related Documents.
"Maturity Date" means June 30, 1997, unless the conditions to the Second
Note Closing set forth in Section 7.4 are satisfied on or prior to June 30,
1997, in which case the "Maturity Date" shall be March 31, 1998; provided that,
if the conditions to the Second Note Closing set forth in Section 7.4 are not
satisfied on or prior to June 30, 1997, the Company may request that the
maturity of the Notes be extended to December 27, 1997 by delivering a notice to
MSAM on behalf of the Investors, which notice, if received by MSAM on or prior
to June 30, 1997, shall result (i) in an automatic extension of the Maturity
Date to December 27, 1997 and (ii) a $600,000 payment to the Investors in
accordance with Section 2.5 (which payment shall be made to each of the holders
of the Notes pro rata according to the principal amount held by each such
holders).
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"Maturity Date Extension Notes" is defined in Section 2.5.
"▇▇▇▇▇▇▇ ▇▇▇▇▇" is defined in Section 12(e).
"Mid-Point Purchase Price" means the mid-point of the per share price
range set forth in the Preliminary Prospectus declared effective by the
Commission.
"MSAM" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management Inc.
"Note" is defined in Section 1.1.
"Obligations" is defined in Section 15.1.
"Operating Partnership" is defined in the preamble.
"Operating Partnership Account Pledge Agreement" means the Account Pledge
Agreement, in substantially the form of Exhibit N, to be executed by the
Operating Partnership in favor of the Collateral Agent.
"Operating Partnership Pledge Agreement" means the Account Pledge
Agreement, in substantially the form of Exhibit I, to be executed by the
Operating Partnership in favor of the Collateral Agent.
"Optional Redemption Price" is defined in Section 13.1.
"Permitted Liens" means (i) liens for taxes or assessments or other
government charges or levies not yet due and payable, (ii) liens imposed by law,
such as mechanic's, materialmen's, warehousemen's and carrier's liens, and other
similar liens, securing obligations incurred in the ordinary course of business
which are not past due, and (iii) pledges or deposits made to secure payment of
workmen's compensation, unemployment insurance, social security or similar
programs, (iv) encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, provided, such items do not
materially impair the use of such property for the purposes intended and (v)
restrictions on transfers imposed by contract or the Securities Act.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Per Share Purchase Price" is defined in Section 3.2.
"Potential Termination Event" means any event which with the giving of
notice or the passage of time would constitute a Termination Event.
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"Preliminary Prospectus" means the preliminary prospectus of the Company
circulated to investors in connection with the Initial Public Offering, or any
subsequent preliminary prospectus which is included in a subsequent amendment to
the Company's Registration Statement on Form S-11 which is declared effective by
The Commission. It is the intention of the parties that this definition shall
mean that preliminary prospectus in which the REIT Sponsor equity is last
determined.
"REIT Sponsors" means any Person listed on Exhibit L.
"Registrable Securities" is defined in the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
in substantially the form attached as Exhibit C, to be entered into among the
Company and the Investors.
"Retail Properties" means the real properties owned directly or indirectly
by TERCO Realty, LLC, Smit-Lake LLC and ▇▇▇▇-▇▇▇▇▇▇, LLC.
"Related Documents" means the Notes, the Registration Rights Agreement,
the Contribution Agreements, the Management Company Stock Option Agreement and
the Security Documents.
"Scheduled Assets" means all of the real estate interests and real estate
assets to be contributed to the Operating Partnership by the REIT Sponsors in
connection with the Initial Public Offering, a list of which is attached to the
Budget.
"Second Note Closing" is defined in Section 4.2.
"Second Note Closing Date" is defined in Section 4.2.
"Security Documents" means the Shareholder Pledge Agreement, the Company
Pledge Agreement, the Operating Partnership Pledge Agreement, the Company
Collateral Assignment, the Company Account Pledge Agreement, the Operating
Partnership Account Pledge Agreement and any other documents which the Investors
require to be executed on or after the Closing Dates in order to evidence,
perfect, record or maintain the Collateral Agent's security interest in any
Collateral.
"Securities Act" is defined in Section 5.6.
"Shareholder" means ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing at ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
"Shareholder Pledge Agreement" means the Pledge Agreement, in
substantially the form of Exhibit G, to be executed by the Shareholder in favor
of the Collateral Agent.
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"Significant Agreements" is defined in Section 5.15(e).
"Solvent" means, with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Stock Closing" is defined in Section 4.4.
"Stock Closing Date" is defined in Section 4.4.
"Subsequent Note Closing" has the meaning specified in Section 4.3.
"Subsequent Note Closing Date" has the meaning specified in Section 4.3
"Subsidiary" is defined in Section 5.8.
"Termination Event" means any of the events described in Section 12.
"Underwriting Agreement" means the underwriting agreement entered into by
the Company with its underwriters, including ▇▇▇▇▇▇▇ ▇▇▇▇▇, in connection with
the Company's Initial Public Offering.
(b) In this Agreement the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments shall be deemed to include all amendments thereto or changes therein
entered into in accordance with their respective terms but only to the extent to
which such amendments or changes are not prohibited by the terms of this
Agreement; references to persons include their permitted successors and assigns;
"including" means 'including, without limitation'; "or" is not exclusive; "day"
means a calendar day unless otherwise specified; and an accounting term not
otherwise
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defined has the meaning assigned to it, and all determinations involving any
such term required to be made herein shall be made, in accordance with GAAP.
(c) For purposes of Section 5 of this Agreement, references to the
knowledge of the Credit Parties or any Subsidiary shall be limited to the
knowledge of each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, this Purchase Agreement has been executed this
31st day of March, 1997.
ISSUER:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
TOWER REALTY OPERATING PARTNERSHIP,
L.P.
By: Tower Realty Trust, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
First Note
Closing Total
Commitment Commitment Investors:
$4,000,000 $6,000,000 MS REAL ESTATE SPECIAL SITUATIONS INC.,
on behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Payment Instructions:
------------------------
-54-
60
EXHIBIT A
[Restrictive Legend]
FORM OF NOTE
TOWER REALTY TRUST, INC.
NOTE
No. [____] [_________ __, 1997
$[________]
FOR VALUE RECEIVED, the undersigned, Tower Realty Trust, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Maryland, hereby promises to pay to [__________________],
or registered assigns (the "Holder"), the principal sum of
[________________________] DOLLARS on the Maturity Date (as defined in the
Purchase Agreement referred to below). The Company also promises to pay interest
(computed on the basis of a 365 day year and the actual number of days elapsed)
(a) from the date hereof until the earlier of (i) the Maturity Date, (ii) the
date this Note and all amounts payable in connection herewith have been paid to
the Holder and (iii) the occurrence of a Termination Event (as defined in the
Purchase Agreement) on the unpaid balance hereof at the rate of 15% per annum,
payable quarterly, on the last day of March, June, September and December,
commencing June 30, 1997, and on the Maturity Date (each such date an "Interest
Payment Date") and (b) from the earlier of (i) the Maturity Date or (ii) the
occurrence of a Termination Event until the date this Note and all amounts
payable in connection herewith have been paid to the Holder, at the rate of 20%
per annum payable on demand. Until the earlier of the Maturity Date or the
occurrence of a Termination Event, the Company may at its option, elect to add
up to 50% of the amount of interest payable on any Interest Payment Date to the
then outstanding principal amount of the Notes; provided that if the conditions
to the Second Note Closing (as defined in the Purchase Agreement) do not occur
on or prior to June 30, 1997 but, in accordance with the definition of the term
"Maturity Date," the maturity of the Notes has been extended to December 31,
1997, the Company shall not have the option during the period such conditions
remain unsatisfied of electing to add any portion of the interest payable on the
Notes to the principal thereof. Any such interest added to principal shall
thereafter bear interest as provided above.
Payments of principal of, premium, if any, and interest on this Note
are to be made in lawful money of the United States of America. Payments shall
be made to the Holder at such place and by such means as provided in the
Purchase Agreement.
This Note is one of a series of senior secured convertible notes
issued pursuant to a Purchase Agreement, dated as of March [__], 1997 (as from
time to time amended, the "Purchase Agreement"), among the Company, as issuer,
the Operating Partnership, as guarantor, and the respective Investors named
therein and is entitled to the benefits thereof. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement. As provided in the Purchase Agreement, this Note (i) is subject to
A-1
61
redemption prior to maturity and (ii) is automatically convertible into shares
of the Company's Common Stock on an initial public offering as is described more
fully in the Purchase Agreement. Payment of the principal, of, premium, if any,
and interest on this Note is guaranteed by the Operating Partnership as provided
in the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note (for a like principal amount) or Notes (in authorized
denominations) will be issued to, and registered in the name of, the transferee.
Prior to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
If this Note is collected by or through an attorney at law or
otherwise, then the Company shall be obligated to pay, in addition to the
principal balance hereof and any premium and accrued interest hereon, reasonable
attorney's fees and all out-of-pocket costs of the Holder in connection with the
collection or enforcement of this Note.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
This Note shall be governed by the laws of the State of New York.
TOWER REALTY TRUST, INC.
By:
------------------------------------------
Name:
Title:
A-2
62
EXHIBIT K
CONVERSION RATE OF THE NOTES
The Notes are convertible into the number of shares of Common Stock equal to the
amounts determined in accordance with items 1 and 2 below.
1. The number of shares of Common Stock equal to the following:
IA
------------- 1
6,000,000 X 0.225 x ACP x ------------
MP
where:
IA = the aggregate original principal amount of all
outstanding Notes (other than the original
principal of any note issued pursuant to Section
2.5 or 9.21 or accrued but unpaid interest
allocated therewith), plus all accrued and unpaid
interest thereon to the Stock Closing Date.
ACP = The difference between (1) the value of the
aggregate number of shares of Common Stock and
units of limited partnership interest ("OP Units")
issued or to be issued by the Company and the
Operating Partnership as of the Stock Closing Date
and (2) value of the sum of (i) the aggregate
number of shares of Common Stock issued or to be
issued by the Company as of the Stock Closing Date
in the Initial Public Offering and (ii) the
aggregate number of OP Units issued or to be
issued by the Operating Partnership to continuing
investors (other than REIT Sponsors) as of the
Stock Closing Date; provided that for this purpose
each share of Common Stock and OP Unit shall be
valued at MP.
MP = Mid-Point Purchase Price.
Notwithstanding the foregoing, the number of shares calculated in item 1 shall
not be less than such number of shares of Common Stock equal to (A) the
principal amount of all outstanding Notes plus all accrued and unpaid interest
divided by (B) the Mid-Point Purchase Price.
2. Such number of shares of Common Stock obtained by dividing (A) the product
of (I) the Aggregate Share Amount times (II) the per share amount of the
pro forma underwriting discounts or commissions (as set forth in the
Preliminary Prospectus) that would have been paid by the Company to the
underwriters in connection with the Initial Public Offering assuming such
shares were priced at the Mid-Point Purchase Price (the "Per
K-1
63
Share MP Underwriting Discount") by (B) the difference between (1) the
Mid-Point Purchase Price minus (2) the Per Share MP Underwriting Discount.
K-2
64
TOWER REALTY TRUST, INC.
================================================================================
PURCHASE AGREEMENT SUPPLEMENT
Dated as of May 15, 1997
================================================================================
$1,050,000
Senior Secured Convertible Notes
65
PURCHASE AGREEMENT SUPPLEMENT (this "Supplement") dated as of May 15, 1997, to
Purchase Agreement dated as of March 31, 1997 (the "Agreement"), among TOWER
REALTY TRUST, INC., a Maryland corporation with its principal place of business
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), as
issuer, TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
with its principal place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating Partnership"), as guarantor (the Operating
Partnership and the Company are sometimes hereinafter collectively referred to
as the "Credit Parties"), and each of the investors signatory hereto
(collectively, the "Investors"). The capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Agreement.
