1
INVESTMENT AGREEMENT
between
LEXINGTON CORPORATE PROPERTIES, INC.
and
FIVE ARROWS REALTY SECURITIES L.L.C.
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Dated as of December 31, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINED TERMS............................................................................... 1
Section 1.1 Defined Terms........................................................... 1
Section 1.2 Terms Defined Herein.................................................... 7
ARTICLE 2 SALE AND PURCHASE OF PREFERRED SHARES....................................................... 7
Section 2.1 Sale of Preferred Shares................................................ 7
Section 2.2 Payment for the Preferred Shares........................................ 8
Section 2.3 Transfer Taxes.......................................................... 8
ARTICLE 3 CLOSINGS.................................................................................... 8
Section 3.1 Closings................................................................ 8
Section 3.2 Closing Dates........................................................... 8
Section 3.3 Cancellation of Subsequent
Closings................................................................ 9
Section 3.4 Availability Fee........................................................ 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 10
Section 4.1 Due Incorporation and Status of the
Company................................................................. 10
Section 4.1.1 Due Incorporation....................................................... 10
Section 4.1.2 REIT Status............................................................. 11
Section 4.2 Authority............................................................... 11
Section 4.3 Valid Agreement of the Company.......................................... 11
Section 4.4 No Default.............................................................. 11
Section 4.5 No Required Consents.................................................... 12
Section 4.6 Reservation of Shares .................................................. 12
Section 4.7 Validity of Preferred Shares............................................ 12
Section 4.8 Transferability......................................................... 12
Section 4.9 Disclosure.............................................................. 13
Section 4.9.1 No Misstatement or Omission............................................. 13
Section 4.9.2 Financial Statements.................................................... 13
Section 4.9.3 Subsequent Events....................................................... 13
Section 4.10 Capitalization.......................................................... 14
Section 4.11 Litigation.............................................................. 14
Section 4.12 ERISA................................................................... 15
Section 4.13 Environmental Matters................................................... 15
Section 4.14 Investment Company...................................................... 16
Section 4.15 Taxes................................................................... 16
Section 4.16 Insurance............................................................... 17
Section 4.17 Affiliated Transactions................................................. 17
Section 4.18 Liabilities............................................................. 17
Section 4.19 Limited Waiver of Ownership
Limitations............................................................. 18
Section 4.20 No Event of Default..................................................... 18
Section 4.21 No Brokers.............................................................. 18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.............................................. 19
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Section 5.1 Organization............................................................ 19
Section 5.2 Accredited Investor..................................................... 19
Section 5.3 Valid Agreements of the Investor........................................ 19
Section 5.4 No Default.............................................................. 19
Section 5.5 Opportunity for Inquiry................................................. 19
Section 5.6 Materials............................................................... 20
Section 5.7 Knowledge and Experience................................................ 20
Section 5.8 No Brokers.............................................................. 20
Section 5.9 Investment Company...................................................... 20
ARTICLE 6 COVENANTS AND UNDERTAKINGS.................................................................. 20
Section 6.1 Closings................................................................ 20
Section 6.2 Expenses of Rothschild Realty Inc....................................... 20
Section 6.3 Fees and Expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP............................................................... 21
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
INVESTOR TO CLOSE........................................................................ 21
Section 7.1 Representations and Covenants........................................... 21
Section 7.2 Good Standing Certificates.............................................. 22
Section 7.3 Governmental Permits and
Approvals............................................................... 22
Section 7.4 Legislation............................................................. 22
Section 7.5 Legal Proceedings....................................................... 22
Section 7.6 Third Party Consents.................................................... 23
Section 7.7 Stock Certificates...................................................... 23
Section 7.8 Approval of Counsel to the
Investor................................................................ 23
Section 7.9 Appointment of Director................................................. 23
Section 7.10 Certificate of Designation.............................................. 23
Section 7.11 Operating Agreement..................................................... 23
Section 7.12 Agreement and Waiver.................................................... 24
Section 7.13 Opinion of Counsel...................................................... 24
Section 7.14 Expenses of Rothschild Realty Inc....................................... 24
Section 7.15 Fees and Expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP............................................................... 24
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO CLOSE......................................................................... 24
Section 8.1 Representations and Covenants........................................... 24
Section 8.2 Governmental Permits and
Approvals............................................................... 25
Section 8.3 Legal Proceedings....................................................... 25
Section 8.4 Third Party Consents.................................................... 25
Section 8.5 Purchase Price.......................................................... 25
Section 8.6 Approval of Counsel to the
Company................................................................. 25
Section 8.7 Opinion of Counsel...................................................... 25
ARTICLE 9 ASSIGNMENT.................................................................................. 25
Section 9.1 Assignability by Investor............................................... 25
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Section 9.2 Assignability by the Company............................................ 26
Section 9.3 Binding Agreement....................................................... 26
ARTICLE 10 MISCELLANEOUS.............................................................................. 26
Section 10.1 Applicable Law.......................................................... 26
Section 10.2 Notices................................................................. 26
Section 10.3 Entire Agreement; Amendments............................................ 27
Section 10.4 Remedies for Breaches of This
Agreement............................................................... 27
Section 10.4.1 Survival of Certain Provisions.......................................... 27
Section 10.4.2 Indemnification Provisions for Benefit
of the Investor......................................................... 27
Section 10.4.3 Matters Involving Third Parties......................................... 27
Section 10.5 Confidentiality......................................................... 29
Section 10.6 Lock-Up................................................................. 30
Section 10.7 Termination............................................................. 30
Section 10.8 Counterparts............................................................ 30
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INVESTMENT AGREEMENT
INVESTMENT AGREEMENT dated as of December 31, 1996
between Lexington Corporate Properties, Inc., a corporation organized under the
laws of the State of Maryland (the "Company"), and Five Arrows Realty Securities
L.L.C., a limited liability company organized under the laws of the State of
Delaware (the "Investor").
WHEREAS, the Company wishes to issue the Preferred
Shares (as defined herein) to the Investor, and the Investor wishes to purchase,
acquire and accept the Preferred Shares from the Company (the "Investment").
NOW THEREFORE, in consideration of the promises and
the mutual covenants herein contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1 DEFINED TERMS.
Section 1.1 Defined Terms. The following terms shall,
unless the context otherwise requires, have the meanings set forth in this
Section 1.1.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and disbursements.
"Affiliate" means, with respect to any Person, (a)
any member of the Immediate Family of such Person or a trust established for the
benefit of such member, (b) any beneficiary of a trust described in (a), (c) any
Entity which, directly or indirectly though one or more intermediaries, is
deemed to be the beneficial owner of 10% or more of the voting equity of the
Person for the purposes of Section 13(d) of the Exchange Act, (d) any officer of
the Person or any member of the Board of Directors of the Person or (e) any
Entity which, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person,
including such Person or Persons referred to in the preceding clauses (a) or
(d); provided, however, that none of the Investor, Rothschild Realty Inc. or
their respective Affiliates nor any of their respective officers, directors,
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partners, members or Affiliates nor any Preferred Director (as such term is
defined in the Certificate of Designation) shall be considered an Affiliate of
the Company or its Subsidiaries for purposes of this Agreement.
"Agreement" means this Investment Agreement, as
originally executed and as hereafter from time to time supplemented, amended
and restated.
