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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------
Date of report (Date of earliest event reported):
APRIL 2, 1999
GOLF TRUST OF AMERICA, INC.
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(Exact name of registrant as specified in its charter)
Maryland 000-22091 33-0724736
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
14 North Adger's Wharf, Charleston, SC 29401
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(Address of principal executive offices) (Zip Code)
(843) 723-4653
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(Registrant's telephone number, including area code)
not applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
OFFERING OF SERIES A PREFERRED STOCK
On April 2, 1999, Golf Trust of America, Inc. (the "Company")
completed a registered public offering of 800,000 shares of the Company's 9.25%
Series A Cumulative Convertible Preferred Stock, par value $0.01 per share
("Series A Preferred Stock"), at a price of $25.00 per share to a single
purchaser, AEW Targeted Securities Fund, L.P.
Dividends on the Series A Preferred Shares are cumulative from the
date of original issue and are payable quarterly in arrears, when, as and if
declared by the Board of Directors, on the 15th day of January, April, July and
October, commencing on July 15, 1999. Such dividends will be in an amount per
share equal to the greater of (i) $0.578125 per quarter (or $2.3125 per annum)
(equal to a annual rate of 9.25% of the $25 price per share) or (ii) the cash
dividend paid or payable on the number of Common Shares into which a Series A
Preferred Share is then convertible (determined on each of the quarterly
dividend payment dates referred to above). The initial dividend for the quarter
in which the closing of this offering occurred will be prorated based on the
number of days between issuance of the shares and June 30, 1999, the final day
of the fiscal quarter.
The Series A Preferred Stock is convertible, in whole or in part, at
the option of the holder at any time, unless previously redeemed, into Common
Stock at a conversion price of $26.25 per Common Share (equivalent to an initial
conversion rate of approximately 0.95238 Common Share per Series A Preferred
Share), subject to adjustment in certain circumstances.
Except in certain circumstances relating to preservation of the
Company's status as a real estate investment trust ("REIT"), the Series A
Preferred Shares are not redeemable at the Company's option prior to April 2,
2004. On and after such date, the Series A Preferred Shares will be redeemable,
in whole but not in part, at the option of the Company on 20 days' notice for a
cash payment equal to $25.00 plus accrued and unpaid dividends (whether or not
declared) to the redemption date without interest, plus a premium initially
equal to 4% of such sum and thereafter declining by 1% each year so that the
premium is zero on and after April 2, 2008.
The offering of the Series A Preferred Stock was made pursuant to a
Prospectus Supplement dated April 2, 1999 relating to the Prospectus dated June
5, 1998, which is a part of the Company's registration statement on Form S-3
(File No. 333-56251).
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
The following exhibits are part of this current report on Form 8-K and
are numbered in accordance with Item 601 of Regulation S-K.
EXHIBIT NO. DESCRIPTION
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3.1 Articles Supplementary of the Company relating to the Series A
Preferred Stock, as filed with the State Department of
Assessments and Taxation of the State of Maryland on April 2,
1999.
3.2 Form of Share Certificate for the Series A Preferred Stock.
10.1 Stock Purchase Agreement, dated April 2, 1999, by and among
Golf Trust of America, Inc., Golf Trust of America, L.P., GTA
GP, Inc., GTA LP, Inc. and AEW Targeted Securities Fund, L.P.
10.2 Registration Rights Agreement, dated April 2, 1999, by and
between Golf Trust of America, Inc. and AEW Targeted
Securities Fund, L.P.
10.3 Designation of Series A Preferred OP Units of Golf Trust of
America, L.P., dated April 2, 1999 (which designation has been
added to Exhibit D to the First Amended and Restated Agreement
of Limited Partnership of Golf Trust of America, L.P. (the
"Partnership Agreement"), dated February 12, 1997 (included as
Exhibit 10.1 to the Company's Annual Report on Form 10-K filed
March 31, 1997) as amended by the First Amendment to the
Partnership Agreement, dated as of February 1, 1998 (included
as Exhibit 10.1.2 to the Company's Annual Report on Form 10-K
filed March 31, 1998).
12.1 Statements regarding computation of ratios.
99.1 Press Release issued by the Company on April 5, 1999
announcing the Series A Preferred Stock offering.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GOLF TRUST OF AMERICA, INC.
(Registrant)
Date: April 12, 1999 By: /s/ W. Bradley Blair, II
-------------------------------------
W. Bradley Blair, II
President and Chief Executive Officer
EXHIBIT INDEX
Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index
immediately precedes the exhibits.
EXHIBIT NO. DESCRIPTION
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3.1 Articles Supplementary of the Company relating to the Series A
Preferred Stock, as filed with the State Department of
Assessments and Taxation of the State of Maryland on April 2,
1999.
3.2 Form of Share Certificate for the Series A Preferred Stock.
10.1 Stock Purchase Agreement, dated April 2, 1999, by and among
Golf Trust of America, Inc., Golf Trust of America, L.P., GTA
GP, Inc., GTA LP, Inc. and AEW Targeted Securities Fund, L.P.
10.2 Registration Rights Agreement, dated April 2, 1999, by and
between Golf Trust of America, Inc. and AEW Targeted
Securities Fund, L.P.
10.3 Designation of Series A Preferred OP Units of Golf Trust of
America, L.P., dated April 2, 1999 (which designation has been
added to Exhibit D to the First Amended and Restated Agreement
of Limited Partnership of Golf Trust of America, L.P. (the
"Partnership Agreement"), dated February 12, 1997 (included as
Exhibit 10.1 to the Company's Annual Report on Form 10-K filed
March 31, 1997) as amended by the First Amendment to the
Partnership Agreement, dated as of February 1, 1998 (included
as Exhibit 10.1.2 to the Company's Annual Report on Form 10-K
filed March 31, 1998).
12.1 Statements regarding computation of ratios.
99.1 Press Release issued by the Company on April 5, 1999
announcing the Series A Preferred Stock offering.
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Exhibit 3.1
GOLF TRUST OF AMERICA, INC.
ARTICLES SUPPLEMENTARY CLASSIFYING AND DESIGNATING
800,000 SHARES OF PREFERRED STOCK AS
9.25% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
AND FIXING DISTRIBUTION AND
OTHER PREFERENCES AND RIGHTS OF SUCH SERIES
Golf Trust of America, Inc., a Maryland corporation, having a principal
office in the state of Maryland in the City of Baltimore (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
(the "Department") that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 5 of Article V of the Articles of Amendment and
Restatement of the Corporation filed with the Department on January 31, 1997, as
amended by the Articles of Amendment of the Corporation, filed with the
Department on June 9, 1998 (the "Charter"), and in accordance with Section 2-208
of the Maryland General Corporation Law (the "MGCL") the Board of Directors of
the Corporation, by resolution duly adopted on March 25, 1999, has classified
800,000 shares of the authorized but unissued Preferred Stock par value $.01 per
share ("Preferred Stock") as a separate class of Preferred Stock, authorized the
issuance of a maximum of 800,000 shares of such class of Preferred Stock, set
certain of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such class of Preferred Stock,
and pursuant to the powers contained in the Bylaws of the Corporation and the
MGCL, appointed a committee (the "Committee") of the Board of Directors and
delegated to the Committee, to the fullest extent permitted by the MGCL and the
Charter and Bylaws of the Corporation, all powers of the Board of Directors with
respect to designating and setting all preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock, determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued.
SECOND: Pursuant to the authority conferred upon the Committee as
aforesaid, the Committee has unanimously adopted resolutions designating the
aforesaid class of Preferred Stock as the "9.25% Series A Cumulative Convertible
Preferred Stock," setting the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such class of
Preferred Stock (to the extent not set by the Board of Directors in the
resolutions referred to in Article FIRST of these Article Supplementary) and
authorizing the issuance of up to 800,000 shares of such class of Preferred
Stock.
THIRD: The designation, preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption of such
class of Preferred Stock as designated and set by such Committee with the
authority granted by the Board of Directors are as follows:
SECTION 1. NUMBER OF SHARES AND DESIGNATION. This series of Preferred
Stock shall be designated as 9.25% Series A Cumulative Convertible Preferred
Stock (the "Series A Preferred Shares"), and the number of shares of Preferred
Stock which shall constitute such series shall be 800,000 shares
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which number may be decreased (but not below the number thereof then
outstanding) from time to time by the Board of Directors.
SECTION 2. DEFINITIONS. For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"Agreement" shall have the meaning set forth in paragraph (d)(iii) of
Section 9 hereof.
"AMEX" shall have the meaning set forth in the definition of "Market
Price."
"Articles Supplementary" shall mean these Articles Supplementary of the
Corporation, dated April 2, 1999, as filed with the Department on April 2, 1999.
"Asset Disposition" shall mean a sale, transfer or capital lease (as
determined in accordance with GAAP) of all or substantially all of the assets of
the Corporation or the Operating Partnership to a Person that is not an
affiliate of the Corporation or the Operating Partnership.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series A Preferred Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Bylaws" shall mean the bylaws of the Corporation.
"Capital Expenditure Allowance" means, with respect to each real
property asset for any period, the greater of (a) actual Maintenance Capital
Expenditures made by the Operating Partnership with respect to such real
property asset during such period and (b) an amount equal to three percent (3%)
of Gross Golf Revenues with respect to such real property asset during such
period.
"Capital Expenditures" means, with respect to any Person, the aggregate
cost of all capital assets acquired by such Person during such period,
determined in accordance with GAAP.
"Capital Gains Amount" shall have the meaning set forth in paragraph
(f) of Section 3 hereof.
"Capital Transaction" shall mean (i) any asset or property sale,
transfer or disposition, (ii) the issuance of any preferred stock by the
Corporation or any of its Consolidated Subsidiaries or (iii) the issuance of any
preferred partnership units by the Operating Partnership or any of its
Consolidated Subsidiaries (other than preferred partnership units issued to the
Corporation or any wholly-owned subsidiary thereof).
"Cash Flow" means, with respect to the Corporation, on a consolidated
basis, the difference between (A) the sum of (i) Funds From Operations (adjusted
for non-recurring items and non-cash revenue, including, without limitation, the
effect of straight-lining of rents pursuant to GAAP) and (ii) Interest Expense
and (B) the Capital Expenditure Allowance.
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"Change in Control" shall be deemed to have occurred if any of the
following occur: (i) any merger or consolidation of the Corporation in which one
or more entities acquire more than 50% of the Corporation's outstanding voting
equity securities or as a result of which stockholders of the Corporation
immediately before such merger or consolidation hold, immediately after such
merger or consolidation, less than 50% of the surviving entity's outstanding
common stock; (ii) the Corporation or a wholly-owned subsidiary of the
Corporation ceases to be the sole general partner of the Operating Partnership
or grants or sells to any person, or consents to any amendment to the Operating
Partnership Agreement which has the effect of transferring the power to control
or direct the actions of the Operating Partnership to any person as if such
person (A) were a general partner of the Operating Partnership or (B) were a
limited partner of the Operating Partnership with consent or approval rights
materially greater than the consent or approval rights held by the limited
partners of the Operating Partnership on the date hereof; or (iii) the Operating
Partnership is a party to any entity conversion or any merger or consolidation
in which the Operating Partnership is not the surviving entity in such merger or
consolidation or in which the effect is of the nature set forth in the next
preceding clause (ii).
"Charter" shall have the meaning set forth in the first recital hereof.
"Committee" shall have the meaning set forth in the first recital
hereof.
"Common Shares" shall mean the shares of common stock, par value $0.01
per share, of the Corporation.
"Consolidated" shall mean "consolidated" in accordance with GAAP.
"Consolidated Subsidiary" shall mean at any date any Subsidiary of the
Corporation or the Operating Partnership that is Consolidated on the financial
statements of the Corporation or the Operating Partnership in accordance with
GAAP.
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 9 hereof.
"Contingent Obligation" as to any Person means, without duplication,
(i) any contingent obligation of such Person required to be shown on such
Person's balance sheet in accordance with GAAP, and (ii) any obligation required
to be disclosed in the footnotes to such Person's financial statements in
accordance with GAAP, guaranteeing partially or in whole any non-recourse
Indebtedness, lease, dividend or other obligation, exclusive of contractual
indemnities (including, without limitation, any indemnity or price-adjustment
provision relating to the purchase or sale of securities or other assets) and
guarantees of non-monetary obligations (other than guarantees of completion)
which have not yet been called on or quantified, of such Person or of any other
Person. The amount of any Contingent Obligation described in clause (ii) shall
be deemed to be (a) with respect to a guaranty of interest or interest and
principal, or operating income guaranty, the sum of all payments required to be
made thereunder (which in the case of an operating income guaranty shall be
deemed to be equal to the debt service for the note secured thereby), calculated
at the applicable interest rate, through (i) in the case of an interest or
interest and principal guaranty, the stated date of maturity of the obligation
(and commencing on the date interest could first be payable thereunder), or (ii)
in the case of an operating income guaranty, the date through which such
guaranty with remain in effect, and (b) with respect to all guarantees not
covered by the preceding clause (a), an amount equal to the state or
determinable amount of the primary obligation in respect of which such guaranty
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to
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perform thereunder) as recorded on the balance sheet and on the footnotes to the
most recent financial statements of the Corporation. Notwithstanding anything
contained herein to the contrary, guarantees of completion shall not be deemed
to be Contingent Obligations unless and until a claim for payment or performance
has been made thereunder by the person entitled to performance or payment
thereunder, at which time any such guaranty of completion shall be deemed to be
a Contingent Obligation in an amount equal to any such claim. Subject to the
preceding sentence, (i) in the case of a joint and several guaranty given by
such Person and another Person (but only to the extent such guaranty is directly
or indirectly recourse to such Person), the amount of the guaranty, to the
extent it is directly or indirectly recourse to such Person, shall be deemed to
be 100% thereof unless and only to the extent that such other Person has
delivered cash or a cash equivalents to secure all or any part of such other
Person's guaranteed obligations, and (ii) in the case of a guaranty (whether or
not joint and several) of an obligation otherwise constituting Indebtedness of
another Person, the amount of such guaranty shall be deemed to be only that
amount in excess of the amount of the obligation constituting Indebtedness of
such other Person that is also included as Indebtedness of the Corporation, the
Operating Partnership or a Consolidated Subsidiary hereunder.
"Conversion Price" shall mean the conversion price per Common Share for
which each Series A Preferred Share is convertible, as such Conversion Price may
be adjusted pursuant to Section 9 hereof. The initial conversion price shall be
$26.25 (equivalent to a conversion rate of .95238 Common Shares for each Series
A Preferred Share).
"Current Market Price" shall mean, with respect to the Common Shares,
on any date specified herein, the average of the Market Price during the period
of the most recent twenty consecutive trading days ending on such date.
"Debt" means, with respect to the Corporation at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness including but not limited to
obligations evidenced by bonds, debentures, notes or other similar instruments
of any such Person, (b) all obligations to pay the deferred purchase price of
property or services of any such Person, except trade payables arising in the
ordinary course of business not more than one hundred and twenty (120) days past
due, (c) all obligations of any such Person as lessee under capital leases, (d)
all Contingent Obligations of any such Person, (e) all obligations, contingent
or otherwise, of any such Person relative to the face amount of letters of
credit, whether or not drawn, and banker's acceptances issued for the account of
any such Person and (f) all obligations incurred by any such Person pursuant to
Hedging Agreements.
"Defaulted Preferred Stock" shall have the meaning set forth in
paragraph (b) of Section 12 hereof.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, the 15th calendar day of January, April, July and October, in each year,
commencing on July 15, 1999; provided, however, that if any Dividend Payment
Date falls on any day other than a Business Day, the dividend payment due on
such Dividend Payment Date shall be paid on the first Business Day immediately
following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue Date
and end on and include June 30, 1999).
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"Equity Stock" shall have the meaning set forth in Section 12 hereof.
"Fixed Charges" means, with respect to any fiscal period, the sum of
(a) Total Interest Expense and (b) the aggregate of all scheduled principal
payments of Total Outstanding Indebtedness made or required to be made during
such fiscal period by the Corporation, the Operating Partnership, the
Consolidated Subsidiaries and the Minority Holdings which are allocable to the
Corporation and/or the Operating Partnership (it being agreed that in the case
of Indebtedness of Minority Holdings that is fully recourse to the Corporation
or the Operating Partnership, 100% of Total Interest Expense and scheduled
principal payments shall be included in "Fixed Charges") (exclusive of optional
prepayments and repayments of the outstanding balance of a loan at maturity
other than from loan acceleration), and (c) the aggregate of all dividends or
distributions payable on the Corporation's and/or any of its Consolidated
Subsidiaries' preferred stock or the Operating Partnership's preferred
partnership units not owned by the Corporation or any of its affiliates.
"Funds From Operations" means, with respect to the Corporation on a
consolidated basis, Net Income less, to the extent included in the determination
of Net Income, (a) the income (or loss) of any Person in which the Corporation
has a minority ownership interest, (b) the income (or loss) arising from the
restructuring of any Debt or the disposition of any asset (other than in the
ordinary course of business) plus, without duplication, real estate depreciation
and amortization (but excluding therefrom any amortization of financing costs),
in each case for the Corporation on a consolidated basis for the relevant period
in accordance with GAAP.
"GAAP" shall mean generally acceptable accounting practices,
consistently applied.
"Gross Golf Revenues" means, with respect to any lessee of a real
property asset for any period, all revenues accrued (whether by the lessee under
a participating lease or any subtenants, assignees, concessionaires or licensees
of the Operating Partnership) from or by reason of the operation of the golf
operations at the real property asset to which the Operating Partnership is
entitled calculated in accordance with GAAP (but excluding reasonable reserves
for refunds, allowances and bad debts applicable to such operations), including,
without limitation, (i) revenues from membership initiation fees, to the extent
provided in the applicable participating lease, (ii) periodic membership dues,
(iii) greens fees, (iv) fees to reserve a tee time, (v) guest fees, (vi) golf
cart rentals, (vii) parking lot fees, (viii) locker rentals, (ix) fees for golf
club storage, (x) fees for the use of swim, tennis or other facilities, (xi)
charges for range balls, range fees or other fees for golf practice facilities,
(xii) fees or other charges paid for golf or tennis lessons (except where
retained by or paid to a United States Tennis Association or Professional Golf
Association professional in accordance with historical practice at such real
property asset), (xiii) fees or other charges for fitness centers, (xiv)
forfeited deposits with respect to any membership application, (xv) transfer
fees imposed on any member in connection with the transfer of any membership
interest, (xvi) fees or other charges paid to such lessee by sponsors of golf
tournaments at such real property asset, to the extent provided in the
applicable participating lease, (xvii) advertising or placement fees paid by
vendors in exchange for exclusive use or name rights at such real property
asset, and (xviii) fees received in connection with any golf package sponsored
by any hotel group, condominium group, golf association, travel agency, tourist
or travel association or similar payments; provided, however, that Gross Golf
Revenues shall not include:
(a) Any revenue received from or by reason of such real property asset
relating to (i) the operation of snack bars, restaurants, bars, catering
functions, and banquet operations, (ii) sale of merchandise and inventory on
such real property asset, and (iii) photography services.
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(b) The amount of any city, county, state or federal sales, admissions,
usage, or excise tax on the item included in Gross Golf Revenue, which is both
added to or incorporated in the selling price and paid to the taxing authority
by such Lessee;
(c) Revenues or proceeds from sales or trade-ins of machinery,
vehicles, trade fixtures or personal property owned by such lessee used in
connection with the operation of such real property asset; and
(d) Any other revenues or proceeds to which the Operating Partnership
is not entitled.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified.
"Indebtedness" of any Person means, without duplication, (A) as shown
on such Person's balance sheet (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property and (ii) all indebtedness
of such Person evidenced by a note, bond, debenture or similar instrument
(whether or not disbursed in full in the case of a construction loan), (B) the
face amount of all letters of credit issued for the account of such Person and,
without duplication, all unreimbursed amounts drawn thereunder, (C) all
Contingent Obligations of such Person, and (D) all payment obligations of such
Person under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps and similar agreements which were not entered
into specifically in connection with Indebtedness set forth in clause (A), (B)
or (C) hereof. For purposes of these Articles Supplementary, Indebtedness (other
than Contingent Obligations) of the Corporation or the Operating Partnership
shall be deemed to include only Indebtedness of the Corporation, the Operating
Partnership and the Consolidated Subsidiaries plus, without duplication, the
Corporation's pro rata share (such share being based upon the Corporation's
percentage ownership interest as shown on the Corporation's annual financial
statements) of the indebtedness of any Person in which the Corporation, directly
or indirectly, owns an interest, provided that such Indebtedness is nonrecourse,
both directly and indirectly, to the Corporation, the Operating Partnership or
any such Consolidated Subsidiary.
"Interest Expense" means interest (whether accrued, paid or
capitalized) actually payable by a Person on its Indebtedness for borrowed
money.
"Issue Date" shall mean the first date on which any Series A Preferred
Shares are issued and sold.
"Junior Shares" shall have the meaning set forth in paragraph (c) of
Section 11 hereof.
"Liquidation" shall mean a liquidation, dissolution or winding up of
the Corporation or the Operating Partnership, whether voluntary or involuntary.
"Liquidation Event" shall mean (A) a Liquidation, (B) a Change of
Control, or (C) an Asset Disposition.
"Liquidation Event Notice" shall have the meaning set forth in
paragraph (b) of Section 6 hereof.
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"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 hereof.
"Maintenance Capital Expenditures" means a Capital Expenditure made by
the Operating Partnership for the purpose of repairing, replacing or
refurbishing a then-existing capital asset of the Operating Partnership.
"Mandatory Redemption Notice" shall have the meaning set forth in
Section 5 hereof.
"Management Letter" shall mean that certain letter, dated the date
hereof, from the Corporation to AEW Targeted Securities Fund, L.P., regarding
certain management rights of AEW Targeted Securities, L.P. in the Corporation.
"Market Price" shall mean, with respect to the Common Shares on any
date, the last reported sales price, regular way on such day, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the American Stock Exchange ("AMEX") or, if the Common
Shares are not listed or admitted for trading on AMEX, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted for trading or, if the Common Shares are not listed or
admitted for trading on any national securities exchange, the last quoted price,
or if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASD Automated Quotation System or,
if such system is no longer in use, the principal other automated quotation
system that may then be in use, or if the Common Shares are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker regularly making a market in the Common Shares
selected for such purpose by the Board of Directors or, if there is no such
professional market maker, such amount as an independent investment banking firm
selected by the Board of Directors determines to be the value of a Common Share.
"Minority Holdings" means partnerships, joint ventures, limited
liability companies, trusts, associations and corporations held or owned by the
Operating Partnership and/or the Corporation which are not consolidated with
Operating Partnership or the Corporation on their respective financial
statements.
"Net Income" means, with respect to the Corporation for any period, the
consolidated net income (or loss) of the Corporation for such period determined
in accordance with GAAP.
"Non-Electing Share" shall have the meaning set forth in paragraph (e)
of Section 9 hereof.
"Notice of Election" shall have the meaning set forth in paragraph (c)
of Section 6.
"Operating Partnership" shall mean Golf Trust of America, L.P., a
Delaware limited partnership.
"Operating Partnership Agreement" shall mean the First Amended and
Restated Agreement of Limited Partnership of the Operating Partnership, dated
February 12, 1997.
"Parity Shares" or "Parity Stock" shall have the meaning set forth in
paragraph (b) of Section 11 hereof.
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"Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Preferred Stock" shall meaning set forth in the recital First hereof.
"Preferred Units" shall mean the Series A Preferred Units of limited
partnership interest in the Operating Partnership in number and with rights and
preferences identical to the Series A Preferred Shares.
"Put Date" shall have the set forth in paragraph (c) of Section 6
hereof.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 7 hereof.
"Redemption Notice" shall have the meaning set forth in paragraph (a)
of Section 7 hereof.
"Redemption Premium" shall have the meaning set forth in paragraph (a)
of Section 7 hereof.
"Requesting Holder" shall have the set forth in paragraph (a) of
Section 6 hereof.
"Rights" shall have the meaning set forth in paragraph (d)(iii) of
Section 9 hereof.
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section 9 hereof.
"Senior Shares" shall have the meaning set forth in paragraph (a) of
Section 11 hereof.
"Series A Preferred Shares" shall have the meaning set forth in Section
1 hereof.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of a dividend or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of shares of capital
stock of the Corporation; provided, however, that if any funds for any class or
series of Junior Shares or any class or series of Parity Shares are placed in a
separate account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series A
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated the date hereof, by and among the Corporation, the Operating Partnership,
GTA GP, Inc., GTA LP, Inc. and AEW Targeted Securities Fund, L.P.