WHEREAS, the Company, the Operating Partnership and the Investors
have entered into the Agreement; and
WHEREAS, the Credit Parties and the Investors desire to supplement
and modify the Agreement as contemplated herein;
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 SUPPLEMENT.
1.1 Special Note Closing. Notwithstanding anything to the contrary set
forth in Section 4.3 of the Agreement, a Subsequent Note Closing (the "Special
Note Closing") shall take place on May 15, 1997 (the "Special Note Closing
Date") at the offices of Battle ▇▇▇▇▇▇, LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (or such other time and place as
are mutually agreeable to the Company and the Investors) whereby the Company
will sell Notes in an aggregate principal amount of $1,050,000 with the pro rata
portion (determined according to each Investor's relative total commitment) of
such principal amount to be purchased by each Investor at such Special Note
Closing. At such Special Note Closing, the Company shall deliver to each
Investor the Notes being purchased by such Investor, issued in the name of the
Investor or its nominee in such authorized denominations as MSAM on behalf of
such Investor shall request, against payment to the Company of the purchase
price therefor, by wire transfer, check or other method acceptable to the
Company. If on such Special Note Closing any of the conditions specified in
Sections 7.1 or 7.3 of the Agreement or Section 1.3 of this Supplement shall
have not been fulfilled, each Investor shall, at its election, be relieved of
all of the obligations under this Agreement to purchase the Notes to be
purchased at such Special Note Closing without thereby waiving any other rights
it may have by reason of such failure or nonfulfillment. The Special Note
Closing shall not be deemed to be the Second Note Closing as contemplated under
the Agreement. No waiver of the conditions required to fulfilled in connection
with the Second Note Closing is made hereby, and no waiver shall be implied.
-1-
66
1.2.Representations and Warranties. The Credit Parties, jointly and
severally, represent and warrant to each Investor as follows:
(a) Representations and Warranties in the Agreement. Except as set
forth in the amendment to Exhibit D to the Agreement, each of the
representations and warranties set forth in the Agreement and Related Documents
is true and correct in all material respects on and as of the date hereof with
the same effect as though such representation and warranty had been made on and
as of such date.
1.3 Conditions to Subsequent Note Closing. In addition to the conditions
specified in Section 7 of the Agreement, the following conditions must be
satisfied for the Special Note Closing:
(a) Documents. The Credit Parties shall have delivered to each
Investor the following, each of which shall be in form and substance reasonably
satisfactory to MSAM:
(i) In lieu of the opinion of Battle ▇▇▇▇▇▇ LLP required under
Section 7.3(a)(vii) under the Agreement, an opinion of Battle ▇▇▇▇▇▇ LLP,
counsel for each of the Credit Parties, dated the Special Note Closing Date,
addressed to the Investors, substantially in the form set forth in Annex A.
(b) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Supplement and all other documents
and instruments incident to such transactions shall be reasonably satisfactory
in substance and form to MSAM and MSAM shall have received all such counterpart
originals or certified or other copies of such additional documents, instruments
or opinions as it may request.
1.4 Negative Covenants. There is hereby added to Section 10 of the
Agreement a new subsection 10.12 as follows:
"10.12 Use of Proceeds. The Company shall use the proceeds received
by it from the sale of the Notes issued on the Special Note Closing
Date in the aggregate amount of $1,050,000 for the purchase of the
Tower 45 and Maitland Interests."
1.5 Termination Event. There is hereby added to Section 12 of the
Agreement a new subsection (n) as follows:
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67
"(n) the purchase by or transfer to the Company of the Tower 45 and
Maitland Interests shall for any reason be invalidated or set aside
by a court of competent jurisdiction, or the Company or its
Subsidiaries at any time before the Initial Public Offering does not
own the Tower 45 and Maitland Interests."
1.6 Additional Covenant. If any amounts in excess of $1,500,000 must for
any reason be delivered to the Trustee of the Estate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for the
Tower 45 and Maitland Interests, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ agrees that he will
contribute to the Company such excess amounts as are required to paid to the
Trustee of the Estate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.7 Section 3.1. The reference to $20,000,000 in Section 3.1 of the
Purchase Agreement shall be deleted and replaced with a reference to
$15,000,000.
1.8 Exhibit K. The formula in Item 1 of Exhibit K of the Purchase
Agreement is hereby amended and restated as follows:
IA 1
--------- x 0.29 x ACP x ----
6,000,000 MP
SECTION 2 MISCELLANEOUS.
2.1 Counterparts. Except as herein provided, this Supplement shall be
governed by the terms, conditions, covenants and agreements of the Agreement.
This Supplement may be executed in any number of counterparts, each of which
shall be the same supplementary instrument but all of which taken together shall
constitute one Agreement.
2.2 Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York.
2.3 Expenses; Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors incurred in connection with
execution and delivery of this Supplement, (b) all reasonable out-of-pocket
expenses of the Investors, in connection with all additional and subsequent
documentation contemplated hereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof and (c) if a default occurs, all reasonable
out-of-pocket expenses incurred by the Investors, including reasonable fees and
disbursements of counsel, in connection with such default and collection and
other enforcement proceedings resulting therefrom, including, without
limitation, costs and expenses incurred in a bankruptcy case. The Credit Parties
shall indemnify the Investors against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and
-3-
68
delivery of this Supplement or the Notes. The obligations of the Credit Parties
under this Section 2.3 shall survive transfer by any Investor of the Notes.
2.4 Terms of the Agreement. Except as otherwise expressly modified hereby,
all the terms and conditions of the Agreement shall remain in full force and
effect and from and after the date hereof all references in the Agreement to
"this Agreement" or "the Agreement" shall mean the Agreement as supplemented
hereby.
2.5 Definitions.
(a) As used in this Supplement, the following terms shall have the
meaning specified below:
"Tower 45 and Maitland Interests" shall have the meaning ascribed to it in
the order issued on May 13, 1997, a copy of which is attached hereto as Annex B,
by the United States Bankruptcy Court for the Eastern District of New York with
respect to the matter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Joint Debtors, Case
No.▇▇▇-▇▇▇▇▇-▇▇▇.
[The remainder of this page has been intentionally left blank]
-4-
69
IN WITNESS WHEREOF, this Supplement has been executed as of the 15th
day of May, 1997.
ISSUER:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust Inc., its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Special Note
Closing
Commitment
$1,050,000 Investors:
MS REAL ESTATE SPECIAL SITUATIONS INC.,
on behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Payment Instructions:___________________________
-5-
70
FOR PURPOSES OF SECTION 1.6 OF THIS AGREEMENT:
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his individual capacity
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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71
TOWER REALTY TRUST, INC
================================================================================
PURCHASE AGREEMENT SUPPLEMENT NO.2
Dated as of May 29, 1997
================================================================================
$1,642,145
Senior Secured Convertible Mineola Notes
72
TABLE OF CONTENTS
Page
SECTION 1 AUTHORIZATION OF SECURITIES ..................................... 1
1.1 Authorization of Mineola Notes .............................. 1
SECTION 2 ISSUANCE OF MINEOLA NOTES ....................................... 2
2.1 Purchase and Sale of Mineola Notes .......................... 2
SECTION 3 THE CLOSING ..................................................... 2
3.1 The Mineola Note Closing .................................... 2
SECTION 4 REPRESENTATIONS OF THE COMPANY .................................. 3
4.1 Representations and Warranties in the Agreement ............. 3
4.2 Issuance of Securities ...................................... 3
4.3 Representations and Warranties in the Mineola Financing
Documents ................................................. 3
SECTION 5 REPRESENTATIONS OF THE INVESTORS ................................ 4
5.1 Authorization ............................................... 4
5.2 Purchase Entirely for Own Account ........................... 4
5.3 Accredited Investor ......................................... 4
5.4 Other Representations and Warranties ........................ 4
SECTION 6 CONDITIONS TO THE OBLIGATIONS OF EACH INVESTOR .................. 5
6.1 Conditions to Mineola Note Closing .......................... 5
SECTION 7 CONDITION TO THE OBLIGATIONS OF THE COMPANY ..................... 9
SECTION 8 COVENANTS ....................................................... 9
8.1 Payment of Principal and Interest ........................... 9
8.2 Use of Proceeds ............................................. 9
8.3 Covenants in Agreement ...................................... 9
SECTION 9 TERMINATION OF COVENANTS ....................................... 9
SECTION 10 TERMINATION EVENTS ............................................. 9
SECTION 11 REDEMPTION OF THE MINEOLA NOTES ............................... 10
11.1 Redemption .................................................. 10
SECTION 12 CONVERSION .................................................... 10
12.1 Conversion Rate ............................................. 10
12.2 Surrender of Mineola Notes; Delivery of Shares .............. 10
12.3 Effect of Conversion ........................................ 10
73
Page
----
12.4 Fractional Shares ........................................... 11
12.5 Taxes on Conversion ......................................... 11
12.6 Anti-Dilution ............................................... 11
SECTION 13 GUARANTEE ................................................... 11
13.1 Benefits of Guarantee and Security .......................... 11
SECTION 14 MISCELLANEOUS ............................................... 11
14.1 Counterparts ................................................ 11
14.2 Governing Law ............................................... 12
14.3 Consent to Jurisdiction ..................................... 12
14.4 Expenses; Documentary Taxes ................................. 12
14.5 Terms of the Agreement ...................................... 12
14.6 Related Documents ........................................... 13
14.7 Definitions ................................................. 13
ii
74
INDEX OF EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Opinion of Counsel to be delivered at the Mineola
Note Closing
iii
75
PURCHASE AGREEMENT SUPPLEMENT NO.2 (this "Supplement") dated as of May 29, 1997,
to Purchase Agreement dated as of March 31, 1997 (as supplemented by Purchase
Agreement Supplement dated May 15, 1997 and as the same may be supplemented,
amended, restated, modified or extended from time to time, the "Agreement"),
among TOWER REALTY TRUST, INC., a Maryland corporation with its principal place
of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Company"), as issuer, TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership with its principal place of business located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating Partnership"), as
guarantor (the Operating Partnership and the Company are sometimes hereinafter
collectively referred to as the "Credit Parties"), and each of the investors
signatory hereto (collectively, the "Investors"). The capitalized terms used
herein and not otherwise defined shall have the meaning set forth in the
Agreement.
WHEREAS, the Company, the Operating Partnership and the Investors
have entered into the Agreement;
WHEREAS, pursuant to terms of the Agreement, any additional capital
that the Credit Parties or its Controlled Subsidiaries may require to acquire
any properties or interests in properties may be provided by the Investors in
the form of convertible notes on the terms set forth therein;
WHEREAS, Tower Mineola Limited Partnership, a Delaware limited
partnership ("Mineola Partnership"), is a Controlled Subsidiary of the Company
and needs additional capital in connection with the acquisition and financing of
a certain property situated at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇; and
WHEREAS, pursuant to section 9.21 of the Agreement, the Credit
Parties have notified the Investors of the need for such additional capital and
the Investors wish to provide such additional capital in form of convertible
notes subject to terms and conditions set forth in this Supplement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 AUTHORIZATION OF SECURITIES.