"Agreement and Waiver" means the Agreement and
Waiver, dated as of the date of the first Closing, between the Company and the
Investor.
"Benefit Plan" means a defined benefit plan as
defined in Section 3(35) of ERISA that is subject to Title IV of ERISA (other
than a Multiemployer Plan) and in respect of which the Company or any ERISA
Affiliate is or within the immediately preceding six (6) years was an "employer"
as defined in Section 3(5) of ERISA.
"Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day in which banking institutions in New York
City are authorized or obligated by law or executive order to close.
"Certificate of Designation" means the Articles
Supplementary classifying 2,000,000 shares of preferred stock as Class A Senior
Cumulative Convertible Preferred Stock of the Company and 2,000,000 shares of
excess stock, par value $.01 per share, as Excess Class A Preferred Stock of the
Company, in the form of Exhibit A attached hereto.
"Charter" means the Articles of Amendment and
Restatement of the Company as currently in effect.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time or any successor statute thereto.
"Common Stock" means the shares of the common stock,
par value $.01 per share, of the Company.
"Confidential Information" means the identity of the
Company in the context of the Investment, the existence and contents of
discussions regarding the Investment and information concerning the assets,
operations, business, records, projections and prospects of the Company;
provided, however, that the term "Confidential Information" does not include
information that (i) is or becomes available to the public other than as a
result of disclosure by any of the
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Investor or Rothschild Realty Inc. or any of their respective representatives,
(ii) was available to the Investor or Rothschild Realty Inc. or was within their
respective knowledge on a non-confidential basis prior to its disclosure by the
Company to them, (iii) becomes available to the Investor or Rothschild Realty
Inc., on a non-confidential basis from a source other than the Company, provided
that such source is not known by them to be bound by a confidentiality agreement
with the Company or its representative or (iv) is independently developed by the
Investor or Rothschild Realty Inc. without reference to the Confidential
Information.
"Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
"Environmental Claim" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter or other communication from any
governmental agency, department, bureau, office or other authority, or any third
party involving material violations of Environmental Laws or Releases of
Hazardous Materials.
"Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA), 42
U.S.C. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as
amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq.,
and any other federal, state, local or municipal laws, statutes, regulations,
rules or ordinances imposing liability or establishing standards of conduct for
protection of the environment.
"Environmental Liabilities" means any monetary
obligations, losses, liabilities (including strict liability), damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable out-of-pocket fees, disbursements and expenses of counsel,
reasonable out-of-pocket expert and consulting fees and reasonable out-of-pocket
costs for environmental site assessments, remedial investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim filed by any governmental authority or any third party which
relate to any violations of Environmental Laws, Remedial Actions, Releases of
Hazardous Materials from
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or onto (i) any assets, properties or businesses presently or formerly owned by
the Company, its Subsidiaries or a predecessor in interest, or (ii) any facility
which received Hazardous Materials generated by the Company, its Subsidiaries or
a predecessor in interest.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Company, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Company, any corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"52-Week Trading High" means, for any date, the highest
per share closing price of the Common Stock for the 52-calendar week period
immediately preceding such date.
"GAAP" means United States Generally Accepted Accounting
Principles, as in effect from time to time.
"Hazardous Materials" means (a) any element, compound, or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous
substance or chemical, hazardous waste, medical waste, biohazardous or
infectious waste, special waste, or solid waste under Environmental Laws; (b)
petroleum, petroleum-based or petroleum-derived products; (c) polychlorinated
biphenyls; and (d) asbestos-containing materials.
"Immediate Family" means, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters- in-law.
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"Lien" means and includes any lien, security interest,
pledge, charge, option, right of first refusal, claim, mortgage, lease, easement
or any other encumbrance whatsoever.
"Material Adverse Effect," when used with reference
to events, acts, failures or omissions to act, or conduct of a specified Person,
means that such events, acts, failures or omissions to act, or conduct would
have a material adverse effect on (i) the condition (financial or otherwise),
earnings, or business affairs of such Person and its consolidated subsidiaries,
considered as one enterprise, or (ii) the ability of such Person to perform its
obligations under the Operative Instruments.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA and subject to Title IV of ERISA which
is, or within the immediately preceding six (6) years was, contributed to by the
Company or any ERISA Affiliate.
"Operating Agreement" means the Operating Agreement,
dated as of the initial Closing Date, between the Company and the Investor, in
the form of Exhibit B attached hereto.
"Operative Instruments" means this Agreement, the
Certificate of Designation, and the Operating Agreement.
"Permit" means a permit, license, consent, order or
approval by any federal, state or local governmental agency.
"Person" means any individual or Entity.
"Plan" means an employee benefit plan defined in
Section 3(3) of ERISA in respect of which the Company or any ERISA Affiliate is,
or within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"Preferred Shares" means the shares of the Company
designated in the Certificate of Designation as Class A Senior Cumulative
Convertible Preferred Stock.
"REIT" means a real estate investment trust described in
Code Section 856.
"Release" means any spilling, leaking, pumping, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, dumping, or
disposing of Hazardous
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Materials (including the abandonment or discarding of barrels, containers or
other closed receptacles containing Hazardous Materials) into the environment.
"Remedial Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment; (ii) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post- remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Reportable Event" means any of the events described in
Section 4043(b) of ERISA (other than events for which the notice requirements
have been waived).
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, representatives (including, but not
limited to, financial advisors, attorneys and accountants), agents or potential
sources of financing of such person.
"SDAT" means the State Department of Assessment and
Taxation of Maryland.
"SEC" means the Securities and Exchange Commission or any
successor regulatory authority responsible for enforcement and oversight of the
federal securities laws.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" of any Person or Entity means an Entity in
which such Person or Entity has the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation or the trustees of a real
estate investment trust, to select the managing partner of a partnership, or
otherwise to select, or have the power to remove and then select, a majority of
those persons exercising governing authority over such Entity. In the case of a
limited partnership, the sole general partner, all of the general partners to
the extent each has equal management control and authority, or the managing
general partner or managing general partners thereof shall be deemed to have
control of such partnership and, in the case of a trust other
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than a real estate investment trust, any trustee thereof or any Person having
the right to select any such trustee shall be deemed to have control of such
trust.
"Termination Event" means (i) a Reportable Event
with respect to any Benefit Plan; (ii) the withdrawal of the Company or any
ERISA Affiliate from a Benefit Plan during a plan year in which the Company or
any ERISA Affiliate was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the imposition of an obligation on the Company or any
ERISA Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination described
in Section 4041(c) of ERISA; or (iv) the institution by the PBGC of proceedings
to terminate a Benefit Plan.
Section 1.2 Terms Defined Herein. In addition to
the terms defined in Section 1.1 above, the following terms shall, unless the
context otherwise requires, have the meanings set forth in this Agreement in the
section set forth next to such term.
Defined Term Section
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accredited investor 5.2
Breach 4.20
Closing 2.1
Excess Stock 4.10
Indemnified Party 10.4.3
Indemnifying Party 10.4.3
Liabilities 4.18
NYSE 3.2
1996 10-Qs 4.9
1995 10-K 4.2
1996 Proxy Statement 4.9
Preferred Stock 4.10
Purchase Price 2.1
Third Party Claim 10.4.3
ARTICLE 2 SALE AND PURCHASE OF PREFERRED SHARES.
