<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Schedule 13D
Under the Securities Exchange Act of 1934
Grove Real Estate Asset Trust
(Name of Issuer)
Common Shares of Beneficial Interest, par value $0.01 per share
(Title of Class of Securities)
399613-10-8
(CUSIP Number)
Edward Johnsen
Morgan Stanley Group Inc.
1585 Broadway
New York, New York 10036
(212) 761-4000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 14, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
(Continued on following pages)
(Page 1 of 7 Pages)
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CUSIP NO. 399613-10-8 13D Page 2 of 7 Pages
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Morgan Stanley Group Inc.
IRS #13-283-8811
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO
ITEM 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 494,949
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
494,949
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
494,949
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IA, CO
================================================================================
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CUSIP NO. 399613-10-8 13D Page 3 of 7 Pages
Item 1. Security and Issuer.
This Schedule 13D relates to the common shares of beneficial interests,
par value $0.01 per share ("Common Shares"), of Grove Real Estate Asset Trust
(the "Issuer"). The principal executive offices of the Issuer are located at 598
Asylum Avenue, Hartford, Connecticut 06105.
Item 2. Identity and Background.
This statement is being filed by Morgan Stanley Group Inc., a Delaware
corporation ("MSGI"). MSGI is an investment adviser registered with the
Securities and Exchange Commission. MSGI maintains its office at 1585 Broadway,
New York, New York 10036.
During the last five years, MSGI has not been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The funds used to acquire the Common Shares were obtained from MSGI's
working capital. The amount of the consideration for the acquisition is set
forth in Item 5.
Item 4. Purpose of Transaction.
MSGI acquired the Common Shares described at Item 5(c) below for
investment purposes, and in order to protect its investment in the Issuer, MSGI
has obtained the right to nominate for election one Director to the Issuer's
Board of Trust Managers. MSGI intends to continue to consider various
alternative courses of action and will in the future take such actions with
respect to its equity ownership in the Issuer as MSGI deems appropriate in light
of the circumstances existing from time to time. Such actions may include making
recommendations to management concerning various business strategies,
acquisitions, dividend policies and other matters, pursuing a transaction or
transactions involving a change in control of the Issuer or such other actions
as it may deem appropriate. Such actions also may involve the purchase of
additional Common Shares pursuant to certain preemptive rights described in Item
5(c) below or otherwise or, alternatively, may involve the sale of all or a
portion of the Common Shares beneficially owned by MSGI in the open market or in
privately negotiated transactions to one or more purchasers.
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CUSIP NO. 399613-10-8 13D Page 4 of 7 Pages
Except as described herein, MSGI does not have any plans or proposals
which relate to or would result in (a) an extraordinary corporate transaction,
such as a merger, reorganization or liquidation, involving the Issuer or any of
its subsidiaries, (b) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries, (c) any change in the present management of
the Issuer, (d) any material change in the present capitalization or dividend
policy of the Issuer, (e) any other material change in the Issuer's business or
corporate structure, (f) any other material change in the Issuer's charter,
bylaws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person, (g) causing a class of
securities of the Issuer to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (h) a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, or (i) any action similar to
any of those enumerated in (a) through (h) above.
Item 5. Interest in Securities of the Issuer.
(a)-(b) Incorporated by reference to Items (7)-(11) and (13) of the cover
page. Information regarding the percentage of Common Shares is based on
3,953,463 Common Shares outstanding as of March 14, 1997, which number was
provided by the Issuer.
(c) Pursuant to the Securities Purchase Agreement, dated February 20, 1997
(the "Securities Purchase Agreement"), a copy of which is attached hereto as
Exhibit 7.1, MSGI acquired 494,949 Common Shares for its benefit and 282,829
Common Shares for the benefit of Public Employees' Retirement Association of
Colorado ("PERA"). The shares were acquired at $9.00 per Common Share, resulting
in an aggregate purchase price of $4,454,541 for the shares acquired by MSGI.
The transaction described herein took place in New York, New York on March 14,
1997.
MSGI exercises sole voting and dispositive power with respect to all such
shares of Common Shares that it acquired. MSGI does not exercise either voting
or dispositive power with respect to the shares acquired by Colorado PERA.
Except as disclosed herein, MSGI has not effected any transactions in
Common Shares during the preceding 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with respect to
Securities of the Issuer.
Pursuant to the Securities Purchase Agreement (attached hereto as Exhibit
7.1) MSGI has been granted the right to designate one individual acceptable to
the Issuer to be nominated as a member of the Board of Trust Managers of the
Issuer, and the Issuer will recommend such individual for election to the Board
of Trust Managers. MSGI has
<PAGE> 5
CUSIP NO. 399613-10-8 13D Page 5 of 7 Pages
not yet designated an individual to be elected as a member of the Board of Trust
Managers of the Issuer.
If MSGI does not have a representative on the Board of Trust Managers of
the Issuer, the Issuer must permit a representative of MSGI to attend, but not
vote, as an observer at each meeting of the Board of Trust Managers or any
committee meeting of the Board of Trust Managers of the Issuer. The right to
designate a person for election to the board or to be an observer is not
transferable to any person other than an affiliate of MSGI.
MSGI and PERA have also been granted certain preemptive rights to acquire
that portion of Common Shares (or other securities exchangeable or convertible
into Common Shares or rights or warrants to acquire Common Shares) that are
offered by the Issuer for cash that will permit MSGI and PERA to acquire
sufficient Common Shares that they will own in the aggregate up to 20% of the
outstanding shares of Common Shares (or up to 25% if an offering of Common
Shares is for less than $9.00 per share or if the exercise, conversion or
exchange price is less than $9.00 per share).
Pursuant to a Registration Rights Agreement, dated March 14, 1997, by
and among the Issuer, MSGI, PERA and the other stockholders identified therein,
the Issuer is required to effect a shelf registration, subject to certain
conditions, of shares of the Common Shares of the Issuer held by MSGI promptly
after September 14, 1997. Moreover, subject to certain conditions, the shares of
Common Shares held by MSGI may be included in the registration of the Issuer's
Common Shares when the Issuer proposes to register its Common Shares or the
shares of other holders of Common Shares.
However, there exist no contracts, arrangements, understandings or
relations (legal or otherwise) between MSGI and other persons with respect to
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies; provided that PERA is currently negotiating an investment
management agreement with an affiliate of MSGI pursuant to which that affiliate
of MSGI would be granted a proxy to vote PERA's Common Shares. However, there
can be no assurance that such agreement will be entered into by PERA and such
affiliate of MSGI.
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 Securities Purchase Agreement between the Issuer and
Morgan Stanley Group Inc.
Exhibit 7.2 Secretary's Certificate Authorizing Edward Johnsen to
sign on behalf of Morgan Stanley Group Inc.
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CUSIP NO. 399613-10-8 13D Page 6 of 7 Pages
SIGNATURES
After reasonable inquiry, and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 24, 1997 MORGAN STANLEY GROUP INC.