"Subsidiary" shall mean any corporation, limited partnership, limited
liability company, or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Corporation or the Operating Partnership.
"Total Distributions" shall have the meaning set forth in paragraph (f)
of Section 3 hereof.
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"Total Interest Expense" means, for any period, the sum of (i) the
Interest Expense of the Corporation, the Operating Partnership and the
Consolidated Subsidiaries with respect to the Total Outstanding Indebtedness
paid, accrued and/or capitalized (but exclusive of capitalized construction loan
interest funded from an established interest reserve) for such period, and (ii)
the pro rata share of Interest Expense of the Minority Holdings allocable to the
Corporation or the Operating Partnership during such period and paid, accrued
and/or capitalized during such period as set forth above.
"Total Outstanding Indebtedness" means, for any period, the sum of (i)
the amount of Indebtedness of the Corporation, the Operating Partnership and the
Consolidated Subsidiaries set forth on their then most recent quarterly
financial statements, plus any additional Indebtedness incurred by the
Corporation, the Operating Partnership and the Consolidated Subsidiaries since
the time of such financial statements, including without limitation
reimbursement obligations for letters of credit, and interest rate and currency
hedges, and (ii) the pro rata share of the outstanding amount of Indebtedness of
Minority Holdings properly allocable to the Corporation, the Operating
Partnership or the Consolidated Subsidiaries as of the date of determination,
and (iii) Contingent Obligations of the Corporation, the Operating Partnership
and the Consolidated Subsidiaries and the Corporation's, the Operating
Partnership's or such Consolidated Subsidiaries' pro rata share of the
Contingent Obligations of any Minority Holdings.
"Trading Day" shall mean any day on which the securities in question
are traded on the AMEX, or if such securities are not listed or admitted for
trading on the AMEX, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted on such Nasdaq National Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section 9 hereof.
SECTION 3. DIVIDENDS.
(a) The holders of the Series A Preferred Shares shall be
entitled to receive, when, as and if authorized and declared by the Board of
Directors out of funds legally available for that purpose, dividends payable in
cash at the rate per annum equal to the greater of (i) $2.3125 per Series A
Preferred Share or (ii) an amount per Series A Preferred Share equal to the
aggregate annual amount of cash dividends paid or payable, if any, with respect
to that number of Common Shares, or portion thereof, into which each Series A
Preferred Share is then convertible, in accordance with the terms of these
Articles Supplementary (such greater amount, the "Annual Dividend Rate"). The
amount referred in clause (ii) of this subparagraph (a) with respect to each
Dividend Period shall be determined as of the applicable Dividend Payment Date
by multiplying the number of Common Shares, or portion thereof calculated to the
fourth decimal point, into which a Series A Preferred Share would be convertible
at the opening of business on such Dividend Payment Date (based on the
Conversion Price then in effect) by the quarterly cash dividend payable or paid
for such Dividend Period in respect of a Common Share outstanding as of the
record date for the payment of dividends on the Common Shares with respect to
such Dividend Period and multiplying such product by four. Such dividends shall
be cumulative from the Issue Date, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally available for the
payment of such dividends and shall be payable quarterly, when, as and if
authorized and declared by the Board of Directors, in arrears on Dividend
Payment Dates, commencing on the first Dividend Payment Date after the Issue
Date. Each such dividend shall be payable in arrears to the holders of record of
the Series A Preferred Shares, as they appear on the stock records of the
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Corporation at the close of business on each record date which shall not be more
than 30 days preceding the applicable Dividend Payment Date (the "Dividend
Payment Record Date"), as shall be fixed by the Board of Directors. Accrued and
unpaid dividends for any past Dividend Periods may be authorized and declared
and paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, which shall not be more than 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors. The amount
of accrued and unpaid dividends on any Series A Preferred Share at any date
shall be the amount of any dividends accumulated to and including such date,
whether or not earned or declared, which have not been paid in cash or set aside
for payment. Accumulated and unpaid dividends will not bear interest.
(b) The amount of dividends payable for each full Dividend Period for
the Series A Preferred Shares shall be computed by dividing the Annual Dividend
Rate by four. The amount of dividends payable for the initial Dividend Period,
or any other period shorter or longer than a full Dividend Period, on the Series
A Preferred Shares shall be computed on the basis of twelve 30-day months and a
360-day year. Holders of Series A Preferred Shares shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of cumulative
dividends, as herein provided, on the Series A Preferred Shares, plus any other
amounts provided in these Articles Supplementary.
(c) So long as any Series A Preferred Shares are outstanding, no
dividends, except as described in the immediately following sentence, shall be
authorized and declared or paid or set apart for payment on any series or class
or classes of Parity Shares for any period unless full cumulative dividends have
been or contemporaneously are authorized and declared and paid or authorized and
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series A Preferred Shares for all Dividend Periods terminating on or
prior to the dividend payment date for such class or series of Parity Shares.
When dividends are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, all dividends authorized and declared upon Series A
Preferred Shares and all dividends authorized and declared upon any other series
or class or classes of Parity Shares shall be authorized and declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on the
Series A Preferred Shares and such Parity Shares.
(d) So long as any Series A Preferred Shares are outstanding, no
dividends (other than dividends or distributions paid solely in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Junior
Shares) shall be authorized and declared or paid or set apart for payment or
other distribution authorized and declared or made upon Junior Shares, nor shall
any Junior Shares be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Corporation or any subsidiary), for any consideration (or any moneys to be
paid to or made available for a sinking fund for the redemption of any shares of
such stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for Junior Shares), unless in each case (i) the full cumulative
dividends on all outstanding Series A Preferred Shares and any other Parity
Shares of the Corporation shall have been paid or set apart for payment for all
past Dividend Periods with respect to the Series A Preferred Shares and all past
dividend periods with respect to such Parity Shares and (ii) sufficient funds
shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the Series A Preferred Shares and any
Parity Shares.
(e) Any distribution payment made on the Series A Preferred Stock
shall first be credited against the earliest accrued but unpaid distribution due
with respect to such shares which remains payable.
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(f) If, for any taxable year, the Corporation elects to designate as
"capital gain distributions" (as defined in Section 857 of the Code) any portion
(the "Capital Gains Amount") of the distributions paid or made available for the
year to the holders of all classes of shares (the "Total Distributions"), then
the portion of the Capital Gains Amount that will be allocable to the holders of
Series A Preferred Stock will be the Capital Gains Amount multiplied by a
fraction, the numerator of which will be the total distributions (within the
meaning of the Code) paid or made available to the holders of the Series A
Preferred Stock for the year and the denominator of which shall be the Total
Distributions.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any Liquidation Event, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Shares, the holders of Series
A Preferred Shares shall be entitled to receive a liquidation preference which
is an amount equal to the greater of (i) Twenty-Five Dollars ($25.00) per Series
A Preferred Share plus dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holder (the
"Liquidation Preference") or (ii) an amount per Series A Preferred Share equal
to the amount which would have been payable on the Common Shares, or portion
thereof, into which one Series A Preferred Share is then convertible had each
Series A Preferred Share been converted into Common Shares immediately prior to
such Liquidation Event. The foregoing amounts shall be subject to equitable
adjustment whenever there shall occur a stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the capital structure of the Series A Preferred
Shares. Until the holders of the Series A Preferred Shares have been paid in
full the amounts owed pursuant to this Section 4(a), no payment will be made to
any holder of Junior Shares upon a Liquidation Event. If, upon any such
Liquidation Event, the assets of the Corporation, or proceeds thereof,
distributable among the holders of Series A Preferred Shares shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other shares of any class or series of Parity Stock, then such
assets, or the proceeds thereof, shall be distributed among the holders of such
Series A Preferred Shares and such other Parity Stock ratably in accordance with
the amounts that would be payable on such Series A Preferred Shares and such
other Parity Stock if all amounts payable thereon were paid in full.
(b) Subject to the rights of the holders of any Parity Shares, upon
any Liquidation Event of the Corporation, after payment shall have been made in
full to the holders of Series A Preferred Shares and any Parity Shares, as
provided in this Section 4, any other series or class or classes of Junior
Shares shall, subject to the respective terms thereof, be entitled to receive
any and all assets remaining to be paid or distributed, and the holders of the
Series A Preferred Shares and any Parity Shares shall not be entitled to share
therein.
SECTION 5. MANDATORY REDEMPTION. Upon the occurrence of a Liquidation,
the Corporation will automatically redeem for cash all, and not less than all,
of the outstanding shares of Series A Preferred Shares at a price per Series A
Preferred Share equal to the Liquidation Preference. In order to effect the
mandatory redemption, the Corporation will deliver written notice to all holders
of Series A Preferred Shares (the "Mandatory Redemption Notice"), such notice
not be delivered later than 60 days prior to the Liquidation, setting forth the
date of the intended redemption and the Liquidation Preference amount.
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SECTION 6. REDEMPTION AT THE OPTION OF HOLDERS OF SERIES A PREFERRED
SHARES.
(a) Upon a Change of Control or an Asset Disposition, each
record holder of shares of Series A Preferred Shares will have the right, but
not the obligation, at such holder's option, to elect to cause the Corporation
to redeem for cash, all, but not less than all, of the outstanding shares of
Series A Preferred Shares owned by such holder (a "Requesting Holder") at a
price per Series A Preferred Share equal to the Liquidation Preference.
(b) The Corporation shall give the holders of shares of Series
A Preferred Shares written notice (the "Liquidation Event Notice") of the
occurrence of any of the events described in Section 6(a) no later than 60 days
after such occurrence containing a detailed description of the event or events
which occurred and the rights of the holders in respect thereof.
(c) The Requesting Holders shall give written notice of their
election (the "Notice of Election") pursuant to this Section 6 by first-class,
certified mail, return receipt requested, postage prepaid, to the Corporation no
later than 30 days after the date of the Liquidation Event Notice at its
principal place of business or to any transfer agent of the Corporation. Upon
receipt of a Notice of Election, the Corporation shall fix a date for redemption
which shall not be more than sixty (60) days after receipt of Notice of Election
from the Requesting Holders (the date fixed for any such redemption, the "Put
Date"). Notice will be mailed by the Corporation, first class, certified mail,
return receipt requested, postage prepaid, not less than thirty (30) days prior
to the redemption date, addressed to each Requesting Holder at their respective
addresses as they appear on the stock transfer records of the Corporation. No
failure to give such notice or any defect therein or in the mailing thereof will
affect the validity of the proceedings for the redemption of any shares of
Series A Preferred Shares. Each such notice shall state, as appropriate: (i) the
Put Date; (ii) the Liquidation Preference amount; (iii) the number of shares of
Series A Preferred Shares to be redeemed (which number shall equal all of the
then outstanding shares of Series A Preferred Shares held of record by such
Requesting Holder); and (iv) the place or places at which certificates for such
shares are to be surrendered for cash.
(d) From and after the Put Date, (i) except as otherwise
provided herein, dividends on the Series A Preferred Shares so called for
redemption shall cease to accrue, (ii) said shares shall no longer be deemed to
be outstanding, and (iii) all rights of the holders thereof as holders of Series
A Preferred Shares of the Corporation shall cease (except the rights to receive
the cash payable upon such redemption, without interest thereon, upon surrender
and endorsement of their certificates if so required and to receive any
dividends payable thereon). The Corporation's obligation to provide cash in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has an office in the
Borough of Manhattan, City of New York and that has, or is an affiliate of a
bank or trust company that has, a capital and surplus of at least $500,000,000,
any cash necessary for such redemption, in trust, with irrevocable instructions
that such cash be applied to the redemption of the Series A Preferred Shares so
called for redemption. No interest shall accrue for the benefit of the holder of
Series A Preferred Shares to be redeemed on any cash so set aside by the
Corporation.
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SECTION 7. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Except as provided in Article V of the Charter, the Series A
Preferred Shares shall not be redeemable at the option of Corporation prior to
April 2, 2004. On and after April 2, 2004, the Corporation, at its option, may
redeem the Series A Preferred Shares, in whole but not in part, as set forth
herein, subject to the provisions described below. Except as set forth in
Section 5 hereto, the Series A Preferred Shares have no mandatory redemption
date.
At any time on or after April 2, 2004, upon the written
election of the Corporation given to each record holder of Series A Preferred
Shares (the "Redemption Notice"), the Corporation may redeem for cash on the
date specified in the Redemption Notice (which date shall not be less than 20
days nor more than 45 days after the date of the Redemption Notice) (the
"Redemption Date"), all, but not less than all, of the outstanding Series A
Preferred Shares at a price per Series A Preferred Share equal to the
Liquidation Preference plus a premium (the "Redemption Premium") which shall
equal the following percentages of the Liquidation Preference during the
following periods:
From April 2, 2004 through and including April 1, 2005.......... 4%
From April 2, 2005 through and including April 1, 2006.......... 3%
From April 2, 2006 through and including April 1, 2007.......... 2%
From April 2, 2007 through and including April 1, 2008.......... 1%
April 2, 2008 and thereafter.................................... 0%
During the period beginning on the date of the Redemption
Notice and ending at the close of business on the Redemption Date, the holders
of the Series A Preferred Shares shall retain all conversion rights pursuant to
Section 9 hereof.
(b) From and after the Redemption Date, (i) except as
otherwise provided herein, dividends on the Series A Preferred Shares so called
for redemption shall cease to accrue, (ii) said shares shall no longer be deemed
to be outstanding, and (iii) all rights of the holders thereof as holders of
Series A Preferred Shares of the Corporation shall cease (except the rights to
receive the cash payable upon such redemption, without interest thereon, upon
surrender and endorsement of their certificates if so required and to receive
any dividends payable thereon). The Corporation's obligation to provide cash in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has an office in the
Borough of Manhattan, City of New York and that has, or is an affiliate of a
bank or trust company that has, a capital and surplus of at least $500,000,000,
any cash necessary for such redemption, in trust, with irrevocable instructions
that such cash be applied to the redemption of the Series A Preferred Shares so
called for redemption. No interest shall accrue for the benefit of the holder of
Series A Preferred Shares to be redeemed on any cash so set aside by the
Corporation.
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(c) The Notice of Redemption shall be provided (i) by first
class mail, postage prepaid, to such holder's address as the same appears on the
stock records of the Corporation, or (ii) by publication in The Wall Street
Journal or The New York Times, or if neither such newspaper is then being
published, any other daily newspaper of national circulation, in either case not
less than 20 nor more than 45 days prior to the Redemption Date. If the
Corporation elects to provide such notice by publication, it shall also promptly
mail notice of such redemption to the holders of the Series A Preferred Shares
to be redeemed. Neither the failure to mail any notice required by this
paragraph, nor any defect therein or in the mailing thereof to any particular
holder, shall affect the sufficiency of the notice or the validity of the
proceedings for redemption with respect to the other holders. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given on the date mailed whether or not the holder receives the
notice.
(d) The deposit of funds with a bank or trust corporation for
the purpose of redeeming Series A Preferred Stock (pursuant to Section 6,
Section 7, or otherwise) shall be irrevocable except that:
(i) the Corporation shall be entitled to receive from such
bank or trust corporation the interest or other earnings, if any,
earned on any money so deposited in trust, and the holders of any
shares redeemed shall have no claim to such interest or other earnings;
and
(ii) any balance of monies so deposited by the Corporation and
unclaimed by the holders of the Series A Preferred Stock entitled
thereto at the expiration of two years from the applicable redemption
dates shall be repaid, together with any interest or other earnings
thereon, to the Corporation, and after any such repayment, the holders
of the shares entitled to the funds so repaid to the Corporation shall
look only to the Corporation for payment without interest or other
earnings.
SECTION 8. REACQUIRED SHARES TO BE RETIRED. All Series A Preferred
Shares which shall have been issued and reacquired in any manner by the
Corporation (including any shares surrendered upon conversion as described in
Section 9) shall be restored to the status of authorized but unissued shares of
Preferred Stock, without designation as to series. The Board of Directors may
also retire any unissued Series A Preferred Shares, and at such time such shares
shall be restored to the status of authorized but unissued Preferred Shares,
without designation as to series.
SECTION 9. CONVERSION. Holders of Series A Preferred Shares shall have
the right to convert all or a portion of such shares into Common Shares, as
follows:
(a) Subject to and upon compliance with the provisions of this Section
9, a holder of Series A Preferred Shares shall have the right, at such holder's
option, at any time and from time to time, to convert such shares into the
number of fully paid and non-assessable Common Shares obtained by dividing the
aggregate Liquidation Preference (excluding, for this purpose only, any
dividends accrued in respect of the then-current Dividend Period) of such Series
A Preferred Shares by the Conversion Price (as in effect at the time and on the
date provided for in the last paragraph of paragraph (b) of this Section 9) by
surrendering such Series A Preferred Shares to be converted, such surrender to
be made in the manner provided in paragraph (b) of this Section 9; provided,
however, that
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the right to convert Series A Preferred Shares called for redemption pursuant to
Section 7 hereof or put for redemption pursuant to Section 6 hereof shall
terminate at the close of business on the Redemption Date or the Put Date, as
applicable, fixed for such redemption, unless the Corporation shall default in
making payment of any cash payable upon such redemption under Section 6 or 7
hereof, as applicable.
(b) In order to exercise the conversion right, the holder of each
Series A Preferred Share to be converted shall surrender the certificate
representing such Series A Preferred Share, duly endorsed or assigned to the
Corporation or in blank, to the Corporation, accompanied by written notice to
the Corporation that the holder thereof elects to convert such Series A
Preferred Shares. Unless the Common Shares issuable on conversion are to be
issued in the same name as the name in which such Series A Preferred Shares are
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
Holders of Series A Preferred Shares at the close of business on any
Dividend Payment Record Date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such Dividend Payment Record Date and prior to such
Dividend Payment Date. A holder of Series A Preferred Shares on a Dividend
Payment Record Date who (or whose transferee) tenders any such shares for
conversion into Common Shares on such Dividend Payment Date will receive the
dividend payable by the Corporation on such Series A Preferred Shares on such
date.
As promptly as practicable after the surrender of certificates for
Series A Preferred Shares as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or send on such holder's written order, a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such Series A Preferred Shares in accordance with the
provisions of this Section 9, and any fractional interest in respect of a Common
Share arising upon such conversion shall be settled as provided in paragraph (c)
of this Section 9.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
A Preferred Shares shall have been surrendered and such notice received by the
Corporation as aforesaid, and the Person or Persons in whose name or names any
certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
Common Shares represented thereby at such time on such date, and such conversion
shall be at the Conversion Price in effect at such time and on such date unless
the stock transfer books of the Corporation shall be closed on that date, in
which event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such Series A Preferred Shares
shall have been surrendered and such notice received by the Corporation. If the
dividend payment record date for the Series A Preferred Stock and Common Stock
do not coincide, and the preceding sentence does not operate to ensure that a
holder of Series A Preferred Shares whose shares are converted into Common Stock
does not receive dividends on both the Series A Preferred Shares and the Common
Stock into which such shares are converted for the same Dividend Period, then
notwithstanding anything herein to the contrary, it is the intent of these
Articles Supplementary that, and the transfer agent is authorized to ensure
that, no conversion after the earlier of such record dates will be accepted
until after the latter of such record dates.
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(c) No fractional shares or scrip representing fractions of Common
Shares shall be issued upon conversion of the Series A Preferred Shares. Instead
of any fractional interest in a Common Share that would otherwise be deliverable
upon the conversion of a Series A Preferred Share, the Corporation shall pay to
the holder of such Series A Preferred Share an amount in cash based upon the
Current Market Price of Common Shares on the Trading Day immediately preceding
the date of conversion. If more than one Series A Preferred Share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares issuable upon conversion thereof shall be computed on the basis of
the aggregate number of Series A Preferred Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its shares of capital stock in Common Shares,
(B) subdivide its outstanding Common Shares into a greater number of shares, (C)
combine its outstanding Common Shares into a smaller number of shares or (D)
issue any shares of capital stock by reclassification of its Common Shares, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or distribution or at the opening of business on the day following the
day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of any
Series A Preferred Share thereafter surrendered for conversion shall be entitled
to receive the number of Common Shares that such holder would have owned or have
been entitled to receive after the happening of any of the events described
above, had such Series A Preferred Share been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately upon the
opening of business on the day next following the record date (subject to
paragraph (h) below) in the case of a dividend or distribution and shall become
effective immediately upon the opening of business on the day next following the
effective date in the case of a subdivision, combination or reclassification.
(ii) Notwithstanding anything else contained herein, if the
Corporation shall issue, after the Issue Date, rights, options or warrants to
all holders of Common Shares entitling them (for a period expiring within 45
days after the record date mentioned below in this subparagraph (ii)) to
subscribe for or purchase Common Shares at a price per share less than the
Market Price per Common Share on the record date for the determination of
stockholders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the day next following
such record date shall be adjusted to equal the price determined by multiplying
(A) the Conversion Price in effect immediately prior to the opening of business
on the day following the date fixed for such determination by (B) a fraction,
the numerator of which shall be the sum of (I) the number of Common Shares
outstanding on the close of business on the date fixed for such determination
and (II) the number of Common Shares that the aggregate proceeds to the
Corporation from the exercise of such rights, options or warrants for Common
Shares would purchase at such Market Price, and the denominator of which shall
be the sum of (I) the number of Common Shares outstanding on the close of
business on the date fixed for such determination and (II) the number of
additional Common Shares offered for subscription or purchase pursuant to such
rights, options or warrants. Such adjustment shall become effective immediately
upon the opening of business on the day next following such record date (subject
to paragraph (h) below). In determining whether any rights, options or warrants
entitle the holders of Common Shares to subscribe for or purchase Common Shares
at less than such Market Price, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other than
cash, to be determined in
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good faith by the Board of Directors, whose determination shall be conclusive.
(iii) If the Corporation shall distribute to all
holders of its Common Shares any shares of capital stock of the Corporation
(other than Common Shares) or evidence of its indebtedness or assets (excluding
cash dividends or distributions paid out of assets based upon a fair valuation
of the assets, in excess of the sum of the liabilities of the Corporation and
the amount of stated capital attributable to Common Shares, determined on the
basis of the most recent annual consolidated cost basis and current value basis
and quarterly consolidated balance sheets of the Corporation and its
consolidated subsidiaries available at the time of the declaration of the
dividend or distribution) or rights or warrants to subscribe for or purchase any
of its securities (excluding those rights and warrants issued to all holders of
Common Shares entitling them for a period expiring within 45 days after the
record date referred to in subparagraph (ii) above to subscribe for or purchase
Common Shares, which rights and warrants are referred to in and treated under
subparagraph (ii) above) (any of the foregoing being hereinafter in this
subparagraph (iii) called the "Securities"), then in each case the Conversion
Price shall be adjusted so that it shall equal the price determined by
multiplying (A) the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
receive such distribution by (B) a fraction, the numerator of which shall be the
Market Price per Common Share on the record date mentioned below less the then
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive) of the portion of the shares of capital stock or assets or
evidences of indebtedness so distributed or of such rights or warrants
applicable to one Common Share, and the denominator of which shall be the
Current Market Price per Common Share on the record date mentioned below. Such
adjustment shall become effective immediately upon the opening of business on
the day next following (subject to paragraph (h) below) the record date for the
determination of stockholders entitled to receive such distribution. For the
purposes of this subparagraph (iii), the distribution of a Security, which is
distributed not only to the holders of the Common Shares on the date fixed for
the determination of shareholders entitled to such distribution of such
Security, but also is required to be distributed with each Common Share
delivered to a Person converting a Series A Preferred Share after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subparagraph (iii); provided that on the date, if any, on which
a person converting a Series A Preferred Share would no longer be entitled to
receive such Security with a Common Share (other than as a result of the
termination of all such Securities), a distribution of such Securities shall be
deemed to have occurred, and the Conversion Price shall be adjusted as provided
in this subparagraph (iii) (and such day shall be deemed to be "the date fixed
for the determination of the shareholders entitled to receive such distribution"
and "the record date" within the meaning of the two preceding sentences).
The occurrence of a distribution or the occurrence of any other event
as a result of which holders of Series A Preferred Shares shall not be entitled
to receive rights, including exchange rights (the "Rights"), pursuant to any
shareholders protective rights agreement (the "Agreement") that may be adopted
by the Corporation as if such holders had converted such shares into Common
Shares immediately prior to the occurrence of such distribution or event shall
not be deemed a distribution of Securities for the purposes of any Conversion
Price adjustment pursuant to this subparagraph (iii) or otherwise give rise to
any Conversion Price adjustment pursuant to this Section 9; provided, however,
that in lieu of any adjustment to the Conversion Price as a result of any such a
distribution or occurrence, the Corporation shall make provision so that Rights,
to the extent issuable at the time of conversion of any Series A Preferred
Shares into Common Shares, shall issue and attach to such Common Shares then
issued upon conversion in the amount and manner and to the extent and as
provided in the Agreement in respect of issuances at the time of Common Shares
other than upon conversion.