1.1 Authorization of Mineola Notes. The Company has duly authorized the
sale and issuance of its senior secured convertible note in the aggregate
principal amount of $1,642,145, in substantially the form attached hereto as
Exhibit A (each note delivered pursuant to this Supplement and each note
delivered in substitution or exchange for any such note, being hereinafter
referred to as the "Mineola Notes"). The Mineola Notes shall (i) be dated the
date of issuance, (ii) bear interest (computed on the basis of a 365-day year
and the actual number of days elapsed) from the date of issuance until the
earlier of (A) maturity, (B) the date such Mineola Notes are repaid in full or
(C) the occurrence of a Termination Event, at the rate of 15% per annum payable
quarterly, in arrears, on the last day of each March, June, September
-1-
76
and December, commencing June 30, 1997, and at maturity (each such date being
hereinafter referred to as an "Interest Payment Date"), (iii) bear interest
(computed as provided in clause (ii) above) from the earlier of (A) maturity or
(B) the occurrence of a Termination Event, until the date such Mineola Notes are
repaid in full at the rate of 20% per annum payable on demand (the "Default
Rate") and (iv) mature on the Maturity Date. The Mineola Notes issued pursuant
to this Supplement shall be deemed to be "Notes" for all purposes of the
Agreement and shall be guaranteed by the Operating Partnership as provided in
Section 13 of this Supplement and shall be secured by all Collateral now or
hereinafter provided as security for any Notes now or hereinafter issued under
the Agreement or any Supplement or amendment thereto. The Mineola Notes shall be
convertible into the Common Stock, as provided in Section 12 of this Supplement
and shall be redeemable as provided in Section 11 of this Supplement and Section
13 of the Agreement.
The Company shall contribute the proceeds received by it from the sale of
Mineola Notes to the capital of the Operating Partnership, which shall in turn
contribute such proceeds to the capital of Mineola Partnership. The Company
shall cause Mineola Partnership to use such proceeds for the completion and
closure of the transactions contemplated in the Mineola Financing Documents, and
this Supplement, including, without limitation, the payment of expenses
(including transfer taxes and the fees and expenses of counsel to (i) the
Company, the Operating Partnership and Mineola Partnership, (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇
and (iii) MSAM and the Investors) of such completion and closure.
SECTION 2 ISSUANCE OF MINEOLA NOTES.
2.1 Purchase and Sale of Mineola Notes. Subject to the terms and
conditions of this Supplement, the Company will issue and sell to each Investor,
and each Investor will purchase, Mineola Notes in an aggregate principal amount
not to exceed the amount set forth opposite its name under the heading "Mineola
Note Closing Commitment" on the signature pages hereto. The obligations of each
Investor are several and not joint, and no Investor shall be liable for the acts
and omissions of any other Investor. The Investors shall not be deemed to be
Affiliated shareholders or Affiliated purchasers.
SECTION 3 THE CLOSING.
3.1 The Mineola Note Closing. The closing of the purchase and sale of the
Mineola Notes under this Supplement shall take place at the offices of Battle
▇▇▇▇▇▇, LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
(the "Mineola Note Closing"), at 10:00 A.M. on the date hereof, or at such other
time, date and place as are mutually agreeable to the Company and the Investors.
The date of the Mineola Note Closing is hereinafter referred to as the "Mineola
Note Closing Date." At the Mineola Note Closing, the Company shall deliver to
each Investor Mineola Notes in an aggregate principal amount set forth opposite
its name under the heading "Mineola Note Closing Commitment" on the signature
pages hereto, issued in the name of the Investor or its nominee and in such
authorized denominations as MSAM on behalf of the Investor shall request,
against payment to the Company of the purchase
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price therefor, by wire transfer, check, or other method acceptable to the
Company. If on the Mineola Note Closing Date any of the conditions specified in
Sections 6.1 shall not have been fulfilled, each Investor shall, at its
election, be relieved of all of its obligations under this Supplement without
thereby waiving any other rights it may have by reason of such failure or such
nonfulfillment.
SECTION 4 REPRESENTATIONS OF THE COMPANY.
The Credit Parties, jointly and severally, represent and warrant to each
Investor as follows:
4.1 Representations and Warranties in the Agreement. Except as set forth
in the amendment to Exhibit D to the Agreement delivered pursuant to Section 6.1
of this Supplement each of the representations and warranties set forth in the
Agreement and Related Documents is true and correct in all material respects on
and as of the Mineola Note Closing Date with the same effect as though such
representation and warranty had been made on and as of such date.
4.2 Issuance of Securities. The issuance and delivery of the Mineola Notes
and the shares of the Common Stock issuable upon conversion of the Mineola
Notes, have been duly authorized by all necessary corporate action on the part
of the Company. The Mineola Notes, when issued, will have been duly and validly
authorized and issued and will constitute legal, valid and binding obligations
of the Company entitled to all the rights and benefits provided under the
Agreement as supplemented by this Supplement and shall be enforceable against
the Company in accordance with their terms except as such enforceability may be
limited under (i) applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the rights of creditors generally, and (ii) general
principles of equity. Payment of the Mineola Notes is not, and will not, be
subordinate to any other Indebtedness or obligations of the Credit Parties and
will rank pari passu with the Notes. The Mineola Notes shall be entitled to all
the rights and benefits provided in the Agreement as supplemented hereby,
including without limitation the benefit of the guarantee set forth in Section
15 of the Agreement and the security of all Collateral. The shares of Common
Stock issuable to the Investors upon conversion of the Mineola Notes, when
issued as contemplated hereunder, will be duly and validly authorized and
issued, and fully paid and non-assessable.
4.3 Representations and Warranties in the Mineola Financing Documents. The
representations and warranties set forth in the Mineola Financing Documents and
other related documents thereto are true, complete and accurate and may be
relied upon by the Investors as if such representations and warranties were
fully set forth herein.
SECTION 5 REPRESENTATIONS OF THE INVESTORS.
Each Investor severally, and not jointly, hereby represents and warrants
as follows:
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5.1 Authorization. The Investor has full power and authority to enter into
this Supplement and this Supplement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms except as such
enforceability may be limited under (i) applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the rights of creditors
generally, and (ii) general principles of equity.
5.2 Purchase Entirely for Own Account. The Mineola Notes and the Common
Stock to be acquired by such Investor will be acquired for investment for
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
5.3 Accredited Investor. The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D, under the Securities Act, as
presently in effect.
5.4 Other Representations and Warranties.
(a) The Investor, by reason of its business and financial
experience, together with the business and financial experience of MSAM, which
is its investment adviser,
(i) has such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of this
type that it is capable of evaluating the merits and risks of and of
making an informed investment decision with respect to an investment in
the Mineola Notes,
(ii) is capable of protecting its own interest or has engaged
representatives or advisors to assist it in protecting its interests and
(iii) is capable of bearing the economic risk of such
investment.
(b) (i) The Investor understands that an investment in the Company
involves substantial risks.
(ii) The Investor has been given the opportunity to make an
investigation of the proposed activities of the Company.
(iii) The Investor has been afforded the opportunity to obtain
any additional information requested by it.
(iv) The Investor has had an opportunity to ask questions of
and receive answers from representatives of the Company concerning the Company
and its proposed activities and the terms and conditions of an investment in the
Mineola Notes.
(c) The Investor was not formed for the specific purpose of
acquiring an interest in the Company.
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(d) The Investor acknowledges that:
(i) the Mineola Notes and Common Stock to be issued to such
Investor have not been registered under the Securities Act or state
securities laws by reason of a specific exemption or exemptions from
registration under the Securities Act and applicable state securities laws
and such Mineola Notes and Common Stock will bear a legend to such effect,
(ii) the Company's reliance on such exemptions is predicated
in part on the accuracy and completeness of the representations and
warranties of such Investor contained herein,
(iii) the Mineola Notes and Common Stock to be issued to such
Investor may not be resold or otherwise distributed unless registered
under the Securities Act and applicable state securities laws, or unless
an exemption from registration is available,
(iv) there is no public market for the Mineola Notes and
Common Stock; and
(v) other than as set forth in this Supplement and the Related
Documents, the Company has no obligation or intention to register such
Mineola Notes and Common Stock under the Securities Act or any state
securities laws or to take any action that would make available any
exemption from the registration requirements of such laws.
SECTION 6 CONDITIONS TO THE OBLIGATIONS OF EACH INVESTOR.
6.1 Conditions to Mineola Note Closing. The obligation of each Investor to
purchase the securities to be purchased by it at the Mineola Note Closing are
subject to the satisfaction of each of the following conditions on or before the
Mineola Note Closing Date:
(a) Accuracy of Representations and Warranties. Except as set forth
in the amendment to Exhibit D to the Agreement delivered pursuant to this
Section 6, each representation and warranty contained in Section 5 of the
Agreement and in this Supplement shall be true and correct in all material
respects on and as of such Mineola Note Closing Date with the same effect as
though such representation and warranty had been made on and as of such Mineola
Note Closing Date.
(b) Performance. The Credit Parties shall have performed and
complied with all covenants, agreements and conditions contained in the
Agreement and this Supplement and the Agreement required to be performed or
complied with by the Credit Parties hereunder and thereunder.
(c) No Termination Event. No Termination Event or Potential
Termination Event shall have occurred and be continuing or result from the
transactions contemplated to be consummated on such Mineola Note Closing Date.
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(d) No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.
(e) No Material Adverse Change. No event shall have occurred or
conditions shall exist that could reasonably be expected to have a Material
Adverse Effect.
(f) Compliance with Laws; Consents and Approvals. The Company shall
have complied with all applicable requirements of federal and state securities
or "blue sky" laws with respect to the issuance and sale of the securities to be
sold at the Mineola Note Closing and each of the Credit Parties shall have
received all consents, permits and other authorizations, and made all such
filings and declarations as may be required under any applicable law or
regulation or pursuant to any other agreement, order or decree to which any of
them is a party or subject in connection with the transactions to be consummated
on or prior to such Mineola Note Closing Date.
(g) Purchase Permitted. Each Investor's purchase of the securities
to be purchased by it at the Mineola Note Closing shall be permitted under all
applicable laws and regulations governing the activities of such Investor.
(h) Expenses. The Investors shall have received all amounts payable
pursuant to Section 14.4 of this Supplement on or prior to such Mineola Note
Closing Date.
(i) Documents. The Credit Parties shall have delivered to each of
the Investors the following, each of which shall be in form and substance
reasonably satisfactory to MSAM:
(i) The following agreements, duly executed by each of the
parties thereto:
(A) this Supplement;
(B) the Mineola Notes being purchased by each Investor
at such Closing, registered in such names and in such denominations as
such Investor, shall have requested;
(C) the Supplement to Operating Partnership Pledge
Agreement;
(D) the Supplement to Company Pledge Agreement;
(E) the Mineola Pledge Agreement;
(F) Amendments to Exhibit D to the Agreement to reflect
any modifications to the representations and warranties in Section 5 of
the Agreement since the prior Closing; provided, however, that such
modifications shall be consistent with the Budget.