By: /s/ Edward Johnsen
-------------------
Name: Edward Johnsen
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CUSIP NO. 399613-10-8 13D Page 7 of __ Pages
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
7.1 Securities Purchase Agreement, dated as of February 20,
1997, between the Issuer and Morgan Stanley Group Inc.
7.2 Secretary's Certificate Authorizing Edward Johnsen to sign
on behalf of Morgan Stanley Group Inc.
<PAGE> 1
SECURITIES PURCHASE AGREEMENT
dated as of February 20, 1997
between
GROVE REAL ESTATE ASSET TRUST
and
MORGAN STANLEY GROUP INC.
<PAGE> 2
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement"), dated as of
February 20, 1997, between Grove Real Estate Asset Trust, a Maryland real estate
investment trust ("GREAT") and Morgan Stanley Group Inc., a corporation
organized and existing under the laws of the State of Delaware ("Purchaser").
WHEREAS, GREAT has distributed to certain prospective investors (including
Purchaser) who are Accredited Investors (as defined), a Private Placement
Memorandum, dated December 5, 1996 (together with all appendices thereto, the
"PPM"), in connection with the offering by GREAT to such investors of up to
3,333,333 of GREAT's common shares of beneficial interest, par value $0.01 per
share (each a "Common Share"), at a price of $9.00 per Common Share (the
"Purchase Price Per Share");
WHEREAS, following a complete and thorough review of the PPM, Purchaser
desires to purchase from GREAT, and GREAT desires to sell to Purchaser, 777,778
Common Shares (the "Purchased Common Shares"), upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
Article I
Definitions
1.1 Definitions. As used in this Agreement, the following terms have the
meaning set forth below:
"Accredited Investor" means, as defined under Regulation D promulgated
under the Act, any Person who (i) is able to bear the economic risk of the
acquisition of a security and can afford to sustain a total loss with respect to
such investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment,
and therefore has the capacity to protect its own interest in connection with
the acquisition of a security and/or (ii) comes within any of the following
categories: (1) any bank as defined in Section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to Section 15 of the Exchange Act; any
insurance company as defined in Section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that act; any Small Business
Investment Company licensed by the
<PAGE> 3
U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of ERISA, if
the investment decision is made by a plan fiduciary, as defined in Section 3(21)
of ERISA, which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are Accredited Investors; (2)
any private business development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940; (3) any organization described in Section
501(c)(3) of the Code, corporation, Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000; (4) any trust manager or
executive officer of GREAT; (5) any natural person whose individual net worth,
or joint net worth with that person's spouse, at the time of that person's
purchase exceeds $1,000,000; (6) any natural person who had an individual income
in excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years, and who has a
reasonable expectation of reaching the same income level in the current year;
(7) any trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and (8) any entity in which all of the equity owners are Accredited Investors.
As used in this definition, the term "net worth" means the excess of the
total assets over total liabilities. In calculating "net worth," the value of a
principal residence must be valued at cost or at a written appraised value used
by an institutional lender to make a loan secured by the property. In
determining income, an investor should add to such investor's adjusted gross
income any amounts attributable to tax exempt income received, losses claimed as
a limited partner in any limited partnership, deductions claimed for depletion
contributions to an "IRA" or "KEOGH" retirement plan, alimony payments and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
"Act" means the Securities Act of 1933, as amended, or any successor
statute.
"Affiliate" of any Person means any Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person. The
term "control" (including, with correlative meaning, the terms "controlled by"
and "under common control with"), as used with respect to any Person, means 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 contract or otherwise.
2
<PAGE> 4
"Agreement" has the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"AMEX" means the American Stock Exchange, Inc. (Emerging Company
Marketplace).
"best efforts" , as used in this Agreement, shall mean commercially
reasonable efforts; provided, that in no event shall "best efforts" mean efforts
which require the performing party (i) to do any act that is unreasonable under
the circumstances, to make any capital contribution or to expend any funds other
than reasonable out-of-pocket expenses incurred in satisfying its obligations
under this Agreement, including, but not limited to, the fees, expenses and
disbursements of its accountants, counsel and other professionals, or (ii) in
the case of GREAT, to modify the terms of the Consolidation Transactions.
"Charter" means the Second Amended and Restated Declaration of Trust of
GREAT.
"Charter Amendments" means the amendments proposed to be effected to the
Charter, as set forth in the Proxy Statement.
"Charter Documents" means the Charter and the Bylaws of GREAT, as each may
be amended from time to time.
"Closing" has the meaning ascribed to such term in Section 2.2 of this
Agreement.
"Closing Date" has the meaning ascribed to such term in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, together with
the rules and regulations promulgated thereunder, or any successor statute.
"Common Shares" means the common shares of beneficial interest, $0.01 par
value per share, of GREAT.
"Common Units" means common units representing ownership interests in the
Operating Partnership.
"Consolidation Transactions" means the consolidation transactions,
including the Private Placement, proposed to be entered into by GREAT, as
described in the Proxy Statement.
3
<PAGE> 5
"Current Proposals" has the meaning ascribed to such term in Section
5.1(b) of this Agreement.
"Damages" of any Person means any loss, liability (however defined or
characterized), diminution in value, damage or expense (including reasonable
costs of investigation and prosecution of litigation and attorneys' fees)
incurred by such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Certification" has the meaning ascribed to such term in Section
5.3(a) of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"Exchange Offer" means the Offer to Exchange, dated December 2, 1996, by
the Operating Partnership to the limited partners of certain limited
partnerships, pursuant to which certain such limited partners can exchange the
interests held by them in such limited partnerships for Common Units or, under
certain circumstances, cash, as such Offer to Exchange may be supplemented,
amended or modified from time to time.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States.
"GREAT" has the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"Knowledge" of GREAT means the actual knowledge of any of its officers
(other than assistant officers whose duties are principally ministerial) after
due inquiry to satisfy themselves that there is a reasonable basis for belief in
the accuracy of any of the representations and warranties made by GREAT, but
shall not be construed to require independent review or verification by them of
underlying facts.
"Material Adverse Effect" means any change in or effect on the business of
GREAT or its Subsidiaries that is materially adverse to the business, assets,
liabilities, results of operations, financial condition or prospects of GREAT
and its Subsidiaries taken as a whole, or materially impairs the ability of
GREAT to consummate the transactions contemplated by this Agreement.
"Operating Partnership" means Grove Operating, L.P., a Delaware limited
partnership and the operating partnership of GREAT.
4
<PAGE> 6
"Permitted Transferee" means (i) any Affiliate of Purchaser and (ii) any
investor party to the Morgan Stanley Real Estate Special Situations Fund
Separate Accounts Agreement that has granted Purchaser discretionary authority
(with respect to voting and investment) over the funds invested pursuant
thereto; provided that such transferee executes a counterpart of this Agreement
under which it agrees to be bound by all the terms and conditions hereof,
including, without limitation, making the representations and warranties set
forth in Article IV.
"Person" means any individual, a partnership, a joint venture, a
corporation, a trust, limited liability company, an unincorporated organization
or a government or any department or agency thereof.