(iv) No adjustment in the Conversion Price shall be
required unless such
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adjustment would require a cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments that by reason of this
subparagraph (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Section 9 (other than this subparagraph (iv)) not later than such time
as may be required in order to preserve the tax-free nature of a distribution to
the holders of Common Shares. Notwithstanding any other provisions of this
Section 9, the Corporation shall not be required to make any adjustment of the
Conversion Price for the issuance of any Common Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Corporation and the investment of additional optional amounts in Common
Shares under such plan. All calculations under this Section 9 shall be made to
the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth
of a share (with .05 of a share being rounded upward), as the case may be.
Anything in this paragraph (d) to the contrary notwithstanding, the Corporation
shall be entitled, to the extent permitted by law, to make such reductions in
the Conversion Price, in addition to those required by this paragraph (d), as it
in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of shares,
distribution of rights, options or warrants to purchase stock or securities, or
a distribution of other assets (other than cash dividends) hereafter made by the
Corporation to its shareholders shall not be taxable.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for all or substantially all Common Shares outstanding, sale of all
or substantially all of the Corporation's assets or recapitalization of the
Common Shares but excluding any transaction as to which subparagraph (d)(i) of
this Section 9 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which Common Shares shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each Series A Preferred Share that
is not redeemed or converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Common Shares
into which one Series A Preferred Share was convertible immediately prior to
such Transaction, assuming such holder of Common Shares (i) is not a Person with
which the Corporation consolidated or into which the Corporation merged or which
merged into the Corporation or to which such sale or transfer was made, as the
case may be (a "Constituent Person"), or an affiliate of a Constituent Person
and (ii) failed to exercise his or her rights of the election, if any, as to the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction (provided that if the kind or amount of stock,
securities and other property (including cash) receivable upon such Transaction
is not the same for each Common Share of the Corporation held immediately prior
to such Transaction by other than a Constituent Person or an affiliate thereof
and in respect of which such rights of election shall not have been exercised
("Non-Electing Share"), then for the purpose of this paragraph (e) the kind and
amount of stock, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per share by a plurality of the Non-Electing Shares). The
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series A
Preferred Shares that will contain provisions enabling the holders of the Series
A Preferred Shares that remain outstanding after such Transaction to convert
their Series A Preferred Shares into the consideration received by holders of
Common Shares at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this paragraph (e) shall similarly apply
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to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Shares (other than in cash out of assets, based on a
fair valuation of assets, in excess of the sum of the liabilities of the
Corporation and the amount of stated capital attributable to Common Shares,
determined on the basis of the most recent annual consolidated cost basis and
current value basis and quarterly consolidated balance sheets of the Corporation
and its consolidated subsidiaries available at the time of the declaration of
the dividend or distribution); or
(ii) the Corporation shall authorize the granting to the holders
of the Common Shares of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants (other than Rights to which
the second paragraph of subparagraph (d)(iii) of this Section 9 applies); or
(iii) there shall be any reclassification of the Common Shares
(other than an event to which subparagraph (d) (i) of this Section 9 applies) or
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or a statutory
share exchange involving the conversion or exchange of Common Shares into
securities or other property, or a self tender offer by the Corporation for all
or substantially all of its outstanding Common Shares, or the sale or transfer
of all or substantially all of the assets of the Corporation as an entirety and
for which approval of any shareholders of the Corporation is required; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, then the Corporation shall cause
to be prepared and delivered to the holders of the Series A Preferred Shares at
their addresses as shown on the stock records of the Corporation, as promptly as
possible, but at least 15 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Shares of
record to be entitled to such dividend, distribution or rights or warrants are
to be determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Shares of record shall be entitled to exchange
their Common Shares for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 9.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly prepare and deliver to the holders of the Series A
Preferred Shares a notice of such adjustment of the Conversion Price setting
forth the adjusted Conversion Price and the effective date of such adjustment
and an officer's certificate setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the correctness of
such adjustment absent bad faith or manifest error. The Corporation shall mail
such notice and such certificate to the holders of each Series A Preferred Share
at such holder's last address as shown on the stock records of the Corporation.
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(h) In any case in which paragraph (d) of this Section 9 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any Series A Preferred Share converted after such
record date and before the occurrence of such event the additional Common Shares
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Shares issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any amount of cash in
lieu of any fraction pursuant to paragraph (c) of this Section 9.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any shares of capital stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 9. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 9, only one adjustment shall be made, and such adjustment shall be the
amount of adjustment that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Shares, other than action described in this Section 9, that in the opinion of
the Board of Directors would materially adversely affect the conversion rights
of the holders of the Series A Preferred Shares, the Conversion Price for the
Series A Preferred Shares may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
(k) The Corporation will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Shares, for the purpose of effecting conversion of the Series A Preferred
Shares, the full number of Common Shares deliverable upon the conversion of all
outstanding Series A Preferred Shares not theretofore converted. For purposes of
this paragraph (k), the number of Common Shares that shall be deliverable upon
the conversion of all outstanding shares of Series A Preferred Shares shall be
computed as if at the time of computation all such outstanding shares were held
by a single holder and without regard to the ownership restrictions referred to
in Section 14.
The Corporation covenants that any Common Shares issued upon
conversion of the Series A Preferred Shares shall be validly issued, fully paid
and non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the Common Shares
deliverable upon conversion of the Series A Preferred Shares, the Corporation
shall take any corporate action that, in the opinion of its counsel, may be
necessary in order that the Corporation may validly and legally issue fully paid
and non-assessable Common Shares at such adjusted Conversion Price.
The Corporation shall list the Common Shares required to be delivered
upon conversion of the Series A Preferred Shares, prior to such delivery, upon
each national securities exchange, if any, upon which the outstanding Common
Shares are listed at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series A Preferred Shares, the
Corporation shall comply with all federal and state laws and regulations
thereunder requiring the registration of such securities with, or any approval
or consent to the delivery thereof, by any governmental authority.
(l) The Corporation shall pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
Common Shares or other securities or
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property on conversion of the Series A Preferred Shares pursuant hereto;
provided, however, that the Corporation shall not be required to pay any tax
that may be payable in respect of any transfer involved in the issue or delivery
of any Common Shares or other securities or property in a name other than that
of the holder of the Series A Preferred Shares to be converted, and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
SECTION 10. PERMISSIBLE DISTRIBUTIONS. In determining whether a
distribution (other than upon liquidation, dissolution or winding up), whether
by dividend, or upon redemption or other acquisition of shares or otherwise, is
permitted under Maryland law, amounts that would be needed, if the Corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of holders of shares of any class or series
of capital stock whose preferential rights upon dissolution are superior or
prior to those receiving the distribution shall not be added to the
Corporation's total liabilities.
SECTION 11. RANKING. Any class or series of shares of capital stock of
the Corporation shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series A Preferred Shares ("Senior Shares");
(b) on a parity with the Series A Preferred Shares, as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series A Preferred Shares, if the holders of such class of stock or
series and the Series A Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority one over the
other ("Parity Shares"); and
(c) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Shares or if the holders of
Series A Preferred Shares shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such stock or
series, and such stock or series shall not in either case rank prior to the
Series A Preferred Shares ("Junior Shares").
SECTION 12. VOTING.
(a) Other than as required by law or paragraph (b), (f) and (g)
of this Section 12, the Series A Preferred Shares shall not have any voting
rights or powers, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
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(b) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series A Preferred Shares shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the holders of
all shares of Series A Preferred Shares and any shares of Parity Shares upon
which like voting rights have been conferred and are exercisable (the Series A
Preferred Stock and any such Parity Shares, collectively for purposes of this
Section 12, the "Defaulted Preferred Stock") shall be entitled to elect two
directors of the Corporation at the Corporation's next annual meeting of
stockholders, and at each subsequent annual meeting of stockholders; provided,
however, the holders of shares of Defaulted Preferred Stock shall be entitled to
exercise their voting rights at a special meeting of the holders of shares of
Defaulted Preferred Stock as set forth in paragraphs (c) and (d) of this Section
12. At election for such directors, each holder of Series A Preferred Shares
shall be entitled to one vote for each share held (the holders of shares of any
other series of Defaulted Preferred Stock ranking on such a parity being
entitled to such number of votes, if any, for each share of stock held as may be
granted to them). Upon the vesting of such right in the holders of Defaulted
Preferred Stock, the maximum authorized number of members of the Board of
Directors shall automatically be increased by two, and the vacancies so created
shall be filled by vote of the holders of outstanding Defaulted Preferred Stock
as hereinafter set forth. The right of holders of Defaulted Preferred Stock,
voting separately as a class without regard to series, to elect members of the
Board of Directors as aforesaid shall continue until such time as all dividends
accumulated and unpaid on the Series A Preferred Shares shall have been paid or
declared and funds set apart for payment in full, at which time such right shall
terminate, except as herein expressly provided, subject to revesting in the
event of each and every subsequent default of the character above mentioned.
(c) Whenever such voting right shall have vested, such right may
be exercised initially either at a special meeting of the holders of shares of
Defaulted Preferred Stock called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at such meeting or by the written consent of such holders pursuant to
Section 2-505 of the MGCL.
(d) At any time when such voting right shall have vested in the
holders of shares of Defaulted Preferred Stock entitled to vote thereon, and if
such right shall not already have been initially exercised, an officer of the
Corporation shall, upon the written request of the holders of record of 10% or
more of shares of such Defaulted Preferred Stock then outstanding, addressed to
the Secretary of the Corporation, call a special meeting of holders of shares of
such Defaulted Preferred Stock. Such meeting shall be held at the earliest
practicable date upon the notice required for special meetings of stockholders
at the principal executive office of the Corporation or at such other place as
may be designated by the Secretary of the Corporation. If such meeting shall not
be called by the proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of the Corporation,
or within 30 days after mailing the same within the United States, by registered
mail, addressed to the Secretary of the Corporation at its principal office
(such mailing to be evidenced by the registry receipt issued by the postal
authorities), then holders of record of 10% or more of the shares of Defaulted
Preferred Stock then outstanding may designate in writing any person to call
such meeting at the expense of the Corporation, and such meeting may be called
by such person so designated upon the notice required for special meetings of
stockholders and shall be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted Preferred Stock then
outstanding that would be entitled to vote at such meeting shall have access to
the stock books of the Corporation's transfer agent for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
paragraph.
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(e) Subject to the provisions hereof, the directors elected
pursuant to this section shall serve until the next annual meeting of
stockholders and until their respective successors shall be elected and
qualified. Subject to applicable law, any director elected by the holders of
Defaulted Preferred Stock may be removed by, and shall not be removed otherwise
than by, the vote of the holders of a majority of the outstanding shares of the
Defaulted Preferred Stock entitled to vote in such election of directors, voting
as a separate class, without regard to series, at a meeting called for such
purpose or by written consent pursuant to Section 2-505 of the MGCL and the
Charter and Bylaws of the Corporation. If the position of any director elected
by the holders of Defaulted Preferred Stock, voting as a class, without regard
to series, becomes vacant by reason of death, resignation, retirement,
disqualification or removal or otherwise, the remaining director elected by the
holders of Defaulted Preferred Stock, voting as a class, without regard to
series, may choose a successor who shall serve for the unexpired term in respect
of which such vacancy occurred. Upon any termination of the right of the holders
of Defaulted Preferred Stock to vote for directors as herein provided, the term
of office of all directors then in office elected by the holders of Defaulted
Preferred Stock, voting as a class, without regard to series, shall terminate
immediately. Whenever the terms of the directors elected by the holders of
Defaulted Preferred Stock, voting as a class, without respect to series, shall
so terminate and the special voting powers vested in the holders of Defaulted
Preferred Stock shall have expired, the number of directors shall be such number
as provided for in the Corporation's Bylaws irrespective of any increase made
pursuant to the provisions of this Section 12.
(f) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by the Charter,
the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the
holders of Series A Preferred Shares, at the time outstanding, voting as a
single class, given in person or by proxy, either in writing without a meeting
or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating: (i) any amendment, alteration of or repeal of the
Operating Partnership Agreement pertaining to the terms and conditions of, or
the rights or preferences of the Preferred Units that would, directly or
indirectly, materially and adversely affect the rights, privileges and
preferences of the Preferred Units or the Preferred Shares; or (ii) any
amendment, alteration of or repeal of any of the provisions of the Charter
(including, the terms of the Series A Preferred Shares), in such a manner as
would affect adversely the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series A Preferred
Shares (including, without limitation, taking any such action the result of
which could be to alter the manner or rate of exchange of Preferred Units for
securities of the Corporation as in effect on the date hereof); provided,
however, that (A) the amendment or supplement of the provisions of the Charter
so as to authorize or create, or to increase the authorized amount of, any
Junior Shares or any Parity Shares shall not be deemed to adversely affect
Series A Preferred Shares, and (B) any filing with the Department in connection
with a merger or consolidation of the Corporation or the sale of all or
substantially all of the assets of the Corporation shall not be deemed to
adversely affect the Series A Preferred Shares so long as (1) the Corporation is
the surviving entity and the Series A Preferred Stock remains outstanding with
the terms thereof materially unchanged or (2) the Series A Preferred Stock is
exchanged for a security of the resulting, surviving or transferee entity having
substantially the same terms and rights as the Series A Preferred Stock,
including with respect to dividends, voting rights and rights upon liquidation,
dissolution or winding-up, provided , further, that the provisions of this
subsection (B) shall not impact any rights of the holders of Series A Preferred
Shares under Section 6 of these Articles Supplementary, or (iii) any Capital
Transaction or the incurrence of any Indebtedness if, after making pro forma
adjustments in accordance with GAAP for such Capital Transaction or
Indebtedness, the ratio of (A) Cash Flow to (B) Fixed Charges, for the
immediately preceding four most recent fiscal quarters, is less than 1.75 to 1.
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(g) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by the Charter,
the affirmative vote of 100% of the votes entitled to be cast by the holders of
Series A Preferred Shares, at the time outstanding, voting as a single class,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for the purpose, shall be necessary for effecting or
validating the authorization or creation of, or the issuance of, any Senior
Shares.
(h) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding Series A Preferred Shares shall
have been redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption in accordance
with Section 6 or Section 7, as applicable, hereof.
(i) Except as otherwise required by law or provided in the
Charter, the holders of Common Stock shall not be entitled to vote on any matter
submitted to a vote of the holders of Series A Preferred Stock pursuant to this
Section 12.
(j) Except as otherwise required by law or provided herein or
elsewhere in the Charter, the Stock Purchase Agreement and the management
Letter, the holders of Series A Preferred Stock shall not be entitled to receive
any notice of any proceedings of the Corporation.
For purposes of the foregoing provisions of this Section 12, each
Series A Preferred Share shall have one (1) vote per share.
SECTION 13. RECORD HOLDERS. The Corporation may deem and treat the
record holder of any Series A Preferred Shares as the true and lawful owner
thereof for all purposes, and the Corporation shall not be affected by any
notice to the contrary.
SECTION 14. RESTRICTIONS ON OWNERSHIP AND TRANSFER. The Series A
Preferred Shares constitute Preferred Shares, and Preferred Shares constitutes
Equity Shares of the Corporation. Therefore, the Series A Preferred Shares,
being Equity Shares, as well as Common Shares issuable upon conversion of Series
A Preferred Shares pursuant to Section 9 of these Articles Supplementary, are
governed by and issued subject to all the limitations, terms and conditions of
the Articles applicable to Equity Shares generally, including but not limited to
the terms and conditions (including exceptions and exemptions) of Article V of
the Charter. The foregoing sentence shall not be construed to limit the
applicability to the Series A Preferred Shares of any other term or provision of
the Charter.
SECTION 15. CERTIFICATE LEGENDS. The Board of Directors may authorize
the issue of some or all of the Series A Preferred Shares without certificates.
If issued in certificated form, each Series A Preferred Share shall bear
substantially the following legends in addition to any legends required to
comply with federal and state securities laws:
CLASSES OF STOCK
THE CORPORATION IS AUTHORIZED TO ISSUE CAPITAL STOCK OF MORE THAN ONE
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CLASS, CONSISTING OF COMMON STOCK AND ONE OR MORE CLASSES OF PREFERRED
STOCK. THE BOARD OF DIRECTORS IS AUTHORIZED TO DETERMINE THE
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF ANY CLASS OF PREFERRED
STOCK BEFORE THE ISSUANCE OF SHARES OF SUCH CLASS OF PREFERRED STOCK.
THE CORPORATION WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER MAKING
A WRITTEN REQUEST THEREFORE, A COPY OF THE CORPORATION'S CHARTER AND A
WRITTEN STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES,
CONVERSION OR OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS
TO THE DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND
CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE
CORPORATION HAS THE AUTHORITY TO ISSUE AND, IF THE CORPORATION IS
AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, (i) THE
DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES
OF EACH SERIES TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD
OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.
REQUESTS FOR SUCH WRITTEN STATEMENT MAY BE DIRECTED TO THE SECRETARY OF
THE CORPORATION AT ITS PRINCIPAL OFFICE.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS,
OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE CHARTER OF
THE CORPORATION, NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY OWN
(1) COMMON SHARES OF THE CORPORATION IN EXCESS OF 9.8% OF THE LESSER OF
THE TOTAL NUMBER OR VALUE OF THE OUTSTANDING COMMON SHARES OF THE
CORPORATION, (2) PREFERRED SHARES OF THE CORPORATION IN EXCESS OF 9.8%
OF THE LESSER OF THE TOTAL NUMBER OF VALUE OF THE OUTSTANDING PREFERRED
SHARES OF THE CORPORATION, (3) EQUITY SHARES THAT WOULD RESULT IN THE
TRUST BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE, (4) EQUITY
SHARES THAT WOULD RESULT IN THE EQUITY SHARES BEING BENEFICIALLY OWNED
BY FEWER THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE TO ANY RULES OF
ATTRIBUTION) OR (5) EQUITY SHARES THAT WOULD CAUSE THE CORPORATION OR
GOLF TRUST OF AMERICA, L.P., A DELAWARE LIMITED PARTNERSHIP, TO
CONSTRUCTIVELY OWN 10% OR MORE OF THE OWNERSHIP INTERESTS IN A TENANT
OF THE REAL PROPERTY OF THE CORPORATION OR GOLF TRUST OF AMERICA, L.P.,
WITHIN THE MEANING OF SECTION 856(d)(2)(B) OF THE CODE, WITH FURTHER
RESTRICTIONS AND EXCEPTIONS SET FORTH IN THE CORPORATION'S CHARTER. ANY
PERSON WHO ATTEMPTS OR PROPOSES TO BENEFICIALLY OWN OR CONSTRUCTIVELY
OWN SHARES OF EQUITY SHARES IN EXCESS OF THE ABOVE LIMITATIONS MUST
IMMEDIATELY NOTIFY THE CORPORATION IN WRITING. IF AN ATTEMPT IS MADE TO
VIOLATE OR THERE IS A VIOLATION OF THESE RESTRICTIONS (i) ANY PURPORTED
TRANSFER WILL BE VOID AB INITIO AND WILL NOT BE RECOGNIZED BY THE
CORPORATION, (ii) THE EQUITY SHARES IN VIOLATION OF THESE RESTRICTIONS,
WHETHER AS A RESULT OF A TRANSFER OR NON-TRANSFER EVENT, WILL BE
TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A SHARE TRUST AND
SHALL BE DESIGNATED
25
<PAGE>
SHARES-IN-TRUST. ALL TERMS USED IN THIS LEGEND AND DEFINED IN THE
CORPORATION'S CHARTER HAVE THE MEANINGS DEFINED IN THE CORPORATION'S
CHARTER, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE
SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS.
SECTION 16. EFFECTIVE DATE. These Articles Supplementary shall be
effective at the time the Department accepts these Articles Supplementary for
record.
FOURTH: The Series A Preferred Shares have been classified and
designated by the Board of Directors under the authority contained in the
Charter.
FIFTH: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
SIXTH: Each of the undersigned officers of the Corporation
acknowledges these Articles Supplementary to be the act of the Corporation and,
as to all matters or facts required to be verified under oath, each of the
undersigned officers acknowledges that to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and that
this statement is made under the penalties for perjury.
[SIGNATURE PAGE TO FOLLOW IMMEDIATELY]
26
<PAGE>
IN WITNESS WHEREOF, Golf Trust of America, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf by its Chief
Executive Officer and President and attested to by its Secretary of this 2nd day
of April, 1999.
GOLF TRUST OF AMERICA, INC.
By: /s/ W. Bradley Blair, II
--------------------------------------------
Name: W. Bradley Blair, II
Title: Chief Executive Officer and President
Attest:
/s/ Scott D. Peters
- -------------------------------------
Name: Scott D. Peters
Title: Assistant Secretary
<PAGE>
Exhibit 3.2
[Face of Certificate.]
No. ___________ __________ Shares
CUSIP: 38168B 20 2
GOLF TRUST OF AMERICA, INC.
THIS CERTIFIES THAT _________________________ is the registered holder of
__________________ (______) shares of
9.25% Series A Cumulative Convertible Preferred Stock of
Golf Trust of America, Inc., a Maryland corporation,
par value $0.01 per share, transferable only on the books of the Corporation by
the holder hereof in person or by duly authorized Attorney upon surrender of
this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ____day of __________ A.D. ______.
- ------------------------------------- ----------------------------------
President Secretary
Shares $0.01 par Each
[seal]
<PAGE>
[Reverse of Certificate.]
CLASSES OF STOCK
THE CORPORATION IS AUTHORIZED TO ISSUE CAPITAL STOCK OF MORE THAN ONE CLASS,
CONSISTING OF COMMON STOCK AND ONE OR MORE CLASSES OF PREFERRED STOCK. THE BOARD
OF DIRECTORS IS AUTHORIZED TO DETERMINE THE PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF ANY CLASS OF PREFERRED STOCK BEFORE THE ISSUANCE OF SHARES OF
SUCH CLASS OF PREFERRED STOCK. THE CORPORATION WILL FURNISH, WITHOUT CHARGE, TO
ANY STOCKHOLDER MAKING A WRITTEN REQUEST THEREFORE, A COPY OF THE CORPORATION'S
CHARTER AND A WRITTEN STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS,
PREFERENCES, CONVERSION OR OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO THE DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS AND
TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE
CORPORATION HAS THE AUTHORITY TO ISSUE AND, IF THE CORPORATION IS AUTHORIZED TO
ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, (i) THE DIFFERENCES IN THE
RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE EXTENT
SET, AND (ii) THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET SUCH RIGHTS AND
PREFERENCES OF SUBSEQUENT SERIES. REQUESTS FOR SUCH WRITTEN STATEMENT MAY BE
DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS, OF THE CORPORATION'S
MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). EXCEPT AS OTHERWISE PROVIDED
PURSUANT TO THE CHARTER OF THE CORPORATION, NO PERSON MAY BENEFICIALLY OWN OR
CONSTRUCTIVELY OWN (1) COMMON SHARES OF THE CORPORATION IN EXCESS OF 9.8% OF THE
LESSER OF THE TOTAL NUMBER OR VALUE OF THE OUTSTANDING COMMON SHARES OF THE
CORPORATION, (2) PREFERRED SHARES OF THE CORPORATION IN EXCESS OF 9.8% OF THE
LESSER OF THE TOTAL NUMBER OF VALUE OF THE OUTSTANDING PREFERRED SHARES OF THE
CORPORATION, (3) EQUITY SHARES THAT WOULD RESULT IN THE TRUST BEING "CLOSELY
HELD" UNDER SECTION 856(h) OF THE CODE, (4) EQUITY SHARES THAT WOULD RESULT IN
THE EQUITY SHARES BEING BENEFICIALLY OWNED BY FEWER THAN 100 PERSONS (DETERMINED
WITHOUT REFERENCE TO ANY RULES OF ATTRIBUTION) OR (5) EQUITY SHARES THAT WOULD
CAUSE THE CORPORATION OR GOLF TRUST OF AMERICA, L.P., A DELAWARE LIMITED
PARTNERSHIP, TO CONSTRUCTIVELY OWN 10% OR MORE OF THE OWNERSHIP INTERESTS IN A
TENANT OF THE REAL PROPERTY OF THE CORPORATION OR GOLF TRUST OF AMERICA, L.P.,
WITHIN THE MEANING OF SECTION 856(d)(2)(B) OF THE CODE, WITH FURTHER
RESTRICTIONS AND EXCEPTIONS SET FORTH IN THE CORPORATION'S CHARTER. ANY PERSON
WHO ATTEMPTS OR PROPOSES TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES
<PAGE>
OF EQUITY SHARES IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION IN WRITING. IF AN ATTEMPT IS MADE TO VIOLATE OR THERE IS A VIOLATION
OF THESE RESTRICTIONS (i) ANY PURPORTED TRANSFER WILL BE VOID AB INITIO AND WILL
NOT BE RECOGNIZED BY THE CORPORATION, (ii) THE EQUITY SHARES IN VIOLATION OF
THESE RESTRICTIONS, WHETHER AS A RESULT OF A TRANSFER OR NON-TRANSFER EVENT,
WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A SHARE TRUST AND
SHALL BE DESIGNATED SHARES-IN-TRUST. ALL TERMS USED IN THIS LEGEND AND DEFINED
IN THE CORPORATION'S CHARTER HAVE THE MEANINGS DEFINED IN THE CORPORATION'S
CHARTER, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH,
INCLUDING THE RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE SENT WITHOUT
CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS.