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(ii) A certificate duly executed on behalf of the Company by
its Secretary or an Assistant Secretary, certifying as to the incumbency
and signatures of each officer of the Company executing this Supplement
and all other documents to be delivered at the Mineola Note Closing to
which the Company is a party and to which is attached copies, certified to
be true, correct, complete and in full force and effect of (A) the
Company's Articles of Incorporation, (B) the Company's by-laws and (C)
resolutions of the Company's Board of Directors authorizing the execution,
delivery and performance by the Company of this Supplement and all other
documents to be delivered at the Mineola Note Closing to which the Company
is a party, the issuance and sale of the Mineola Notes and the
authorization and issuance of the Common Stock upon conversion of the
Mineola Notes as contemplated in this Supplement;
(iii) A certificate, duly executed on behalf of the Operating
Partnership, by the Secretary or an Assistant Secretary of the Company, in
its capacity as the sole general partner of the Operating Partnership,
certifying as to the incumbency and signatures of the officers of the
Company executing this Supplement and all other documents to be delivered
at the Mineola Note Closing to which the Operating Partnership is a party
and to which is attached copies, certified to be true, correct, complete
and in full force and effect of (A) the Operating Partnership's
certificate of limited partnership, (B) the partnership agreement of the
Operating Partnership and (C) resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance by the
Operating Partnership of this Supplement and all other documents to be
delivered at the Mineola Note Closing to which it is a party;
(iv) A certificate duly executed by the Chief Executive
Officer of the Company certifying as to each of the matters set forth in
Sections 6.1(a), (b) and (c) of this Supplement;
(v) Good standing certificates for each of the Company, the
Operating Partnership and the Management Company from the Secretary of
State of their respective jurisdictions of formation and each other
jurisdiction in which they are required to be qualified to do business;
(vi) An opinion of Battle ▇▇▇▇▇▇, LLP, counsel for each of the
Credit Parties, dated the Mineola Note Closing Date, addressed to the
Investors, substantially in form set forth in Exhibit B;
(vii) All certificates or other instruments representing any
interests or other securities pledged as Collateral at the Mineola Note
Closing, together with executed and undated stock powers or assignments in
blank, and evidence that all filings and other actions necessary to
perfect the Collateral Agent's security interest in the Collateral
delivered at the Mineola Note Closing, have been made or taken and that
the Collateral Agent's Lien on the Collateral has priority over any other
Liens, other than Permitted Liens; and
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(viii) Copies, certified to be true, correct and complete by
the Credit Parties, of consents and approvals of any Governmental
Authority or third party required in connection with the transactions to
be consummated on the Mineola Note Closing Date (including, without
limitation, any consents of any partners and lenders required in order to
pledge the interests to be pledged under the Security Documents).
(j) Initial Public Offering. MSAM shall continue to be reasonably
satisfied that each of the Credit Parties is using its reasonable best efforts
to accomplish the Initial Public Offering at the soonest possible time.
(k) Financial Information. The Company shall have delivered to the
Investors a Pro Forma Statement of Operations in the form to be included in the
Company's Registration Statement on Form S-11 in connection with its Initial
Public Offering, together with a certificate duly executed by the Chief
Executive Officer of the Company certifying that the Pro Forma Statement of
Operations presents fairly in all material respects, on a pro forma basis, the
financial condition and results of operations of the Company purported to be
shown thereby, at the dates and for the periods indicated.
(l) Mineola Financing. The transactions contemplated under the
Mineola Financing Documents shall have closed and the MSAM shall have received
copies, each of which shall be reasonably satisfactory in substance and form to
MSAM, certified by the Secretary or an Assistant Secretary to the Company as
true, correct and complete, of the Mineola Financing Documents and all other
agreements, opinions and documents entered into in contemplation therewith.
(m) Title Insurance. Mineola Partnership shall have received an
owner's extended coverage policy of title insurance with respect to certain
property situated at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, issued
by a title insurance company approved by MSAM. Such title insurance policy shall
have Mineola Partnership as an insured person and shall be in form and substance
acceptable to MSAM.
(n) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Supplement and all other documents
and instruments incident to such transactions shall be reasonably satisfactory
in substance and form to MSAM and MSAM shall have received all such counterpart
originals or certified or other copies of such additional documents, instruments
or opinions as it may request.
SECTION 7 CONDITION TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company under Section 3.1 of this Supplement
as to each Investor are subject to the condition that the representations and
warranties of the Investor contained in Section 5 of this Supplement shall be
true and correct in all material respects on and as of the Mineola Note Closing
Date with the same effect as though such representations and warranties had been
made on and as of that date.
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SECTION 8 COVENANTS.
8.1 Payment of Principal and Interest. The Company covenants and agrees
that it will duly and promptly pay or cause to be paid the principal of and
interest on each of the Mineola Notes at the place or places, at the respective
times and in the manner provided in the Agreement, this Supplement and the
Mineola Notes. Unless otherwise provided in this Supplement, all payments shall
be made by electronic wire transfer of immediately available United States
funds.
8.2 Use of Proceeds For Mineola Notes. There is hereby added to Section 10
of the Agreement a new subsection 10.13 as follows:
"10.13 Use of Proceeds From Mineola Notes. The Company shall use the
proceeds received by it from the sale of the Mineola Notes issued on
the Mineola Note Closing Date in the aggregate amount of $1,642,145
for the completion and closure of the transactions contemplated in
the Mineola Financing Documents, including, without limitation, the
payment of expenses (including transfer taxes and the fees and
expenses of counsel to (i) the Company, the Operating Partnership
and Mineola Partnership, (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ and (iii) MSAM and the
Investors) of such completion and closure. Any amounts remaining in
excess of that needed for the completion and closure of the
transactions contemplated in the Mineola Financing Documents shall
be used in accordance with the Budget."
8.3 Covenants in Agreement. The Mineola Notes are entitled to the benefits
of each of the covenants set forth in Section 9 and Section 10 of the Agreement
with the same force and effect as if set forth herein in full.
SECTION 9 TERMINATION OF COVENANTS.
Each of the covenants set forth in Sections 8.1 and 8.2 of this
Supplement shall terminate on the date the Mineola Notes and all of the
Obligations are repaid in full or on the date of the closing of the Initial
Public Offering.
SECTION 10 TERMINATION EVENTS.
There is hereby added to Section 12 of the Agreement a new
subsection (o) as follows:
"(o) event of default (as defined in the Mineola Financing
Documents) shall occur."
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SECTION 11 REDEMPTION OF THE MINEOLA NOTES.
11.1 Redemption. The Mineola Notes are redeemable on the same terms and
conditions set forth in Section 13 of the Agreement, including, without
limitation, the provision relating to Major Capital Events; provided however
that the Optional Redemption Price for the Mineola Notes shall be equal to the
following:
((0.25 x OPA) -- INT) + CPA
OPA = the principal amount of the Mineola Notes issued and
outstanding immediately prior to the date of
redemption, but not less than the original principal
amount
INT = all interest paid on the Mineola Notes as of the
date of redemption
CPA = OPA plus all accrued but unpaid interest as of the date
of redemption;
provided further that if the Optional Redemption Price payable under this
Section 11.1 would be less than the Optional Redemption Price computed as set
forth in Section 13.1 of the Agreement, then the Optional Redemption Price for
the Mineola Notes will be established in accordance with Section 13.1 of the
Agreement.
SECTION 12 CONVERSION.
12.1 Conversion Rate. Upon the closing of the Initial Public Offering each
Mineola Note shall, without any action on the part of any holder thereof,
automatically be converted into fully paid and nonassessable shares of Common
Stock at the following conversion rate:
(((0.25 x OPA) - INT* + CPA)/MP
* If this calculation results in an amount less than
zero, then such calculation shall be equal to zero such
that the conversion rate shall be equal to the quotient
of CPA divided by MP
OPA = the principal amount of the Mineola Notes issued and
outstanding immediately prior to the Initial Public
Offering, but not less than the original principal
amount
INT = all interest paid on the Mineola Notes as of the date
of the Initial Public Offering
CPA = OPA plus all accrued but unpaid interest as of the
date of the Initial Public Offering
MP = the Mid-Point Purchase Price
12.2 Surrender of Mineola Notes, Delivery of Shares. At the Stock Closing,
the Company shall issue and deliver, against surrender of the Mineola Notes, to
each Investor, (a)
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a certificate or certificates for the number of full shares of Common Stock or
other securities issuable upon the conversion of such Investor's Mineola Notes
as provided in Section 12.1 of this Supplement, in accordance with the
instructions provided by MSAM pursuant to Section 4.4 of the Agreement, (b) the
amount of cash required to be paid for any fractional interest in respect of a
share of Common Stock or other security arising upon the conversion as provided
in Section 12.3 of this Supplement and (c) cash (or, if interest on the Mineola
Notes is to be paid in Common Stock, then Common Stock) in the amount of all
accrued and unpaid interest on the Mineola Notes surrendered up to and including
the date of the closing of the Initial Public Offering.
12.3 Effect of Conversion. Each person in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
conversion of the Mineola Notes shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented by those
certificates at the time of the closing of the Initial Public Offering. All
shares of Common Stock delivered upon conversion of the Mineola Notes will upon
delivery be duly and validly issued and fully paid and nonassessable, free of
all Liens and charges and not subject to any preemptive rights. Upon conversion,
the Mineola Notes shall no longer be deemed to be outstanding and all rights of
a holder with respect to the Mineola Notes shall immediately terminate except
the right to receive the Common Stock or other securities, cash or other assets
as herein provided.
12.4 Fractional Shares. No fractional shares or securities representing
fractional shares of Common Stock shall be issued upon conversion of Mineola
Notes. Any fractional interest in a share of Common Stock resulting from
conversion of a Mineola Note shall be paid in cash (computed to the nearest
cent) based on the principal amount of the Mineola Notes represented by the
fractional share.
12.5 Taxes on Conversion. The Company will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue of
delivery of shares of Common Stock on conversion of the Mineola Notes pursuant
hereto.
12.6 Anti-Dilution. In the event that at any time prior to the Initial
Public Offering the Company issues any shares of Common Stock or securities
exchangeable or convertible into Common Stock or any options, warrants or rights
to acquire any shares of Common Stock or securities exchangeable or convertible
into Common Stock to any Person other than a Person contributing assets to the
Company or the Operating Partnership in connection with the Initial Public
Offering (the "Dilutive Securities"), the conversion rate formula in Section
12.1 of this Supplement shall be adjusted to increase the number of shares of
Common Stock into which the Mineola Notes are convertible so that, after such
adjustment, the Investors will have, in the aggregate, on conversion of the
Mineola Notes, the same percentage ownership interest in the Company as they
would have had the Dilutive Securities not been issued.
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SECTION 13 GUARANTEE AND SECURITY.
13.1 Benefits of Guarantee and Security. The payment of the
principal of and interest on the Mineola Notes, and any other amount payable in
connection therewith shall be deemed "Obligations" for all purposes of the
Agreement and the Related Documents and shall be absolutely, unconditionally and
irrevocably guaranteed by the Operating Partnership and shall be entitled to the
rights and benefits of all Collateral now or hereinafter provided as security
for the Notes now or hereinafter issued pursuant to the Agreement.
SECTION 14 MISCELLANEOUS.
14.1 Counterparts. Except as herein provided, this Supplement shall be
governed by the terms, conditions, covenants and agreements of the Agreement.
This Supplement may be executed in any number of counterparts, each of which
shall be the same supplementary instrument but all of which taken together shall
constitute one Agreement.
14.2 Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York.
14.3 Consent to Jurisdiction. Each of the Credit Parties and Investors
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York located in New York County, City of New York and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding relating to this Supplement,
the Mineola Notes and the other Related Documents or any of the transactions
contemplated hereby or thereby. Each of the Credit Parties and Investors agrees
to commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or, if such suit,
action or proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York located in New York
County, City of New York. Each of the Credit Parties further agrees that service
of process, summons, notice or document by hand delivery or U.S. registered
certified mail return receipt requested in care of Battle ▇▇▇▇▇▇ LLP, Park
Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq., shall be effective service of process for any action, suit or
proceeding brought against such Credit Party in any such court. Each of the
Credit Parties and Investors irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding relating to
this Supplement, the Mineola Notes and the other Related Documents and any of
the transactions contemplated hereby or thereby in (i) the Supreme Court of the
State of New York located in New York County, City of New York or (ii) the
United States District Court for the Southern District of New York and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
14.4 Expenses; Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors incurred through the date
hereof, and such other fees and disbursements
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incurred in connection with execution and delivery of this Supplement, (b) all
reasonable out-of-pocket expenses of the Investors, in connection with all
additional and subsequent documentation contemplated hereby, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof and (c) if a
default occurs, all reasonable out-of-pocket expenses incurred by the Investors,
including reasonable fees and disbursements of counsel, in connection with such
default and collection and other enforcement proceedings resulting therefrom,
including, without limitation, costs and expenses incurred in a bankruptcy case.