"PPM" has the meaning ascribed to such term in the first Whereas clause of
this Agreement.
"Private Placement" means the private placement of up to 3,333,333 Common
Shares by GREAT pursuant to and as more fully set forth in the PPM.
"Proxy Statement" has the meaning ascribed to such term in Section 5.1(b)
of this Agreement.
"Purchase Price" means $7,000,000, which is equal to the product of $9.00
(the Purchase Price Per Share) and 777,778 (the number of Common Shares which
constitutes the Purchased Common Shares).
"Purchase Price Per Share" has the meaning ascribed to such term in the
first Whereas clause of this Agreement.
"Purchased Common Shares" has the meaning ascribed to such term in the
second Whereas clause of this Agreement.
"Qualified Public Offering" means an underwritten public offering of
Common Shares yielding gross proceeds (including upon exercise of any
over-allotment option) of at least $40 million and the listing for trading of
such Common Shares on the AMEX or similar or successor national stock exchange.
"Receipt" means the receipt to be executed and delivered by each of
Purchaser and GREAT at Closing, in the form attached as Exhibit D hereto.
"Redemption Rights" means the right, beginning one year after the issuance
of Common Units to limited partners of the limited partnerships participating in
the Exchange Offer, of certain limited partners to require the Operating
Partnership to redeem their Common Units for cash equal to the fair market value
of an equivalent number of Common Shares at the time of redemption or, at the
Operating Partnership's
5
<PAGE> 7
option, it can exchange such Common Units for Common Shares on a one-for-one
basis (subject to adjustment).
"Registration Rights Agreement" means the Registration Rights Agreement,
to be entered into on or prior to the Closing, among GREAT, Purchaser and
certain other purchasers of the Common Shares offered in the Private Placement,
substantially in the form attached hereto as Exhibit E.
"SEC" means the United States Securities and Exchange Commission.
"SEC Filings" has the meaning ascribed to such term in Section 3.4 of this
Agreement.
"Special Meeting" shall have the meaning ascribed to such term in Section
5.1(b) of this Agreement.
"Subsidiaries" means, collectively, GREAT's direct or indirect
majority-owned subsidiaries, including, without limitation, the Operating
Partnership.
Article II.
Purchase of Common Shares
2.1 Purchase of Common Shares. At the Closing, GREAT shall issue and sell
to Purchaser, and Purchaser shall purchase from GREAT, the Purchased Common
Shares. At the Closing, Purchaser shall pay the Purchase Price for the Purchased
Common Shares by wire transfer of immediately available funds or by certified or
official bank check payable in same day funds to the order of GREAT. Upon
receipt of the Purchase Price, GREAT shall deliver to Purchaser certificates
representing the number of Common Shares constituting the Purchased Common
Shares, registered in such name or names and such denominations and delivered at
such address or addresses as Purchaser shall request.
2.2 Closing. The closing of the issuance and sale of the Purchased Common
Shares hereunder (the "Closing") shall take place at the offices of Kaye,
Scholer, Fierman, Hays & Handler, LLP located at 425 Park Avenue, New York, New
York 10022, and will occur substantially simultaneously with the closing of the
other purchases and sales of Common Shares in the Private Placement. GREAT will
notify Purchaser of the date of the Closing (the "Closing Date") not less than
three business days prior to the Closing Date.
2.3 Deliveries.
6
<PAGE> 8
(a) Purchaser's Deliveries. At the Closing, in consideration of
Purchaser's receipt from GREAT of the Purchased Common Shares, Purchaser shall
deliver to GREAT the following:
(i) the Purchase Price in accordance with Section 2.1 hereof;
(ii) the certificate referred to in Section 7.3 hereof duly
executed on behalf of Purchaser;
(iii) the Registration Rights Agreement, duly executed on
behalf of Purchaser; and
(iv) the Receipt, duly executed on behalf of Purchaser.
(b) GREAT's Deliveries. At the Closing, in consideration of GREAT's
receipt of the Purchase Price from Purchaser, GREAT shall deliver to Purchaser
the following:
(i) certificates representing the Purchased Shares in
accordance with Section 2.1 hereof.
(ii) the certificate referred to in Section 6.3 hereof, duly
executed by an authorized officer on behalf of GREAT;
(iii) the Registration Rights Agreement, duly executed by an
authorized officer on behalf of GREAT;
(iv) the Receipt, duly executed by an authorized officer on
behalf of GREAT;
(v) A comfort letter of Ernst & Young, LLP in the form
attached as Exhibit F hereto;
(vi) a Secretary's certificate of GREAT certifying as to the
Charter Documents and the resolutions of the Board of Trust Managers approving
the transactions contemplated hereby and by the Proxy Statement; and
(vii) A Certificate of Good Standing of GREAT issued by the
Maryland State Department of Assessments and Taxation.
2.4 Legends. In addition to the legend concerning inter alia, Excess
Shares, set forth in the Charter, the certificates evidencing the Purchased
Common Shares shall bear the following legends:
7
<PAGE> 9
(a) "The transfer of the securities represented by this certificate
is subject to conditions specified in section 5.3(d) of a Securities Purchase
Agreement dated February 20, 1997, as such agreement may be amended from time to
time, and no transfer of such securities shall be valid or effective until such
conditions have been fulfilled with respect to such transfer. A copy of such
Securities Purchase Agreement will be furnished by the company to the holder of
this certificate upon written request and without charge."
(b) "These securities have not been registered under the Securities
Act of 1933, as amended (the "Act") and may not be offered sold or otherwise
transferred except pursuant to an effective registration statement under the Act
or an exemption from the registration requirements thereof. These securities
have not been registered under the securities laws of any state."
Article III
Representations and Warranties of GREAT
GREAT hereby represents and warrants to Purchaser that, as of the date of
this Agreement and as of the Closing Date:
3.1 Organization, Good Standing and Qualification. GREAT has been duly
organized and is a validly existing trust in good standing under the laws of
Maryland with all requisite power and authority to carry on its business as
presently conducted. GREAT is duly qualified to transact business and is in good
standing in each jurisdiction in which it is required to be qualified except
where the failure to be so qualified or in good standing would not, in the
aggregate, have a Material Adverse Effect.
3.2 Capitalization. (a) As of the date hereof, the authorized capital
stock of GREAT consists of 10,000,000 Common Shares, 525,000 of which are issued
and outstanding as of the date hereof, and 4,000,000 preferred shares of
beneficial interest, $0.01 par value per share, none of which are issued and
outstanding as of the date hereof. No other shares of capital stock of GREAT are
outstanding or held as treasury shares. There are no outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from GREAT of any shares of its capital stock or
securities or obligations of any kind convertible into any shares of its capital
stock except for (i) options to purchase an aggregate of 100,000 Common Shares
held by certain executive officers and trust managers of GREAT and issued under
GREAT's 1994 Share Option Plan, (ii) as contemplated by the Private Placement
(including pursuant to this Agreement and pursuant to other Securities Purchase
Agreements between GREAT on the one hand, and other purchasers of Common Shares
therein on the other hand), (iii) the Common Shares issuable to
8
<PAGE> 10
certain Persons participating in the Exchange Offer at the option of the
Operating Partnership upon the exercise by such Persons of Redemption Rights in
all material respects on the terms described in the Proxy Statement and (iv)
warrants to purchase 40,000 Common Shares granted to Barclay Investments, Inc.
in connection with GREAT's initial public offering.