CERTIFICATE
For
----------------
Shares
of the
Preferred
Stock
9.25% Series A Cumulative
Convertible Preferred Stock
Issued to
----------------------------
Date
----------------------------
For Value Received _____ hereby sell, assign and transfer unto
________________________, __________________ Shares of the Preferred Stock
represented by the within Certificate and to hereby irrevocably constitute and
appoint _________________ Attorney to transfer the said Stock on the books of
the within named Corporation with full power of substitution in the premises.
Dated:
In presence of:
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
Exhibit 10.1
- ------------------------------------------------------------------------------
GOLF TRUST OF AMERICA, INC.,
GOLF TRUST OF AMERICA, L.P.,
GTA GP, INC.
GTA LP, INC.
and
AEW TARGETED SECURITIES FUND, L.P.
---------------------
STOCK PURCHASE AGREEMENT
---------------------
9.25% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
GOLF TRUST OF AMERICA, INC.
Dated as of April 2, 1999
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. Agreement to Sell and Purchase the Shares........................1
2. Closing of Sale of Shares........................................1
3. Pre-Closing Conditions...........................................3
3.1. Conditions to the Obligations of the Purchaser...................3
(a) Opinion of Counsel..........................................3
(b) Registration Rights Agreement...............................3
(c) Management Rights Letter....................................3
(d) Ownership Limit Waiver Letter...............................3
(e) Closing Certificates........................................3
(f) Listing of Shares...........................................3
(g) Prospectus...................................................3
(h) Effectiveness of Articles Supplementary......................4
(i) Amended Partnership Agreement................................4
(j) Resolutions..................................................4
(k) HSR Act.......................................................4
(l) No SEC Stop Orders...........................................4
(m) Related Matters...............................................4
3.2. Conditions to the Obligations of the REIT Parties................4
(a) Related Matters.............................................5
(b) Closing Certificates........................................5
(c) Ownership Limit Waiver Representation Letter................5
(d) AMEX Approval................................................5
(e) No Objection from the NASD..................................5
(f) No SEC Stop Orders..........................................5
4. Representations and Warranties, Covenants, Etc. of the REIT Parties5
4.1. Organization and Qualification; Authority.......................5
4.2. Licenses........................................................7
4.3. Corporate, Partnership and Governmental Authorization,
No Contravention ...............................................7
4.4. Validity and Binding Effect.....................................8
4.5. Capitalization..................................................9
4.6. Litigation, Defaults............................................9
4.7. Public Reports; No Material Adverse Change.....................10
4.8. Broker's or Finder's Commissions...............................11
<PAGE>
4.9. Investment Company Act, Public Utility Holding Company;
U.S. Entity ...................................................11
4.10. ERISA Requirements.............................................11
4.11. Tax Matters....................................................11
4.12. Material Commitments...........................................12
4.13. REOC Status....................................................12
4.14. Environmental..................................................12
4.15. No Adverse U.S. Legislation, Action or Decision................13
4.16. AMEX Listing...................................................14
4.17. Registration of Preferred Stock and Common Stock...............14
4.18. Affiliate Status...............................................14
4.19. Ownership Limitation...........................................14
5. Representations and Warranties, Covenants, Etc. of the Purchaser .....15
5.1. Authority, Enforceability......................................15
5.2. Broker's or Finder's Commissions...............................15
5.3. ERISA Matters..................................................15
6. Definitions...........................................................15
7. Miscellaneous.........................................................20
7.1. Indemnification, Expenses, Etc.................................20
7.2. Survival.......................................................21
7.3. Attorney's Fees................................................22
7.4. Entire Agreement; Amendment and Waiver.........................22
7.5. Notices, Etc...................................................22
7.6. Successors and Assigns.........................................23
7.7. Descriptive Headings...........................................23
7.8. Satisfaction Requirement.......................................23
7.9. GOVERNING LAW..................................................23
7.10. Expenses.......................................................23
7.11. Counterparts...................................................23
7.12. Invalid Provisions.............................................23
<PAGE>
EXHIBITS
EXHIBIT A -- Form of Articles Supplementary
EXHIBIT B -- Names and Denominations for Recipients of Shares
EXHIBIT C -- Form of Opinion of O'Melveny & Myers LLP and Ballard Spahr
Andrews & Ingersoll, LLP
EXHIBIT D -- Form of Registration Rights Agreement
EXHIBIT E -- Form of Management Rights Letters
EXHIBIT F -- Form of Ownership Limit Waiver Letter
EXHIBIT G -- Closing Certificate of REIT
EXHIBIT H -- Closing Certificate of Purchaser
EXHIBIT I -- Form of Certificate as to Certain REOC Matters
EXHIBIT J -- List of REIT Properties
EXHIBIT K -- REIT Board of Director Resolutions
EXHIBIT L -- Certificate A to O'Melveny & Myers LLP Legal Opinion
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 2, 1999 by and between Golf
Trust of America, Inc., a Maryland corporation (the "REIT"), Golf Trust of
America, L.P., a Delaware limited partnership (the "Operating Partnership"), GTA
GP, Inc., a Maryland corporation ("GTA GP"), GTA LP, Inc., a Maryland
corporation ("GTA LP" and collectively with the REIT, the Operating Partnership
and GTA GP, the "REIT Parties") and AEW Targeted Securities Fund, L.P. (the
"Purchaser"). Unless otherwise defined, capitalized terms used in this Agreement
are defined in Section 6; references to an "Exhibit" are, unless otherwise
specified, to an Exhibit attached to this Agreement; references to a "Section"
are, unless otherwise specified, to a section of this Agreement.
In consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the REIT Parties and the Purchaser respectively
agree, as follows:
1. AGREEMENT TO SELL AND PURCHASE THE SHARES.
1.1. At the Closing provided for in Section 2, subject to the terms
and conditions of this Agreement, the REIT will issue and sell to the Purchaser
and the Purchaser will purchase from the REIT, 800,000 shares (the "Shares") of
the REIT's 9.25% Series A Cumulative Convertible Preferred Stock, par value $.01
per share (the "Preferred Stock"), having the rights, restrictions, privileges
and preferences set forth in the form of Articles Supplementary attached as
EXHIBIT A hereto. The Shares will be issued to the Purchaser pursuant to the
REIT's Shelf Registration Statement and upon receipt by the Purchaser will,
together with the Common Stock into which they are convertible, be registered
under the Securities Act.
1.2. The cash purchase price (the "Purchase Price") for the Shares
is set forth on the signature page hereto.
2. CLOSING OF SALE OF SHARES. (a) The purchase and delivery of the Shares
to be purchased by the Purchaser shall take place at the offices of Battle
Fowler LLP, 75 E. 55th Street, New York, New York, at a closing (the "Closing")
on April 2, 1999 or at such other place or on such other date as the Purchaser
and the REIT may mutually agree (such date on which the Closing shall have
actually occurred, the "Closing Date"). At the Closing, the REIT will deliver or
cause to be delivered to the Purchaser the Shares to be purchased by it against
payment of the Purchase Price. Payment of the Purchase Price by the Purchaser
shall be by wire transfer of immediately available funds to the following
account: NationsBank, Myrtle Beach, ABA: 053904483, Beneficiary: Golf Trust of
America, L.P., Acct. #: 763439908, or to such other account(s) as may be
designated by the REIT to the Purchaser in writing at least one business day
prior to the Closing. If at the Closing (i) the REIT fails to tender to the
Purchaser any of the Shares to be purchased as provided in this Section 2 or
(ii) the Purchaser
<PAGE>
fails to tender the cash Purchase Price for the Shares to the REIT, the
Purchaser or the REIT, as the case may be, shall, at its election, be relieved
of all further obligations under this Agreement, without thereby waiving any
other rights each may have by reason of such failure or such non-fulfillment.
(b) The REIT will contribute the net proceeds from the sale of the
Shares to GTA GP and GTA LP, which, in turn, will contribute such net proceeds
to the Operating Partnership in exchange for Series A Preferred Units of limited
partnership interest in the Operating Partnership ("Preferred OP Units") in
number and with rights and preferences identical to the Preferred Stock. The
Operating Partnership will use the net proceeds primarily to reduce borrowings
under its line of credit, including, without limitation, borrowings incurred in
connection with the Palm Desert Country Club, located in Palm Desert, California
and the Brentwood Golf and Country Club located in Detroit Michigan.
(c) The REIT shall, upon the irrevocable release of the wire
transfer referred to in Section 2(a), cause its transfer agent to deliver one or
more certificates representing the Shares to the Purchaser at the Closing
registered in the names (and in the denominations) set forth in EXHIBIT B.
(d) The REIT has prepared and filed with the Commission in
accordance with the provisions of the Securities Act and the Rules and
Regulations, a registration statement on Form S-3 under the Securities Act,
Commission No. 333-56251 (the "Initial Registration Statement"), including a
base prospectus. No amendments to the Initial Registration Statement have been
required or filed prior to the date hereof. The Initial Registration Statement
has become effective under the Securities Act. The Company also has filed, or
will file, with the Commission pursuant to Rule 424(b) under the Securities Act,
a prospectus supplement relating to the offering of the Shares pursuant to Rule
415 of the Securities Act.
The term "Shelf Registration Statement" as used in this Agreement
means the Initial Registration Statement (including all financial schedules and
exhibits), as amended at the time it became effective and as may be supplemented
or amended prior to the execution of this Agreement together with any
Incorporated Documents (as defined below). The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Shelf Registration
Statement at the time it was declared effective (the "Base Prospectus") together
with the prospectus supplement relating to the offering of the Shares under Rule
415 of the Securities Act dated the date hereof in the form first filed with the
Commission on or after the date hereof (the "Prospectus Supplement"). Any
reference in this Agreement to the Initial Registration Statement, the Shelf
Registration Statement, the Base Prospectus, or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of the Initial
Registration Statement, the Shelf Registration Statement or the Prospectus, as
the case may be, and any reference to any amendment or supplement to the Initial
Registration Statement, the
-2-
<PAGE>
Shelf Registration Statement or the Prospectus shall be deemed to refer to and
include any documents filed after such date under the 1934 Act which, upon
filing, are incorporated by reference therein, as required by paragraph (b) of
Item 12 of Form S-3. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Initial
Registration Statement, the Shelf Registration Statement, the Prospectus, or any
amendment or supplement thereto.
3. PRE-CLOSING CONDITIONS.
3.1. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The Purchaser's
obligation to purchase and pay for the Shares to be sold to it at the Closing is
subject to the fulfillment prior to or at the Closing of the following
deliveries, any or all of which may be waived in writing at the option of the
Purchaser:
(a) OPINION OF COUNSEL. The Purchaser shall have received from
REIT Counsel their opinion substantially in the form set forth in EXHIBIT C,
addressed to the Purchaser, dated the Closing Date.
(b) REGISTRATION RIGHTS AGREEMENT. The REIT and the Purchaser
shall have duly entered into the Registration Rights Agreement in the form of
EXHIBIT D and the Purchaser shall have received a fully-executed counterpart of
the Registration Rights Agreement and such agreement shall be in full force and
effect.
(c) MANAGEMENT RIGHTS LETTER. The REIT and the Purchaser shall
have duly entered into the Management Rights Letter substantially in the form of
EXHIBIT E, the Purchaser shall have received a fully-executed counterpart of the
Management Rights Letter and such agreement shall be in full force and effect.
(d) OWNERSHIP LIMIT WAIVER LETTER. The REIT shall have duly
executed and delivered to the Purchaser an Ownership Limit Waiver Letter
substantially in the form of EXHIBIT F, and such letter shall be in full force
and effect.
(e) CLOSING CERTIFICATES. The Purchaser shall have received a
certificate, dated the Closing Date, from the Secretary (or Assistant Secretary)
of the REIT, substantially in the form of EXHIBIT G.
(f) LISTING OF SHARES. At the Closing, the REIT shall have
delivered to the Purchaser a letter from the American Stock Exchange (the
"AMEX") confirming the approval by the AMEX for the listing of the shares of
Common Stock into which the Preferred Stock is convertible.
(g) PROSPECTUS. At the Closing, the REIT shall deliver to the
Purchaser the Prospectus, dated the date hereof.
-3-
<PAGE>
(h) EFFECTIVENESS OF ARTICLES SUPPLEMENTARY. The Articles
Supplementary shall have been duly adopted by the REIT and shall have been duly
filed with the State Department of Assessments and Taxation of the State of
Maryland and shall be in full force and effect. The Purchaser shall have
received a certified copy of the Articles Supplementary, as filed with the State
Department of Assessments and Taxation of the State of Maryland.
(i) AMENDED PARTNERSHIP AGREEMENT. GTA GP shall have duly
prepared or updated, as applicable, exhibits to the Agreement of Limited
Partnership of the Operating Partnership so as validly to designate and to
reflect the issuance of the Preferred OP Units to GTA GP and GTA LP (the
"Preferred OP Unit Amendment"), and a certified copy of the Preferred OP Unit
Amendment shall be delivered to the Purchaser.
(j) RESOLUTIONS. At the Closing, the REIT shall deliver to the
Purchaser a certified copy of the resolutions of the REIT's Board of Directors
by which the REIT (i) exempted the Purchaser and certain other persons from the
applicability of Title 3, Subtitle 6 of the Maryland General Corporate Law and
(ii) authorized the execution, delivery and performance of the Managements
Rights Letter. These resolutions shall be certified in the Closing Certificate
of the REIT, pursuant to Paragraph (e) of this Section 3.1. In addition, the
REIT covenants that the Board of Directors of REIT shall, no later than 30 days
after the Closing, pass resolutions stating that the adopted resolutions
described in clause (i) above shall be made irrevocable with respect to the
Purchaser, its affiliates and associates.
(k) HSR ACT. Any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action has not been withdrawn or terminated.
(l) NO SEC STOP ORDERS. No stop order affecting the
effectiveness of the Shelf Registration Statement or the use of the Prospectus
or applicable to the sale of the Shares hereunder shall have been issued by the
Commission or by any state securities authority and no proceeding for that
purpose shall have been instituted.
(m) RELATED MATTERS. At the Closing, the Purchaser shall have
been issued and received the Shares in exchange of the Purchase Price paid
pursuant to this Agreement.
3.2. CONDITIONS TO THE OBLIGATIONS OF THE REIT PARTIES. The REIT and
the Operating Partnership's obligations to issue the Shares and the Preferred OP
Units at the Closing is subject to the fulfillment prior to or at the Closing of
the following conditions, any or all of which may be waived in writing at the
option of the REIT or Operating Partnership:
-4-
<PAGE>
(a) RELATED MATTERS. At the Closing, the REIT shall have
received payment in full for the Shares issued pursuant to this Agreement.
(b) CLOSING CERTIFICATES. The REIT shall have received a
certificate, dated the Closing Date, from the Secretary (or Assistant Secretary)
of the General Partner of the Purchaser, substantially in the form of EXHIBIT H.
(c) OWNERSHIP LIMIT WAIVER REPRESENTATION LETTER. No later
than the Closing Date, the REIT shall have received a representation letter,
meeting the criteria of Article V, Section 2(f) of the REIT's Charter.
(d) AMEX APPROVAL. AMEX shall have approved the listing of the
shares of Common Stock into which the Preferred Stock is convertible, subject
only to official notice of issuance.
(e) NO OBJECTION FROM THE NASD. BancBoston Robertson Stephens,
as placement agent, shall have received a letter from the National Association
of Securities Dealers, Inc. or its subsidiary NASD Regulation,
Inc.(collectively, the "NASD") confirming that the NASD has decided to raise no
objection to the fairness and reasonableness of the terms and conditions of the
subject offering.
(f) NO SEC STOP ORDERS. No stop order affecting the
effectiveness of the Shelf Registration Statement or the use of the Prospectus
or applicable to the sale of the Shares hereunder shall have been issued by the
Commission or by any state securities authority and no proceeding for that
purpose shall have been instituted.
4. REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE REIT PARTIES.
The REIT Parties, jointly and severally, hereby represent and warrant to, and
agree with, the Purchaser, subject to such exceptions as are specifically set
forth in the Schedules attached hereto (which "Schedules" shall be deemed to be
part of this Agreement), as follows:
4.1. ORGANIZATION AND QUALIFICATION; AUTHORITY.
(a) Each of the REIT and its Subsidiaries, whether wholly or
indirectly owned, (i) is a corporation duly incorporated, or a partnership,
limited partnership or limited liability company duly formed, and is validly
existing and in good standing under the laws of its jurisdiction of its
incorporation or formation; (ii) has full corporate, partnership or limited
liability company power and authority to own and lease its respective properties
and carry on its respective business as presently conducted; and (iii) is duly
qualified, registered or licensed as a foreign corporation, partnership, limited
partnership or limited liability company to do business and is in good standing
in each jurisdiction in which the ownership or leasing of its respective
properties or the character of its present operations makes such qualification,
-5-
<PAGE>
registration or licensing necessary, except where the failure so to qualify or
be in good standing does not and would not reasonably be expected to have a
Material Adverse Effect on the REIT and the Subsidiaries on a consolidated
basis. The REIT has heretofore made available to Purchaser's Counsel (i) true,
complete and correct copies of the Articles of Incorporation, the Articles
Supplementary, and the by-laws or equivalent document of the REIT, GTA GP and
GTA LP each as amended and restated to date and as presently in effect or to be
in effect immediately upon the Closing (collectively, the "Charter Documents")
and (ii) true, correct and complete copies of the certificate of limited
partnership and agreement of limited partnership of the Operating Partnership,
each as amended and restated on this date and as presently in effect or to be in
effect immediately upon the Closing (collectively, the "Partnership Documents").
(b) Schedule 4.1(b) sets forth the name of each Subsidiary of
the REIT and the Operating Partnership (whether owned directly or indirectly
through one or more intermediaries). All of the outstanding shares of capital
stock of, or other equity interest in, each of the Subsidiaries owned by the
REIT or the Operating Partnership are duly authorized, validly issued, fully
paid and nonassessable, and are owned, directly or indirectly, by the REIT or
the Operating Partnership free and clear of all Liens, except as set forth in
Schedule 4.1(b) and were issued in compliance with all applicable federal and
state securities laws. Except as set forth in Schedule 4.1(b), there are no
existing options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments which obligate the REIT or any of the
Subsidiaries to issue, transfer or sell any shares of capital stock or equity
interests in any of the Subsidiaries.
(c) The Preferred Stock and Preferred OP Units to be issued
pursuant to this Agreement have been duly authorized for issuance by all
necessary corporate and partnership action on the part of the REIT and the
Operating Partnership, as the case may be, and when the Preferred Stock is
issued by the REIT and the Preferred OP Units issued by the Operating
Partnership, each will be duly and validly issued and fully paid and, in the
case of the Preferred Stock, nonassessable. When issued and delivered against
payment therefor as provided herein, the Purchaser will receive good and
marketable title to such Preferred Stock and GTA GP and GTA LP will each receive
good and marketable title to the Preferred OP Units, as the case may be, free
and clear of all Liens, security interests, pledges, charges, encumbrances,
shareholders' agreements and voting trusts or claims, preemptive rights or
rights of interest of any nature whatsoever, subject to any rights of the
Purchaser hereunder and under the Registration Rights Agreement, and except for
those resulting from any action taken by the Purchaser. A sufficient number of
shares of Common Stock to be issued by the REIT upon the conversion of the
Preferred Stock have been duly reserved by the REIT out of its authorized shares
of Common Stock for issuance pursuant to duly adopted resolutions and such
shares of Common Stock have been approved for listing on the AMEX. The shares of
Common Stock issuable upon conversion of the Preferred Stock in accordance with
the provisions of the Articles Supplementary will, upon issuance of such
conversion, be duly and validly issued, fully paid and nonassessable.
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(d) The Articles Supplementary have been duly authorized by
all necessary corporate acts on the part of the REIT such that no further
actions are required for the due and valid issuance of Preferred Stock in
accordance herewith and therewith. The Articles Supplementary will have been
duly filed with the State Department of Assessments and Taxation of the State of
Maryland in full compliance with Maryland law.
(e) The Preferred OP Unit Amendment has been duly authorized
by all necessary partnership acts on the part of the Operating Partnership such
that no further actions are required for the creation and due and valid issuance
of the Preferred OP Units in accordance herewith. The Preferred OP Unit
Amendment has been duly prepared by GTA GP on behalf of the Operating
Partnership and such Preferred OP Unit Amendment is enforceable against the
Operating Partnership in accordance with its terms.
(f) Neither the issue and sale of Preferred Stock nor the
issue and sale of the Preferred OP Units hereunder will give any stockholder in
the REIT or any partner in the Operating Partnership the right to demand payment
for shares or partnership interests, as the case may be, under applicable law or
give rise to any preemptive or similar rights.
4.2. LICENSES. Each of the REIT and the Subsidiaries holds all
licenses, franchises, permits, consents, registrations, certificates and other
approvals (individually, a "License" and collectively, "Licenses") required for
the conduct of its business as presently conducted, and operates in substantial
compliance therewith, except where the failure to hold any such License or to
operate in compliance therewith would not reasonably be expected to have a
Material Adverse Effect on the REIT and the Subsidiaries on a consolidated
basis. Each of the REIT and each of the Subsidiaries are in compliance with all
applicable laws, regulations, orders and decrees, except in each case where the
failure so to comply would not reasonably be expected to have a Material Adverse
Effect on the REIT and the Subsidiaries on a consolidated basis, or a Material
Adverse Effect on the ability of the REIT Parties to perform on a timely basis
any obligation that each has or will have under any Transaction Document to
which it is a party.
4.3. CORPORATE, PARTNERSHIP AND GOVERNMENTAL AUTHORIZATION, NO
CONTRAVENTION.
(a) The execution, delivery and performance by the applicable
REIT Party of the Transaction Documents, as the case may be, and the issuance
and sale to (and the purchase hereunder by) the Purchaser of the Shares and GTA
GP and GTA LP of the Preferred OP Units pursuant to this Agreement (a) are
within the REIT's corporate powers and the Operating Partnership's partnership
powers; (b) have been duly authorized by all necessary action on the part of the
REIT and the Operating Partnership; (c) do not contravene or constitute a
default under or violation of or do not or will not result in the creation or
imposition of any Lien on any asset of the REIT or any of its Subsidiaries; and
(d) do not
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contravene, constitute a default under, violate and will not result in violation
of (i) any provision of applicable law or regulation of any Governmental
Authority, (ii) the Charter Documents, Partnership Documents or similar
documents of any Subsidiary, (iii) any agreement (or require the consent of any
Person under any agreement that has not been made or obtained) to which the
REIT, the Operating Partnership or any of the other Subsidiaries are a party
including, without limitation, the participating leases to which the Operating
Partnership or any other Subsidiary is a party, or (iv) any judgment,
injunction, order, decree or other instrument binding upon the REIT, the
Operating Partnership, any of the other Subsidiaries or any of their respective
properties, except where such contravention, default or violation or creation or
imposition of Liens in this Section 4.3 would not reasonably be expected to have
a Material Adverse Effect on the REIT and the Subsidiaries on a consolidated
basis. The REIT does not have any shareholder rights plan or other "poison
pill;" PROVIDED, HOWEVER, that the REIT may adopt one after the date of this
Agreement. The REIT has opted out of Subtitle 7 of Title 3 of the Maryland
General Corporation Law and its Board of Directors has duly adopted a resolution
exempting all Persons, including the Purchaser, from the applicability of
Subtitle 6 thereof, a copy of which has been provided to Purchaser's counsel.
