<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 24, 1998
AMERICAN REAL ESTATE INVESTMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
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620 W. Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
(Address of Principal Executive Offices)(Zip Code)
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
(610) 834-7950
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 24, 1998, American Real Estate Investment Corporation (the
"Company"), through American Real Estate Investment, L.P. (the "Operating
Partnership"), a limited partnership of which the Company is the sole general
partner and in which the Company owns an interest of approximately 54%, after
the consummation of the transactions discussed herein, announced in a press
release attached hereto as Exhibit 99.1 and incorporated herein by reference,
the acquisition on December 24, 1998 of an industrial portfolio consisting of 26
industrial buildings (the "Brashier Portfolio"). The Brashier Portfolio
aggregates 2,396,198 square feet and was purchased for approximately $49.6
million. The purchase price was funded through proceeds from the Company's
revolving credit facility and the issuance of $7.5 million in Convertible
Preferred Limited Partnership Units to the sellers. As of December 31, 1998, the
Brashier Portfolio was leased to 19 tenants. BMW of North America, Benore
Logistic Systems, and Fabri-Kal Corp. each occupies more than 10% of the total
leaseable square feet of the Brashier Portfolio.
The Brashier Portfolio is located in South Carolina as follows:
<TABLE>
<CAPTION>
LEASEABLE DECEMBER 31,
SQUARE 1998 YEAR
PROPERTY NAME LOCATION FEET OCCUPANCY CONSTRUCTED
- ------------- -------- ---- --------- -----------
<S> <C> <C> <C> <C>
White Horse Industrial Park Greenville, SC 390,000 100% 1989
Buncombe Road Industrial Park Greer, SC 350,000 100% 1988
Outlaw/South Highway 14 Industrial Park Greer, SC 302,000 100% 1994
Piedmont Highway Industrial Park Piedmont, SC 400,000 100% 1995
Augusta Road Industrial Park Greenville, SC 360,000 100% 1996
1221 South Batesville Road Greer, SC 434,798 100% 1970/1985
Rocky Creek Business Park Greenville, SC 159,400 100% 1997
-------
TOTAL 2,396,198
---------
---------
</TABLE>
<PAGE>
The following table set forth below shows certain information regarding rental
rates and lease expirations for the Brashier Portfolio as of December 31, 1998
(assuming that no tenants exercise renewal or cancellation options and that
there are no tenant bankruptcies or other tenant defaults):
<TABLE>
<CAPTION>
ANNUALIZED RENT
PERCENTAGE OF ANNUALIZED RENT PER LEASED SQUARE
YEAR OF LEASE NUMBER OF SQUARE FOOTAGE OF TOTAL LEASED OF EXPIRING FOOT OF EXPIRING
EXPIRATION EXPIRING LEASES EXPIRING LEASES SQUARE FEET LEASES (1) LEASES
------------- --------------- ----------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
1998 --- --- --- --- ---
1999 20 1,520,600 63.46% $ 3,846,250 $ 2.53
2000 5 541,198 22.59% 1,352,795 2.50
2001 1 20,000 0.83% 65,000 3.25
2002 1 14,400 0.60% 50,400 3.50
2003 --- --- --- --- ---
2004 --- --- --- --- ---
2005 --- --- --- --- ---
2006 2 300,000 12.52% 750,000 2.50
2007 --- --- --- --- ---
Thereafter --- --- --- --- ---
------------- ------------ ------------- -------------- ---------
Total/Average 29 2,396,198 100.0% $ 6,064,445 $ 2.53
------------- ------------ ------------- -------------- ---------
------------- ------------ ------------- -------------- ---------
</TABLE>
(1) Annualized Rent of Expiring Leases, as used above, represents the monthly
contractual rental rate in the month the lease expires, multiplied by twelve.
The sellers of the Brashier Portfolio (T. Walter Brashier, Martin Timothy
Brashier, Hopewell Properties, Inc., TTT Partnership, Stonelodge, Inc., and
Kidco) are parties unaffiliated with the Company and the Operating Partnership.
The Company based its determination of the purchase price of these properties on
the expected cash flow, physical condition, location, competitive advantages,
existing tenancies, and opportunities to retain and attract tenants. The
purchase price was determined through an arm's length negotiation between the
Company and the sellers.
ITEM 5. OTHER EVENTS
As announced in a press release dated December 24, 1998, attached hereto as
Exhibit 99.2 and incorporated herein by reference, the Company completed a
private placement of 800,000 shares of its Series A Convertible Preferred Stock
to AEW Targeted Securities Fund, L.P., an investment partnership managed by AEW
Capital Management, L.P. The Convertible Preferred Shares have a conversion
price of $16.50, a distribution rate of 9% per annum and are convertible at any
time, at AEW's option. The liquidation preference of each Convertible Preferred
Share is $25.00. The Company may redeem the Convertible Preferred Shares at any
time on or after December 15, 2003. The net proceeds of $19.6 million from the
sale were used to repay outstanding indebtedness.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable to file with this Form 8-K the financial
statements and pro forma financial information required by this Item 7
with regard to the acquisitions described in Item 2 above. Those
financial statements and pro forma financial information will be filed
by amendment to this Form 8-K as soon as practicable and, in any
event, within 60 days after the required filing date for this Form
8-K.
(b) PRO FORMA FINANCIAL INFORMATION
See Item 7(a).