Section 2.1 Sale of Preferred Shares. At the
closings provided for, and subject in all respects to the terms and conditions
set forth, in Article 3 and Section 10.7 hereof (each a "Closing"): (i) the
Company shall issue and sell an aggregate of 2,000,000 Preferred Shares to the
Investor, and shall deliver to the Investor a stock certificate or certificates
representing all of the Preferred Shares, registered in the Investor's or its
nominee's name;
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and (ii) the Investor shall purchase, acquire and accept such Preferred Shares
for $12.50 per share (the "Purchase Price") or an aggregate, if all such
2,000,000 Preferred Shares shall be issued, of approximately twenty-five million
dollars ($25,000,000.00).
Section 2.2 Payment for the Preferred Shares.
At the Closings and in accordance with, and subject
to, the provisions set forth in Article 3, the Purchase Price shall be paid by
the Investor to the Company in United States dollars by wire transfer of funds
immediately available in New York City to such account(s) as the Company shall
designate in a written notice delivered to the Investor not less than five (5)
Business Days prior to the applicable Closing Date.
Section 2.3 Transfer Taxes. The Company shall
pay all stock transfer taxes, recording fees and other sales, transfer, use,
purchase or similar taxes resulting from the Investment.
ARTICLE 3 CLOSINGS.
Section 3.1 Closings. Subject to the provisions
of Section 3.2 and Section 10.7, the Company shall be entitled to designate up
to three Closings, the first two of which shall provide, in the Company's
discretion, for the sale to the Investor of at least 400,000 Preferred Shares
each, and the last of which shall provide for the sale to the Investor of the
remaining Preferred Shares, if any. Each Closing of the sale and purchase of the
Preferred Shares shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. New York City time.
Section 3.2 Closing Dates. The first Closing
shall occur on or before January 21, 1996, and each subsequent Closing, if
required, shall occur on a date designated by the Company upon not less than ten
(10) Business Days notice to the Investor, or, in either case, at such other
time and place as the Company and the Investor mutually agree in writing (each,
a "Closing Date"); provided, however, that if the sale of all of the Preferred
Shares as provided for herein shall not have occurred before the one year
anniversary date of this Agreement, the Closing for such Preferred Shares as
shall not have been previously so sold, subject to the provisions of this
Article 3 and Section 10.7, shall occur on such anniversary date; provided,
further, that, without reducing the availability fee under Section 3.4, the
Company shall not be required to sell and the Investor shall not be required to
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purchase, that number of Preferred Shares that would cause the Company to
violate Section 312 of the New York Stock Exchange ("NYSE") Listed Company
Manual.
Section 3.3 Cancellation of Subsequent Closings.
In the event that a Change of Control or a Put Event (each as defined in the
Certificate of Designation) occurs after any Closing Date, but prior to the sale
by the Company to the Investor of all 2,000,000 Preferred Shares to be sold
pursuant to this Agreement, and the Investor notifies the Company that it will
tender into the Put Offer (as defined in the Certificate of Designation), any
further Closings shall be canceled and the Company shall, within ten (10) days
after receipt of such notice, pay to the Investor by wire transfer in
immediately available funds an amount equal to the product of (i) $0.25,
multiplied by (ii) the difference between (x) 2,000,000 and (y) the number of
Preferred Shares which the Company has sold to the Investor pursuant to this
Agreement prior to the consummation of such Change of Control or occurrence of
such Put Event. In the event that a REIT-Put Event (as defined in the
Certificate of Designation) occurs after any Closing Date, but prior to the sale
by the Company to the Investor of all 2,000,000 Preferred Shares to be sold
pursuant to this Agreement, and the Investor notifies the Company that it will
tender into the REIT-Put Offer (as defined in the Certificate of Designation),
any further Closings shall be canceled and the Company shall, within ten (10)
days after receipt of such notice, pay to the Investor by wire transfer in
immediately available funds an amount equal to the product of (1) the greater of
(x) $1.25, (y) the product of 0.05 multiplied by the Current Market Price (as
defined in the Certificate of Designation) referred to in Section 8(c)(ii) of
the Certificate of Designation, and (z) the difference between the 52-Week
Trading High and $12.50, multiplied by (2) the difference between (x) 2,000,000
and (y) the number of Preferred Shares which the Company has sold to the
Investor pursuant to this Agreement prior to the consummation of such Change of
Control or occurrence of such Put Event.
Section 3.4 Availability Fee. In the event that
the Company has determined not to sell all 2,000,000 Preferred Shares to the
Investor on or prior to April 1, 1997, the Company shall pay, on each of April
1, 1997, May 1, 1997 and June 1, 1997, to the Investor by wire transfer in
immediately available funds, an amount equal to the product of (i) 0.0015,
multiplied by (ii) the difference between (x) $25,000,000, multiplied by (y) the
aggregate Purchase Price paid by the Investor in respect of Preferred Shares
which the Company has
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sold to the Investor pursuant to this Agreement prior to each such date. In the
event that the Company has determined not to sell all 2,000,000 Preferred Shares
to the Investor on or prior to July 1, 1997, the Company shall pay, on each of
July 1, 1997, August 1, 1997 and September 1, 1997, to the Investor by wire
transfer in immediately available funds, an amount equal to the product of (i)
0.0025, multiplied by (ii) the difference between (x) $25,000,000 and (y) the
aggregate Purchase Price paid by the Investor in respect of Preferred Shares
which the Company has sold to the Investor pursuant to this Agreement prior to
each such date. In the event that the Company has determined not to sell all
2,000,000 Preferred Shares to the Investor on or prior to October 1, 1997, the
Company shall pay, on each of October 1, 1997, November 1, 1997 and December 1,
1997, to the Investor by wire transfer in immediately available funds, an amount
equal to the product of (i) 0.0035, multiplied by (ii) the difference between
(x) $25,000,000 and (y) the aggregate Purchase Price paid by the Investor in
respect of Preferred Shares which the Company has sold to the Investor pursuant
to this Agreement prior to each such date. No availability fee shall be required
to be paid on any date after which (i) the Company shall have sold all such
2,000,000 Preferred Shares to the Investor pursuant to this Agreement, (ii) all
subsequent Closings have been canceled pursuant to Section 3.3 of this Agreement
(iii) this Agreement shall have been terminated pursuant to Section 10.7, or
(iv) the fee contemplated by Section 8.7 of the Operating Agreement shall have
been paid.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The Company hereby represents and warrants to the
Investor as follows:
Section 4.1 Due Incorporation and Status of the
Company.
Section 4.1.1 Due Incorporation. The Company
and each of its Subsidiaries have been duly incorporated or formed, as the case
may be, and are validly existing and in good standing under the laws of their
respective states of organization and are qualified or licensed, and in good
standing, as a foreign corporation authorized to do business in each other
jurisdiction in which their ownership of properties or their conduct of business
requires such qualification or licensing, except where the failure to be so
qualified or licensed, or in good standing, as a foreign
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corporation would not have a Material Adverse Effect on the Company.
Section 4.1.2 REIT Status. As of the date
hereof, the Company qualifies as a REIT under the Code and has taken no action
or omitted to take any action, the effect of which could reasonably be likely to
disqualify the Company as a REIT under the Code.