(b) None of the Charter Documents or the Partnership Documents
have been modified or amended since the date such documents were delivered to
the Purchaser by the REIT other than the filing of the Articles Supplementary
with the Maryland State Department of Assessments and Taxation, the preparation
of the Preferred OP Unit Amendments and routine changes to the ledger of
partnership interest (attached as Exhibit A to the agreement of limited
partnership of the Operating Partnership, as amended from time to time) in
connection with the redemption of 2,000 units of limited partnership interest in
the Operating Partnership.
(c) The REIT has duly applied for and obtained all approvals,
orders, licenses, consents and other authorizations (collectively, the
"Approvals") from each federal, state and local government and governmental
agency, department or body, or pursuant to any agreement to which any REIT Party
is a party or to which it or any of its respective assets is subject, which may
be required in connection with this Agreement and the other Transaction
Documents, including, without limitation, any rule or regulation of AMEX.
4.4. VALIDITY AND BINDING EFFECT. Each of the Transaction Documents,
when executed and delivered, will be duly executed and delivered by each of the
REIT Parties that is a party thereto, and will be a valid and binding agreement
of each of the REIT Parties that is a party thereto, enforceable against each of
the REIT Parties that is a party thereto in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible
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unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
4.5. CAPITALIZATION.
(a) As of the date of this Agreement, the REIT had authorized
100,000,000 shares of capital stock, 90,000,000 of which are designated as
Common Stock, and, upon the Closing, upon the filing of the Articles
Supplementary, 10,000,000 shares of Preferred Stock. Upon the Closing there will
be 7,682,956 shares of Common Stock issued and outstanding and 800,000 shares of
Preferred Stock issued and outstanding.
(b) As of the date of this Agreement, the Operating
Partnership has issued and outstanding 12,961,894 common units of limited
partnership interest and, upon the Closing and by virtue of the use of proceeds
as described in Section 2(b) hereof, 800,000 Preferred OP Units.
(c) GTA GP is the sole general partner of the Operating
Partnership and owns a 0.2% partnership interest therein and GTA LP owns a
59.08% common limited partnership interest of the Operating Partnership. Upon
the Closing, GTA GP will be the sole general partner and will own a 0.2%
partnership interest in the Operating Partnership and 0% of the Preferred OP
Units and GTA LP will own a 59.08% common limited partnership interest in the
Operating Partnership and 100% of the Preferred Units. GTA GP and GTA LP are
wholly-owned subsidiaries of the REIT.
(d) Except as disclosed in the SEC Filings, there are no
outstanding subscriptions, options, warrants, rights, convertible or
exchangeable securities or other agreements or commitments of any character
obligating the REIT or the Subsidiaries to issue any securities. There are no
voting trusts or other agreements or understandings in favor of any person other
than the REIT (or its Board of Directors) or the Subsidiaries to which the REIT
or the Subsidiaries are a party with respect to the voting of the Capital Stock
or partnership interests of the REIT or the Subsidiaries, as the case may be.
4.6. LITIGATION, DEFAULTS. Except as set forth on Schedule 4.6,
there is no action, suit, proceeding or investigation, as to which notice has
been served on any REIT Party, pending or, to the knowledge of the REIT,
threatened against or affecting the REIT or any of the Subsidiaries, or any
properties of any of the foregoing, before or by any court or arbitrator or any
governmental body, agency or official which (individually or in the aggregate)
could reasonably be expected to (i) have a Material Adverse Effect on the REIT
and the Subsidiaries on a consolidated basis, or (ii) impair the ability of the
REIT or the Operating Partnership to perform fully any material obligation which
the REIT or the Operating Partnership has or will have under any Transaction
Document. Neither the REIT nor any Subsidiary is in violation of, or in default
under (and there does not exist any event or condition which, after notice or
lapse of time or both, would constitute such a default under),
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any term of its Charter Documents, Partnership Documents or similar documents of
any Subsidiary or of any term of any agreement, instrument, judgment, decree,
order, statute, injunction, governmental regulation, rule or ordinance
(including without limitation, those relating to zoning, city planning or
similar matters) applicable to the REIT or any Subsidiary or to which the REIT
or any Subsidiary is bound, or to any properties of the REIT and any Subsidiary,
except in each case to the extent that such violations or defaults, individually
or in the aggregate, would not reasonably be expected to (a) affect the validity
of any Transaction Document, (b) have a Material Adverse Effect on the REIT and
any Subsidiary on a consolidated basis, or (c) impair the ability of any REIT
Party to perform fully any material obligation which such REIT Party has or will
have under any Transaction Document.
4.7. PUBLIC REPORTS; NO MATERIAL ADVERSE CHANGE. (a) The Shelf
Registration Statement complies as to form in all material respects with the
requirements of the Securities Act and the 1934 Act and does not 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. The REIT has
made all of the SEC Filings required to be made by it since June 1, 1997. Except
as disclosed in the SEC Filings, there has been since December 31, 1998 no
adverse change in the condition (financial or other), assets, business, or
results of operations of the REIT or any of the Subsidiaries which could
reasonably be expected to have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis. Except as for matters reflected or
reserved against in the balance sheet included in the REIT's most recent 10-K as
filed with the Commission, and except as disclosed in the SEC Filings (in each
case as filed with the Commission since the date of filing of the REIT's most
recent 10-K), since the date of such balance sheet there has been no material
obligation or material liability (contingent or otherwise) incurred by the REIT
or any of the Subsidiaries, except liabilities or obligations which were
incurred in the ordinary course of business. The documents listed on Part IV,
Item 14 of the REIT's 10-K for the year ended December 31, 1998 have been
compiled in compliance with Item 601 of Regulation S-K of the Securities Act.
(b) The financial statements of the REIT included in or
incorporated by reference in the Shelf Registration Statement comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
consolidated financial position of the REIT and the Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
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(c) As of the date hereof, to the knowledge of the REIT and
the Operating Partnership there are not any material liabilities, contingent or
otherwise, of the REIT and the Operating Partnership, that have not been
disclosed in the financial statements (including the notes thereto) referred to
above or otherwise disclosed in the SEC Filings or other items provided to the
Purchaser.
4.8. BROKER'S OR FINDER'S COMMISSIONS. Except as disclosed in the
Prospectus, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the REIT directly with the
Purchaser without the intervention of any person other than BancBoston Robertson
Stephens on behalf of the REIT in such manner as to give rise to any valid claim
by any Person against the Purchaser for a finder's fee, brokerage commission or
similar payment.
4.9. INVESTMENT COMPANY ACT, PUBLIC UTILITY HOLDING COMPANY; U.S.
ENTITY. The REIT (i) is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), (ii) is not an
"investment company" for purposes of Section 12(d)(1) of the 1940 Act, (iii) is
not and will not become a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, (iv) is
not and will not be headquartered or organized in any jurisdiction outside the
United States of America or (v) does not directly or indirectly conduct
activities or own assets in any foreign jurisdiction.
4.10. ERISA REQUIREMENTS. At or promptly following the Closing and
annually thereafter within 30 days of the end of the REIT's annual valuation
period (or 30 days after the Purchaser's request, if later), but only if
requested by the Purchaser with respect to such annual valuation period, the
Purchaser shall receive from the REIT a certificate substantially in the form of
EXHIBIT I certifying certain information which the Purchaser reasonably
determines to be necessary to conclude whether the REIT is a "real estate
operating company" within the meaning of 29 C.F.R. Section 2510.3-101(e) (the
"Plan Assets Regulation") and otherwise satisfactory in substance and form to
the Purchaser to enable the Purchaser to make such a conclusion; PROVIDED
HOWEVER, that the REIT shall not be required to certify as to any information
that is not factually correct when the certificate is delivered.
4.11. TAX MATTERS.
(a) The REIT has been, for each year ending on and after
December 31, 1997 and on or before the date hereof, organized and operated in
conformity with the requirements for qualification and taxation as a "real
estate investment trust" under Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code") and the Treasury Regulations promulgated
thereunder. The REIT does not intend and has not taken any action or failed to
take any action which would reasonably be expected to, alone or in conjunction
with any other factors, result in the loss of its status as a real estate
investment trust for federal income tax purposes.
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(b) To the knowledge of the REIT, the REIT is not currently a
"pension-held REIT" within the meaning of Code Section 856(h)(3)(D) and the
Treasury Regulations promulgated thereunder.
(c) The Operating Partnership and each of the other
Subsidiaries that is eligible to be classified as a partnership for federal
income tax purposes is so classified and taxed.
(d) The REIT will use reasonable efforts not to take any
action or not to permit any action to be taken (to the extent the action is
within the control of the REIT) that would cause any of the representations set
forth in this Section 4.11 to be incorrect or incomplete if made as of any date
following the Closing. This however does not prohibit the REIT from revoking its
election to be taxed as a real estate instrument trust except in accordance with
the voting procedures set forth in its charter. In the event of the taking or
proposed taking of any action that to the REIT's knowledge would cause the
representation set forth in Section 4.11(b) to be incorrect if made as of any
date following the Closing, the REIT shall use reasonable efforts to notify the
Purchaser prior to the taking of such action.
4.12. MATERIAL COMMITMENTS. Schedule 4.12 sets forth a complete and
accurate list of all material contracts, options, commitments, letters of intent
or similar written understandings made or entered into by the REIT or any of the
Subsidiaries in writing as of the date hereof (x) in the future to enter into
any material lease, or (y) in the future to sell, mortgage, pledge, hypothecate
any of the REIT, Operating Partnership or any other Subsidiary's property or to
otherwise enter into a material transaction in respect of the ownership or
financing of any property, excluding however, in each case such commitments,
letters of intent or similar written understandings which do not bind any party
thereto. The REIT has previously made available to the Purchaser for its review
at the REIT's office a true and complete copy of each such commitment, letter of
intent or other understanding.
4.13. REOC STATUS. The REIT makes the same factual representations
to the Purchaser as those contained in the Form of REOC Certificate, attached
hereto as EXHIBIT I and in Certificate A attached to the legal opinion of
O'Melveny & Myers LLP, which is attached hereto as EXHIBIT L.
4.14. ENVIRONMENTAL. (a) Except as may be specifically disclosed in
the SEC Filings or in environmental reports obtained by the REIT and made
available to the Purchaser (the "Environmental Reports"), the REIT and the
Operating Partnership have not at any time, and, to the actual knowledge of the
REIT and the Operating Partnership, no other party has at any time, handled,
buried, stored, retained, refined, transported, processed, manufactured,
generated, produced, spilled, allowed to seep, leak, escape or leach, or be
pumped, poured, emitted, emptied, discharged, injected, dumped, transferred or
otherwise disposed of or dealt with, Hazardous Materials on, to or from the
Properties. The REIT and the Operating
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Partnership do not intend to use the Properties or any subsequently acquired
properties for the purpose of handling, burying, storing, retaining, refining,
transporting, processing, manufacturing, generating, producing, spilling,
seeping, leaking, escaping, leaching, pumping, pouring, emitting, emptying,
discharging, injecting, dumping, transferring or otherwise disposing of or
dealing with Hazardous Materials, except for such Hazardous Materials as may be
customarily required in golf course operations, stored and used in the
quantities customary for such uses and in compliance in all material respects
with any and all applicable, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") and except in each case for such non-compliance as cannot
reasonably be expected to cause a material Adverse Effect.
(b) Except as disclosed in the SEC Filings or the
Environmental Reports, to the knowledge of the REIT or the Operating
Partnership, there has been no material seepage, leak, escape, leach, discharge,
injection, release, emission, spill, pumping, pouring, emptying or dumping of
Hazardous Materials into waters on or adjacent to the Properties or onto lands
from which such hazardous or toxic waste of substances might seep, flow or drain
into such waters.
(c) Except as disclosed in the SEC Filings or the
Environmental Reports, neither the REIT nor the Operating Partnership has
received a specific, written notice of any occurrence or circumstance which,
with notice or passage of time or both, would give rise to, any material claim
under or pursuant to any Environmental Law pertaining to hazardous or toxic
waste or substances on or originating from the Properties or arising out of the
conduct of any such party, including, without limitation, pursuant to any
Environmental Law.
4.15. NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. To the
knowledge of the REIT Parties, no legislation, order, rule, ruling or regulation
has been enacted or made by or on behalf of any governmental body, department or
agency of the United States, nor has any decision of any court of competent
jurisdiction within the United States been rendered which would, in the REIT
Parties' reasonable judgment, have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis. There is no action, suit, investigation or
proceeding pending or to the knowledge of the REIT Parties, threatened, against
or affecting any REIT Party, any of its respective properties or rights, or any
of its respective Affiliates, associates, officers or directors, before any
court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions, and there shall be no valid basis for any such action, proceeding
or investigation.
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4.16. AMEX LISTING. The listing of shares of the Common Stock on the
AMEX has not been terminated, nor has the REIT been notified that such listing
may be terminated or that any termination is contemplated.
4.17. REGISTRATION OF PREFERRED STOCK AND COMMON STOCK.
(a) The shares of Preferred Stock and the Common Stock, into
which the Preferred Stock is convertible, have been duly registered under the
Securities Act by the Shelf Registration Statement and such Shelf Registration
Statement has been prepared by the REIT in conformity with the requirements of
the Securities Act and the rules and regulations (the "Rules and Regulations")
of the Commission thereunder and has been filed with the Commission under the
Securities Act and has been declared effective by the Commission pursuant to
such act and the Rules and Regulations. The REIT and the sale of the Shares
pursuant to this Agreement meet the requirements for using Form S-3 under the
Securities Act.
(b) No stop order affecting the effectiveness of the Shelf
Registration Statement or any part thereof has been issued and no proceeding for
that purpose has been instituted or, to the knowledge of the REIT, threatened by
the Commission or the securities authority of any state or any jurisdiction.
(c) Except as set forth on Schedule 4.17(c), since the
respective dates as of which information is given in the Shelf Registration
Statement, as it may be amended or supplemented, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the REIT or the
Operating Partnership or the funds from operations, business affairs, management
or business prospects of the REIT or the Operating Partnership, whether or not
occurring in the ordinary course of business, and there has not been any
material transaction entered into by the REIT or the Operating Partnership other
than transactions in the ordinary course of business and changes and
transactions contemplated by the Shelf Registration Statement, as it may be
amended or supplemented. Neither the REIT nor the Operating Partnership have any
material contingent obligations which are not disclosed in the Shelf
Registration Statement, as it may be amended or supplemented.
4.18. AFFILIATE STATUS. To the best of the REIT's knowledge, the
Purchaser is not, and the REIT will not take the position that the Purchaser is,
an "affiliate" of the REIT as that term is defined in Securities Act Rule
144(a)(1) either currently or upon the sale and issuance of the Shares
hereunder.
4.19. OWNERSHIP LIMITATION. The REIT hereby agrees that following
the Closing it will not amend, modify, rescind or revoke any of the resolutions
referred to in Section 3.1(j) herein, without the prior written consent of the
Purchaser.
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5. REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE PURCHASER. The
Purchaser hereby represents and warrants that:
5.1. AUTHORITY, ENFORCEABILITY. The Purchaser has full power and
authority and has taken all action necessary to authorize it to enter into and
perform its obligations under the Transaction Documents to which the Purchaser
is a party and all other documents or instruments contemplated hereby. The
Transaction Documents to which the Purchaser is a party are legal, valid and
binding obligations of the Purchaser and are enforceable in accordance with
their terms.
5.2. BROKER'S OR FINDER'S COMMISSIONS. Except as disclosed in the
Prospectus, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser directly with the REIT
without the intervention of any person on behalf of Purchaser (other than
BancBoston Robertson Stephens), in such manner as to give rise to any valid
claim by any Person against the REIT for a finder's fee, brokerage commission or
similar payment. The Purchaser acknowledges that the REIT has informed it that
BancBoston Robertson Stephens did not participate in the drafting of the
Prospectus Supplement or the accompanying Prospectus and is not responsible for
any of their content.
5.3. ERISA MATTERS. None of the assets used by Purchaser to purchase
the Shares include "plan assets" within the meaning of Department of Labor
Regulation Section 2510.3-101.
6. DEFINITIONS. As used herein the following terms have the following
respective meanings:
"1934 ACT," means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder, as from time to time
amended.
"1940 ACT" has the meaning ascribed thereto in Section 4.9 hereof.
"AFFILIATE," except as otherwise defined in this Agreement, means
with respect to any Person any other Person directly or indirectly controlling
or controlled by or under common control with such first Person or any of its
Subsidiaries; PROVIDED, HOWEVER, that, for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"AGREEMENT" means this Stock Purchase Agreement, as amended,
modified or supplemented from time to time, together with any exhibits,
schedules, appendices or other attachments thereto.
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"AMEX" has the meaning ascribed thereto in Section 3.1(f) hereto.
"APPROVALS" has the meaning ascribed thereto in Section 4.3(c)
hereof.
"ARTICLES OF INCORPORATION" means the Articles of Incorporation of
the REIT, as amended and restated to date and in effect upon the Closing.
"BASE PROSPECTUS" has the meaning ascribed thereto in Section 2(d)
hereof.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participation, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrant or options exchangeable for
or convertible into such capital stock.
"CHARTER DOCUMENTS" has the meaning ascribed thereto in Section
4.1(a) hereof.
"CLOSING" has the meaning ascribed thereto in Section 2 hereof.
"CLOSING DATE" has the meaning ascribed thereto in Section 2 hereof.
"CODE" has the meaning ascribed thereto in Section 4.11(a) hereof.
"COMMISSION" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the REIT.
"DTC" has the meaning ascribed thereto in Section 2(c) hereof.
"EMPLOYEE BENEFIT PLANS" means each and all "EMPLOYEE BENEFIT PLANS"
as defined in Section 3(3) of ERISA maintained or contributed to by a party
hereto or in which a party hereto participates or participated and which
provides benefits to employees of the REIT or any of its Subsidiaries, including
(i) any such plans that are "EMPLOYEE WELFARE BENEFIT PLANS" as defined in
Section 3(l) of ERISA, including retiree medical and life insurance plans, and
(ii) any such plans that constitute "EMPLOYEE PENSION BENEFIT PLANS" as defined
in Section 3(2) of ERISA.
"ENVIRONMENTAL LAWS" has the meaning ascribed thereto in Section
4.14(a) hereof.
"ENVIRONMENTAL REPORTS" has the meaning ascribed thereto in Section
4.14(a) hereof.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, as amended from time to time.
"GENERAL PARTNER'S CERTIFICATE" means a certificate executed on
behalf of the Purchaser by its general partner.
"GOVERNMENTAL AUTHORITY" means any governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"GTA GP" means GTA GP, Inc., a Maryland corporation.
"GTA LP" means GTA LP, Inc., a Maryland corporation.
"HAZARDOUS MATERIALS" shall have the meanings set forth in the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss.ss. 1251 et seq, as amended, and the regulations thereunder, Solid Waste
Disposal Act, 42 U.S.C. ss.ss. 6901 et seq., as amended, including amendments
under Resource Conservation and Recovery Act, and the regulations thereunder,
and Federal Water Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq., as
amended, and regulations thereunder, and the regulations thereunder, and such
terms shall also include asbestos, petroleum products, radon, radioactive
materials, lead paint, UFFI and any other regulated substances under any Law.
"INCORPORATED DOCUMENTS" has the meaning ascribed thereto in
Section 2(d) hereof.
"INDEMNIFIED PARTY" means either a REIT Indemnified Party or a
Purchaser Indemnified Party, as the context requires.
"INDEMNIFYING PARTY" has the meaning ascribed thereto in Section
8.1(c) hereof.
"INITIAL REGISTRATION STATEMENT" has the meaning ascribed thereto
in Section 2(d) hereof.
"KNOWLEDGE OF THE REIT" or "knowledge of the REIT Parties" means
the actual knowledge of W. Bradley Blair, II, David D. Joseph and Scott D.
Peters.
"LICENSE" or "LICENSES" has the meaning ascribed thereto in Section
4.2 hereof.
"LIEN" means any mortgage, lien (statutory or otherwise), charge,
pledge, hypothecation, conditional sales agreement, adverse claim, title
retention agreement or other
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security interest, encumbrance or other title defect in or on any interest or
title of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale, trust receipt or other title retention agreement
with respect to any Property or asset of such Person.
"LOSSES" has the meaning ascribed thereto in Section 8.1(a) hereof.
"MANAGEMENT RIGHTS LETTER" mean the Management Rights Letter by and
between the Purchaser and the REIT.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
condition (financial or otherwise), assets, business or results of operation of
the REIT and the Subsidiaries on a consolidated basis.
"NASD" has the meaning ascribed thereto in Section 3.2(e) hereof.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of
the REIT by the Chief Financial Officer of the REIT.
"OPERATING PARTNERSHIP" means Golf Trust of America, L.P., a
Delaware limited partnership.
"PARTNERSHIP DOCUMENTS" has the meaning ascribed thereto in Section
4.1(a).
"PERSON" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"PLAN ASSETS REGULATION" has the meaning set forth in Section 4.10
hereof.
"PREFERRED OP UNITS" has the meaning ascribed thereto in Section
2(b) hereof.
"PREFERRED OP UNIT AMENDMENT" has the meaning ascribed thereto in
Section 3.1(i).
"PREFERRED STOCK" has the meaning ascribed thereto in Section 1.1
hereof.
"PROPERTY" shall mean, each of the golf course properties listed on
EXHIBIT J attached to this Agreement including the applicable real property and
all personal property and intangibles related thereto, and "Properties" shall
mean all such golf course properties collectively, including all of the real
property, personal property and intangibles.
"PROSPECTUS" has the meaning ascribed thereto in Section 2(d)
hereof.
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"PROSPECTUS SUPPLEMENT" has the meaning ascribed thereto in Section
2(d) hereof.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 1.2
hereof.
"PURCHASER" has the meaning ascribed thereto in the introduction
hereof.
"PURCHASER'S COUNSEL" means Battle Fowler LLP.
"PURCHASER INDEMNIFIED PARTY" or "PURCHASER INDEMNIFIED PARTIES"
has the meaning ascribed thereto in Section 7.1(a) hereof.
"REGISTRATION RIGHT AGREEMENT" means the registration rights
agreement by and between the REIT and the Purchaser, as amended or supplemented
from time to time in accordance with the terms thereof.
"REIT" mean Golf Trust of America, Inc., a Maryland corporation.
"REIT COUNSEL" means O'Melveny & Myers LLP.
"REIT INDEMNIFIED PARTY" has the meaning ascribed thereto in
Section 8.1(b) hereof.
"RULES AND REGULATIONS" has the meaning ascribed thereto in Section
4.17(a) hereof.
"SEC FILINGS" means official filings made by the REIT filed with
the Commission in accordance with the Securities Act and the 1934 Act with
respect to events occurring, or periods ending on or after February 12, 1997 and
includes the Shelf Registration Statement and the Prospectus.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations of the Commission promulgated thereunder, as from time to time
amended.
"SCHEDULES" shall have the meaning ascribed thereto in Section 4
hereto.
"SHARES" has the meaning ascribed thereto in Section 1.1 hereof.
"SHELF REGISTRATION STATEMENT" has the meaning ascribed thereto in
Section 2(d) hereof.
"SUBSIDIARIES" means subsidiary corporations, partnerships, limited
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partnerships, joint ventures and limited liability companies which are directly
or indirectly and wholly or majority owned by the REIT, including, unless the
context requires otherwise, the Operating Partnership.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Articles Supplementary, the Preferred OP Unit Amendment, the Registration Rights
Agreement, the Ownership Limit Waiver Letter, the Management Rights Letter and
any and all agreements, certificates, instruments and other documents of the
REIT or the Purchaser required thereby or executed and delivered pursuant
hereto.