The Credit Parties shall indemnify the Investors against any transfer taxes,
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Supplement or the Mineola Notes.
The obligations of the Credit Parties under this Section 14.4 shall survive
transfer by any Investor of the Mineola Notes.
14.5 Terms of the Agreement. Except as otherwise expressly modified
hereby, all the terms and conditions of the Agreement shall remain in full force
and effect and from and after the date hereof all references in the Agreement to
"this Agreement" or "the Agreement" shall mean the Agreement as supplemented
hereby.
14.6 Related Documents. The Mineola Pledge Agreement dated as the date
hereof, among Mineola UPREIT, LLC, Tower QRS No.1 Corp., Tower QRS No.2 Corp.
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Management Inc., as collateral Agent for the Investors,
shall be deemed to be a "Related Document" for all purposes of the Agreement and
Related Documents.
14.7 Definitions.
(a) As used in this Supplement, the following terms shall have the
meaning specified below:
"Mineola Note" is defined in Section 1.1.
"Mineola Note Closing" is defined in Section 3.1.
"Mineola Note Closing Date" is defined in Section 3.1
"Mineola Financing Documents" means the Consolidated, Amended and Restated
Fee and Leasehold Indenture of Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits
in the amount of $11,000,000 given by Tower Mineola Limited Partnership, as
mortgagor, in favor of Midland Loan Services, L.P., secured by certain property
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ and any other documents and
instruments incident to such transaction.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, this Supplement has been executed on the first
day and year first above written.
ISSUER:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Mineola Note
Closing
Commitment Investors:
$1,642,145 MS REAL ESTATE SPECIAL SITUATIONS INC.,
on behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Payment Instructions:________________________
89
EXHIBIT A
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state, and neither the securities nor any interest therein may be
sold, transferred, pledged or otherwise disposed of in the absence of such
registration or an exemption therefrom.
FORM OF MINEOLA NOTE
TOWER REALTY TRUST, INC.
Mineola Note
No.[__] May , 1997
$[__________]
FOR VALUE RECEIVED, the undersigned, Tower Realty Trust, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Maryland, hereby promises to pay to [__________], or
registered assigns (the "Holder"), the principal sum of [__________] DOLLARS on
the Maturity Date (as defined in the Agreement referred to below). The Company
also promises to pay interest (computed on the basis of a 365 day year and the
actual number of days elapsed) (a) from the date hereof until the earlier of (i)
the Maturity Date, (ii) the date this Mineola Note and all amounts payable in
connection herewith have been paid to the Holder and (iii) the occurrence of a
Termination Event (as defined in the Agreement) on the unpaid balance hereof at
the rate of 15% per annum, payable quarterly, on the last day of March, June,
September and December, commencing June 30, 1997, and on the Maturity Date (each
such date an "Interest Payment Date") and (b) from the earlier of (i) the
Maturity Date or (ii) the occurrence of a Termination Event until the date this
Mineola Note and all amounts payable in connection herewith have been paid to
the Holder, at the rate of 20% per annum payable on demand.
Payments of principal of, premium, if any, and interest on this
Mineola Note are to be made in lawful money of the United States of America.
Payments shall be made to the Holder at such place and by such means as provided
in the Agreement.
This Mineola Note is one of a series of senior secured convertible
notes issued pursuant to Purchase Agreement, dated as of March 31, 1997 (as from
time to time amended and supplemented, the "Agreement"), among the Company, as
issuer, the Operating Partnership, as guarantor, and the respective Investors
named therein and is entitled to the benefits thereof. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Agreement. As provided in the Agreement, this Mineola Note (i) is subject to
redemption prior to maturity and (ii) is automatically convertible into shares
of the Company's Common Stock on an initial public offering as is described more
fully in the Agreement. Payment of the principal, of, premium, if any, and
interest on this Mineola Note is guaranteed by the Operating Partnership as
provided in the Agreement.
A-1
90
This Mineola Note is a registered Mineola Note and, as provided in
the Agreement, upon surrender of this Mineola Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Mineola Note (for a like principal amount) or Mineola Notes (in
authorized denominations) will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Mineola Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
If this Mineola Note is collected by or through an attorney at law
or otherwise, then the Company shall be obligated to pay, in addition to the
principal balance hereof and any premium and accrued interest hereon, reasonable
attorney's fees and all out-of-pocket costs of the Holder in connection with the
collection or enforcement of this Mineola Note.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Mineola Note.
This Mineola Note shall be governed by the laws of the State of New
York.
TOWER REALTY TRUST, INC.
By: ______________________________
Name:
Title:
A-2
91
TOWER REALTY TRUST, INC.
================================================================================
PURCHASE AGREEMENT SUPPLEMENT NO. 3
Dated as of May 29, 1997
================================================================================
$411,016
Senior Secured Convertible Notes
92
PURCHASE AGREEMENT SUPPLEMENT NO. 3 (this "Supplement") dated as of May 29,
1997, to Purchase Agreement dated as of March 31, 1997 (as supplemented by
Purchase Agreement Supplement dated May 15, 1997 and Purchase Agreement
Supplement No. 2 dated the date hereof ("Supplement No. 2") and as the same may
be further supplemented, amended, restated , modified or extended from time to
time, the "Agreement"), among TOWER REALTY TRUST, INC., a Maryland corporation
with its principal place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), as issuer, TOWER REALTY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership with its principal place of business
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating
Partnership"), as guarantor (the Operating Partnership and the Company are
sometimes hereinafter collectively referred to as the "Credit Parties"), and
each of the investors signatory hereto (collectively, the "Investors"). The
capitalized terms used herein and not otherwise defined shall have the meaning
set forth in the Agreement.
WHEREAS, the Company, the Operating Partnership and the Investors
have entered into the Agreement; and
WHEREAS, the Credit Parties and the Investors desire to supplement
and modify the Agreement as contemplated herein.
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 SUPPLEMENT.
1.1 Subsequent Special Note Closing. Notwithstanding anything to the
contrary set forth in Section 4.3 of the Agreement, a Subsequent Note Closing
(the "Special Note Closing") shall take place on May 29, 1997 (the "Special Note
Closing Date") at the offices of Battle ▇▇▇▇▇▇, LLP, Park Avenue Tower, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (or such other time and
place as are mutually agreeable to the Company and the Investors) whereby the
Company will sell Notes in an aggregate principal amount of $411,016 with the
pro rata portion (determined according to each Investor's relative total
commitment) of such principal amount to be purchased by each Investor at such
Subsequent Special Note Closing. At such Subsequent Special Note Closing, the
Company shall deliver to each Investor the Notes being purchased by such
Investor, issued in the name of the Investor or its nominee in such authorized
denominations as MSAM on behalf of such Investor shall request, against payment
to the Company of the purchase price therefor, by wire transfer, check or other
method acceptable to the Company. If on such Special Note Closing any of the
conditions specified in Section 1.2 of this Supplement shall have not been
fulfilled, each Investor shall, at its election, be relieved of all of the
obligations under this Agreement to purchase the Notes to be purchased at such
Special Note Closing without thereby waiving any other rights it may have by
reason of such failure or nonfulfillment. The Special Note Closing shall not be
deemed to be the Second Note Closing as contemplated under the Agreement. No
waiver of the conditions required to fulfilled in connection with the Second
Note Closing is made hereby, and no waiver shall be implied. The parties hereto
expressly agree and acknowledge that if the condition specified in Section
93
7.4(c) of the Agreement is not met prior to June 30, 1997, the Notes shall
become due and payable on June 30, 1997, subject to extension as contemplated in
the Agreement, in full, including all accrued and unpaid interest thereon.
1.2 Conditions to Subsequent Note Closing. In addition to the conditions
specified in Section 6.1 of the Supplement No. 2, the following conditions must
be satisfied for the Subsequent Special Note Closing on or before the Special
Closing Date:
(a) Documents. The Credit parties shall have delivered to each
Investor the Notes in an aggregate principal amount of $411,016 in accordance
with the terms hereof, registered in such names and in such denominations as
such Investor, shall have requested.
(b) Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Supplement and in Supplement No. 2
and all other documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to MSAM and MSAM shall have
received all such counterpart originals or certified or other copies of such
additional documents, instruments or opinions as it may request.
1.3 Use of Proceeds. The Company shall use the proceeds received by it
from the sale of the Notes issued on the Special Note Closing Date in an
aggregate amount of $411,016 solely as set forth in the new Section 10.13 of the
Agreement, added to the Agreement by Section 8.2 of Supplement No. 2.
SECTION 2 MISCELLANEOUS.
2.1 Counterparts. Except as herein provided, this Supplement shall be
governed by the terms, conditions, covenants and agreements of the Agreement.
This Supplement may be executed in any number of counterparts, each of which
shall be the same supplementary instrument but all of which taken together shall
constitute one Agreement.
2.2 Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York.
2.3 Expenses; Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors incurred in connection with
execution and delivery of this Supplement, (b) all reasonable out-of-pocket
expenses of the Investors, in connection with all additional and subsequent
documentation contemplated hereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof and (c) if a default occurs, all reasonable
out-of-pocket expenses incurred by the Investors, including reasonable fees and
disbursements of counsel, in connection with such default and collection and
other enforcement proceedings resulting therefrom, including, without
limitation, costs and expenses incurred in a bankruptcy case. The Credit Parties
shall indemnify the Investors against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Supplement or the Notes. The obligations of the
Credit Parties under this Section 2.3 shall survive transfer by any Investor of
the Notes.
94
2.4 Terms of the Agreement. Except as otherwise expressly modified hereby,
all the terms and conditions of the Agreement shall remain in full force and
effect and from and after the date hereof all references in the Agreement to
"this Agreement" or "the Agreement" shall mean the Agreement as supplemented
hereby.
[The remainder of this page has been intentionally left blank]
95
IN WITNESS WHEREOF, this Supplement has been executed as of the day
and year first above written.
ISSUER:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Subsequent
Special Note
Closing
Commitment Investors:
$411,016 MS REAL ESTATE SPECIAL SITUATIONS INC.,
on behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Principal
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Payment Instructions: _________________________
96
TOWER REALTY TRUST, INC.
================================================================================
PURCHASE AGREEMENT SUPPLEMENT No. 4
Dated as of July 9, 1997
================================================================================
$265,829
Senior Secured Convertible Notes
97
PURCHASE AGREEMENT SUPPLEMENT NO. 4 (this "Supplement"), dated as of July 9,
1997, to Purchase Agreement dated as of March 31, 1997 (as supplemented by
Purchase Agreement Supplement, dated May 15, 1997, Purchase Agreement Supplement
No. 2, dated May 30, 1997 ("Supplement No. 2"), Purchase Agreement Supplement
No. 3, dated May 30, 1997 ("Supplement No. 3") and as the same may be further
supplemented, amended, restated, modified or extended from time to time, the
"Agreement"), among TOWER REALTY TRUST, INC., a Maryland corporation with its
principal place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Company"), TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership with its principal place of business located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating Partnership"; the
Operating Partnership and the Company are sometimes hereinafter collectively
referred to as the "Credit Parties"), and each of the investors signatory hereto
(collectively, the "Investors"). The capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Agreement.
W I T N E S S E T H:
WHEREAS, the Credit Parties and the Investors desire to supplement
and modify the Agreement as contemplated herein; and
WHEREAS, MSAM has assigned its rights and obligations as Collateral
Agent under the Purchase Agreement and the Related Documents to MS Real Estate
Special Situations Inc. ("MSRESS");
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 SUPPLEMENT.