Section 4.2 Authority. The Company has the power
and authority to own, lease and operate its properties, directly or indirectly,
and to conduct its business as presently conducted and as described in the
Annual Report on Form 10-K as filed by the Company under the Exchange Act for
the year ended December 31, 1995 (the "1995 10-K").
Section 4.3 Valid Agreement of the Company. The
execution, delivery and performance of this Agreement, the Agreement and Waiver
and the Operating Agreement have each been duly authorized by the Company. This
Agreement has been, and the Agreement and Wavier and the Operating Agreement,
upon the Closing, will be duly executed and delivered by the Company. This
Agreement represents and the Agreement and Waiver and the Operating Agreement,
upon the Closing will represent, the valid and binding obligations of the
Company, each enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether enforcement is sought by proceedings in equity or at law).
Section 4.4 No Default. The execution and
delivery of the Operative Instruments by the Company and the performance by the
Company of its obligations thereunder do not (or if not yet executed, upon the
execution and delivery thereof will not) (a) violate the Charter or By-Laws of
the Company; (b) violate or constitute a breach of or default under any
mortgage, indenture, loan agreement, promissory note or other material agreement
to which the Company or any of its Subsidiaries is a party, or by which any of
them is bound, or to which any property of the Company or any of its
Subsidiaries is subject; or (c) conflict with or violate any law or any
regulation, rule, order or decree of any governmental body, court or
administrative agency having jurisdiction over the Company or any of its
Subsidiaries or the properties of any of them; except that Preferred Shares
representing in excess of 20% of the Company's voting power outstanding at the
time of issuance or 20% of the number of
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shares of Common Stock before such issuance may not be sold to the Investor
hereunder without violating Section 312 of the NYSE Listed Company Manual unless
the approval of the holders of a majority of the Common Stock is obtained prior
thereto.
Section 4.5 No Required Consents. The execution
and delivery of the Operative Instruments by the Company and the performance by
the Company of its obligations thereunder do not legally or contractually
require any filing or registration with, or the receipt of any consent by, any
governmental or regulatory authority by the Company or its Subsidiaries other
than any which have already been obtained or waived.
Section 4.6 Reservation of Shares . The Company
has duly reserved solely for purposes of issuance upon conversion of the
Preferred Shares the shares of Common Stock into which the Preferred Shares may
be converted from time to time.
Section 4.7 Validity of Preferred Shares. The
Company has duly authorized the issuance and delivery of 2,000,000 shares of
Preferred Stock pursuant to this Agreement and, upon delivery thereof and
receipt by the Company of the Purchase Price therefor, such shares of Preferred
Stock will be duly authorized, validly issued, fully paid and nonassessable. The
Preferred Shares have the dividend, conversion, voting and other terms set forth
in the Certificate of Designation and, to the extent not inconsistent therewith,
as set forth in the Charter and By-Laws of the Company and the Maryland General
Corporation Law.
Section 4.8 Transferability. Upon the issuance
and sale of the Preferred Shares by the Company to the Investor pursuant to this
Agreement, the Preferred Shares shall be fully-registered shares under the
Securities Act. Upon such issuance and sale, such Preferred Shares shall be
freely transferable by the Investor without the requirement that (i) such
Preferred Shares be registered or qualified pursuant to any federal or state
securities law or (ii) the Investor comply with the prospectus delivery
requirements of the Securities Act; provided, however, that the transfer of such
Preferred Shares may be subject to the restrictions on transferability imposed
by the Securities Act on "affiliates" or "control persons" (as such terms are
defined by the Securities Act). Upon the conversion of the Preferred Shares into
shares of Common Stock, pursuant to the provisions of the Certificate of
Designation, such shares of Common Stock shall be fully-registered shares under
the Securities Act. Upon
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such conversion, such shares of Common Stock shall be freely transferable by the
Investor without the requirement that (i) such shares of Common Stock be
registered or qualified pursuant to any federal or state securities law or (ii)
the Investor comply with the prospectus delivery requirements of the Securities
Act; provided, however, that the transfer of such shares of Common Stock may be
subject to the restrictions on transferability imposed by the Securities Act on
"affiliates" or "control persons" (as such terms are defined by the Securities
Act).
Section 4.9 Disclosure. The Company has
heretofore delivered to the Investor the Proxy Statement relating to its 1996
Annual Meeting of Shareholders (the "1996 Proxy Statement"), the 1995 10-K, and
the Quarterly Reports on Form 10-Q as filed by the Company under the Exchange
Act for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996
(the "1996 10-Qs").
Section 4.9.1 No Misstatement or Omission. At the
time of filing, the 1996 Proxy Statement, the 1995 10-K and the 1996 10-Qs
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated by the SEC thereunder. The 1996 Proxy
Statement, the 1995 10-K and the 1996 10-Qs do not, as of their respective
dates, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Section 4.9.2 Financial Statements. The financial
statements, including the notes thereto, and supporting schedules included in
the 1995 10-K and the 1996 10-Qs have been prepared in conformity with GAAP
applied on a consistent basis (except as otherwise noted therein and except that
the quarterly statements are subject to standard year-end adjustments) and
present fairly the financial position of the Company and its Subsidiaries as of
the dates indicated and the results of their operations for the periods shown.
Section 4.9.3 Subsequent Events. Since the
respective dates as of which information is given in the 1995 10-K and the 1996
10-Qs, except as otherwise stated therein or in the press releases listed on
Schedule 4.9.3 hereto and other than changes in general economic conditions or
industry conditions, there has not been any change in the condition (financial
or otherwise) or in the earnings or business
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affairs of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, which could
reasonably be likely to have a Material Adverse Effect on the Company.
Section 4.10 Capitalization. The authorized
capital stock of the Company consists of: (i) 40,000,000 shares of Common Stock;
(ii) 10,000,000 shares of preferred stock, par value $.0001 per share (the
"Preferred Stock"); and (iii) 40,000,000 shares of excess stock, par value
$.0001 per share (the "Excess Stock"). As of the date hereof, (i) 9,426,900, 0,
and 0 shares of the Common Stock, the Preferred Stock and the Excess Stock,
respectively, were validly issued and outstanding, fully paid and nonassessable;
and (ii) 3,820,443, 0, and 0 shares of the Common Stock, the Preferred Stock and
the Excess Stock, respectively, were reserved for issuance as set forth on
Schedule 4.10 hereto. Except as set forth in the preceding sentence of this
Section 4.10 or as set forth on Schedule 4.10 hereto, as of the date hereof
there are no other shares of capital stock of the Company outstanding and no
other outstanding options, warrants, convertible or exchangeable securities,
subscriptions, rights (including preemptive rights), stock appreciation rights,
calls or commitments of any character whatsoever to which the Company is a party
or may be bound requiring the issuance or sale of shares of any capital stock of
the Company, and there are no contracts or other agreements by which the Company
is or may become bound to issue additional shares of its capital stock or any
options, warrants, convertible or exchangeable securities, subscriptions, rights
(including preemptive rights), stock appreciation rights, calls or commitments
of any character whatsoever relating to such shares.