7. MISCELLANEOUS.
7.1. INDEMNIFICATION, EXPENSES, ETC.
(a) In addition to any and all obligations of the REIT Parties
to indemnify the Purchaser hereunder or under the other Transaction Documents,
the REIT Parties hereby agree, jointly and severally, without limitation as to
time, to indemnify and hold harmless the Purchaser, its Affiliates and the
employees, officers, directors, trustees, direct and indirect partners, members,
agents and investment advisors of the Purchaser and its Affiliates
(individually, a "Purchaser Indemnified Party" and, collectively the "Purchaser
Indemnified Parties") from and against any and all losses, claims, damages
(including incidental and consequential damages), liabilities, costs (including
the costs of preparation and reasonable attorneys' fees, but in no event more
than one counsel (other than local counsel) and reasonable expenses (including
expenses of investigation), whether or not involving a third party claim
(collectively, "Losses") incurred or suffered by a Purchaser Indemnified Party
in connection with or arising out of any breach by a REIT Party of any warranty
or representation made by a REIT Party in this Agreement, any breach by a REIT
Party of any covenants made by a REIT Party in this Agreement or in the
Transaction Documents and for any claims by any Person against the Purchaser for
any finder's fee, brokerage commission or similar payment in connection with the
transaction contemplated hereby; PROVIDED HOWEVER, that no REIT Party shall be
liable for any Losses resulting from action on the part of any Purchaser
Indemnified Party which is finally determined in such proceeding to be an act of
gross negligence, recklessness or willful misconduct by such Purchaser
Indemnified Party. The REIT Parties agree, jointly and severally, as promptly as
practicable to reimburse any Purchaser Indemnified Party for all such Losses
incurred pursuant to this Section 7.1(a) as they are incurred or suffered by
such Purchaser Indemnified Party following the receipt of a reasonably detailed
invoice setting forth the amount of such Losses.
(b) In addition to any and all obligations of the Purchaser to
indemnify the REIT Parties hereunder or under the other Transaction Documents,
the Purchaser agrees, without limitation as to time, to indemnify and hold
harmless the REIT Parties, their Affiliates, and the employees, officers,
directors, trustees, direct and indirect partners, members and agents of the
REIT Parties and their Affiliates (individually, a "REIT Indemnified Party" and
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collectively the "REIT Indemnified Parties") from and against any and all
Losses, incurred or suffered by a REIT Indemnified Party in connection with or
arising out of any breach by the Purchaser of any warranty or representation
made by the Purchaser in this Agreement; PROVIDED, HOWEVER, that the Purchaser
shall not be liable for any Losses resulting from action on the part of any REIT
Indemnified Party which is determined in such proceeding to be an act of gross
negligence, recklessness, or willful misconduct by such REIT Indemnified Party.
The Purchaser agrees as promptly as practicable to reimburse any REIT
Indemnified Party for all such Losses incurred pursuant to this Section 7.1(b)
as they are incurred or suffered by such REIT Indemnified Party following the
receipt of a reasonably detailed invoice setting forth the amount of such
Losses.
(c) If any Indemnified Party is entitled to indemnification
hereunder, such Indemnified Party or its representative shall give prompt
written notice to the REIT Parties or the Purchaser, as the case may be (each,
for purposes of this Section 8.1(c), an "Indemnifying Party") of any claim or of
the commencement of any proceeding against such Indemnified Party brought by any
third party with respect to which such Indemnified Party seeks indemnification
pursuant hereto; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent the Indemnifying Party is prejudiced by such
failure. The Indemnifying Party shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such claim or proceeding, to assume, at
the expense of the Indemnifying Party, the defense of any such claim or
proceeding with counsel reasonably satisfactory to such Indemnified Party. The
Indemnified Party or Indemnified Parties will not be subject to any liability
for any settlement made without its or their consent (but such consent will not
be unreasonably withheld). The Indemnifying Party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof and the giving by claimant or plaintiff to such
Indemnified Party or Parties of a release, in form and substance satisfactory to
the Indemnified Party or Parties, from all liability in respect of such claim,
litigation or proceeding.
7.2. SURVIVAL. (a) All representations, warranties, covenants and
agreements contained in this Agreement or in any certificate delivered pursuant
to this Agreement shall survive the Closing notwithstanding any investigation
conducted with respect thereto. The right to indemnification, payment of Losses
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warrant, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Losses, or other remedy based on such
representations, warranties, covenants, and obligations.
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<PAGE>
(b) TIME LIMITATIONS. None of the REIT Parties shall have any
liability (for indemnification or otherwise) with respect to any representation
or warranty other than those set forth in Sections 4.1(c), 4.11 and 4.13 unless
on or before the date which is 2 years after the Closing Date, any of the REIT
Parties is given notice asserting a claim with respect thereto and specifying
the factual basis of that claim in reasonable detail to the extent then known by
Purchaser; a claim with respect to Sections 4.1(c), 4.11 and 4.13 may be made at
any time. Purchaser shall have no liability (for indemnification or otherwise)
with respect to any representation or warranty other than as to Section 5.3
unless on or before the date which is 2 years after such Closing Date, Purchaser
is given notice of a claim with respect thereto and specifying the factual basis
of that claim in reasonable detail to the extent then known by the REIT Parties.
A claim with respect to Section 5.3 may be made at any time.
7.3. ATTORNEY'S FEES. If any action or proceeding is commenced by
any REIT Party or Purchaser to enforce their rights under this Agreement, or to
collect damages as a result of the breach of any of the provisions of this
Agreement, the prevailing party in such action or proceeding, including any
bankruptcy, insolvency or appellate proceedings, shall be entitled to recover
all reasonable costs and expenses actually incurred, including, without
limitation, reasonable attorneys' fees and court costs actually incurred, in
addition to any other relief awarded. The determination of who is the prevailing
party shall be decided by the court or courts, including any appellate court, in
which such matter is tried, heard or decided.
7.4. ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement and the
other Transaction Documents and all documents delivered in connection herewith
or therewith embody the entire agreement and understanding between the Purchaser
and the REIT Parties and supersede all prior agreements and understandings
relating to the subject matter hereof. This Agreement may be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may be given, provided that the same are in writing and signed by the
Purchaser and each of the REIT Parties.
7.5. NOTICES, ETC. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be sent by facsimile, with receipt confirmed, or delivered or mailed by
registered or certified mail, return receipt requested, or by a nationally
recognized overnight courier, postage prepaid, addressed, (a) if to the
Purchaser, at the address set forth on the Purchaser's signature page hereto or
such other address as the Purchaser shall have furnished to the REIT in writing,
or (b) if to any other holder of any Shares, at such address as such other
holder shall have furnished to the REIT in writing, or, until any such other
holder so furnishes to the REIT an address, then to and at the address of the
last holder of such Shares who has furnished an address to the REIT, or (c) if
to any REIT Party, at the address set forth at the beginning of this Agreement,
to the attention of President, or at such other address, or to the attention of
such other officer, as the REIT shall have furnished to the Purchaser and each
such other holder in writing.
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<PAGE>
7.6. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the
parties hereto are referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the respective parties which are contained in this Agreement
shall bind and inure to the benefit of the successors and assigns of all other
parties. Except as otherwise provided herein, the terms and provisions of this
Agreement and the other Transaction Documents shall inure to the benefit of and
shall be binding upon any assignee of the Purchaser, and in the event of such
assignment, the rights and privileges herein conferred upon the Purchaser shall
automatically extend to and be vested in, and become an obligation of, such
assignee, all subject to the terms and conditions hereof.
7.7. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
7.8. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to a particular party, the determination
of such satisfaction shall be made by such party, as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
7.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY THE LAW
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.
7.10. EXPENSES. The REIT will pay at the Closing (or on such later
date as one or more invoices may be submitted to the REIT) the expenses of
Purchaser reasonably and actually incurred in connection with this Agreement and
consummation of the transactions contemplated hereby.
7.11. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
7.12. INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party to this Agreement will not be materially
and adversely affected thereby, (a) such provision will be fully severable, (b)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added
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automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
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<PAGE>
SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed as of the date first set forth above.
GOLF TRUST OF AMERICA, INC., a
Maryland corporation
By: /s/ W. Bradley Blair, II
---------------------------------
Name: W. Bradley Blair, II
Title: President and Chief
Executive Officer
GTA GP, Inc., a Maryland corporation
By: /s/ W. Bradley Blair, II
---------------------------------
Name: W. Bradley Blair, II
Title: President and Chief
Executive Officer
GTA LP, Inc., a Maryland corporation
By: /s/ W. Bradley Blair, II
---------------------------------
Name: W. Bradley Blair, II
Title: President and Chief
Executive Officer
GOLF TRUST OF AMERICA, L.P., a
Delaware limited partnership
By: GTA GP, Inc., its general partner
Copies of notices to.:
O'Melveny & Myers LLP By: /s/ W. Bradley Blair, II
275 Battery Street, Suite 2600 ---------------------------------
San Francisco, California 94111-3305 Name: W. Bradley Blair, II
Attention: Peter T. Healy, Esq. Title: President and Chief
Telephone: (415) 984-8833
Facsimile: (415) 984-8701
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<PAGE>
SECURITIES PURCHASE AGREEMENT PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Number and Manner of Payment
dated first written above of Purchase Price of Shares to be Purchased:
800,000 Shares of 9.25% Series A Cumulative
Convertible Preferred Stock of Golf Trust of
America, Inc.
AEW TARGETED SECURITIES FUND, L.P.
Purchase Price: $20,000,000
By: AEW TSF, L.L.C. its General Partner
By: AEW TSF, INC., its Managing Member
By: /s/ Michael J. Buckley
--------------------------------
Name: Michael J. Buckley
Title: Vice President
Address: AEW Targeted Securities Fund, L.P.
225 Franklin Street
Boston, MA 02109
Attn: AEW, TSF, L.L.C
Telephone: 617-261-9000
Telecopier: 617-261-9555
Nominee (name in which the Shares to be
registered, if different than the name of Purchaser)
- ----------------------------------------
(Nominee's Name)
COPIES OF NOTICE TO:
Tax I.D. Number: 04-343-6657 J. Grant Monahon, Esq.
(if acquired in the name of a General Counsel
nominee, the taxpayer I.D. AEW Capital Management, Inc.
number of such nominee) 225 Franklin Street
Boston, Massachusetts 02109
Telephone No.: 617-261-9000
Telecopier No.: 617-261-9555
and
<PAGE>
Steven L. Lichtenfeld, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telephone No.: 212-856-6996
Telecopier No.: 212-856-7823
<PAGE>
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") dated as of April 2, 1999,
by and between Golf Trust of America, Inc., a Maryland corporation (the
"COMPANY"), and AEW Targeted Securities Fund, L.P. (the "PURCHASER").
This Agreement is made pursuant to a certain Stock Purchase Agreement (the
"STOCK PURCHASE AGREEMENT") dated as of the date hereof by and between the
Company and the Purchaser, pursuant to which the Purchaser shall purchase
800,000 shares of Series A Cumulative Convertible Preferred Stock, par value
$.01 per share, of the Company (the "PREFERRED STOCK"), which are convertible
into shares of Common Stock, par value $.01 per share, of the Company. In order
to induce the purchasers to enter into the Stock Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing of the transactions
contemplated by the Stock Purchase Agreement.
In consideration of the foregoing, the parties hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"ADVICE" has the meaning set forth in Section 3.
"AFFILIATE" means, with respect to any specified Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with such specified Person.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which commercial banking institutions in New York, New York are authorized by
law to be closed. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, par value $0.01 per share, of the
Company,
"COMPANY" has the meaning set forth in the preamble and shall include the
Company's successors by merger, acquisition, reorganization or otherwise.
"CONTROLLING PERSONS" has the meaning set forth in Section 6(a).
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<PAGE>
"DAMAGES" has the meaning set forth in Section 6(a).
"DEVELOPMENT SUSPENSION NOTICE" has the meaning set forth in Section 4.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"HOLDER" means (i) each Person (other than the Company and its Affiliates)
who is a signatory to this Agreement as listed on Schedule 1 hereto and (ii)
each Person (other than the Company and its Affiliates) to whom a Holder
transfers Securities if such Person acquires such Securities as Registrable
Securities.
"HOLDER'S UNDERWRITTEN OFFERING" has the meaning set forth in Section
3(s).
"INSPECTORS" has the meaning set forth in Section 3(k).
"LIMITED PARTNERS" shall mean the limited partners of Golf Trust of
America, L.P., a Delaware limited partnership.
"NASD" has the meaning set forth in Section 3(m).
"NASDAQ" has the meaning set forth in Section 3(m).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or other agency or political
subdivision thereof.
"PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"RECORDS" has the meaning set forth in Section 3(k).
"REGISTRABLE SECURITIES" means the Securities; PROVIDED, HOWEVER, that any
Securities shall cease to be Registrable Securities when (i) a Registration
Statement covering such Securities has been declared effective and such
Registrable Securities have been disposed of by the holder thereof pursuant to
such effective Registration Statement or any other effective
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<PAGE>
registration statement, (ii) such Securities are transferred by the holder
thereof to any Person other than a Holder pursuant to Rule 144 (or any successor
rule or similar provision then in effect, but not Rule 144A) under the
Securities Act, including a sale pursuant to the provisions of Rule 144(k), or
(iii) such Securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" has the meaning set forth in Section 5.
"REGISTRATION STATEMENT" means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration statement,
including post-effective amendments, in each case including the Prospectus, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"REQUIRED FILING DATE" has the meaning set forth in Section 2(a).
"SECURITIES" shall mean the Preferred Stock, including any subdivisions,
reclassifications or other recapitalization thereof and all shares of Common
Stock issued or to be issued to the Holders upon the conversion of their
Preferred Stock.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, or any successor statute, the rules and regulations of the Commission
promulgated thereunder.
"SECTION 3 SUSPENSION NOTICE" has the meaning set forth in Section 3.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in Section 2(a).
"STOCK PURCHASE AGREEMENT" has the meaning set forth in the introduction.
"SUSPENSION NOTICE" has the meaning set forth in Section 4.
"TARGET EFFECTIVE DATE" means the date thirty (30) days after the earlier
of (i) a Required Filing Date or (ii) the date on which the Shelf Registration
Statement is actually filed with the Commission.
SECTION 2. (a) SHELF REGISTRATION.
(i) FILING; EFFECTIVENESS. No later than thirty (30) days
after the closing of the transactions contemplated by the Stock Purchase
Agreement (the "REQUIRED FILING DATE"), the Company shall prepare and file
with the Commission a "shelf" registration statement (the "SHELF
REGISTRATION STATEMENT") on the appropriate form for an offering to be
made on a continuous basis pursuant to Rule 415 under the Securities Act
(or any successor rule or similar provision then in effect) covering all
of the Registrable Securities. The Company shall use its commercially
reasonable efforts
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<PAGE>
to have the Shelf Registration Statement declared effective on or before
the Target Effective Date and to keep such Shelf Registration Statement
continuously effective for a period expiring on the date on which all of
the Registrable Securities cease to be Registrable Securities.
(ii) SUPPLEMENTS; AMENDMENTS. The Company agrees, if
necessary, to supplement or amend the Shelf Registration Statement, as
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration
Statement or by the Securities Act or as otherwise required by this
Agreement.
(iii) EFFECTIVE REGISTRATION. A registration will not be
deemed to have been effected as a Shelf Registration Statement unless the
Shelf Registration Statement with respect thereto has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
PROVIDED, HOWEVER, that if after the Shelf Registration Statement has been
declared effective, the offering of Registrable Securities pursuant to
such Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Shelf Registration Statement will be
deemed not to have been effective during the period of such interference
until the offering of Registrable Securities pursuant to such Shelf
Registration Statement may legally resume. If a registration requested
pursuant to this Section 2 is deemed not to have been effected, then the
Company shall continue to be obligated to effect a registration pursuant
to this Section 2.
(b) DEMAND REGISTRATION RIGHTS. At any time (i)(a) after the Shelf
Registration Statement is no longer effective or (b) a suspension of the
Holder's rights as provided in Section 4(a) exceeds ninety (90) days, and (ii)
upon the affirmative vote of no less than a majority of the issued and
outstanding (excluding treasury stock) Registrable Securities owned by the
Holders at that time (such group of holders the "Majority Holders") and (iii)
provided the aggregate fair market value (to be calculated as the aggregate
number of shares to be subject to an offering multiplied by the average closing
sales price of the Common Stock during the twenty trading days prior to the
applicable date) of the Registrable Securities to be subject to such requested
registration shall equal at least $3 million dollars as of the date of the
notice delivered by the Majority Holders to the Company requesting such Demand
Registration Statement under this Section 2(b), then the Holders shall have the
right to request the Company to prepare and file one or more registration
statements (a "DEMAND REGISTRATION STATEMENT") covering the Registrable
Securities; PROVIDED HOWEVER, if the requested registration pursuant to this
Section 2(b) involves a syndicated underwritten offering that contemplates a
"road show," which requires the Company's executive officers to accompany the
underwriters with their sales efforts, then the aggregate fair market value (to
be calculated as the aggregate number of shares to be subject to an offering
multiplied by the average closing sales price of the Common Stock during the
twenty trading days prior to the applicable date) of the Registrable Securities
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<PAGE>
to be subject to such requested registration shall equal at least $5 million
dollars as of the date of the notice delivered by the Majority Holders to the
Company requesting such Demand Registration Statement under this Section 2(b).
The Company covenants and agrees with Purchaser that, upon written request of
such Holders made pursuant to this Section 2(b) (which request shall state the
number of Registrable Securities to be so registered and the intended method of
distribution thereof), the Company shall use its reasonable best efforts to file
a Demand Registration Statement under the Securities Act, to the extent
necessary to permit their sale or other disposition in accordance with the
intended method of distribution specified in the request of such Holders.
The Majority Holders may demand in writing that the Company list, not
earlier than one year following the date hereof, the Registrable Securities on
the principal exchange on which the Company's securities are then listed if so
permitted by applicable law and the regulations of such exchange.
(c) INCIDENTAL REGISTRATION. Whenever the Company proposes to file a
registration statement (other than on Form S-4 or on Form S-8 or on any
successor form relating to shares issuable in connection with any employee
benefit plan (including any option plan) or any transaction of the type to which
Rule 145 of the Act or any successor provision is applicable, or any dividend
reinvestment or direct stock purchase plan for the benefit of the Company's
stockholders), at any time and from time to time (a "REGISTRATION"), it will,
prior to such filing, give thirty (30) days' prior written notice to the Holders
of its intention to do so and, upon the written request of any Holder, given
within fifteen (15) days after the Company provides such notice (which request
shall state the intended method of distribution of such shares), the Company
shall use its reasonable best efforts to cause all such shares which the Company
has been requested to include by any Holder, to be included in the Registration;
PROVIDED that the Company shall have the right to postpone or withdraw any
Registration effected pursuant to this Section 2(c) without obligation to any
Holder. The Company will keep such registration statement effective and current
under the Securities Act permitting the sale of the Registrable Securities
covered thereby for the same period that the registration statement is
maintained effective for other persons (including the Company) selling
thereunder.
In connection with any offering under this Section 2(c) involving an
underwritten offering, if, in the good faith written opinion of the
underwriters, inclusion of all, or part of, the shares which any Holder has
requested to be included would materially or adversely affect such public
offering, then the number of such shares of the Holders to be offered will be
reduced as follows: (i) no Holder of Registrable Securities shall be entitled to
participate in such underwritten offering unless all shares proposed to be sold
by the Company for its own account have been included in such underwritten
offering, and (ii) after the Company has included its proposed shares, the
Limited Partners shall be entitled to include any securities subject to
"piggyback registration rights" pursuant to Section 8.07 of the First Amended
and Restated Agreement of Limited Partnership of Golf Trust of America, L.P., as
amended through and in effect on the date hereof, but including Limited Partners
admitted after the date
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<PAGE>
hereof, and (iii) after the Company and the Limited Partners have included their
proposed shares, the Holders shall be entitled to include their Registrable
Securities in an amount up to the amount that such managing underwriter or
underwriters advise may be included therein (as allocated among the Holders pro
rata based on the number of Registrable Securities each Holder has requested to
include therein). In addition, the Company shall not be required to include any
such shares in such underwritten offering unless the Holders thereof accept the
terms of the offering as agreed upon between the Company and the underwriters
selected by it and execute and deliver an underwriting agreement, including such
representations, warranties, covenants, indemnities, opinions and other terms as
are customary from selling shareholders in underwritten offerings.
SECTION 3. REGISTRATION PROCEDURES
In connection with the obligations of the Company to effect or cause the
registration of any Registrable Securities pursuant to the terms and conditions
of this Agreement, the Company shall use its reasonable best efforts to effect
the registration of such Registrable Securities in accordance with the intended
method of distribution thereof as quickly as practicable, and in connection
therewith:
(a) The Company shall prepare and file with the Commission a
Registration Statement on the appropriate form under the Securities Act, which
Registration Statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and use its reasonable best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that, prior to filing a Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall furnish to the Holders of
the Registrable Securities covered by such Registration Statement, Holders'
counsel and the managing underwriters, if any, draft copies of all such
documents proposed to be filed, and shall, prior to filing such documents,
review any comments which are submitted by any Holder or its counsel within five
(5) days after delivery of such documents to such Holder by the Company;
PROVIDED, FURTHER, that, except to the extent such comments relate to specific
disclosure regarding such Holder or its proposed method of disposition of the
Securities, the Company shall not be required to incorporate any such comments
into the documents.
(b) The Company shall (i) prepare and file with the Commission such
amendments to such Registration Statement as may be necessary to keep such
Registration Statement effective as provided in this Agreement; (ii) cause the
Prospectus to be amended or supplemented as required and to be filed as required
by Rule 424 or any similar rule that may be adopted under the Securities Act;
(iii) respond as promptly as practicable to any comments received from the SEC
with respect to a Registration Statement or any amendment thereto; and (iv)
comply with the provisions of the Securities Act with respect to the disposition
of all
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<PAGE>
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the Holder
covered thereby.
(c) The Company shall promptly furnish to any Holder and the
managing underwriters, if any, without charge, such number of conformed copies
of such Registration Statement and any post-effective amendment thereto and such
number of copies of the Prospectus (including each preliminary Prospectus) and
any amendments or supplements thereto, any documents incorporated by reference
therein and such other documents as any such Holder or underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities being sold by such Holder.
(d) The Company, if necessary, shall, on or prior to the date on
which a Registration Statement is declared effective, (i) use its reasonable
best efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or "blue sky" laws, or obtain
appropriate exemptions therefrom, in such states of the United States as are
reasonably requested by any Holder in writing; (ii) do any and all other acts
and things which may be reasonably necessary or advisable to enable the Holders
of Registrable Securities included in such Registration Statement to consummate
the disposition of such Registrable Securities in accordance with their intended
method of distribution thereof; (iii) use its commercially reasonable efforts to
keep each such state securities or "blue sky" registration or qualification (or
exemption therefrom) effective during the period in which the Company is
required to keep the Registration Statement effective; and (iv) do any and all
other acts or things which may be reasonably necessary or advisable to enable
the Holders of Registrable Securities included in such Registration Statement to
complete the disposition in such jurisdictions of such Registrable Securities in
accordance with their intended method of distribution thereof; PROVIDED,
HOWEVER, that the Company shall not be required (A) to qualify generally to do
business in any jurisdiction or to register as a broker or dealer in such
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(d), (B) to submit to the general service of process in any such
jurisdiction where it is not otherwise subject to general service of process or
(C) subject itself to taxation in any such jurisdiction where it is not
otherwise subject to taxation.
(e) The Company shall promptly notify each Holder and Holders'
counsel in writing, (i) when a Registration Statement or a Prospectus or any
post-effective amendment or any Prospectus supplement has been filed and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or any state
securities authority for amendments and supplements to a Registration Statement
and Prospectus or for additional information after the Registration Statement
has become effective, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) of the issuance by any
state securities commission or other regulatory authority of any order
suspending the registration or qualification or exemption from registration or
qualification of any of the Registrable Securities under state securities or
"blue
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<PAGE>
sky" laws or the initiation of any proceedings for that purpose, (v) if, between
the effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties of
the Company contained in any underwriting agreement, if any, relating to the
offering of such Registrable Securities cease to be true and correct in all
material respects, and (vi) of the happening of any event which requires the
making of any changes in such Registration Statement or Prospectus so that such
Registration Statement or Prospectus will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and, as promptly as practicable
thereafter, prepare and file an amendment to such Registration Statement with
the Commission and furnish to the Holders, Holders' counsel and any underwriter
a supplement or amendment to such Prospectus so that, as thereafter deliverable
to the purchasers of such Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(f) The Company shall make generally available to its security
holders an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act as soon as practicable after the effective date of a Registration
Statement, which requirement will be deemed to be satisfied if the Company
timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under
the Exchange Act and otherwise complies with Rule 158 under the Securities Act.
(g) The Company shall use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration Statement,
and, if any such order suspending the effectiveness of a Registration Statement
is issued, shall use its reasonable best efforts to obtain the withdrawal of
such order at the earliest possible moment.
(h) The Company shall, if reasonably requested by Holders' counsel
or any Holder, promptly incorporate in a Prospectus supplement or post-effective
amendment such information regarding such Holder, the terms of the disposition
and the plan of distribution as such Holder or Holders' counsel requests to be
included therein, including, without limitation, with respect to the Registrable
Securities being sold by such Holder to any underwriter or underwriters, the
purchase price being paid therefor by such underwriter or underwriters and any
other terms of an underwritten offering of the Registrable Securities to be sold
in such offering, and the Company shall promptly make all required filings of
such Prospectus supplement or post-effective amendment.