(b) The Capitalization Table set forth in the section of Appendix I
to the PPM entitled "SUMMARY -- Capitalization" sets forth the currently
anticipated capitalization of GREAT at the Closing, giving effect to the
consummation of the Consolidation Transactions, including the Private Placement.
The capitalization set forth on such table has been calculated taking into
account various assumptions regarding the Consolidation Transactions, as
described in further detail in the above-referenced section of Appendix I to the
PPM, and accordingly, the actual capitalization of GREAT following the
consummation of the Consolidation Transactions may differ.
3.3 Authorization. GREAT has full power and corporate authority to execute
and deliver this Agreement and the Registration Rights Agreement (subject to
shareholder approval as contemplated by the Proxy Statement) and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Registration Rights Agreement and the other agreements
and instruments contemplated hereby and thereby, and the consummation of the
transactions contemplated by this Agreement and the Registration Rights
Agreement, have been authorized by the Board of Trust Managers of GREAT and no
other proceedings (except for a meeting of the shareholders of GREAT for the
purpose of obtaining shareholder approval as contemplated by the Proxy
Statement) on the part of GREAT are necessary to authorize this Agreement and
the Registration Rights Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed by GREAT and,
subject as aforesaid, constitutes, and upon execution and delivery thereof the
Registration Rights Agreement will constitute a valid and binding agreement of
GREAT enforceable in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
3.4 SEC Filings. Purchaser has been provided (or will, upon Purchaser's
written request, be provided) true and correct copies of GREAT's annual reports
on Form 10-KSB for the fiscal years ended December 31, 1995 and 1994, GREAT's
quarterly reports on Form 10-QSB for the fiscal quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996 and the Proxy Statement (collectively, the
"SEC Filings"). As of their respective dates, the SEC Filings (including all
exhibits and schedules thereto and documents incorporated by reference therein)
complied in all material respects with the laws, regulations and forms governing
the SEC Filings; and none of the SEC Filings contained, as of the date it was
filed with the SEC, any untrue statement of any material fact or omitted to
state a material fact required to be stated
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therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.5 Valid Issuance of Shares. The Purchased Common Shares, when issued,
sold and delivered to Purchaser in accordance with the terms hereof for the
consideration expressed herein, will be duly authorized and validly issued,
fully paid and nonassessable and, based in part on the representations of
Purchaser in this Agreement, will be issued in compliance with all applicable
federal and state securities laws.
3.6 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement by GREAT, its
consummation of the transactions contemplated hereby or thereby nor its
compliance with any of the provisions hereof or thereof will (a) conflict with
or result in the breach of any provision of the Charter Documents; (b) require
any consent, approval, order or authorization of, or registration,
qualification, designation or filing with or notification to, any governmental
or regulatory authority, the failure of which to obtain would have a Material
Adverse Effect, except for (i) the filing with the SEC of a Form D and such
other documents as may be required in connection with this Agreement and the
other Common Shares being issued in the Private Placement, (ii) the filing of
such documents with, and the obtaining of orders from, the various state
securities authorities that are required in connection with the transactions
contemplated by this agreement and (iii) the filing of an additional listing
application and the listing of the Purchased Common Shares to be issued pursuant
to this Agreement and the other Common Shares to be issued in the Private
Placement, as contemplated by Section 5.1(c); or (c) conflict with or result in
any breach or default (with or without notice or lapse of time or both) or
violate any loan agreement, note, mortgage, indenture, lease or other
obligation, instrument, order, injunction, decree, statute, rule or regulation
applicable to GREAT or its Subsidiaries or any of their respective properties or
assets where such conflicts, breaches, defaults or violations would, in the
aggregate, have a Material Adverse Effect.
3.7 REIT Status. (a) To GREAT's Knowledge, no person or entity which would
be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by the by Section 856(h) of the Code) owns or would be considered to
own (taking into account the ownership attribution rules under Section 544 of
the Code, as modified by Section 856(h) of the Code) in excess of 5.0% of the
value of the outstanding equity interest in GREAT. The Board of Trust Managers
of GREAT has not exempted any Person from the Ownership Limit (as defined in the
Charter) or the Grove Affiliate Investor Limit (as defined in the Charter) or
otherwise waived any of the provisions of Section 7 of the Charter. The
Ownership Limit and the Grove Affiliate Investor Limit (each as defined in the
Charter) have not been modified pursuant to Section 7.9 or 7.10 of the Charter
or otherwise; provided, that such limits are expected to be modified pursuant to
the Charter Amendments, and, if the Charter Amendments
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are effected, GREAT's Board of Trust Managers will be permitted to exempt from
such limits one or more Persons in connection with a purchase of Common Shares
by such Persons in the Private Placement.
(b) GREAT (i) has been in its federal income tax returns for the tax
years ended December 31, 1994 and 1995 taxed as a real estate investment trust
within the meaning of Section 856 of the Code (a "REIT"), and intends in its
federal income tax returns for the tax year ended December 31, 1996 to be so
taxed and has complied with all applicable provisions of the Code relating to a
REIT for 1994, 1995 and 1996, (ii) has operated and currently intends to
continue to operate in such a manner so as to qualify as a REIT, (iii) has not
taken or omitted to take any action which would reasonably be expected to result
in a challenge to its status as a REIT, and (iv) to GREAT's Knowledge, and
assuming the accuracy of Purchaser's representations in Article IV hereof, will
not be rendered unable to qualify as a REIT for federal income tax purposes as a
consequence of the transactions contemplated hereby.
3.8 No Brokers' or Other Fees. No broker, finder or investment banker is
entitled to any brokerage, finder or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
GREAT for which Purchaser shall be liable or obligated.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to GREAT that, as of the date of
this Agreement and as of the Closing Date:
4.1 Organization and Authorization. Purchaser is an entity of the type
identified in the introductory paragraph of this Agreement, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation. The execution and delivery of this Agreement and the other agreements
and instruments contemplated hereby have been, and the consummation of the
transactions contemplated hereby and thereby have been, duly and validly
authorized by all necessary action of Purchaser, and no other proceedings on the
part of Purchaser are or will be necessary to consummate the transactions
contemplated hereby. Purchaser has the right, power, legal capacity and
authority to enter into, deliver and perform this Agreement and any other
agreements and instruments contemplated hereby and to own the Purchased Common
Shares, and this Agreement and all such other agreements are, or upon the
execution thereof will be, valid and legally binding upon Purchaser and
enforceable in accordance with their respective terms except as limited
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by bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally.