Section 4.11 Litigation. Except as set forth on
Schedule 4.11 hereto or in the 1995 10-K or the 1996 10-Qs, the Company has not
received any written notice of any outstanding judgments, rulings, orders,
writs, injunctions, awards or decrees of any court or any foreign, federal,
state, county or local government or any other governmental, regulatory or
administrative agency or authority or arbitral tribunal against or involving the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is a party to, or to the knowledge of the Company, threatened with,
any litigation or judicial, governmental, regulatory, administrative or
arbitration proceeding which, if decided adversely to their respective interests
could be reasonably likely to have an adverse effect upon the transactions
contemplated hereby or a Material Adverse Effect on the Company.
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Section 4.12 ERISA. (i) Each Plan is in
substantial compliance with the applicable provisions of ERISA and the Code,
(ii) no Termination Event has occurred nor is reasonably expected to occur with
respect to any Benefit Plan, (iii) the most recent annual report (Form 5500
Series) with respect to each Plan, including Schedule B (Actuarial Information)
thereto, copies of which have been filed with the Internal Revenue Service, is
complete and correct in all material respects and fairly presents the funding
status of such Benefit Plan, and since the date of such report there has been no
material adverse change in such funding status, (iv) no Benefit Plan had an
accumulated or waived funding deficiency or permitted decreases which would
create a deficiency in its funding standard account within the meaning of
Section 412 of the Code at any time during the previous 60 months, and (v) no
Lien imposed under the Code or ERISA exists or is likely to arise on account of
any Benefit Plan within the meaning of Section 412 of the Code. Neither the
Company nor any of its ERISA Affiliates has incurred any withdrawal liability
under ERISA with respect to any Multiemployer Plan, and the Company is not aware
of any facts indicating that the Company or any of its ERISA Affiliates may in
the future incur any such withdrawal liability. Except as required by Section
4980B of the Code, the Company does not maintain a welfare plan (as defined in
Section 3(1) of ERISA) which provides benefits or coverage after a participant's
termination of employment. Neither the Company nor any of its ERISA Affiliates
has incurred any liability under the Worker Adjustment and Retraining
Notification Act. All Plans in existence as of the date hereof are set forth on
Schedule 4.12 hereto.
Section 4.13 Environmental Matters. Except as set
forth in Schedule 4.13 hereto, to the knowledge of the
Company:
(a) The operations and properties of the Company
and its Subsidiaries are in material compliance with
Environmental Laws;
(b) There has been no Release (i) at any assets,
properties or businesses currently owned or operated by the Company, any of its
Subsidiaries or any predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received Hazardous
Materials generated by the Company, any of its Subsidiaries or any predecessor
in interest, in each case that would result in any Environmental Liabilities
affecting the Company;
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(c) No Environmental Claims have been asserted
against the Company, any of its Subsidiaries or any predecessor in interest
which is or has been an Affiliate of the Company and neither the Company nor any
of its Subsidiaries has notice of any threatened or pending Environmental
Claims;
(d) No Environmental Claims have been asserted
against any facilities that may have received Hazardous Materials generated by
the Company, any of its Subsidiaries or any predecessor in interest which is or
has been an Affiliate of the Company;
(e) The Company or its predecessors have conducted
Phase 1 Environmental Site Assessments on all of the assets, properties and
businesses owned or operated by the Company and its Subsidiaries and the Company
has delivered to the Investor true and complete copies of all material
environmental reports, studies or investigations in their possession regarding
any Environmental Liabilities at the assets, properties or businesses of the
Company or any of its Subsidiaries; and
(f) None of the assets, properties or businesses
owned or operated by the Company or any of its Subsidiaries are located in
"wetlands" regulated under Environmental Laws and no dredged or fill materials
have been placed, discharged or deposited in any wetlands located at any asset,
property or business owned or operated by the Company or any of its Subsidiaries
except in either case where such was in compliance, in all material respects,
with Environmental Laws.
Section 4.14 Investment Company. The Company is
not, and upon the issuance and sale of the Preferred Shares as herein
contemplated will not be, an "investment company" or an Entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
Section 4.15 Taxes. The Company has filed all
federal, state, local or foreign tax returns that are required to be filed or
has duly requested extensions thereof and has paid all taxes required to be paid
by it and any related assessments, fines or penalties, except for any such tax,
assessment, fine or penalty that is being contested in good faith and by
appropriate proceedings or where the failure to make any such filing or payment
would not be reasonably expected to have a Material Adverse Effect on the
Company; and adequate charges, accruals and reserves have been provided for
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in the financial statements of the Company in respect of all material federal,
state, local and foreign taxes for all periods as to which the tax liability of
the Company has not been finally determined or remains open to examination by
applicable taxing authorities. The Company is not currently under review by any
federal or state taxing authority.
Section 4.16 Insurance. The Company carries or is
entitled to the benefits of insurance in such amounts and covering such risks as
is reasonably sufficient under the circumstances and is consistent with
comparable businesses and all such insurance is in full force and effect.
Section 4.17 Affiliated Transactions. Except as
disclosed in the 1995 10-K, the 1996 10-Qs or the 1996 Proxy Statement or as
generally described on Schedule 4.17, Schedule 4.17 sets forth a description of
all transactions with, or payments to, any Affiliate in excess of $30,000 in the
aggregate (other than reimbursement of expenses and compensation payable to
employees or officers or directors' fees payable to the Company's directors).
Except as set forth on Schedule 4.17 or as disclosed in the 1995 10-K, the 1996
10-Qs or the 1996 Proxy Statement, neither the Company, nor any officer or
director of the Company, nor any of its Subsidiaries, or any Affiliate of any of
the foregoing, or, to the knowledge of the Company, any member of the Immediate
Family of any of the foregoing: (i) owns, directly or indirectly, any interest
in (excepting not more than five (5) percent stock holdings held solely for
investment purposes in securities of any Person which are listed on any national
securities exchange or regularly traded in the over-the-counter market) or is an
owner, sole proprietor, shareholder, partner, director, officer, employee,
consultant or agent of any person which is a competitor, lessor, lessee,
customer or supplier of the Company or any of its Subsidiaries; (ii) owns,
directly or indirectly, in whole or in part, any property, patent, trademark,
service ▇▇▇▇, trade name, copyright, franchise, invention, permit, license or
secret or confidential information which the Company or any of its Subsidiaries
is using or the use of which is necessary for the business of the Company or any
of its Subsidiaries; or (iii) has any cause of action or other suit, action or
claim whatsoever against, or owes any amount to, the Company or any of its
Subsidiaries, in each case (i) through (iii) except for those in the ordinary
course of business.
Section 4.18 Liabilities. Except as set forth on
Schedule 4.18 or as disclosed in the 1995 10-K, the 1996 10-Qs or the 1996 Proxy
Statement and except for obligations which
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the Company may have under the terms of its leases with tenants, to the
knowledge of the Company, the Company and its Subsidiaries, as of the date of
this Agreement, do not have any material direct or indirect indebtedness,
liability, claim, loss, damage, deficiency or obligation, fixed or unfixed,
▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured,
subordinated or unsubordinated, matured or unmatured, accrued, absolute,
contingent or otherwise, including, without limitation, liabilities on account
of taxes, other governmental, regulatory or administrative charges or lawsuits
brought, whether or not of a kind required by GAAP to be set forth on a
financial statement (collectively, "Liabilities"), that were not adequately
reflected or reserved against on the Balance Sheet of the Company (less
Liabilities that have been discharged in the ordinary course of business since
the date of the Balance Sheet of the Company).