(i) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
Registrable Securities sold under a Registration Statement to the purchasers
thereof, and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
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<PAGE>
any, or such Holders may request and keep available and make available to the
Company's transfer agent prior to the effectiveness of such Registration
Statement a supply of such certificates.
(j) The Company shall enter into such customary agreements
(including, if applicable, an underwriting agreement) and take such other
actions as the Holders or the underwriters retained by the Holders participating
in an underwritten public offering, if any, may reasonably request in order to
expedite or facilitate the disposition of Registrable Securities; provided,
however, that such underwriters are reasonably acceptable to the Company. (The
Holders may, at their option, require that any or all of the representations,
warranties and covenants of the Company to or for the benefit of any
underwriters also be made to and for the benefit of the Holders.)
(k) The Company shall promptly make available to each Holder, any
underwriter participating in any disposition of Registrable Securities pursuant
to a Registration Statement, and any attorney, accountant or other agent or
representative retained by any such Holder or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply such Records as are reasonably requested by any such Inspector in
connection with such Registration Statement; PROVIDED, HOWEVER, that such
records, documents or information which the Company determines, in good faith,
to be confidential and notifies such representatives, representative of the
underwriters, special counsel or accountants are confidential, shall be kept
confidential and shall not be disclosed by any Inspector unless (i) subject to
the provisions hereof, the disclosure of such records, documents or information
is necessary to avoid or correct a misstatement or omission in a Registration
Statement or Prospectus, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public; PROVIDED, FURTHER, that the
foregoing inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of the Inspectors by one counsel designated
by and on behalf of such Inspectors and reasonably acceptable to the Company.
(l) The Company shall furnish to each Holder of Registrable
Securities included in such offering and to each underwriter, if any, if
requested by such Holder or underwriter, a signed counterpart, addressed to such
Holder or underwriter, of (i) an opinion or opinions of counsel to the Company,
and (ii) a comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering matters of the type
customarily covered by opinions or comfort letters, as the case may be.
(m) The Company shall use its best efforts to cause the Registrable
Securities included in a Registration Statement (if the Company and the
Registrable Securities so qualify)
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<PAGE>
(i) to be listed on each national securities exchange, if any, on which
securities of such class or series issued by the Company are then listed, or
(ii) if similar securities of the Company are not then listed, to be authorized
for quotation or listing, as applicable, on the National Association of
Securities Dealers, Inc.'s ("NASD") Nasdaq Stock Market ("NASDAQ").
(n) The Company shall cooperate with each Holder and each
underwriter participating in the disposition of Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD.
(o) The Company shall reasonably assist each Holder and each
underwriter participating in the disposition of Registrable Securities with the
marketing of such Registrable Securities.
(p) The Company shall, during the period when the Prospectus is
required to be delivered under the Securities Act, file in a timely fashion all
documents required to be filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act.
(q) The Company shall maintain a transfer agent and registrar for
all Registrable Securities covered by a Registration Statement not later than
the effective date of such Registration Statement.
(r) If the Registrable Securities are of a class of securities that
is listed on a national securities exchange, the Company shall file copies of
any Prospectus with such exchange to satisfy the requirements of Rule 153 under
the Securities Act so that the Holders shall benefit from the prospectus
delivery procedures described therein.
(s) Upon the written request of any Holder, unless previously filed,
the Company shall promptly file a Form 8-A with the Commission registering the
Preferred Stock under the Exchange Act.
(t) If the Purchaser so elects, the offering of Registrable
Securities pursuant to a Shelf Registration Statement or a Demand Registration
Statement may be in a form of a registration in which the Registrable Securities
are sold to an underwriter for reoffering to the public in a manner requiring
registration under the Securities Act (a "HOLDER'S UNDERWRITTEN OFFERING"). If
the Holders are conducting a Holder's Underwritten Offering, then the Company
agrees to suspend any underwritten offering proposed or being conducted by the
Company (other than a registration by the Company on a Form S-4 or S-8, or
successor or substantially similar forms of (i) an employee stock option, stock
purchase or compensation plan or of securities issued or issuable pursuant to
any plan or (ii) a dividend reinvestment or direct stock purchase plan or (iii)
a transaction of the type to which Rule 145 of the Act or any successor
provision is applicable) until the date that the Holder's Underwritten Offering
is completed.
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<PAGE>
In the case of a Shelf Registration Statement, each Holder, upon receipt
of any notice (a "SECTION 3 SUSPENSION NOTICE") of the happening of any event of
the kind described in Section 3(e)(vi), shall forthwith discontinue disposition
of the Registrable Securities pursuant to the Shelf Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(e) or until
such Holder is advised in writing (the "ADVICE") by the Company that the use of
the Prospectus may be resumed, and such Holder has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, such Holder will, and will
request the managing underwriter or underwriters, if any, to deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In no event shall such period extend for
longer than ninety (90) days; provided the Company may deliver only two Section
3 Suspension Notices in any twelve-month period without the consent of a
majority in interest of the Holders. In the event that the Company shall give
any Section 3 Suspension Notice, the Company shall use its best efforts and take
such actions as are reasonably necessary to render the Advice and deliver copies
of the supplemental or amended Prospectus as promptly as reasonably practicable.
The Company may require each Holder to furnish to the Company such
information regarding the proposed distribution by such Holder of Registrable
Shares as the Company may from time to time reasonably request in writing and no
Holder shall be entitled to be named as a selling securityholder in any
Registration Statement and no Holder shall be entitled to use the Prospectus
forming a part thereof if such Holder does not provide such information to the
Company.
If any Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require the deletion of the reference to such Holder in the event that
such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar federal or state securities or "blue sky" statute
and the rules and regulations thereunder then in force.
SECTION 4. SUSPENSION OF OFFERING.
(a) If the Company determines in its good faith judgment that the
filing of the Shelf Registration Statement under Section 2(a) or the use of any
Prospectus would materially impede, delay or interfere with any pending material
financing, acquisition or corporate reorganization or other material corporate
development involving the Company or any of its subsidiaries, or require the
disclosure of important information which the Company has a material business
purpose for preserving as confidential or the disclosure of which would
materially impede the Company's ability to consummate a significant transaction,
upon written notice of such determination by the Company, the rights of each
Holder to offer, sell or distribute any Registrable Securities pursuant to the
Shelf Registration Statement or to require the Company to take action with
respect to the registration or sale of any Registrable Securities
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<PAGE>
pursuant to the Shelf Registration Statement (including any action contemplated
by Section 2 hereof) will be suspended until the date upon which the Company
notifies the Holders in writing (a "DEVELOPMENT SUSPENSION NOTICE" and, together
with a Section 3 Suspension Notice, a "SUSPENSION NOTICE") that suspension of
such rights for the grounds set forth in this Section 4 is no longer necessary,
but, in any event, no such period shall extend for longer than ninety (90) days;
PROVIDED the Company may deliver only two such notices in any twelve-month
period without the consent of a majority in interest of the Holders.
(b) In the case of the registration of any underwritten public offering
proposed by the Company (other than any registration by the Company on Form S-8,
or a successor or substantially similar form, of (i) an employee stock option,
stock purchase or compensation plan or of securities issued or issuable pursuant
to any plan or (ii) a dividend reinvestment plan), each Holder agrees, if
requested in writing by the managing underwriter or underwriters administering
such offering, not to effect any underwritten offering for the resale of
Registrable Securities (or any option or right to acquire Registrable
Securities) during the period commencing on the 30th day prior to the expected
effective date of the registration statement covering such underwritten public
offering or the date on which the proposed offering is expected to commence
(which date shall be stated in such notice) and ending on the date specified by
such managing underwriter in such written request to such Holder, which date
shall not be later than forty-five (45) days after such expected date of
effectiveness or the commencement of the offering, as the case may be.
SECTION 5. REGISTRATION EXPENSES. Any and all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all Commission and securities exchange, Nasdaq or NASD registration,
listing and filing fees, all fees and expenses incurred in connection with
compliance with state securities or "blue sky" laws (including reasonable fees
and disbursements of counsel for any underwriters or Holder in connection with
the state securities or "blue sky" qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of the
Company's officers and employees performing legal or accounting duties), all
expenses for word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements and other documents relating to the performance of and
compliance with this Agreement, the fees and expenses incurred in connection
with the listing of the Registrable Securities, the fees and disbursements of
counsel for the Company and of the independent certified public accountants of
the Company (including the expenses of any comfort letters or costs associated
with the delivery by independent certified public accountants of a comfort
letter or comfort letter requested pursuant to Section 3(l)), Securities Act
liability insurance (if the Company elects to obtain such insurance), and the
reasonable fees and expenses of any special experts or other Persons retained by
the Company in connection with any registration (all such expenses being herein
called "REGISTRATION EXPENSES"), will be borne by the Company whether or not the
Shelf Registration Statement to which such expenses relate
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becomes effective. The Company shall not be required to pay underwriters'
discounts, commissions or expenses or stock transfer taxes relating to the
Registrable Securities.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each Holder, its
partners, officers, directors, trustees, stockholders, employees, agents and
investment advisers, and each Person who controls such Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the partners, officers, directors, trustees, stockholders,
employees, agents and investment advisors of such controlling Person
(collectively, the "CONTROLLING PERSONS"), from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, any legal or
other fees and expenses reasonably incurred by any Holder or any such
Controlling Person in connection with defending or investigating any action or
claim in respect thereof) (collectively, the "DAMAGES") to which such Holder,
its partners, officers, directors, trustees, stockholders, employees, agents and
investment advisers, and any such Controlling Person, may become subject under
the Securities Act or otherwise, insofar as such Damages (or proceedings in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Registrable Securities were registered
under the Securities Act, including all documents incorporated therein by
reference, or are caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or are caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company shall not be liable
for Damages to any Holder under this Section 6(a) to the extent that any such
Damages (i) arise out of or are based upon any such untrue statement or omission
which is based upon information relating to such Holder furnished in writing to
the Company by or on behalf of such Holder expressly for use in any such
Registration Statement (or any amendment thereto) or Prospectus (or amendment or
supplement thereto); or (ii) were caused by the fact that such Holder sold
Securities to a Person as to whom it shall be established that there was not
sent or given, or deemed sent or given pursuant to Rule 153 under the Securities
Act, at the time of or prior to the written confirmation of such sale, a copy of
the Prospectus as then amended or supplemented if, and only if, (a) the Company
has previously furnished copies of such amended or supplemented Prospectus to
such Holder or the Company has notified such Holder for the need for an amended
or supplemental Prospectus and (b) such Damages were caused by any untrue
statement or omission or alleged untrue statement or omission contained in the
Prospectus so delivered which was or was to be corrected in such amended or
supplemented Prospectus. In connection with an underwritten offering, the
Company will indemnify the underwriters
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thereof, their officers and directors and each Person who controls such
underwriters (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities except
with respect to information provided by the underwriter specifically for
inclusion therein.
(b) INDEMNIFICATION BY THE HOLDERS. Each Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, its directors and
officers and each Person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against all Damages to the same extent as the foregoing indemnity from the
Company to such Holder set forth in Section 6(a), but only to the extent such
Damages arise out of or are based upon any untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(or any amendment or supplement thereto) or are caused by any omission to state
therein a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, which untrue
statement or omission is based upon information relating to such Holder
furnished in writing to the Company by or on behalf of such Holder expressly for
use in any such Registration Statement (or any amendment thereto) or any such
Prospectus (or any amendment or supplement thereto); PROVIDED, HOWEVER, that
such Holder shall not be obligated to provide such indemnity to the extent that
such Damages result from the failure of the Company to amend or take action to
correct or supplement any such Registration Statement or Prospectus in a timely
fashion on the basis of corrected or supplemental information furnished in
writing to the Company by such Holder expressly for such purpose. In no event
shall the liability of any Holder of Registrable Securities hereunder be greater
in amount than the amount of the proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) INDEMNIFICATION PROCEDURES. In case any proceeding (including
any governmental investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to either paragraph (a) or (b)
above, such Person (the "INDEMNIFIED PARTY") shall promptly notify the Person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceedings and shall pay the fees and disbursements of such counsel relating to
such proceeding. The failure of an indemnified party to notify the indemnifying
party with respect to a particular proceeding shall not relieve the indemnifying
party from any obligation or liability (i) which it may have pursuant to this
Agreement if the indemnifying party is not substantially prejudiced by such
failure to so notify it or (ii) which it may have otherwise than pursuant to
this Agreement. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel, or (ii) the indemnifying party fails
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within a reasonable time to assume the defense of such proceeding or fails to
employ counsel reasonably satisfactory to such indemnified party, or (iii) (A)
the named parties to any such proceeding (including any impleaded parties)
include both such indemnified party or an Affiliate of such indemnified party
and any indemnifying party or an Affiliate of such indemnifying party, (B) there
may be one or more defenses available to such indemnified party or any Affiliate
of such indemnified party that are different from or additional to those
available to any indemnifying party or any Affiliate of any indemnifying party
and (C) such indemnified party shall have been advised by such counsel that
there may exist a conflict of interest between or among such indemnified party
or any Affiliate of such indemnified party and such indemnifying party or any
Affiliate of such indemnifying party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to employ a single
separate counsel of its choice (other than local counsel) at the reasonable
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the indemnifying party, it being understood, however, that unless there exists a
conflict among indemnified parties, the indemnifying parties shall not, in
connection with any one such proceeding or separate but substantially similar or
related proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for more than the reasonable fees and
expenses of one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified parties. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent but, if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify each indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of each
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which such indemnified party is a party, and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on all
claims that are the subject matter of such proceeding with no payment by such
indemnified party of consideration in connection with such settlement.
(d) CONTRIBUTION. If the indemnification from the indemnifying party
provided for in this Section 6 is found, pursuant to a final judicial
determination not subject to appeal, to be unavailable to an indemnified party
hereunder or insufficient in respect of any Damages incurred by such indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the Damages paid or payable by such indemnified party
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the actions or
omissions that resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action or omission in question, including any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such indemnifying party
or indemnified parties, and the parties' relative intent, knowledge, access to
information and
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opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the Damages referred to above shall be deemed to include,
subject to the limitations set forth in Section 6(c), any legal or other
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public (less any underwriting discounts or
commissions) exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no selling Holder shall be
required to contribute any amount in excess of the amount by which the total net
proceeds received by such selling Holder with respect to Registrable Securities
sold by such selling Holder exceeds the amount of any damages which such selling
Holder has otherwise been required to pay by reason of such untrue statement or
alleged untrue statement or omission or alleged omission. Each Holder's
obligation to contribute pursuant to this Section 6(d) is several and not joint
and shall be determined by reference to the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds of the offering
received by all the Holders. No person guilty of fraudulent misrepresentation
(within the meaning of Section II (f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 6 are not exclusive
and shall not limit any rights or remedies that may otherwise be available to
any indemnified party at law or in equity.
Notwithstanding the foregoing, if indemnification is available under
paragraph (a) or (b) of this Section 6, the indemnifying parties shall indemnify
each indemnified party to the full extent provided in such paragraphs without
regard to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 6(d).
SECTION 7. RULE 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act, and
the rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary to permit
sales of the Registrable Securities under Rule 144 under the Securities Act),
and it will take such further action as any Holder may request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any successor rule or similar
provision or regulation hereafter adopted by the Commission. Upon the request of
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any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 8. RULE 144A. The Company covenants that it will file all reports
required to be filed by it under the Securities Act and the Exchange Act, and
the rules and regulations adopted by the Commission thereunder (or if the
Company is not required to file such reports, it will, upon the request of any
Holder, make available other information so long as necessary to permit sales of
the Registrable Securities pursuant to Rule 144A under the Securities Act), and
it will take such further action as any Holder may request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144A, as such rule may be amended from time to
time, or (b) any successor rule or similar provision or regulation hereafter
adopted by the Commission.
SECTION 9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
which conflicts with the rights granted to the Holders of Registrable Securities
in this Agreement. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in interest of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or consent;
PROVIDED, HOWEVER, that, no amendment, modification, supplement, waiver or
consent to any departure from the provisions of Section 4 hereof (other than any
immaterial amendment, modification, supplement, waiver or consent) shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.
(c) NOTICES. Except as otherwise provided in this Agreement, notices
and other communications under this Agreement shall be in writing and shall be
sent by facsimile, delivered or mailed by registered or certified mail, return
receipt requested, or by a nationally recognized overnight courier, postage
prepaid, addressed, (a) if to the Holder, at the facsimile number or address set
forth on the signature page hereto or such other facsimile number or address as
the Holder shall have furnished to the Company in writing or, if not otherwise
provided, in the stock register of the Company, or (b) if to the Company, at its
facsimile number or address set forth on the signature page hereto, or at such
other address the Company shall have furnished to the Holder and each such other
holder in writing.
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All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five (5) Business
Days after being deposited in the mail, postage prepaid, if mailed; by confirmed
receipt of transmission, if telecopied; and on the next Business Day if timely
delivered to a courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Registrable Securities in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles or rules of conflicts of law.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(j) FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
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(k) REMEDIES. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that remedies at law for violations
hereof, including monetary damages, are inadequate and that the right to object
in any action for specific performance or injunctive relief hereunder on the
basis that a remedy at law would be adequate is waived.
[SIGNATURE PAGE TO FOLLOW IMMEDIATELY]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
GOLF TRUST OF AMERICA, INC.
By: /s/ W. Bradley Blair, II
-------------------------------------
Name: W. Bradley Blair, II
Title: President and CEO
Notice Information:
14 North Adger's Wharf
Charleston, SC 29401
Attn: W. Bradley Blair, II
Telecopier: (843) 723-0479
with a copy to:
O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, CA 94111
Attn: Peter T. Healy, Esq.
Telecopier: (415) 984-8701
AEW TARGETED SECURITIES FUND, L.P.
By: AEW TSF, L.L.C., its General Partner
By: AEW TSF, INC., its Managing Member
By: /s/ Michael J. Buckley
-------------------------------------
Name: Michael J. Buckley
Title: Vice President
Notice Information:
c/o AEW Capital Management, Inc.
225 Franklin Street
Boston, MA 02125
Attn: Robert G. Gifford
J. Grant Monahon, Esq.
Telecopier: (617) 261-9555
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with a copy to:
Battler Fowler LLP
75 East 55th Street
New York, NY 10022
Attn: Steven L. Lichtenfeld, Esq.
Telecopier: (212) 856-7823
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Exhibit 10.3
GOLF TRUST OF AMERICA, L.P.
ARTICLES OF DESIGNATION
CLASSIFYING AND DESIGNATING 800,000 UNITS OF
9.25% SERIES A LIMITED PARTNERSHIP INTEREST
APRIL 2, 1999
WHEREAS, Golf Trust of America, Inc., a Maryland corporation ("GTA" or
the "Corporation") intends to issue 800,000 Shares of 9.25% Series A Cumulative
Convertible Preferred Stock ("Series A Preferred Shares"); and
WHEREAS, Section 4.02(a)(ii) of the Partnership Agreement provides "the
Company shall not issue any additional REIT Shares ... (collectively, "New
Securities") ... unless (A) the General Partner shall cause the Partnership to
issue to the General Partner and GTA LP, as the Company [shall] designate,
Partnership Interests ... having designations, preferences and other rights, all
such that the economic interests are substantially similar to those of the New
Securities, and (B) the Company, through the General Partner and GTA LP,
contributes the proceeds from the issuance of such New Securities and from the
exercise of rights contained in such New Securities to the Partnership;
WHEREAS, Section 4.02(a)(iii) of the Partnership Agreement (as added by
the First Amendment thereto, dated February 1, 1998), provides "The General
Partner shall record on EXHIBIT D the name of any additional class or series of
Partnership Interests together with the terms and conditions, designations,
preferences and relative, participating, optional or other special rights,
powers and duties (collectively, together with all associated provisions,
"Rights and Duties") of the holders thereof. In the event of any conflict
between (A) the Rights and Duties of an additional class of Partnership
Interests established pursuant to this Section 4.02 and recorded in EXHIBIT D
and (B) the Rights and Duties of Limited Partners generally under this
Agreement, EXHIBIT D shall govern the Rights and Duties of such additional class
of Limited Partner."
NOW, THEREFORE, GTA GP, Inc., a Maryland corporation and the sole
general partner of the Partnership, hereby certifies that, pursuant to authority
granted by Section 4.02 of the Partnership Agreement, it has designated a new
class of preferred partnership interest in the Partnership to be known as 9.25%
Series A Preferred Partnership Interest and to be denominated in units and
hereby sets forth in this EXHIBIT D the preferences, conversion and other
rights, voting powers, restrictions, limitations as to distributions,
qualifications, and terms and conditions of redemption and other terms and
conditions of such class of preferred partnership interest as follows:
SECTION 1. NUMBER OF UNITS AND DESIGNATION. This series of preferred
partnership interest shall be designated as the 9.25% Series A Preferred
Partnership Interest (the "Series A Preferred Units") and the number of units of
9.25% Series A Preferred Partnership Interest which shall initially constitute
such series shall be 800,000 units. The number of Series A Preferred Units shall
increase by one for each Series A Preferred Share (in excess of the initial
800,000) issued by GTA and shall decrease by one for each Series A Preferred
share retired by GTA.
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SECTION 2. DEFINITIONS. For purposes of the Series A Preferred Units,
the following terms shall have the meanings indicated:
"Agreement" shall have the meaning set forth in paragraph (d)(iii) of
Section 9 hereof.
"AMEX" shall mean the American Stock Exchange.
"Articles of Designation" shall mean these provisions in EXHIBIT D to
the Partnership Agreement recording the preferences, conversion and other
rights, voting powers, restrictions, limitations as to distributions,
qualifications, and terms and conditions of redemption and other terms and
conditions of the Series A Preferred Units.
"Articles Supplementary" shall mean the Articles Supplementary of GTA
relating to the Series A Preferred Shares, dated April 2, 1999, as filed with
the Department on April 2, 1999.
"Board of Directors" shall mean the Board of Directors of the General
Partner or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Series A Preferred Units.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Change of Control" shall be deemed to have occurred if any of the
following occur: (i) any merger or consolidation of the Corporation in which one
or more entities acquire more than 50% of the Corporation's outstanding voting
equity securities or as a result of which stockholders of the Corporation
immediately before such merger or consolidation hold, immediately after such
merger or consolidation, less than 50% of the surviving entity's outstanding
common stock; (ii) the Corporation or a wholly-owned subsidiary of the
Corporation ceases to be the sole general partner of the Partnership or grants
or sells to any person, or consents to any amendment to the Partnership
Agreement which has the effect of transferring the power to control or direct
the actions of the Partnership to any person as if such person (A) were a
general partner of the Partnership or (B) were a limited partner of the
Partnership with consent or approval rights materially greater than the consent
or approval rights held by the limited partners of the Partnership on the date
hereof; or (iii) the Partnership is a party to any entity conversion or any
merger or consolidation in which the Partnership is not the surviving entity in
such merger or consolidation or in which the effect is of the nature set forth
in the next preceding clause (ii).
"Committee" shall have the meaning set forth in the first recital
hereof.
"Common Share" shall mean one share of the common stock of GTA.
"Common Units" shall mean the common units of limited partnership
interest in the Partnership.
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 9 hereof.
"Conversion Price" shall mean the conversion price per Common Share for
which each Series A Preferred Share is convertible, as such Conversion Price may
be adjusted pursuant to Section 9 of the
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Articles Supplementary. The initial conversion price shall be $26.25 (equivalent
to a conversion rate of .95238 Common Shares for each Series A Preferred Share).
"Corporation" means Golf Trust of America, Inc., a Marlyand
corporation.
"Distribution Payment Date" shall mean, with respect to each
Distribution Period, the 15th calendar day of January, April, July and October,
in each year, commencing on July 15, 1999; provided, however, that if any
Distribution Payment Date falls on any day other than a Business Day, the
distribution payment due on such Distribution Payment Date shall be paid on the
first Business Day immediately following such Distribution Payment Date.
"Distribution Periods" shall mean quarterly distribution periods
commencing on January 1, April 1, July 1 and October 1 of each year and ending
on and including the day preceding the first day of the next succeeding
Distribution Period (other than the initial Distribution Period, which shall
commence on the Issue Date and end on and include June 30, 1999).
"Issue Date" shall mean the first date on which any Series A Preferred
Units are issued and sold.