1.1 Special Note Closing. Notwithstanding anything to the contrary set
forth in Section 4.3 of the Agreement, a Subsequent Note Closing (the "Special
Note Closing") shall take place on July 9, 1997 (the "Special Note Closing
Date") at the offices of Battle ▇▇▇▇▇▇, LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. (or such other time and place as
are mutually agreeable to the Company and the Investors) whereby the Company
will sell Notes in an aggregate principal amount of $265,829 with the pro rata
portion (determined according to each Investor's relative total commitment) of
such principal amount to be purchased by each Investor at such Special Note
Closing. At such Special Note Closing, the Company shall deliver to each
Investor the Notes being purchased by such Investor, issued in the name of the
Investor or its nominee in such authorized denominations as MSRESS on behalf of
such Investor shall request, against payment to the Company of the purchase
price therefor, by wire transfer, check or other method acceptable to the
Company. If on such Special Note Closing any of the conditions specified in
Sections 7.1 or 7.3 of the Agreement or Section
-2-
98
1.3 of this Supplement shall have not been fulfilled, each Investor shall, at
its election, be relieved of all of the obligations under the Agreement to
purchase the Notes to be purchased at such Special Note Closing without thereby
waiving any other rights it may have by reason of such failure or
nonfulfillment. No waiver of the covenants relating to contributions by the
Credit Parties of their respective interests in the Retail Properties to the
Operating Partnership, as more fully described under Section 9.15 of the
Agreement, is made hereby, and no waiver shall be implied. Each of the Credit
Parties shall continue to use its reasonable efforts to cause all direct or
indirect interests in the Retail Properties that are held directly or indirectly
by the REIT Sponsors which are not subject to restrictions on transfer under the
organizational documents pursuant to which such interest were issued to be
contributed to the Operating Partnership and pledged as collateral to the
Collateral Agent.
1.2. Payment In-Kind. In lieu of the cash payment of the accrued interest
payable to the Investors on the Interest Payment Date of June 30, 1997, the
Company shall add such accrued interest to principal as of June 30, 1997, and
deliver to the Investors Notes in the amount of such accrued interest, which
Notes shall be dated as of, and accrue interest from, June 30, 1997. Such Notes
shall be in the same form as the previously issued Notes.
1.3.Representations and Warranties. The Credit Parties, jointly and
severally, represent and warrant to each Investor as follows:
(a) Representations and Warranties in the Agreement. Each of the
representations and warranties set forth in the Agreement and Related Documents
is true and correct in all material respects on and as of the date hereof with
the same effect as though such representation and warranty had been made on and
as of such date.
1.4 Conditions to Subsequent Note Closing. In addition to the conditions
specified in Section 7 of the Agreement, the following conditions must be
satisfied for the Special Note Closing:
(a) Documents. The Credit Parties shall have delivered to each
Investor the following agreements, duly executed by each of the parties, which
agreements shall be in form and substance reasonably satisfactory to MSRESS:
(i) this Supplement;
(ii) the Notes being purchased at the Special Note Closing
pursuant to terms of this Supplement; and
(iii) the Notes to be issued pursuant to Section 1.2 of this
Supplement.
(b) Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Supplement and all other
documents and instruments incident
-3-
99
to such transactions shall be reasonably satisfactory in substance and form to
MSRESS and MSRESS shall have received all such counterpart originals or
certified or other copies of such additional documents, instruments or opinions
as it may request.
SECTION 2 MISCELLANEOUS.
2.1 Counterparts. Except as herein provided, this Supplement shall be
governed by the terms, conditions, covenants and agreements of the Agreement.
This Supplement may be executed in any number of counterparts, each of which
shall be the same supplementary instrument but all of which taken together shall
constitute one Agreement.
2.2 Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York.
2.3 Expenses; Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors incurred in connection with
execution and delivery of this Supplement, (b) all reasonable out-of-pocket
expenses of the Investors, in connection with all additional and subsequent
documentation contemplated hereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof and (c) if a default occurs, all reasonable
out-of-pocket expenses incurred by the Investors, including reasonable fees and
disbursements of counsel, in connection with such default and collection and
other enforcement proceedings resulting therefrom, including, without
limitation, costs and expenses incurred in a bankruptcy case. The Credit Parties
shall indemnify the Investors against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Supplement or the Notes. The obligations of the
Credit Parties under this Section 2.3 shall survive transfer by any Investor of
the Notes.
2.4 Terms of the Agreement. Except as otherwise expressly modified hereby,
all the terms and conditions of the Agreement shall remain in full force and
effect and from and after the date hereof all references in the Agreement to
"this Agreement" or "the Agreement" shall mean the Agreement as supplemented
hereby.
2.5 Collateral Agent. All references to MSAM, in its capacity as the
Collateral Agent, in the Agreement and the Related Documents shall henceforth be
deemed to refer to MSRESS, and its successors and assigns.
[The remainder of this page has been intentionally left blank]
-4-
100
IN WITNESS WHEREOF, this Supplement has been executed as of the day
and year first above written.
ISSUER:
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Special Note
Closing
Commitment Investors:
$265,829 MS REAL ESTATE SPECIAL SITUATIONS INC.,
on behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Principal
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Payment Instructions: _________________________
101
TOWER REALTY TRUST, INC.
================================================================================
PURCHASE AGREEMENT SUPPLEMENT NO. 5
Dated as of July 31, 1997
================================================================================
102
PURCHASE AGREEMENT SUPPLEMENT NO. 5 (this "Supplement"), dated as of July 31,
1997, to Purchase Agreement dated as of March 31, 1997 (as supplemented by
Purchase Agreement Supplement, dated May 15, 1997, Purchase Agreement Supplement
No. 2, dated May 30, 1997 ("Supplement No. 2"), Purchase Agreement Supplement
No. 3, dated May 30, 1997 ("Supplement No. 3"), Purchase Agreement Supplement
No. 4, dated July 30, 1997 ("Supplement No. 4"), and as the same may be further
supplemented, amended, restated, modified or extended from time to time, the
"Agreement"), among TOWER REALTY TRUST, INC., a Maryland corporation with its
principal place of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Company"), TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership with its principal place of business located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Operating Partnership"; the
Operating Partnership and the Company are sometimes hereinafter collectively
referred to as the "Credit Parties"), and each of the investors signatory hereto
(collectively, the "Investors"). The capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Agreement.
W I T N E S S E T H:
WHEREAS, the Credit Parties and the Investors desire to
supplement and modify the Agreement as contemplated herein;
WHEREAS, MSAM has assigned its rights and obligations as Collateral
Agent under the Agreement and the Related Documents to MS Real Estate Special
Situations Inc. ("MSRESS"); and
WHEREAS, the Company has advised the Investors that it wishes to
amend and supplement the Agreement to, among other things, (i) increase the
aggregate principal amount of the Notes from $6,000,000 to $11,000,000, (ii) to
modify the Maturity Date and (iii) to modify and supplement certain other
provisions, all as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 AMENDMENT.
The Agreement is hereby amended as follows:
1.1 Section 1.1. Section 1.1 of the Agreement is hereby deleted in its
entirety and the following is hereby substituted in lieu thereof:
"1.1 Authorization of Notes. The Company has duly authorized the
sale and issuance of its senior secured convertible notes of the
Company in the aggregate principal amount of $11,000,000, in
substantially the form attached hereto as
2
103
Exhibit A (each note delivered pursuant to this Agreement and each
note delivered in substitution or exchange for any such note, being
hereinafter referred to, as the "Notes"). The Notes shall (i) be
dated the date of issuance, (ii) bear interest (computed on the
basis of a 365-day year and the actual number of days elapsed) from
the date of issuance until the earlier of (A) maturity, (B) the date
such Notes are repaid in full or (C) the occurrence of a Termination
Event at the rate of 15% per annum payable quarterly, in arrears, on
the last day of each March, June, September and December, commencing
September 30, 1997, and at maturity (each such date being
hereinafter referred to as an "Interest Payment Date"), (iii) bear
interest (computed as provided in clause (ii) above) from the
earlier of (A) maturity or (B) the occurrence of a Termination Event
until the date such Notes are repaid in full at the rate of 20% per
annum payable on demand (the "Default Rate") and (iv) mature on the
Maturity Date. Until the earlier of maturity or the occurrence of a
Termination Event, the Company shall add 100% of the amount of
interest payable on any Interest Payment Date to the then
outstanding principal amount of the Notes. Any such interest added
to principal shall thereafter bear interest as provided above. The
Notes issued by the Company and purchased by the Investors shall be
subject to the terms and conditions set forth in this Agreement. The
Notes shall be guaranteed by the Operating Partnership as provided
in Section 15 of the Agreement and shall be entitled to the rights
and benefits of all Collateral now or hereinafter provided as
security for the Notes now or hereinafter issued pursuant to this
Agreement. The Notes shall be convertible into shares of the
Company's common stock, par value $.01 per share (the "Common
Stock") ,as provided in Section 14 of this Agreement and shall be
redeemable as provided in Section 13 of this Agreement."
3
104
1.2 Exhibit A. Exhibit A attached hereto shall replace Exhibit A attached
to the Agreement.
1.3 Section 2.5. Section 2.5 of the Agreement is hereby deleted in its
entirety and the following is hereby substituted in lieu thereof:
"2.5 Additional Payment. No later than July 31, 1997, the Company
shall deliver a $300,000 payment to the Investors by issuing to such
Investors recourse promissory notes (the "Maturity Date Extension
Notes") in a principal amount equal to their respective pro rata
share (determined according to the principal amount of the Notes
held by such Investor) of such $300,000 payment. If the conditions
set forth in Section 7.4(c) are not satisfied prior to August 15,
1997, the Company may request that the maturity of the Notes be
extended to December 27, 1997 by (i) delivering a notice to MSRESS,
on behalf of the Investors, and (ii) an additional $300,000 payment
to the Investors by issuing to such Investors the Maturity Date
Extension Notes in a principal amount equal to their respective pro
rata share (determined according to the principal amount of the
Notes held by such Investor) of such $300,000 payment. The Maturity
Date Extension Notes shall be in substantially the form of this Note
except that they shall reflect the following terms: (i) such
Maturity Date Extension Notes shall bear interest (computed on the
same basis as the Notes) at the rate of 15% per annum (20% per annum
following the occurrence of a Termination Event) payable on each
Interest Payment Date; (ii) such Maturity Date Extension Notes shall
mature on the same day as the Notes, (iii) such Maturity Date
Extension Notes shall be guaranteed by the Operating Partnership and
shall be secured by the Collateral, and (iv) if the Initial Public
Offering occurs, the outstanding principal amount of such Maturity
Date Extension Notes shall be repayable by issuing to the holders
thereof such number of shares of Common Stock determined by dividing
(A) the aggregate principal amount of such Maturity Date Extension
Notes plus all accrued but unpaid interest thereon to the date of
repayment (to the extent such interest has not been added to
principal) by (B) the Mid-Point Purchase Price."
1.4 Section 9.21. Section 9.21 of the Agreement is hereby amended by
deleting the reference to "1.5" in seventh line therein and replacing it with
"1.25".
1.5 Section 17.15. The definition of "Maturity Date" is hereby deleted in
its entirety and the following is hereby substituted in lieu thereof:
""Maturity Date" means August 15, 1997, unless the conditions set
forth in Section 7.4(c) are satisfied on or prior to August 15,
1997, in which case the "Maturity Date" shall be March 31, 1998;
provided that, if the conditions set forth in Section 7.4(c) are not
satisfied on or prior to August 15, 1997, the Maturity Date shall
automatically be extended to December 27, 1997 if the conditions set
forth in Section 2.5 of the Agreement are satisfied."