Section 4.19 Limited Waiver of Ownership
Limitations. Subject to the terms and conditions set forth in the Agreement and
Waiver, the Board of Directors of the Company, acting pursuant to Section
subparagraph (a)(9) of Article NINTH of the Charter, has properly voted to
exempt the Investor, and has agreed to exempt any successor in interest to the
Investor that is an Affiliate of the Investor, from the Ownership Limit imposed
by the Charter; provided, however, that such waiver shall not be effective,
unless the terms and conditions of the Agreement and Waiver have been satisfied,
or to exempt any Person from such ownership limits imposed by the Charter if the
ownership of such interest by such Person would cause the Company to fail to
qualify as a REIT.
Section 4.20 No Event of Default. No event has
occurred and is continuing and no condition exists which constitutes a material
breach, an event of default, or otherwise gives any other party the rights to
accelerate or require payment of any obligation, or with the passage of time
would constitute such an event (a "Breach"), under any material agreement or
instrument to which the Company or any of its Subsidiaries is a party; provided,
however, that to the extent that a Breach exists with respect to an immaterial
agreement or instrument, which under a cross-default, cross-acceleration or
comparable provision creates a Breach under a material agreement, such Breach
shall be deemed to be material for purposes of this Section 4.20.
Section 4.21 No Brokers. In connection with the
Investment, the Company has not retained or become obligated to any broker or
finder other than Rothschild Realty Inc.
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR.
In order to induce the Company to enter into this
Agreement and to consummate the transactions contemplated hereby, the Investor
hereby represents and warrants to, and covenants with, the Company as follows:
Section 5.1 Organization. The Investor has been
duly organized and is validly existing and in good standing under the laws of
the State of Delaware.
Section 5.2 Accredited Investor. The Investor is
an "accredited investor," as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
Section 5.3 Valid Agreements of the Investor.
The Investor has all right, power and authority to enter into this Agreement,
the Agreement and Waiver and the Operating Agreement and to consummate the
transactions contemplated hereby and thereby. Each of the Operative Instruments
to which the Investor is a party has been duly authorized, executed and
delivered by the Investor, and constitutes a legal, valid and binding obligation
of the Investor, enforceable against the Investor in accordance with its terms.
Section 5.4 No Default. The execution and
delivery of this Agreement and the Operating Agreement by the Investor and the
performance by the Investor of its obligations thereunder do not (or if not yet
executed, upon the execution and delivery thereof will not) (a) violate the
organizational documents of the Investor; (b) violate or constitute a breach of
or default under any mortgage, indenture, loan agreement, promissory note or
other agreement to which the Investor is a party, or by which the Investor is
bound, or to which any property of the Investor is subject; or (c) conflict with
or violate any law or any regulation, rule, order or decree of any governmental
body, court or administrative agency having jurisdiction over the Investor or
its properties except with respect to clauses (b) and (c) where such conflict,
breach, default or violation would not reasonably be expected to have a Material
Adverse Effect on the Investor.
Section 5.5 Opportunity for Inquiry. The
Investor has had a reasonable opportunity to ask questions of and to receive
answers from representatives of the Company regarding the business, management
and financial affairs of the Company; it being understood that no inquiry or
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investigation shall affect the Investor's ability to rely on any representation
or warranty of the Company or the conditions to the obligations of the Investor
under this Agreement.
Section 5.6 Materials. The Investor acknowledges
that all documents, agreements, instruments, records, and books that it has
requested pertaining to the Company and its businesses and financial affairs
have been made available to the Investor and the Investor's attorneys,
accountants and advisors for inspection. The Investor further acknowledges that
it has received copies of the 1996 Proxy Statement, the 1995 10-K and the 1996
10-Qs.
Section 5.7 Knowledge and Experience. The
Investor has such knowledge and experience in financial and business matters
that the Investor is capable of evaluating the merits and risks involved in
connection with the Investment.
Section 5.8 No Brokers. In connection with the
Investment, the Investor has not retained or become obligated to any broker or
finder.
Section 5.9 Investment Company. The Investor is
not, and upon the purchase of the Preferred Shares as herein contemplated, will
not be, an "investment company" or an Entity "controlled" by and "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
ARTICLE 6 COVENANTS AND UNDERTAKINGS.
Section 6.1 Closings. The Company shall use its
reasonable best efforts to comply with all conditions precedent to the Closings,
including, without limiting the foregoing, causing the Certificate of
Designation to have been filed with the SDAT and become effective.
Section 6.2 Expenses of Rothschild Realty Inc.
The Company agrees to reimburse Rothschild Realty Inc. at each Closing for its
reasonable out-of-pocket expenses incurred in connection with this transaction
documented to the reasonable satisfaction of the Company. All such amounts paid
pursuant to this Section 6.2 shall be paid by wire transfer of funds immediately
available in New York City to such account(s) as Rothschild Realty Inc. shall
designate in a written notice delivered to the Company not less than two
Business Days prior to the initial Closing Date; provided, however, that the
Investor, on behalf of the Company, may directly pay out of
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the Purchase Price payable hereunder such fees and expenses to Rothschild Realty
Inc.; provided, further, that the aggregate of all such expenses including,
without limitation, the fees and expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP provided
for in Section 6.3 hereof, shall not exceed $100,000 through the initial Closing
Date, $15,000 (plus any amount of the $100,000 remaining) through the second
Closing Date, if applicable, and $15,000 (plus any amount of the $100,000 or
$15,000 remaining) through the third Closing Date, if applicable.
Section 6.3 Fees and Expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP. Subject to the limitation set forth in Section 6.2, the Company
agrees to pay to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the Investor, at each
Closing reasonable fees and expenses in connection with services rendered and
expenses incurred in connection with the issuance and sale of Preferred Shares
to the Investor. All such amounts paid pursuant to this Section 6.3 shall be
paid by wire transfer of funds immediately available in New York City to such
account(s) as ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP shall designate in a written notice
delivered to the Company not less than two Business Days prior to each Closing
Date; provided, however, that the Investor, on behalf of the Company, may
directly pay out of the Purchase Price hereunder such fees and expenses to
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE INVESTOR TO CLOSE.
The obligation of the Investor to complete each
Closing is subject, at its option, to the fulfillment on or prior to the related
Closing Date (unless otherwise provided) the following conditions, any one (1)
or more of which may be waived by it in its sole discretion:
Section 7.1 Representations and Covenants. The
representations and warranties of the Company contained in this Agreement shall
be true, complete and accurate in all material respects on and as of the related
Closing Date with the same force and effect as though made on and as of the
related Closing Date, except for changes contemplated or permitted by this
Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case, such representation and warranty shall be
true and correct in all material respects as of such date. The Company shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Company on or prior to the related Closing Date. The Company shall have
delivered to
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the Investor a certificate, dated the related Closing Date and signed by the
President and Chief Financial Officer of the Company, to the foregoing effect
and stating that all conditions to the Investor's obligations hereunder have
been satisfied.
Section 7.2 Good Standing Certificates. The
Company shall have delivered to the Investor: (i) copies of its Charter,
including all amendments thereto, certified by the SDAT; (ii) a certificate from
the SDAT to the effect that the Company is in good standing and subsisting in
such jurisdiction and listing all charter documents of the Company on file in
such state; (iii) a certificate from the Secretary of State or other appropriate
official in each State in which the Company is qualified to do business to the
effect that the Company is in good standing in such State; and (iv) a
certificate as to the Tax status of the Company from the appropriate official in
Maryland and each State in which the Company is qualified to do business, in
each case, dated as of a date within reasonable proximity to the related Closing
Date.