"Junior Units" shall have the meaning set forth in paragraph (c) of
Section 11 hereof.
"Liquidation" shall mean a liquidation, dissolution or winding up of
the Corporation or the Partnership, whether voluntary or involuntary.
"Liquidation Event" shall mean (A) a Liquidation, (B) a Change of
Control, or (C) an Asset Disposition.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 hereof.
"Partnership" shall mean Golf Trust of America, L.P., a Delaware
limited partnership.
"Partnership Agreement" shall mean the First Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, dated February
12, 1997, as amended.
"Parity Units" shall have the meaning set forth in paragraph (b) of
Section 11 hereof.
"Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Preferred Units" shall mean the Series A Preferred Units of limited
partnership interest in the Partnership in number and with rights and
preferences identical to the Series A Preferred Units.
"Redemption Date" shall have the meaning set forth in paragraph (d) of
Section 5 hereof.
"Redemption Premium" shall have the meaning set forth in the Articles
Supplementary.
"Senior Units" shall have the meaning set forth in paragraph (a) of
Section 11 hereof.
"Series A Preferred Share" shall mean one share of GTA's 9.25% Series A
Cumulative Convertible Preferred Stock.
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"Series A Preferred Unit" shall have the meaning set forth in Section 1
hereof.
"Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of a distribution or other distribution by the Board of Directors,
the allocation of funds to be so paid on any series or class of units of
partnership interest of the Partnership; PROVIDED, however, that if any funds
for any class or series of Junior Units or any class or series of Parity Units
are placed in a separate account of the Partnership or delivered to a
disbursing, paying or other similar agent, then "set apart for payment" with
respect to the Series A Preferred Units shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question
are traded on the AMEX, or if such securities are not listed or admitted for
trading on the AMEX, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted on such Nasdaq National Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (f) of
Section 9 hereof.
SECTION 3. DISTRIBUTIONS.
(a) The holders of the Series A Preferred Units shall be entitled
to receive, when, as and if authorized and declared by the General Partner out
of funds legally available for that purpose, distributions payable in cash at
the rate per annum equal to the greater of (i) $2.3125 per Series A Preferred
Unit or (ii) an amount per Series A Preferred Unit equal to the aggregate annual
amount of cash distributions paid or payable, if any, with respect to that
number of Common Units, or portion thereof, into which each Series A Preferred
Unit is then convertible, in accordance with the terms of these Articles of
Designation (such greater amount, the "Annual Distribution Rate"). The amount
referred in clause (ii) of this subparagraph (a) with respect to each
Distribution Period shall be determined as of the applicable Distribution
Payment Date by multiplying the number of Common Units, or portion thereof
calculated to the fourth decimal point, into which a Series A Preferred Unit
would be convertible at the opening of business on such Distribution Payment
Date (based on the Conversion Price then in effect) by the quarterly cash
distribution payable or paid for such Distribution Period in respect of a Common
Unit outstanding as of the record date for the payment of distributions on the
Common Units with respect to such Distribution Period and multiplying such
product by four. Such distributions shall be cumulative from the Issue Date,
whether or not in any Distribution Period or Periods there shall be funds of the
Corporation legally available for the payment of such distributions and shall be
payable quarterly, when, as and if authorized and declared by the Board of
Directors, in arrears on Distribution Payment Dates, commencing on the first
Distribution Payment Date after the Issue Date. Each such distribution shall be
payable in arrears to the holders of record of the Series A Preferred Units, as
they appear on the records of the Partnership at the close of business on each
record date which shall not be more than 30 days preceding the applicable
Distribution Payment Date (the "Distribution Payment Record Date"), as shall be
fixed by the Board of Directors. Accrued and unpaid distributions for any past
Distribution Periods may be authorized and declared and paid at any time,
without reference to any regular Distribution Payment Date, to holders of record
on such date, which shall not be more than 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors. The amount of
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accrued and unpaid distributions on any Series A Preferred Unit at any date
shall be the amount of any distributions accumulated to and including such date,
whether or not earned or declared, which have not been paid in cash or set aside
for payment. Accumulated and unpaid distributions will not bear interest.
(b) The amount of distributions payable for each full Distribution
Period for the Series A Preferred Units shall be computed by dividing the Annual
Distribution Rate by four. The amount of distributions payable for the initial
Distribution Period, or any other period shorter or longer than a full
Distribution Period, on the Series A Preferred Units shall be computed on the
basis of twelve 30-day months and a 360-day year. Holders of Series A Preferred
Units shall not be entitled to any distributions, whether payable in cash,
property or stock, in excess of cumulative distributions, as herein provided, on
the Series A Preferred Units, plus any other amounts provided in these Articles
Supplementary.
(c) So long as any Series A Preferred Units are outstanding, no
distributions, except as described in the immediately following sentence, shall
be authorized and declared or paid or set apart for payment on any series or
class or classes of Parity Units for any period unless full cumulative
distributions have been or contemporaneously are authorized and declared and
paid or authorized and declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Units for all Distribution
Periods terminating on or prior to the distribution payment date for such class
or series of Parity Units. When distributions are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all distributions
authorized and declared upon Series A Preferred Units and all distributions
authorized and declared upon any other series or class or classes of Parity
Units shall be authorized and declared ratably in proportion to the respective
amounts of distributions accumulated and unpaid on the Series A Preferred Units
and such Parity Units.
(d) So long as any Series A Preferred Units are outstanding, no
distributions (other than distributions or distributions paid solely in Units
of, or options, warrants or rights to subscribe for or purchase Units of, Junior
Units) shall be authorized and declared or paid or set apart for payment or
other distribution authorized and declared or made upon Junior Units, nor shall
any Junior Units be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Units made in connection
with an employee incentive or benefit plan of GTA or any subsidiary or pursuant
to the Redemption Right referred to in Section 8.05 of the Partnership
Agreement), for any consideration (or any moneys to be paid to or made available
for a sinking fund for the redemption of any such Units by the Partnership,
directly or indirectly (except by conversion into or exchange for Junior Units),
unless in each case (i) the full cumulative distributions on all outstanding
Series A Preferred Units and any other Parity Units of the Partnership shall
have been paid or set apart for payment for all past Distribution Periods with
respect to the Series A Preferred Units and all past distribution periods with
respect to such Parity Units and (ii) sufficient funds shall have been paid or
set apart for the payment of the distribution for the current Distribution
Period with respect to the Series A Preferred Units and any Parity Units.
(e) Any distribution payment made on the Series A Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to such Units which remains payable.
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SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any Liquidation Event, before any payment or
distribution of the assets of the Partnership (whether capital or surplus) shall
be made to or set apart for the holders of Junior Units, the holders of Series A
Preferred Units shall be entitled to receive a liquidation preference which is
an amount equal to the greater of (i) Twenty-Five Dollars ($25.00) per Series A
Preferred Unit plus distributions (whether or not earned or declared) accrued
and unpaid thereon to the date of final distribution to such holder (the
"Liquidation Preference") or (ii) an amount per Series A Preferred Unit equal to
the amount which would have been payable on the Common Units, or portion
thereof, into which one Series A Preferred Unit is then convertible had each
Series A Preferred Unit been converted into Common Units immediately prior to
such Liquidation Event. The foregoing amounts shall be subject to equitable
adjustment whenever there shall occur a stock distribution, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the capital structure of the Series A Preferred
Units. Until the holders of the Series A Preferred Units have been paid in full
the amounts owed pursuant to this Section 4(a), no payment will be made to any
holder of Junior Units upon a Liquidation Event. If, upon any such Liquidation
Event, the assets of the Partnership, or proceeds thereof, distributable among
the holders of Series A Preferred Units shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any other Units of any
class or series of Parity Units, then such assets, or the proceeds thereof,
shall be distributed among the holders of such Series A Preferred Units and such
other Parity Units ratably in accordance with the amounts that would be payable
on such Series A Preferred Units and such other Parity Units if all amounts
payable thereon were paid in full.
(b) Subject to the rights of the holders of any Parity Units, upon any
Liquidation Event of the Corporation, after payment shall have been made in full
to the holders of Series A Preferred Units and any Parity Units, as provided in
this Section 4, any other series or class or classes of Junior Units shall,
subject to the respective terms thereof, be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the Series A
Preferred Units and any Parity Units shall not be entitled to share therein.
SECTION 5. RESTRICTED OWNERSHIP. For so long as an affiliate of GTA is
the General Partner of the Partnership, the Series A Preferred Units may be held
only by GTA GP, Inc., GTA LP, Inc. and/or another wholly-owned subsidiary of
GTA.
SECTION 6. MANDATORY REDEMPTION.
(a) Simultaneously with each and every redemption of one or more Series
A Preferred Share by GTA (regardless of whether such redemption is a mandatory
redemption, a redemption at the option of the holder or a redemption at the
option of GTA), the Partnership will automatically redeem for cash the same
number of Series A Preferred Units for the same redemption price per Series A
Preferred Unit as GTA is required by the Articles Supplementary to pay per
Series A Preferred Share (including any applicable Redemption Premium, as
defined in the Articles Supplementary). Each date of such redemption of Series A
Preferred Units is referred to herein as a "Redemption Date." The Partnership
shall not otherwise redeem any Series A Preferred Units.
(b) In the event that on any Redemption Date, Series A Preferred Units
are held by more than one partner, the General Partner shall decide, in its sole
discretion, from which partner or in
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what proportion between partners to redeem the number of Series A Preferred
Units to be redeemed on such date, and the General Partner shall update the
ledger of Partnership Interests maintained as EXHIBIT A to the Partnership
Agreement accordingly.
(c) From and after a Redemption Date, (i) except as otherwise
provided herein, distributions on the Series A Preferred Units called for
redemption on such date shall cease to accrue, (ii) said Units shall no longer
be deemed to be outstanding, and (iii) all rights of the holders thereof as
holders of Series A Preferred Units of the Partnership shall cease (except the
rights to receive the cash payable upon such redemption, without interest
thereon and to receive any distributions payable thereon).
(d) Except as set forth in this Section 5, the Series A
Preferred Units have no mandatory redemption date.
SECTION 7. MANDATORY ISSUANCE. Upon each and every issuance of Series A
Preferred Shares by GTA (and against contribution of the proceeds of such
issuance to the Partnership) the Partnership shall automatically issue the same
number of Series A Preferred Units to GTA GP, Inc. and/or GTA LP, Inc. and/or
any other wholly-owned subsidiary of GTA, with such allocation among them as the
General Partner shall decide, in its sole discretion.
SECTION 8. REACQUIRED UNITS TO BE RETIRED. All Series A Preferred Units
which shall have been issued and reacquired in any manner by the Partnership
(including any Series A Preferred Units surrendered upon conversion as described
in Section 10) shall be retired and cancelled.
SECTION 9. AUTOMATIC CONVERSION. Series A Preferred Units shall
automatically convert into Common Units, as follows:
(a) Simultaneously with each and every conversion of one or
more Series A Preferred Share pursuant to the Articles Supplementary, an equal
number of Series A Preferred Units will automatically convert into a number of
fully-paid Common Units (or portion thereof) per Series A Preferred Unit equal
to the number of Common Shares (or portion thereof) into which each said Series
A Preferred Share was converted. Each date of such conversion of Series A
Preferred Units is referred to herein as a "Conversion Date." Series A Preferred
Units shall not otherwise be convertible.
(b) In the event that on any Conversion Date, Series A
Preferred Units are held by more than one partner, the General Partner shall
decide, in its sole discretion, which partner or partners' Series A Preferred
Units were automatically converted (so long as the aggregate amount of the
conversion equals the number of Series A Preferred Units to be converted on such
date), and the General Partner shall update the ledger of Partnership Interests
maintained as EXHIBIT A to the Partnership Agreement accordingly.
(c) Holders of Series A Preferred Units at the close of
business on any Distribution Payment Record Date shall be entitled to receive
the distribution payable on such Units on the corresponding Distribution Payment
Date notwithstanding the conversion thereof following such Distribution Payment
Record Date and on or prior to such Distribution Payment Date.
Page 7
<PAGE>
(d) Each conversion of a Series A Preferred Unit shall be deemed to
have been effected at exactly the same time as the conversion of the
corresponding Series A Preferred Share pursuant to the Articles Supplementary.
If the distribution payment record date for the Series A Preferred Units and
Common Units do not coincide, and the preceding sentence does not operate to
ensure that a holder of Series A Preferred Units whose Units are converted into
Common Units does not receive distributions on both the Series A Preferred Units
and the Common Units into which such Units are converted for the same
Distribution Period, then notwithstanding anything herein to the contrary, it is
the intent of these Articles Supplementary that, and the transfer agent is
authorized to ensure that, no conversion after the earlier of such record dates
will be accepted until after the latter of such record dates.
(e) No fractional Units or scrip representing fractions of Common Units
shall be issued upon conversion of the Series A Preferred Units. The Partnership
shall pay to the holder of each Series A Preferred Unit an amount in cash equal
to the cash amount, if any, payable by GTA to the converting holder of the
corresponding Series A Preferred Units pursuant to Section 9(c) of the Articles
Supplementary in lieu of fractional shares or scrip representing fractions of
Common Shares.
(f) If the Partnership shall be a party to any transaction (including
without limitation a merger, consolidation, partnership interest exchange, self
tender offer for all or substantially all Common Units outstanding, sale of all
or substantially all of the Partnership's assets or recapitalization of the
Common Units (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which Common Units shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each Series A Preferred Unit that
is not redeemed or converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of Units of stock, securities and other
property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Common Units into
which one Series A Preferred Unit was convertible immediately prior to such
Transaction, assuming such holder of Common Units (i) is not a Person with which
the Partnership consolidated or into which the Partnership merged or which
merged into the Partnership or to which such sale or transfer was made, as the
case may be (a "Constituent Person"), or an affiliate of a Constituent Person
and (ii) failed to exercise his or her rights of the election, if any, as to the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction (provided that if the kind or amount of stock,
securities and other property (including cash) receivable upon such Transaction
is not the same for each Common Unit of the Partnership held immediately prior
to such Transaction by other than a Constituent Person or an affiliate thereof
and in respect of which such rights of election shall not have been exercised
("Non-Electing Unit"), then for the purpose of this paragraph (f) the kind and
amount of stock, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Unit shall be deemed to be the kind and
amount so receivable per Unit by a plurality of the Non-Electing Units). The
Partnership shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (f), and it
shall not consent or agree to the occurrence of any Transaction until the
Partnership has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series A
Preferred Units that will contain provisions enabling the holders of the Series
A Preferred Units that remain outstanding after such Transaction to convert
their Series A Preferred Units into the consideration received by holders of
Common Units at the Conversion Price in effect under the Articles Supplementary
immediately prior to such Transaction. The provisions of this paragraph (e)
shall similarly apply to successive Transactions.
Page 8
<PAGE>
The Partnership covenants that any Common Units issued upon conversion
of the Series A Preferred Units shall be validly issued and fully paid.
The Partnership shall list the Common Units required to be delivered
upon conversion of the Series A Preferred Units, prior to such delivery, upon
each national securities exchange, if any, upon which the outstanding Common
Units are listed at the time of such delivery.
Prior to the delivery of any securities that the Partnership shall be
obligated to deliver upon conversion of the Series A Preferred Units, the
Partnership shall comply with all federal and state laws and regulations
thereunder requiring the registration of such securities with, or any approval
or consent to the delivery thereof, by any governmental authority.
(g) The Partnership shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Units or other securities or property on conversion of the Series A Preferred
Units pursuant hereto; provided, however, that the Partnership shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of any Common Units or other securities or property in
a name other than that of the holder of the Series A Preferred Units to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Partnership the amount
of any such tax or established, to the reasonable satisfaction of the
Partnership, that such tax has been paid.
SECTION 10. PERMISSIBLE DISTRIBUTIONS. In determining whether a
distribution (other than upon liquidation, dissolution or winding up), whether
by distribution, or upon redemption or other acquisition of Units or otherwise,
is permitted under Delaware law, amounts that would be needed, if the
Partnership were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of holders of Units of any class or series
of capital stock whose preferential rights upon dissolution are superior or
prior to those receiving the distribution shall not be added to the
Partnership's total liabilities.
SECTION 11. RANKING. Any class or series of partnership interests of
the Partnership shall be deemed to rank:
(a) prior to the Series A Preferred Units, as to the payment of
distributions and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of distributions or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to the
holders of Series A Preferred Units ("Senior Units");
(b) on a parity with the Series A Preferred Units, as to the payment of
distributions and as to the distribution of assets upon liquidation, dissolution
or winding up, whether or not the distribution rates, distribution payment dates
or redemption or liquidation prices per Unit thereof be different from those of
the Series A Preferred Units, if the holders of such class of stock or series
and the Series A Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
distributions per Unit or liquidation preferences, without preference or
priority one over the other ("Parity Units"); and
(c) junior to the Series A Preferred Units, as to the payment of
distributions or as to the distribution of assets upon liquidation, dissolution
or winding up, if such stock or series shall be
Page 9
<PAGE>
Common Units or Class B Limited Partnership Interests or if the holders of
Series A Preferred Units shall be entitled to receipt of distributions or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of units of such class series
of partnership interest, and such class or series shall not in either case rank
prior to the Series A Preferred Units ("Junior Units").
SECTION 12. VOTING.
(a) Other than as required by law or paragraph (b), (f) and
(g) of this Section 12, the Series A Preferred Units shall not have any voting
rights or powers, and the consent of the holders thereof shall not be required
for the taking of any partnership action.
(b) So long as any Series A Preferred Units are outstanding,
in addition to any other vote or consent of Unitholders required by the
Partnership Agreement, the affirmative vote of at least 66-2/3% of the votes
entitled to be cast by the holders of Series A Preferred Units, at the time
outstanding, voting as a single class, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating any amendment, alteration of or
repeal of the Partnership Agreement materially and adversely affecting, directly
or indirectly, the terms and conditions of, or the rights or preferences of the
Preferred Units; PROVIDED, HOWEVER, that (A) the amendment or supplement of the
provisions of the Partnership Agreement so as to authorize or create, or to
increase the authorized amount of, any Junior Units or any Parity Units shall
not be deemed to adversely affect Series A Preferred Units, and (B) any
amendment, alteration of or repeal of the Partnership Agreement in connection
with a merger or consolidation of GTA or the Partnership or the sale of all or
substantially all of the assets of the Partnership shall not be deemed to
adversely affect the Series A Preferred Units so long as (1) the Partnership is
the surviving entity and the Series A Preferred Units remains outstanding with
the terms thereof materially unchanged or (2) the Series A Preferred Units are
exchanged for a security of the resulting, surviving or transferee entity having
substantially the same terms and rights as the Series A Preferred Stock,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up.
(c) So long as any Series A Preferred Units are outstanding,
in addition to any other vote or consent of Unitholders required by the
Partnership Agreement, the affirmative vote of 100% of the votes entitled to be
cast by the holders of Series A Preferred Units, at the time outstanding, voting
as a single class, given in person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating the authorization or creation of, or the issuance of,
any Senior Units.
(d) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding Series A Preferred Units shall
have been redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption.
(e) Except as otherwise required by law or provided in the
Partnership Agreement, the holders of Common Units shall not be entitled to vote
on any matter submitted to a vote of the holders of Series A Preferred Stock
pursuant to this Section 12.
(f) Except as otherwise required by law or provided herein or
elsewhere in the Partnership Agreement, the holders of Series A Preferred Units
shall not be entitled to receive any notice of any proceedings of the
Corporation.
Page 10
<PAGE>
For purposes of the foregoing provisions of this Section 12, each
Series A Preferred Unit shall have one (1) vote per Unit.
SECTION 13. RECORD HOLDERS. The Partnership may deem and treat the
record holder of any Series A Preferred Units as the true and lawful owner
thereof for all purposes, and the Partnership shall not be affected by any
notice to the contrary.
SECTION 14. EFFECTIVE DATE. These Articles of Designation shall be
effective as of April 2, 1999.
FOURTH: The Series A Preferred Units have been classified and
designated by the board of directors of the General Partner under the authority
contained in the Partnership Agreement.
FIFTH: These Articles of Designation have been approved by the board of
directors of the General Partner in the manner and by the vote required by law.
SIXTH: Each of the undersigned officers of the General Partner
acknowledges these Articles of Designation to be the act of the Partnership and,
as to all matters or facts required to be verified under oath, each of the
undersigned officers acknowledges that to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and that
this statement is made under the penalties for perjury.
[Signature page follows.]
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<PAGE>
IN WITNESS WHEREOF, GTA GP, Inc. has caused these Articles of
Designation to be signed in its name and on its behalf by its Chief Executive
Officer and President and attested to by its Assistant Secretary as of this 2nd
day of April, 1999.
GTA GP, INC.
By: /s/ W. Bradley Blair, II
-------------------------------------
Name: W. Bradley Blair, II
Title: Chief Executive Officer and President
Attest:
/s/ Scott D. Peters
- -----------------------------------
Name: Scott D. Peters
Title: Assistant Secretary
<PAGE>
EXHIBIT 12.1 to Form 8-K: Statements Regarding Computation of Ratios.
The "Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends"
appearing at page S-8 of the Company's Prospectus Supplement dated April 2, 1999
were calculated as follows:
<TABLE>
<CAPTION>
12/31/98 2/12/97-12/31/97
<S> <C> <C>
Net income before minority interest 17,736 11,767
Interest expense 9,673 1,879
Capitalized interest - -
Debt issuance costs 588 280
--------------------------------------------
Net income before minority interest and fixed charges 27,997 13,926
--------------------------------------------
Interest expense 9,673 1,879
Capitalized interest - -
Debt issuance costs 588 280
--------------------------------------------
Fixed charges 10,261 2,159
--------------------------------------------
--------------------------------------------
Fixed charges to net income before minority interest 2.73 6.45
--------------------------------------------
</TABLE>
<PAGE>
Exhibit 99.1
GOLF TRUST OF AMERICA, INC. ANNOUNCES SALE OF $20 MILLION OF PREFERRED STOCK
CHARLESTON, S.C.--(BUSINESS WIRE)--April 5, 1999-- Golf Trust of
America, Inc. (AMEX:GTA - news) a self-administered real estate investment
trust, today reported that the Company has completed a $20 million private
placement of convertible preferred equity securities with AEW Targeted
Securities Fund, L.P. (AEW), an investment partnership managed by AEW Capital
Management, L.P. The net proceeds from the sale of 800,000 shares of Series A
Convertible Preferred Stock to AEW will be used to pay down existing company
debt and for other corporate purposes.
The convertible preferred shares have a conversion price of $26.25, a
distribution rate of 9.25% per annum and are convertible at AEW's option. The
liquidation preference of each convertible preferred share is $25.00. The
Company may redeem the shares at any time on or after April 1, 2003.
Commenting on the transaction, Mr. W. Bradley Blair, II, President and
Chief Executive Officer of the Company, said: "We are extraordinarily pleased
that AEW, one of the premier investment and real estate advisory firms, has made
this significant investment in Golf Trust. The alignment of AEW's investment
objectives with Golf Trust's objectives should provide for a strong investor
relationship. Long-term institutional equity capital investors like AEW Targeted
Securities Fund are an important part of the continuing development of Golf
Trust's capital structure."
"The AEW Targeted Securities Fund invests in REITs with strong growth
prospects and potential for high shareholder returns," said Michael F. Buckley,
Vice President of AEW Capital Management, L.P. "Golf Trust is positioned to
continue its rapid growth and strong performance by acquiring upscale golf
courses that meet the increasing public demand for high-quality facilities."
BancBoston Robertson Stephens advised the Company and acted as
placement agent in connection with this transaction. AEW Capital Management
serves as investment advisor and private investors, including some of the
nation's largest corporate, public and union pension funds, university
endowments and governmental entities. The firm focuses on investments in real
estate securities portfolios (REIT's, CMBS and private placements), high-yield
equity investing, and the acquisition and management of directly held property
portfolios. On behalf of its clients, the firm currently manages approximately
$5.7 billion of capital, which is invested in more than $9 billion of real
estate nationwide.
To receive Golf Trust of America's latest news and other corporate
developments via fax, call 1-843-723-4653.
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Actual results and the timing of certain events could differ materially from
those projected in or contemplated by the forward-looking statements due to a
number of factors including general economic conditions, competition for golf
course acquisitions, the availability of equity and debt financing, interest
rates and other risk factors as outlined in the Company's SEC reports, including
the prospectus dated November 4, 1997 and the annual report on Form 10-K dated
March 31, 1999.
Contact: Golf Trust of America, Inc.
W. Bradley Blair, II or Scott D. Peters, 843/723-4653