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105
SECTION 2 SUPPLEMENT.
The Agreement is hereby supplemented as follows:
2.1 Representations of the Company. The Credit Parties, jointly and
severally, represent and warrant as follows:
(a) Representations and Warranties in the Agreement. Each of the
representations and warranties set forth in the Agreement and Related Documents
is true and correct in all material respects on and as of the date hereof with
the same effect and force as though such representation and warranty has been
made on and as of such date.
(b) Representations relating to Ownership Structure. Attached as
Exhibit S is a true, correct and complete copy of the ownership structure chart
(the "Ownership Structure Chart") setting forth details relating to the
ownership structure of each entity, including, without limitation, types and
percentages of the interests held in such an entity, in which any of the Credit
Parties or Shareholder holds, directly or indirectly, any equity interest.
(c) Bank Accounts. Schedule 1 to this Supplement sets forth (a) the
name and account numbers and account balances of all deposit and other accounts
of any kind or nature with any bank, trust company, securities or other broker,
financial institution or other Person (collectively, the "Banks") in which any
Credit Party or their respective Subsidiaries has any interest (collectively,
the "Accounts"); (b) the name of each person authorized by resolution, proxy,
power of attorney or otherwise to have access thereto, draw thereon or give
instructions or take any other action with respect thereto; and (c) the purpose
of each such Account:
(d) Financial Statements. Attached as Exhibit T hereto is a true,
correct and complete copy of (i) the consolidated and consolidating balance
sheet of the Operating Partnership and its Subsidiaries, as of June 30, 1997,
and the related consolidated and consolidating statements of operation,
partners' equity interest and cash flows of the Operating Partnership and its
Subsidiaries for the period from April 1, 1997 to June 30, 1997 (the "Balance
Sheet"), and (ii) a consolidated and consolidating schedule of all commitments
and contingent liabilities of the Operating Partnership and each of its
Subsidiaries, all in reasonable detail (the "Contingent Liability Schedule",
together with the Balance Sheet, the "Operating Partnership's Financial
Statements") , and certified on behalf of the Operating Partnership and its
Subsidiaries by the Company's Chief Financial Officer to fairly represent the
financial position and results of operations of the Operating Partnership and
its Subsidiaries as of June 30, 1997 and for the period then ended and to have
been prepared in accordance with GAAP applied on a consistent basis, subject to
normal year-end audit adjustments and the absence of full footnote disclosures.
The Company's Chief Financial Officer shall certify on behalf of the
Company that there is no material discrepancy between the Operating
Partnership's Financial Statements delivered pursuant to this Section 2.1(d) of
this Supplement and the consolidated and consolidating financial statements of
the Company and its Subsidiaries that would have been prepared and delivered by
the Company according to this Section 2.1(d) of this Supplement for the same
period. If the Company is unable to deliver such certification on behalf of the
Company
5
106
and its Subsidiaries, then the Company shall deliver to MSRESS a true, correct
and complete copy of (i) the consolidated and consolidating balance sheet of the
Company and its Subsidiaries, including, without limitation, the Operating
Partnership, as of June 30, 1997, and the related consolidated and consolidating
statements of operation, shareholders' equity and cash flows of the Company and
its Subsidiaries for the period from April 1, 1997 to June 30, 1997, and (ii) a
consolidated and consolidating schedule of all commitments and contingent
liabilities of the Company and each of its Subsidiaries, all in reasonable
detail, and certified on behalf of the Company and its Subsidiaries by the
Company's Chief Financial Officer to fairly represent the financial position and
results of operations of the Company and its Subsidiaries as of June 30, 1997
and for the period then ended and to have been prepared in accordance with GAAP
applied on a consistent basis, subject to normal year-end audit adjustments and
the absence of full footnote disclosures;
(e) Cash Reconciliation. Attached as Exhibit U hereto is a true,
correct and complete copy of a statement setting forth details of all cash
receipts received by the Company and its Subsidiaries, including, without
limitation, the Operating Partnership and all cash expenditures made by the
Company and its Subsidiaries, in each case, for the period beginning from June
30, 1997 through the date hereof, together with a reconciliation of such
receipts and expenditures to the financial statements dated as of June 30, 1997;
and
(f) Budget. Attached as Exhibit V hereto is a true, correct and
complete copy of the Budget dated the date hereof covering the period from the
date hereof through September 30, 1997. Such Budget sets forth all cash receipts
and the sources thereof, expected to be received by the Company and its
Subsidiaries during such period and all cash expenditures and the uses thereof
expected to be made by the Company and its Subsidiaries during such period. In
addition, such Budget details all expenditures or series of expenditures, cash
or otherwise, and the uses thereof expected to be incurred by the Company or any
Subsidiary during such period in excess of $500. The Budget shall include a
true, correct and complete copy of the time and responsibility schedule setting
forth details of each action that the Company proposes to take in order to
complete the Initial Public Offering, the parties responsible for each such
action and the proposed time schedule of each such action.
2.2 Covenants. The Credit Parties, jointly and severally, covenant to the
Investors as follows:
(a) Weekly Cash Reconciliations. No later than 10:00 a.m., New York
time, on Monday of every week (or the next business day if Monday is not a
business day), the Company shall deliver to MSRESS at its offices a statement
showing for the prior week all cash receipts and expenditures (including copies
of checks or other information or reports that MSRESS may reasonably request) of
the Company and its Subsidiaries, including, without limitation, the Operating
Partnership, for such week and reconciling such receipts and expenditures to the
Budget attached as Exhibit V hereto, together with a detailed explanation of any
variances. Such statement shall be substantially in form of Exhibit U, with
appropriate insertion or in such other form as MSRESS may reasonably request in
order to ascertain regularly, the cash position of the Company and its
Subsidiaries, and certified on behalf of the
6
107
Company and its consolidated Subsidiaries by the Company's Chief Financial
Officer to be true, correct and complete.
(b) Financial Statements. No later than 10:00 a.m., New York time,
on the twenty-fifth day of every month (or the next business day if such day is
not a business day), the Operating Partnership shall deliver to MSRESS at its
offices copies of the consolidated and consolidating balance sheets and related
consolidated and consolidating statements of operations, partners' equity
interest and cash flows of the Operating Partnership and its Subsidiaries, as of
the close of business on the last business day of the immediately preceding
month. Such balance sheets and related consolidated and consolidating statements
of operations, partners' equity interest and cash flows (the "Financial
Statements") shall be certified on behalf of the Operating Partnership and its
Subsidiaries by the Company's Chief Financial Officer to be true, correct and
complete, to fairly represent the financial position and the results of
operations of the Operating Partnership and its Subsidiaries as of such date and
to have been prepared in accordance with GAAP applied on a consistent basis
subject to normal year-end adjustments and the absence of full footnote
disclosure.
The Company's Chief Financial Officer shall certify on behalf of the
Company that there is no material discrepancy between the Financial Statements
of the Operating Partnership and its Subsidiaries delivered pursuant to this
Section 2.2(b) of this Supplement and the consolidated and consolidating
financial statements of the Company and its Subsidiaries that would have been
prepared and delivered by the Company according to this Section 2.2(b) of this
Supplement for the same period. If the Company is unable to deliver such
certification on behalf of the Company and its Subsidiaries, then no later than
10:00 a.m., New York time, on the twenty-fifth day of every month (or the next
business day if such day is not a business day), the Company shall deliver to
MSRESS at its offices copies of the consolidated and consolidating balance
sheets and related consolidated and consolidating statements of operations,
shareholders' equity and cash flows of the Company and its Subsidiaries,
including, without limitation, the Operating Partnership, as of the close of
business on the last business day of the immediately preceding month prepared
and delivered by the Company in accordance with terms of this Section 2.2(b) of
this Supplement.
(c) Modifications to Budget. The Credit Parties shall not make any
modification to the Budget attached as Exhibit V hereto, without the prior
written consent of MSRESS, nor shall the Credit Parties make, or permit any of
their Subsidiaries to make, any expenditure or series of expenditures, cash or
otherwise, in excess of 5% of any individual item included in the Budget or any
variation in excess of $10,000.
(d) Modifications to Ownership Structure. The Credit Parties shall
not make any modification in the ownership structure attached as Exhibit S
hereto, without the prior approval of MSRESS.
(e) Bank Accounts. No Credit Party and none of its Subsidiaries
shall maintain or open any other Account other than those listed on Schedule 1
attached hereto, without the prior written consent of MSRESS.
7
108
(f) Letter Agreement. The Credit Parties or their respective
Subsidiaries, as the case may be, shall execute a side letter with the relevant
Bank relating to the Accounts listed in Schedule 1 to this Supplement Agreement
(each, a "Letter Agreement"), the form of which is attached hereto as Exhibit X
or such other form as may be acceptable to the counsel to the Investors, and
deliver the same to MSRESS within 10 days from the date hereof. If any of the
Credit Parties or a Subsidiary fails to execute and deliver the Letter
Agreements (i) within 10 days from the date hereof, then on the 10th day from
the date hereof the Company shall deliver a payment of $100,000 to the Investors
by issuing to such Investors Notes in a principal amount equal to their
respective pro rata shares (determined according to the principal amount of the
Notes held by such Investor) of such $100,000 payment; (ii) within 30 days from
the date hereof, then on the 30th day from the date hereof the Company shall
deliver a payment of $400,000 to the Investors by issuing to such Investors
Notes in a principal amount equal to their respective pro rata shares
(determined according to the principal amount of the Notes held by such
Investor) of such $400,000 payment; and (iii) after 30 days from the date
hereof, then beginning on the 31st day from the date hereof, the Company shall
deliver a payment of $10,000 per day on each such day that the Letter Agreements
are not executed and delivered to MSRESS by issuing to such Investors Notes in a
principal amount equal to their respective pro rata shares (determined according
to the principal amount of the Notes held by such Investor) of such payment.
(g) Additional Covenant. Not by way of limitation of any other
provisions hereof, each of the Credit Parties shall use best efforts to cause
all direct or indirect interests in the Retail Properties that are held directly
or indirectly by the REIT Sponsors which are not subject to restrictions on
transfer under the organizational documents pursuant to which such interests
were issued to be contributed to the Operating Partnership and pledged as
collateral to the Collateral Agent no later than August 15, 1997.
(h) Covenant Relating to Contribution Agreements. The Credit Parties
shall not enter into, and shall prohibit each Controlled Subsidiary from
entering into, any transaction or series of transactions, directly or
indirectly, designed to or having the effect of frustrating the purpose of the
Contribution Agreements listed on Schedule 2 to this Supplement.
2.3 Contribution Agreements. No Credit Party shall, or permit any
Controlled Subsidiary to, amend, rescind, cancel or modify any Contribution
Agreement, without the prior approval of MSRESS.
2.4 Exhibit K. Exhibit K to the Agreement is hereby deleted in its
entirety and the Exhibit K annexed hereto is hereby substituted in lieu thereof.
2.5 Termination Event. There is hereby added to section 12 of the
Agreement a new subsection (p) as follows:
"(p) the failure of the New Management Company, the Old
Management Company, ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Assignors (each as
defined in the Assignment and Option Agreement referred to below) to
comply with their obligations set forth in the Amended and Restated
Assignment and Option
8
109
Agreement dated July 31, 1997 (the "Assignment and Option
Agreement"), a copy of which is attached as Exhibit Y hereto, or any
breach by the New Management Company, the Old Management Company,
▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Assignors of a representation or warranty set
forth in the Assignment and Option Agreement, provided, however,
that if such failure or breach is unintentional and is capable of
being cured, then such failure or breach shall not constitute a
Termination Event unless such failure or breach remains uncured for
a period of 15 days from the date of occurrence of such failure or
breach."