Section 7.3 Governmental Permits and Approvals.
Any and all Permits necessary for the consummation of the transactions
contemplated hereby shall have been obtained and a copy thereof shall have been
delivered to the Investor.
Section 7.4 Legislation. No legislation shall
have been proposed or enacted, and no statute, law, ordinance, code, rule or
regulation shall have been adopted, revised or interpreted, by any foreign,
federal, state, county or local government or any other governmental, regulatory
or administrative agency or authority, which would require, upon or as a
condition to the acquisition of the Preferred Shares by the Investor, the
divestiture or cessation of the conduct of any business presently conducted by
the Company, on the one hand, or by the Investor, on the other hand, or which,
in the good faith judgment of the Investor, may, individually or in the
aggregate, have a Material Adverse Effect on it or on the Company in the event
that the transactions contemplated hereby are consummated.
Section 7.5 Legal Proceedings. No suit, action,
claim, proceeding or investigation shall have been instituted or threatened by
or before any court or any foreign, federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority
seeking to restrain, prohibit or invalidate the issuance or sale of the
Preferred Shares to the Investor hereunder or the consummation
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of the transactions contemplated hereby or to seek damages in connection with
such transactions.
Section 7.6 Third Party Consents. All consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Company which may be required in
connection with the performance by the Company of its obligations under this
Agreement or to assure such contracts and other agreements continue in full
force and effect after the consummation of the transactions contemplated hereby
(without any Breach by the Company or any of its Subsidiaries) shall have been
obtained.
Section 7.7 Stock Certificates. The Company
shall have delivered to the Investor the stock certificate or certificates
representing the Preferred Shares to be purchased on such Closing Date in
accordance with Section 3.1 hereof, registered in the Investor's or it's
nominee's name.
Section 7.8 Approval of Counsel to the Investor.
The Company shall furnish to counsel for the Investor such certificates and
documents as may reasonably be requested by counsel to the Investor to enable
such counsel to pass on or evaluate the satisfaction of the conditions set forth
in this Article 7. All actions and proceedings hereunder and all documents and
other papers required to be delivered by the Company hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall have been reasonably approved by ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
LLP, counsel to the Investor, as to their form and substance.
Section 7.9 Appointment of Director. Prior to or
concurrent with the initial Closing, the nominee designated by the Investor as a
director of the Company shall have been elected and qualified to become a member
of the Board of Directors of the Company, and prior to and concurrent with any
second Closing or third Closing, the nominee designated by the Investor as a
director of the Company shall be continuing to serve as a member of the Board of
Directors of the Company.
Section 7.10 Certificate of Designation. The
Certificate of Designation shall be effective.
Section 7.11 Operating Agreement. The Company
shall have executed and delivered to the Investor the
Operating Agreement.
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Section 7.12 Agreement and Waiver. The Company
shall have executed and delivered to the Investor the
Agreement and Waiver.
Section 7.13 Opinion of Counsel. The Investor
shall have received favorable opinion letters from ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP and Piper & Marbury to the effect of the matters contained in
Sections 4.1.1, 4.1.2, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, the first sentence of
4.10, 4.11, 4.14, and 4.19 hereof.
Section 7.14 Expenses of Rothschild Realty Inc.
Rothschild Realty Inc. shall have been reimbursed for the
expenses to be paid by the Company as described under Section
6.2.
Section 7.15 Fees and Expenses of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP. ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP shall have received the fees and
disbursements to be paid by the Company as described under Section 6.3.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE COMPANY TO CLOSE.
The obligation of the Company to complete each
Closing is subject, at its option, to the fulfillment on or prior to the related
Closing Date of the following conditions, any one (1) or more of which may be
waived it in its sole discretion:
Section 8.1 Representations and Covenants. The
representations and warranties of the Investor contained in this Agreement shall
be true, complete and accurate in all material respects on and as of the related
Closing Date with the same force and effect as though made on and as of the
related Closing Date, except for changes contemplated or permitted by this
Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case, such representation and warranty shall be
true, complete and accurate in all material respects as of such date. The
Investor shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the related Closing Date. The Investor shall have
delivered to the Company a certificate, dated the related Closing Date and
signed by an officer of the Investor to the foregoing effect and stating that
all conditions to the Company's obligations hereunder have been satisfied.
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Section 8.2 Governmental Permits and Approvals.
Any and all Permits necessary for the consummation of the transactions
contemplated hereby shall have been obtained.
Section 8.3 Legal Proceedings. No suit, action,
claim, proceeding or investigation shall have been instituted or threatened
before any court or any foreign, federal, state, county or local government or
any other governmental, regulatory or administrative agency or authority seeking
to restrain, prohibit or invalidate the sale of the Preferred Shares to the
Investor hereunder or the consummation of the transactions contemplated hereby
or to seek damages in connection with such transactions.
Section 8.4 Third Party Consents. All consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Investor which may be required in
connection with the performance by the Investor of its obligations under this
Agreement shall have been obtained.
Section 8.5 Purchase Price. The Investor shall
have tendered payment for the Preferred Shares in the amount and in the manner
specified in Section 3.1 hereof.
Section 8.6 Approval of Counsel to the Company.
The Investor shall furnish to counsel for the Company such certificates and
documents as may reasonably be requested by counsel to the Company to enable
such counsel to pass on or evaluate the satisfaction of the conditions set forth
in this Article 8. All actions and proceedings hereunder and all documents or
other papers required to be delivered by the Investor hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall be subject to the reasonable approval of ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP counsel to the Company, as to their form and substance.
Section 8.7 Opinion of Counsel. The Company
shall have received a favorable opinion letter from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP to
the effect of the matters contained in Section 5.1, 5.3, 5.4(a) and 5.9 hereof.
ARTICLE 9 ASSIGNMENT.
Section 9.1 Assignability by Investor. The
Investor may, without the consent or approval of the Company, assign its rights
and obligations under this Agreement to a
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Person to whom the Investor assigns its interest in the Preferred Shares, in
proportion to the percentage of Preferred Shares transferred, provided that (i)
such assignee agrees in writing to be bound by the terms of this Agreement and
(ii) no such assignment shall be valid as to any Person who purchases less than
ten percent (10%) of the outstanding Preferred Shares.
Section 9.2 Assignability by the Company.
Without the prior written consent of the Investor, in the sole and absolute
discretion of the Investor, the Company may not assign or delegate its rights or
obligations hereunder.
Section 9.3 Binding Agreement. Subject to the
provisions of Sections 9.1 and 9.2, this Agreement shall be binding upon the
heirs, successors and assigns of the parties.
ARTICLE 10 MISCELLANEOUS.
Section 10.1 Applicable Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York as applied between residents of that State entering into contracts to be
performed wholly within that State.