4.2 Consents and Approvals; No Violation. None of the execution and
delivery of this Agreement by Purchaser, its consummation of the transactions
contemplated hereby or its compliance with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the statutes governing
the organization and operation of Purchaser or the organizational documents of
Purchaser, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
for any filings referred to in Section 3.6, filings by Purchaser under Section
13(d) or 16(a) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, and except for such other
consents as are obtained or waived prior to the Closing Date, or (iii) conflict
with or result in any breach or default (with or without notice or lapse of time
or both) or violate any loan agreement, note, mortgage, indenture, lease or
other obligation, instrument, order, writ, injunction, decree, statute, rule or
regulation applicable to Purchaser or any of its properties or assets.
4.3 ERISA Certification. Purchaser has read and comprehends the ERISA
Certification referred to in Section 5.3(a) and attached hereto as Exhibit A
(the "ERISA Certification"), has completed and executed the ERISA Certification
and has delivered the same to GREAT simultaneously with the execution of this
Agreement.
4.4 Information Supplied. None of the written information supplied by
Purchaser in connection with the Proxy Statement will, at the date mailed to
shareholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
4.5 No Brokers' or Other Fees. No broker, finder or investment banker is
entitled to any brokerage, finder or other fee or commission in connection with
the transaction contemplated by this Agreement based upon arrangements made by
or on behalf of Purchaser or its Affiliates for which GREAT shall be liable or
obligated.
4.6 Investment Intent. Purchaser has read and comprehends the definition
of "Accredited Investor" set forth in Section 1.1 hereof, and is an "Accredited
Investor." Purchaser is acquiring the Purchased Common Shares for the purpose of
investment only and not with a view to or for sale in connection with any
distribution thereof (other than in a transaction which is either registered
under the Act or which is exempt from such registration). Purchaser hereby
acknowledges that (i) copies of the SEC Filings have been provided or made
available to Purchaser and (ii) Purchaser has been given an opportunity to ask
questions of, and receive written answers from, GREAT and its executive officers
concerning the terms and conditions of the Private Placement, and to
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obtain any additional written information (to the extent GREAT possesses such
information or can acquire it without unreasonable expense or effort) necessary
to verify the accuracy of the information contained therein.
4.7 Investment Company Matters. Purchaser is not, and after giving effect
to the purchase of the Purchased Common Shares hereunder, will not be, an
"investment company" subject to registration under the Investment Company Act of
1940, as amended.
ARTICLE V
Covenants of GREAT and Purchaser
5.1 Covenants of GREAT. GREAT covenants and agrees with Purchaser as
follows:
(a) Access. Between the date of this Agreement and the Closing Date,
and subject to any limitations imposed by Section 5(c) of the Act, GREAT shall
(and shall cause its Subsidiaries to) give Purchaser and its counsel,
accountants and other representatives access to, and furnish Purchaser and its
representatives with, all documents, copies of documents, financial and
operating data and other information concerning the property and affairs of
GREAT as Purchaser may from time to time reasonably request.
(b) Shareholder Meeting. GREAT shall call a special meeting of its
shareholders (the "Special Meeting") to be held as promptly as practicable in
connection with the approval by shareholders of certain matters relating to the
Consolidation Transactions. GREAT filed on November 21, 1996 with the SEC under
the Exchange Act, a proxy statement with respect to the Special Meeting
(together with any amendments and supplements thereto, the "Proxy Statement"),
and the SEC took a "no review" position with respect to the Proxy Statement. At
the Special Meeting, GREAT will, through its Board of Trust Managers, recommend
to its shareholders approval of all proposals (the "Current Proposals") included
in the Proxy Statement.
(c) Stock Exchange Listing. Prior to the Closing Date, the Purchased
Common Shares to be issued pursuant to this Agreement shall be approved for
listing on the AMEX, subject to official notice of issuance.
(d) Ancillary Agreements. GREAT shall cause the Registration Rights
Agreement to be executed by a duly authorized officer on behalf of GREAT at or
prior to the Closing.
(e) Best Efforts. Subject to the terms and conditions of this
Agreement, GREAT shall use its best efforts to take, or cause to be taken, all
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reasonable action, and to do, or cause to be done, all reasonable things
necessary, proper or advisable under the applicable laws and regulations to
cause the conditions specified in Article VI to be satisfied and otherwise to
consummate and make effective the transactions contemplated by this Agreement.
(f) Material Adverse Changes; SEC Filings; Financial Statements.
(i) GREAT will promptly notify Purchaser of any event of which
GREAT obtains knowledge which has had or might reasonably be expected to have a
Material Adverse Effect or which might reasonably be expected to result in the
non-satisfaction of any condition set forth in Article VI.
(ii) Prior to the Closing, GREAT will timely file with the SEC
all disclosure documents, including each Quarterly Report on Form 10-Q, Current
Report on Form 8-K and Annual Report on Form 10-K, required to be filed by GREAT
under the Exchange Act and the rules and regulations promulgated thereunder. As
of their respective dates, none of such reports shall contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) Each of the financial statements included in GREAT's
Forms 10-Q and Form 10-K referred to in clause (ii) shall be prepared in
accordance with GAAP consistently applied during the periods covered (except as
disclosed therein), except that the quarterly financial statements may omit (y)
statements of changes in financial position and footnote disclosures required by
GAAP to the extent the content thereof would not materially differ from those
disclosures reported in the most recent annual financial statement, and (z)
year-end adjustments to the extent not material.
(g) Director Liability Insurance. GREAT shall maintain directors',
and officers' liability insurance in an amount not less than $5 million for the
benefit of the Board of Trust Managers.
(h) Board of Trust Managers; Nominees; Observers.
(i) Purchaser shall be entitled to designate either Ted Bigman
or Russell Platt or such other individual acceptable to GREAT, in its reasonable
discretion, to be nominated as a member of the Board of Trust Managers and GREAT
shall recommend such nominee for election to the Board of Trust Managers. In
furtherance thereof, at or prior to the Closing, GREAT shall increase the size
of the Board of Trust Managers by at least one additional Trust Manager and
shall elect Purchaser's nominee to the class of Trust Managers whose term
expires at the 1997 annual meeting of GREAT shareholders. At such meeting, GREAT
shall nominate
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Purchaser's nominee for election to the Board of Trust Managers for a three-year
term. With respect to any annual meeting of GREAT shareholders thereafter, at
least 60 days prior to the date GREAT submits nominees for the Board of Trust
Managers to its shareholders, GREAT shall notify Purchaser and thereafter
Purchaser shall have 30 days from the date of such notice to submit the name of
Purchaser's nominee, together with such other information regarding such nominee
as reasonably requested by GREAT in order to prepare the related proxy
statement. In the event that at any time Purchaser is entitled to designate a
nominee to the Board of Trust Managers pursuant to this Section 5.1(h), such
nominee resigns or is removed from the Board, Purchaser shall be entitled to
designate a replacement to fill the vacancy created thereby.