2.6 Subsidiaries. For purposes of this Supplement, including for purposes
of any financial statement, cash reconciliation statement or the Budget that is
required to be delivered pursuant to the terms of this Supplement, "Subsidiary"
or Subsidiaries" shall include, without limitation, each entity in which any of
the Credit Parties or the Shareholder, directly or indirectly, holds any equity
interest, as set forth in the certified copy of the Ownership Structure Chart
attached as Exhibit S to this Supplement.
SECTION 3 MISCELLANEOUS.
3.1 Counterparts. This Supplement may be executed in any number of
counterparts, each of which shall be the same supplementary instrument but all
of which taken together shall constitute one agreement.
3.2 Governing Law. This Supplement shall be governed by and construed in
accordance with the laws of the State of New York.
3.3 Expenses: Documentary Taxes. The Credit Parties agree to pay (a) all
reasonable out-of-pocket expenses of the Investors, including the reasonable
fees and disbursements of counsel for the Investors incurred in connection with
execution and delivery of this Supplement, and (b) all reasonable out-of-pocket
expenses of the Investors, in connection with all additional and subsequent
documentation contemplated hereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof. The Credit Parties shall indemnify the
Investors against any transfer taxes, documentary taxes, assessments or charges
made by any Governmental Authority by reason of the execution and delivery of
this Supplement.
3.4 Terms of the Agreement. Except as otherwise expressly modified hereby,
all the terms and conditions of the Agreement shall remain in full force and
effect and from and after the date hereof all references in the Agreement to
"this Agreement" or "the Agreement" shall mean the Agreement as supplemented by
this Supplement.
3.5 Indemnification. In addition to the Indemnification of the Credit
Parties under Section 17.1 of the Agreement, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇
▇▇▇▇▇▇▇"), agrees to indemnify, in his individual capacity, each Investor, and
their respective shareholders, partners, directors, officers, employees,
Affiliates and agents (collectively, "Indemnified Persons") against, and agrees
to hold each such Indemnified Person harmless, jointly and severally with each
of the Credit Parties, to the same extent that the Credit Parties have agreed to
indemnify and hold
9
110
harmless such Indemnified Persons pursuant to the Agreement. The foregoing shall
remain operative and in full force and effect regardless of the expiration of
the term of the Agreement, the consummation of the transactions contemplated by
the Agreement, the repayment of any of the Notes, the invalidity or
unenforceability of any term or provision of the Agreement or the Notes or any
investigation made by or on behalf of any Indemnified Person or ▇▇▇▇▇ ▇▇▇▇▇▇▇
and the content or accuracy of any representation or warranty made under the
Agreement. All amounts due under this Section 2.5 of this Supplement shall be
payable as incurred upon written demand therefor. This Section 3.5 of this
Supplement is not intended to make ▇▇▇▇▇ ▇▇▇▇▇▇▇ a guarantor of the payment of
principal and interest on the Notes issued pursuant to the Agreement.
3.6 Collateral Agent. All references to MSAM, in its capacity as the
Collateral Agent, in the Agreement and the Related Documents shall henceforth be
deemed to refer to MSRESS, and its successors and assigns.
10
111
IN WITNESS WHEREOF, this Supplement has been executed as of the day
and year first above written.
TOWER REALTY TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer and
President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
24th Floor
New York, New York 10036
MS REAL ESTATE SPECIAL SITUATIONS INC., on
behalf of itself and as agent for certain
undisclosed principals
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Principal
Address: c/o Morgan ▇▇▇▇▇▇▇ Asset
Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
FOR PURPOSES OF SECTION 3.5 OF THIS SUPPLEMENT
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in his individual capacity
112
Schedule 1
Accounts
Set forth below are all the account numbers of all deposit and other accounts of
each of the Company and the Operating Partnership and Subsidiaries held with the
Banks listed below:
(a) Accounts of Tower Realty Trust, Inc.
================================================================================
Bank Account Type of Name of the Account
Number Account and Person Balance as of
Purpose Authorized to July 18, 1997
Operate the
Account
--------------------------------------------------------------------------------
================================================================================
(b) Accounts of Tower Realty Operating Partnership, L.P.
================================================================================
Bank Account Type of Name of the Account
Number Account and Person Balance as of
Purpose Authorized to July 18, 1997
Operate the
Account
--------------------------------------------------------------------------------
================================================================================
(c) Accounts of [name of Subsidiary].
================================================================================
Bank Account Type of Name of the Account
Number Account and Person Balance as of
Purpose Authorized to July 18, 1997
Operate the
Account
--------------------------------------------------------------------------------
================================================================================
12
113
Schedule 2
Contribution Agreements
13
114
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS
OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED AND
(2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE EFFECT
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
TOWER REALTY TRUST, INC.
NOTE
No. [date]
$
FOR VALUE RECEIVED, the undersigned, Tower Realty Trust, Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Maryland, hereby promises to pay to MS Real Estate Special
Situations Inc., or registered assigns (the "Holder"), the principal sum of
_____________ DOLLARS on the Maturity Date (as defined in the Agreement referred
to below). The Company also promises to pay interest (computed on the basis of a
365 day year and the actual number of days elapsed) (a) from the date hereof
until the earlier of (i) the Maturity Date, (ii) the date this Note and all
amounts payable in connection herewith have been paid to the Holder and (iii)
the occurrence of a Termination Event (as defined in the Agreement) on the
unpaid balance hereof at the rate of 15% per annum, payable quarterly, on the
last day of March, June, September and December, commencing September 30, 1997,
and on the Maturity Date (each such date an "Interest Payment Date") and (b)
from the earlier of (i) the Maturity Date or (ii) the occurrence of a
Termination Event until the date this Note and all amounts payable in connection
herewith have been paid to the Holder, at the rate of 20% per annum payable on
demand. Until the earlier of maturity or the occurrence of a Termination Event,
the Company shall add 100% of the amount of interest payable on any Interest
Payment Date to the then outstanding principal amount of the Notes. Any such
interest added to principal shall thereafter bear interest as provided above.
Payments of principal of, premium, if any, and interest on this Note
are to be made in lawful money of the United States of America. Payments shall
be made to the Holder at such place and by such means as provided in the
Agreement.
This Note is one of a series of senior secured convertible notes
issued pursuant to certain Purchase Agreement, dated as of March 31, 1997 (as
from time to time amended, supplemented or otherwise modified, the "Agreement"),
among the Company, as issuer, the Operating Partnership, as guarantor, and the
respective Investors named therein and is entitled to the benefits thereof.
Capitalized terms not otherwise defined herein shall have the meanings
115
ascribed to such terms in the Agreement. As provided in the Agreement, this Note
(i) is subject to redemption prior to maturity and (ii) is automatically
convertible into shares of the Company's Common Stock on an initial public
offering as is described more fully in the Agreement. Payment of the principal,
of, premium, if any, and interest on this Note is guaranteed by the Operating
Partnership as provided in the Agreement.
This Note is a registered Note and, as provided in the Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
(for a like principal amount) or Notes (in authorized denominations) will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.
If this Note is collected by or through an attorney at law or
otherwise, then the Company shall be obligated to pay, in addition to the
principal balance hereof and any premium and accrued interest hereon, reasonable
attorney's fees and all out-of-pocket costs of the Holder in connection with the
collection or enforcement of this Note.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
This Note shall be governed by the laws of the State of New York.
TOWER REALTY TRUST, INC.
By:
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
2
116
Exhibit K
CONVERSION RATE OF THE NOTES
The Notes are convertible into the number of shares of Common Stock equal to the
amounts determined in accordance with items 1, 2 and 3 below.
1. The number of shares of Common Stock equal to the following:
IA x ACP x 1
--------- --------
IA + EV MP
[HANDWRITTEN NOTES OMITTED]
where:
IA = the aggregate principal amount (including any
interest added to principal) of all outstanding
Notes (other than the original principal of any
note issued pursuant to Section 2.5 or 9.21 or
accrued but unpaid interest allocated
therewith) plus all accrued and unpaid interest
thereon to the Stock Closing Date which has not
been added to principal.
ACP = The difference between (1) the value of the
aggregate number of shares of Common Stock and
units of limited partnership interest ("OP
Units") issued or to be issued by the Company
and the Operating Partnership as of the Stock
Closing Date and (2) value of the sum of (i)
the aggregate number of shares of Common Stock
issued or to be issued by the Company as of the
Stock Closing Date in the Initial Public
Offering and (ii) the aggregate number of OP
Units issued or to be issued by the Operating
Partnership to continuing investors (other than
REIT Sponsors) and ▇▇▇▇▇ ▇▇▇▇▇ in return for
the contribution of his equity interest in
Properties Atlantic, a ______ corporation, as
of the Stock Closing Date; provided that for
this purpose each share of Common Stock and OP
Unit shall be valued at MP.
EV = The value of Total Owned Properties as set forth
on Schedule K-1 attached hereto, as the same may
be reduced as provided in Schedule K-1.
MP = Mid-Point Purchase Price.
14
117
Notwithstanding the foregoing, the number of shares calculated in item 1 shall
not be less than such number of shares of Common Stock equal to the following:
((1.15 x OPA) - INT)* + (1.15 x INT)
------------------------------------
MP
* If this calculation results in an amount less
than zero, then such calculation shall be equal to
zero
OPA = the original principal amount (excluding any
interest paid in-kind or added to principal) of
the Notes (other than principal amount of any Note
issued pursuant to Section 2.5 or 9.21) issued and
outstanding immediately prior to the Initial
Public Offering, but not less than the original
principal amount
INT = all interest paid (including interest paid
in-kind or added to principal) and all accrued but
unpaid interest, in each case with respect to the
Notes (other than paid interest or accrued but
unpaid interest on any Note issued pursuant to
section 2.5 or 9.21) as of the date of the Initial
Public Offering
2. Such number of shares of Common Stock obtained by dividing (A) the
product of (I) the Aggregate Share Amount times (II) the per share
amount of the pro forma underwriting discounts or commissions (as set
forth in the Preliminary Prospectus) that would have been paid by the
Company to the underwriters in connection with the Initial Public
Offering assuming such shares were priced at the Mid-Point Purchase
Price (the "Per Share MP Underwriting Discount") by (B) the difference
between (1) the Mid-Point Purchase Price minus (2) the Per Share MP
Underwriting Discount.
3. Such number of shares of Common Stock that is equal to the quotient of (A)
SF less $100,000 for each $1,000,000 that (i) ACP exceeds (ii) the sum of
(a) IA, (b) EV and (c) $10,000,000; divided by (B) MP. ACP, IA, EV and MP
shall have the same meaning as set forth in Item 1 of this Exhibit K. SF
shall equal $500,000 plus $100,000 for each $1,000,000 that ACP exceeds
$10,000,000 provided that SF shall not be greater than $1,000,000.
The quotient to be computed in accordance with above mentioned formula in
this Item 3 of this Exhibit K shall not under any circumstances be less
than zero.
15
118
Schedule K-1
16
119
Exhibit S
17
120
Exhibit T
18
121
Exhibit U
19
122
Exhibit V
20
123
Exhibit W
21
124
Rider to Schedule K-1
As of the date of the Initial Public Offering or Major Capital Event,
$[21,484,000.61] will be reduced by the value attributed to any equity interest
set forth on Schedule K-1 with respect to any property set forth on such
Schedule K-1, if such equity interest is not 100% owned, directly or indirectly,
by the Company or the Operating Partnership, provided, however, the foregoing
amount not be reduced if ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ is not 100% owned, directly or
indirectly, by the Company or the Operating Partnership if the general partner
interest in 2800 North Central is owned by the REIT or the Operating
Partnership.
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