Section 10.2 Notices. All notices hereunder shall
be in writing and shall be given: (a) if to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇. ▇▇▇▇▇▇ Eglin, or such other
address or addresses of which the Investor shall have been given notice, with
copies to ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or such other address of which the
Investor shall have been given notice; and (b) if to the Investor, at Rothschild
Realty Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or such other address of which the Company shall have been given
notice, with copies to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., or such other address of which the
Company shall have been given notice. Any notice shall be deemed to have been
given if personally delivered or sent by United States mail or by commercial
courier or delivery service or by telegram or telex and shall be deemed
received, unless earlier received, (i) if sent by certified or registered mail,
return receipt requested, three business days after deposit in the mail, postage
prepaid, (ii) if sent by United States Express Mail or by commercial courier or
delivery service, one Business Day after delivery to a United States Post Office
or delivery service, postage prepaid, (iii)
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if sent by telegram, telex or facsimile transmission, when receipt is
acknowledged by answerback, and (iv) if delivered by hand, on the date of
receipt.
Section 10.3 Entire Agreement; Amendments. This
Agreement and other agreements referred to herein set forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
and this Agreement shall not be amended except by an instrument in writing
executed by the Company and the Investor.
Section 10.4 Remedies for Breaches of This
Agreement.
Section 10.4.1 Survival of Certain Provisions.
All of the representations and warranties of the Company contained in Article 4
above and all of the covenants and undertakings of the Company contained in
Article 6 above, shall survive the Closings hereunder and continue in full force
and effect until April 1, 1998 (subject to any applicable statutes of
limitations).
Section 10.4.2 Indemnification Provisions for
Benefit of the Investor. In the event the Company breaches any of its
representations, warranties, and covenants contained herein, provided that the
Investor makes a written claim for indemnification against the Company pursuant
to Section 10.2, then the Company agrees to indemnify the Investor from and
against the entirety of any Adverse Consequences the Investor may actually
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences the Investor, its members or Rothschild Realty Inc. may
suffer after the end of any applicable survival period, provided that notice of
any claim is delivered prior to the end of such survival period) resulting from,
arising out of, relating to, or caused by such material breach; provided,
however, that the Company's obligation to so indemnify the Investor shall not
exceed the amount of funds invested by the Investor in the Company at any time a
claim is made. In addition to the indemnification rights provided for herein,
the Investor shall also have the right to all such remedies to which it is
entitled as a matter of law or equity.
Section 10.4.3 Matters Involving Third Parties.
(i) If any third party shall notify any party
entitled to be indemnified hereunder (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give
rise to a claim for
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indemnification against the Company (the "Indemnifying Party")
under this Section 10.4, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right
to assume the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party at any
time within 15 days after the Indemnified Party has given written
notice of the Third Party Claim; provided, however, that the
Indemnifying Party must conduct the defense of the Third Party
Claim actively and diligently thereafter in order to preserve its
rights in this regard; and provided further that the Indemnified
Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has
assumed and is conducting the defense of the Third Party Claim in
accordance with Section 10.4.3(ii) above, the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages by one or more of the
Indemnifying Parties and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iv) So long as the Indemnifying Party has
assumed and is conducting the defense of the Third Party Claim in
accordance with Section 10.4.3(ii) above, the Indemnified Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably).
(v) In the event none of the Indemnifying
Parties assumes and conducts the defense of the Third Party Claim
in accordance with Section 10.4.3(ii) above, (A) the Indemnified
Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third Party
Claim in any manner he or it reasonably may deem appropriate (and
the
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Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith) and (B) the
Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, or caused by the Third Party Claim to
the fullest extent provided in this Section 10.4.
Section 10.5 Confidentiality. The Investor and
Rothschild Realty Inc. agree not to use, and that their respective
representatives will not use, any Confidential Information for any purpose other
than in connection with evaluating the Investment. The Investor and Rothschild
Realty Inc. agree that the Confidential Information will be kept confidential by
them and their respective representatives; provided, however, that (i) any of
such information may be disclosed to such of their respective representatives
for the purpose of evaluating the Investment (it being understood that such
representatives shall be informed by us of the confidential nature of such
information and the Investor and Rothschild Realty Inc. agree to be responsible
for any breach of the provisions of this Section 10.5 by such representatives),
(ii) the Company may make such disclosure as is necessary under applicable
securities laws, including the filing of a Current Report on Form 8-K and (iii)
any disclosure of such information may be made if the Company shall consent
thereto.
In the event that the Investor, Rothschild Realty
Inc. or any of their respective representatives are requested or required (by
oral question, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, the Investor, Rothschild Realty Inc. will, to the extent permitted
by law, promptly notify the Company of such request or requirement so that the
Company may seek an appropriate protective order. In the event that such
protective order is not obtained, the Company agrees that the Investor,
Rothschild Realty Inc. or such representative may furnish that portion (and only
such portion) of the Confidential Information that they are advised by counsel
is legally required to be disclosed.
Without the prior written consent of the other party
or until such time as a mutually agreeable public announcement is made, none of
the Company, the Investor or Rothschild Realty Inc. will disclose to any person
either the fact that discussions or negotiations are taking place concerning the
Investment or any of the terms, conditions or other facts with
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respect to the Investment, including the status thereof, nor that the
Confidential Information has been made available to the Investor.
Section 10.6 Lock-Up. The Investor agrees that
for a period of one year, commencing on the date of this Agreement, it shall not
sell, transfer, assign, pledge or otherwise dispose of any interest in any of
the Preferred Shares or any shares of Common Stock obtained upon conversion of
any such Preferred Shares.
Section 10.7 Termination. This Agreement may be
terminated at any time prior to the date on which all of the Preferred Shares
have been sold hereunder:
(a) by the mutual written consent of the Investor
and the Company; or
(b) by the Company or the Investor if the first
Closing has not occurred on or prior to January ___, 1997, or if the remaining
amount of Preferred Shares to be sold by the Company to the Investor pursuant to
this Agreement following the initial Closing Date have not been sold by the
Company to the Investor on or prior to January 1, 1998; provided that the party
attempting to terminate this Agreement is not in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement. In the event of termination by the Company or the Investor pursuant
to this Section 10.7, written notice thereof shall forthwith be delivered to the
other party.
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Section 10.8 Counterparts. This Agreement may be
executed in more than one counterpart, each of which may be executed by fewer
than all the parties, with the same effect as if the parties executed one
counterpart as of the day and year first above written.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals as of the day and year first above
written.
LEXINGTON CORPORATE PROPERTIES, INC.
By:_________________________________
Name:
Title:
FIVE ARROWS REALTY SECURITIES L.L.C.
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
36
Schedule 4.9.3
Subsequent Events
None
37
Schedule 4.10
Capital Stock
1. The Company has reserved 800,000 shares of
its Common Stock for issuance under the Company's 1993 Stock
Option Plan.
2. The Company has reserved 2,520,443 shares of
its Common Stock for issuance to holders of units (convertible or exchangeable
into Common Stock) in subsidiary partnerships upon conversion or exchange of
such partnership units into Common Stock.
3. The Company has reserved 250,000 shares of
its Common Stock for issuance under the Company's 1994
Outside Director Stock Plan.
4. The Company has reserved 250,000 shares of
its Common Stock for issuance under the Company's 1994
Employee Stock Purchase Plan.
38
Schedule 4.11
Litigation
None
39
Schedule 4.12
Benefits Plans
1. The Company's 401(k) Plan.
40
Schedule 4.17
Affiliate Transaction
1. Mr. E. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ owns approximately
$50,000 of furniture and equipment used by the Company.
41
Schedule 4.18
Liabilities
None