(ii) If at any time Purchaser is entitled to designate a
nominee to the Board of Trust Managers pursuant to this Section 5.1(h) and
Purchaser does not have a representative on the Board of Trust Managers, GREAT
shall permit one representative of Purchaser (which representative shall be
acceptable to GREAT, in its reasonable discretion) to attend, but not vote, as
an observer at each meeting of the Board of Trust Managers or any committee of
the Board of Trust Managers empowered to act with the full authority of the
Board of Trust Managers, including telephonic meetings. GREAT shall cause notice
of any meeting of the Board of Trust Managers or any such committee of the Board
of Trust Managers to be delivered to any such representative at the same time
and in the same manner as notice is given to the members of the Board of Trust
Managers. Such representative will be entitled to receive all written materials
given to the members of the Board of Trust Managers in connection with such
meetings at the time such materials and information are given to the Board of
Trust Managers. GREAT shall reimburse such representative for his reasonable
out-of-pocket expenses incurred in connection with attending meetings of the
Board of Trust Managers.
(iii) In the event that the Board of Trust Managers forms a
committee to act in connection with a proposed Qualified Public Offering, GREAT
shall name Purchaser's nominee (if any) on the Board of Trust Managers to serve
on such committee.
(iv) Upon termination pursuant to Section 5.1(j) below of
Purchaser's right to designate a member of the Board of Trust Managers,
Purchaser shall cause its nominee to resign from the Board of Trust Managers,
and the provisions of this Section 5.1(h) shall have no further force or effect.
(i) Preemptive Rights. GREAT shall provide Purchaser with written
notice (the "Issuance Notice") of any proposed issuance for cash of any Common
Shares or any securities convertible into or exchangeable for, or any rights or
warrants to acquire, any Common Shares no later than 30 days prior to the
proposed issuance thereof, including the Qualified Public Offering. The Issuance
Notice shall specify the securities to be issued, a purchase price range or
formula under which the purchase
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price is to be determined, the proposed issuance date and all other material
terms of such issuance (to the extent then known by GREAT). Upon delivery to
GREAT by Purchaser no later than 10 days after the Issuance Notice of a notice
(the "Purchase Notice") stating that Purchaser intends to acquire a portion of
the securities to be issued, Purchaser shall be entitled, on the terms offered
by GREAT to other prospective purchasers of the securities to be issued, to
purchase (A) in the case of a proposed issuance of Common Shares, up to a number
of Common Shares such that, giving effect to the proposed issuance (and the
exercise in full by Purchaser of its rights under this Section 5.1(i) with
respect to such proposed issuance), Purchaser would hold the Percentage Amount
of all issued and outstanding Common Shares and then-exercisable "in-the-money"
options, in the aggregate, and (B) in the case of a proposed issuance of any
securities convertible into or exchangeable for, or any rights or warrants to
acquire, any Common Shares, up to the Percentage Amount of such securities
proposed for issuance. Any Purchase Notice shall state the amount of securities
Purchaser intends to purchase. Notwithstanding anything herein to the contrary,
GREAT shall be entitled not to proceed with the proposed issuance or to alter
the terms thereof; provided that, in the event that any material terms of the
proposed issuance are altered, (i) any Issuance Notice and Purchase Notice shall
be deemed to be revoked automatically and (ii) Purchaser shall be entitled to
participate in such proposed issuance on the terms set forth in a revised
Issuance Notice in accordance with this Section 5.1(i), except that the revised
Issuance Notice shall be given as soon as practicable but in no event later than
five business days prior to the proposed issuance and the Purchase Notice with
respect thereto shall be given no later than two business days after the revised
Issuance Notice. Notwithstanding the foregoing, this Section 5.1(i) shall not
apply to (i) the issuance of Common Shares at any time pursuant to Redemption
Rights, (ii) the issuance of any Common Shares pursuant to warrants, options or
other securities, convertible into, exchangeable or exercisable for or otherwise
carrying the right to receive Common Shares, in each case outstanding as of
Closing Date, (iii) the issuance of Common Shares or options or other rights to
acquire Common Shares (and the issuance of Common Shares pursuant thereto)
pursuant to GREAT's 1996 Share Incentive Plan, and (iv) the issuance of Common
Shares or options or other rights to acquire Common Shares (and the issuance of
Common Shares pursuant thereto) pursuant to any stock incentive plan adopted
after the date of this Agreement. For purposes of this Section 5.1(i), the
"Percentage Amount" shall mean twenty percent (20%), except in the case of any
proposed issuance of Common Shares for less than $9.00 per share or any
securities convertible into or exchangeable for, or any rights or warrants to
acquire, any Common Shares where the initial conversion, exchange or exercise
price, as the case may be, is less than $9.00 per Common Share, in which case
the "Percentage Amount" shall mean twenty-five percent (25%).
(j) Expiration of Covenants. The covenants of GREAT contained in
Sections 5.1(g) through (i) shall expire upon the earlier to occur of (i)
consummation of a Qualified Public Offering, and (ii) such time as the Purchaser
and its Permitted
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Transferees, in the aggregate, hold less than ten percent (10%) of the
outstanding Common Shares (excluding from the number of outstanding Common
Shares for purposes of such calculation, Common Shares issued after the Closing
Date to which Purchaser's preemptive rights set forth in Section 5.1(i) did not
apply).
(k) Registration Statements. Before the filing thereof with the SEC,
the Company will use reasonable efforts to furnish to Purchaser and the managing
underwriters, if any, copies of any shelf registration statement or prospectus,
or any amendments or supplements thereto, to be filed pursuant to the
Registration Rights Agreement if Purchaser has elected to include any
Registrable Securities (as defined in the Registration Rights Agreement) in such
registration statement.
5.2 Covenants of Purchaser. Purchaser covenants and agrees with GREAT as
follows:
(a) Confidentiality. Subject to the requirements of applicable law,
Purchaser shall, and shall use all reasonable efforts to cause its officers,
employees and agents who obtain such information to, hold in confidence all
non-public information obtained from GREAT until such time as such information
is otherwise available to Purchaser without breach of an agreement with
Purchaser or becomes publicly available.
(b) Proxy Statement. Purchaser shall cooperate with GREAT in the
preparation of the Proxy Statement and shall provide to GREAT any information
regarding Purchaser required or deemed advisable by GREAT or its advisors to be
included in the Proxy Statement. None of the information to be supplied by
Purchaser expressly for inclusion in the Proxy Statement, or in any amendments
or supplements thereto, will, at the time of (x) the first delivery or mailing
thereof or (y) the Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. At the Special Meeting called
pursuant to Section 5.1(b), Purchaser shall vote all Common Shares owned by it
(if any) in favor of approval and adoption of each of the Current Proposals.
(c) Ancillary Agreements. Purchaser shall cause the Registration
Rights Agreement to be executed on behalf of Purchaser and delivered to GREAT at
or prior to the Closing.
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(d) Best Efforts. Subject to the terms and conditions of this
Agreement, Purchaser shall use its best efforts to take, or cause to be taken,
all reasonable actions, and to do, or cause to be done, all reasonable things
necessary, proper or advisable under the applicable laws and regulations to
cause the conditions specified in Article VII to be satisfied and otherwise to
consummate and make effective the transactions contemplated by this Agreement.
5.3 ERISA Covenants.
(a) ERISA Certification. Simultaneous with the execution of this
Agreement, Purchaser shall review, complete and deliver to GREAT an ERISA
Certification, substantially in the form of Exhibit A hereto (the "ERISA
Certification").
(b) Restrictions on Transfer. In addition to any other restrictions
on the transfer of the Purchased Common Shares, whether contained in the
Charter, GREAT's Bylaws or elsewhere, until such time as the Purchased Common
Shares are registered under the Act, in no event may a transfer of any interest
in a Purchased Common Share be made unless, prior to such transfer, (i) the
proposed transferee delivers to GREAT a completed and executed ERISA
Certification, and (ii) GREAT determines, in its sole discretion, that such
transfer would not cause any portion of its assets to be deemed to be "plan
assets" for purposes of the fiduciary requirements of ERISA and the prohibited
transaction provisions of ERISA and/or Internal Revenue Code Section 4975.
ARTICLE VI
Conditions of Purchaser's Obligations at Closing
The obligations of Purchaser set forth in Article II are subject to the
fulfillment or waiver by Purchaser on or before the Closing Date of each of the
following conditions:
6.1 Representations and Warranties. The representations and warranties of
GREAT contained in Article III shall be true in all material respects on and as
of the Closing Date with the effect as though such representations and
warranties had been made on and as of the Closing Date.
6.2 Performance. GREAT shall have delivered to the Purchaser the items set
forth in Section 2.3(b) and performed and complied in all material respects with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing Date.
6.3 Compliance Certificate. GREAT shall deliver to Purchaser at the
Closing a certificate, in the form of Exhibit C hereto, duly executed by an
authorized
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officer on behalf of GREAT, certifying that the conditions specified in Sections
6.1 and 6.2 have been satisfied and that no condition exists or event has
occurred requiring GREAT to notify Purchaser under Section 5.1(f)(i).
6.4 No Litigation. There shall not be any action, suit, proceeding,
hearing or investigation or order, decree or injunction of any nature or type
threatened, pending or made by or before any governmental body that questions or
challenges the lawfulness of the transactions contemplated by this Agreement or
in connection with any of the Consolidation Transactions under any law or
regulation or seeks to delay, restrain or prevent or obtain damages in respect
of such transactions.
6.5 Consents and Waivers. Any and all consents or waivers from other
parties to any agreements, or consents, waivers or permits from other Persons,
that are required in connection with the consummation by Purchaser or GREAT of
the transactions contemplated by this Agreement shall have been obtained,
including, without limitation, the approval of GREAT's shareholders of the
Current Proposals.
6.6 Ancillary Agreements. The Registration Rights Agreement shall have
been duly and validly executed by GREAT and shall be in full force and effect.
6.7 Minimum Private Placement. The aggregate gross proceeds received by
GREAT from the concurrent sale of Common Shares hereunder and to other
purchasers of Common Shares in the Private Placement shall be not less than
$17,500,000 (such minimum condition to be reduced to as low as $15.0 million, if
and to the extent that limited partners entitled to receive Common Units in lieu
of cash in the Exchange Offer elect to do so).
6.8 Consolidation Transactions. The Consolidated Transactions (including,
without limitation, the closing under the Contribution Agreement (as defined in
the Proxy Statement), the Exchange Offer and the Refinancing (as defined in the
Proxy Statement)) shall have been consummated in all material respects upon the
terms and conditions set forth in the Proxy Statement, or all conditions thereto
shall have been satisfied so that the same shall occur concurrent with the
Closing of the Purchased Shares.
6.9 Director Nominee. The designee of Purchaser, if any, shall have been
elected to the Board of Trust Managers of GREAT in accordance with Section
5.1(h).
6.10 Ownership Limitations. GREAT's Board of Trust Managers will have
waived the application of the ownership limitations as applied to Purchaser and
its Permitted Transferees with respect to the Purchased Common Shares and any
securities purchased under Section 5.1(i).
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ARTICLE VII
Conditions of GREAT's Obligations at Closing
The obligations of GREAT set forth in Article II are subject to the
fulfillment or waiver by GREAT on or before the Closing of each of the following
conditions:
7.1 Representations and Warranties. The representations and warranties of
Purchaser contained in Article IV shall be true on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date.
7.2 Purchase Price. Purchaser shall have delivered the Purchase Price to
GREAT.
7.3 Compliance Certificate. Purchaser shall deliver to GREAT at the
Closing a certificate, in the form of Exhibit B hereto, duly executed by or on
behalf of Purchaser, certifying that the conditions specified in Sections 7.1
and 7.4 have been satisfied.
7.4 Performance. Purchaser shall have delivered to GREAT the items set
forth in Section 2.3(a) and performed and complied in all material respects with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing Date.
7.5 No Litigation. There shall not be any action, suit, proceeding,
hearing or investigation or order, decree or injunction of any nature or type
threatened, pending or made by or before any governmental body that questions or
challenges the lawfulness of the transactions contemplated by this Agreement or
in connection with any of the Consolidation Transactions under any law or
regulation or seeks to delay, restrain or prevent or obtain damages in respect
of such transactions.
7.6 Consents and Waivers. Any and all consents or waivers from other
parties to any agreements or consents, waivers or permits from other Persons
that are required in connection with the consummation by Purchaser or GREAT of
the transactions contemplated in this Agreement shall have been obtained,
including without limitation approval of the Current Proposals by GREAT's
shareholders.
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7.7 Ancillary Agreements. The Registration Rights Agreement shall have
been duly and validly executed by the parties thereto (other than GREAT) and
shall be in full force and effect.
7.8 ERISA Certification. Purchaser shall have reviewed, completed and
delivered to GREAT the ERISA Certification.
7.9 Minimum Private Placement. The aggregate gross proceeds received by
GREAT from the concurrent sale of Common Shares hereunder and to other
purchasers of Common Shares in the Private Placement shall be not less than
$15,000,000.
7.10 "Consolidation Transactions". The closing under the Contribution
Agreement (as described in the Proxy Statement), the Exchange Offer and the
Refinancing (as described in the Proxy Statement) shall have occurred, or all of
the conditions thereto shall have been satisfied so that the closings thereunder
occur concurrently with the sale of the Purchased Shares.
ARTICLE VIII
MISCELLANEOUS
8.1 Successors and Assigns. Neither party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other; provided, that Purchaser shall be entitled to assign its
rights (and delegate its duties, provided that, notwithstanding such delegation,
Purchaser shall continue to remain obligated therefor) under this Agreement to
any Permitted Transferee who acquires Purchased Common Shares from the
Purchaser, provided, further that Purchaser's rights under Section 5.1(g) and
(h) shall only be assignable to a Permitted Transferee which is an Affiliate of
Purchaser. Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.2 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York, except that
the internal corporate affairs of GREAT shall be governed by the laws of
Maryland applicable thereto.
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8.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.4 Captions. The captions used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
8.5 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to another party hereto shall be in writing,
shall be deemed to have been duly given or delivered when delivered personally
or telecopied (receipt confirmed, with a copy sent by certified or registered
mail as set forth herein) or sent by certified or registered mail, postage
prepaid, return receipt requested, or by Federal Express or other overnight
delivery service, to the address of the party set forth below or to such address
as the party to whom notice is to be given may provide in a written notice to
GREAT, a copy of which written notice shall be on file with the Secretary of
GREAT:
(a) To GREAT:
Grove Real Estate Asset Trust
598 Asylum Avenue
Hartford, Connecticut 06105
Telecopier No.: (860) 947-6960
Telephone No.: (860) 246-1126
Attention: Mr. Joseph LaBrosse, Chief Financial Officer
and Secretary
With copies to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-8689
Telephone No.: (212) 836-8685
Attention: Lynn Toby Fisher, Esq.
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(b) To Purchaser:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
22nd Floor
New York, NY 10020
Telecopier No.: 212-762-7536
Telephone No.: 212-762-4000
Attention: General Counsel
Any Notice given to Purchaser shall be deemed to have been given to any
Permitted Transferee.
8.6 Expenses. Whether or not the Closing occurs, GREAT shall pay all costs
and expenses that it incurs with respect to the negotiation, execution, delivery
and performance of this Agreement and shall reimburse Purchaser for all such
costs incurred by it (including the reasonable fees and expenses of counsel to
Purchaser) provided such costs shall not exceed $50,000 without GREAT's written
consent.
8.7 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only by a
writing executed by each of (i) GREAT and (ii) Purchaser and/or Permitted
Transferees holding a majority of the Purchased Common Shares.
8.8 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
to the fullest extent permitted by law.
8.9 Publicity. GREAT and Purchaser shall continue to consult with each
other before issuing any press releases or otherwise making any public statement
with respect to this Agreement and the transactions contemplated hereby, and
they shall not issue any such press release or make any such public statement
prior to such consultation, except as may, in the judgment of counsel, be
required by law or by obligations pursuant to any securities laws or listing
agreement with any national securities exchange, in which case GREAT shall use
reasonable efforts to provide a copy of any such press release or public
statement to Purchaser prior to the filing or release thereof.
8.10 Further Assurances. Each of the parties shall, without further
consideration, use reasonable efforts to execute and deliver to the other such
additional documents and take such other action as the other may reasonably
request to carry out the intent of this Agreement and the transactions
contemplated hereby.
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8.11 Entire Agreement. This Agreement, including the exhibits hereto, the
documents, schedules, certificates and referred to herein, together with the
Registration Rights Agreement, embodies the entire agreement and understanding
of the parties hereto in respect of the transactions contemplated by such
agreements. There are no restrictions, promises, inducements, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior written or oral
agreements and understandings between the parties with respect to such
transactions.
8.12 Survival. All representations and warranties and covenants of the
parties contained in this Agreement shall survive the Closing.
ARTICLE IX
Termination
9.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the Closing
Date:
(a) by mutual written agreement of Purchaser and GREAT;
(b) by either GREAT or Purchaser at any time after April 30, 1997
if, at the time notice of such termination is given, the Closing has not
occurred, unless the failure of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe any material
covenant or agreement set forth herein required to be performed or observed by
such party on or before the Closing Date;
(c) by Purchaser (if it is not in breach of any of its material
obligations hereunder) in the event of a breach or failure by GREAT that is
material in the context of the transactions contemplated hereby of any
representation, warranty, covenant or agreement by GREAT contained herein which
has not been, or cannot be, cured within 30 days after written notice of such
breach is given to GREAT; or
(d) by GREAT (if it is not in breach of any of its material
obligations hereunder) in the event of a breach or failure by Purchaser that is
material in the context of the transactions contemplated hereby of any
representation, warranty, covenant or agreement by Purchaser contained herein
which has not been, or cannot be, cured within 30 days after written notice of
such breach is given to Purchaser.
The power of termination provided for by this Section 9.1 shall be effective
only after notice thereof, duly executed on behalf of the party for which it is
given, shall have been given to the other.
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9.2 Procedure Upon Termination; Liabilities. In the event of a termination
of this Agreement by either or both of GREAT and Purchaser pursuant to Section
9.1, notice thereof shall forthwith be given by the terminating party to the
other party, and this Agreement shall thereupon terminate and become void and
have no further effect, and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto, except that the
provisions of Section 5.2(a) (Confidentiality), 8.6 (Expenses), 8.2 (Governing
Law), and 8.5 (Notices), and any related definitional, interpretive or other
provisions necessary for the logical interpretation of such provisions, shall
survive the termination of this Agreement; provided, however, that such
termination shall not relieve any party hereto of any liability for any breach
of this Agreement.
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IN WITNESS WHEREOF, Purchaser and GREAT have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
MORGAN STANLEY GROUP INC.
By /s/ Barton M. Biggs
---------------------------------
Name: Barton M. Biggs
Title: Managing Director
GROVE REAL ESTATE ASSET TRUST
By:/s/ Damon Navarro
-----------------
Damon Navarro
Chief Executive Officer
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<PAGE> 1
SECRETARY'S CERTIFICATE
I, Charlene R. Herzer, a duly elected and acting Assistant Secretary
of Morgan Stanley Group Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), certify that the following
resolutions were duly and validly adopted by a Consent in Lieu of a Meeting of
the Executive Committee of the Board of Directors of the Corporation dated as of
October 19, 1995 and that such resolutions are in full force and effect on the
date hereof:
RESOLVED, that the resolutions adopted on September 8, 1993 and
April 17, 1995 relating to signatories to certain reports to be filed with
the Securities and Exchange Commission (the "SEC") are superseded in their
entirety by these resolutions and Stuart J. M. Breslow, Robert G. Koppenol
and Edward J. Johnsen are severally authorized and directed to sign on
behalf of the Corporation any reports to be filed under Section 13 and
Section 16 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, with the Securities and Exchange
Commission, such authorizations to cease automatically upon termination of
employment with any affiliate of the Corporation; and
RESOLVED FURTHER, that all actions heretofore taken by Stuart J. M.
Breslow, Robert G. Koppenol and Edward J. Johnsen that are within the
authority conferred by the foregoing resolution are approved, ratified and
confirmed in all respects.
RESOLVED, that any and all actions to be taken, caused to be taken
or heretofore taken by any officer of the Corporation in executing any and
all documents, agreements and instruments and in taking any and all steps
(including the payment of all expenses) deemed by such officer as
necessary or desirable to carry out the intents and purposes of the
foregoing resolutions are authorized, ratified and confirmed.
<PAGE> 2
IN WITNESS WHEREOF, I have hereunto set my name and affixed the seal
of the Corporation as of the 21st day of March, 1997.
/s/ Charlene R. Herzer
----------------------
Charlene R. Herzer
Assistant Secretary
[SEAL]