(c) EXHIBITS
10.1 Agreement of Sale and Purchase between T. Walter Brashier, Martin
Timothy Brashier, Hopewell Properties, Inc. TTT Partnership,
Stoneledge, Inc., Kidco and American Real Estate Investment, L.P.
10.2 Twelfth Amendment to Agreement of Sale and Purchase between T.
Walter Brashier, Martin Timothy Brashier, Hopewell Properties,
Inc., TTT Partnership, Stoneledge, Inc., and Kidco and American
Real Estate Investment, L.P.
10.3 Preferred Unit Recipient Agreement between Hopewell Properties,
Inc., and American Real Estate Investment, L.P.
10.4 Securities Purchase Agreement between American Real Estate
Investment Corporation and AEW Targeted Securities Fund, L.P.
10.5 Registration Rights Agreement between American Real Estate
Investment Corporation and AEW Targeted Securities Fund, L.P.
10.6 Articles Supplementary classifying and designating a series of
Preferred Stock as Series A Convertible Preferred Stock and
fixing distribution and other preferences and rights of such
series.
99.1 Press Release dated January 4, 1999
99.2 Press Release dated December 24, 1998
<PAGE>
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.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
Date: January 8, 1999 By: /S/ JEFFREY E. KELTER
-----------------------------
Jeffrey E. Kelter
President
Date: January 8, 1999 By: /S/ TIMOTHY A. PETERSON
-----------------------
Timothy A. Peterson
Chief Financial Officer
Date: January 8, 1999 By: /S/ TIMOTHY E. MCKENNA
----------------------
Timothy E. McKenna
Treasurer
(Principal Accounting Officer)
<PAGE>
Exhibit 10.1
AGREEMENT OF SALE AND PURCHASE
------------------------------
THIS AGREEMENT is made as of the 7th day of August, 1998 by and between
the persons and entities that are the signatories to this Agreement
(collectively, "Seller") and AMERICAN REAL ESTATE INVESTMENT, L.P., a Delaware
Limited Partnership ("Buyer").
W I T N E S S E T H :
---------------------
1. AGREEMENT TO SELL AND PURCHASE.
Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms and conditions of this Agreement, certain property
consisting of the following:
(a) REAL PROPERTY. All those certain tracts of land designated
on Schedule 1 hereto as the Whitehorse Road Industrial Park, Standing Springs
Industrial Park, Buncombe Road Industrial Park, Pelham Industrial Park, Piedmont
Highway Industrial Park, Augusta Road Industrial Park, Wunda Weve Building and
Rocky Creek Business Park, which are more fully described by metes and bounds on
Exhibit A-1 to Exhibit A-8 hereto (herein collectively called the "Land");
together with all improvements on the Land, including, without limitation, the
33 buildings containing in the aggregate approximately 2,529,198 square feet of
enclosed floor area and each containing the number of square feet of enclosed
floor area which is designated on Schedule 1 hereto; together with all
appurtenances thereto (including, without limitation, all easements,
rights-of-way, water rights, mineral and timber rights, development rights,
privileges, licenses and other rights and benefits belonging to, running with
the owner of, or in any way relating to the Land); and together with all rights,
title and interest of Seller in and to all land lying in the bed of any street,
opened or proposed, abutting the Land and all right, title and interest of
Seller in and to any unpaid award for the taking by eminent domain of any part
of the Land or for damages to the Land by reason of a change of grade of any
street (all of the property, rights and privileges described in this Section
1(a) herein being collectively called the "Real Property"). Provided, the
condemnation award on Building 1 - Buncombe Road - of approximately Nine
Thousand Dollars ($9,000) shall remain the property of Seller.
(b) All fixtures, equipment and other personal property
attached or appurtenant to the Real Property; all furniture, supplies, and other
unattached items of personal property located in or on, or used in connection
with, the Real Property which are not owned by Tenants (as defined below); and
all intangible personal property used in the ownership, operation or maintenance
of the Real Property, which is not owned by the Tenants; including, without
limitation, the items set forth on Exhibit B hereto (all of the foregoing items
of property being herein collectively called "Personal Property").
<PAGE>
(c) PROPERTY. The Real Property and the Personal Property are
sometimes collectively called the "Property"or the "Properties"; and the Real
Property and the Personal Property with respect to each individual property
listed on Schedule 1, hereto are sometimes individually called a "Property". No
Property may be deleted from this sale without mutual consent of the parties.
2. PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") for the
Property, subject to adjustments and allocation as provided in this Agreement,
shall be Fifty Two Million Dollars ($52,000,000) and shall be paid as follows:
(i) One Hundred Thousand Dollars ($100,000)
(such sum, plus all interest which accrues thereon, being herein called "the
Deposit") shall be paid by Buyer to Commonwealth Land Title Insurance Company
("Title Company") on or prior to the third business day to occur after the date
on which the Inspection Period (as defined below) ends. The Deposit shall be
held by the Title Company in one or more federally-insured money market accounts
acceptable to both Seller and Buyer, or in short-term United States Government
obligations having a maturity date which is not later than the Closing Date (as
defined below).
(ii) The balance of the Purchase Price shall be paid
at Closing by wire transfer of immediately available funds to the account or
accounts designated by Seller.
(b) The Purchase Price shall be allocated among each
respective Property as set forth on Schedule 1 hereto (each of the allocated
amounts set forth on Schedule 1 being herein called an "Allocation Amount").
Provided, however, Seller retains the right to change allocations (in reasonable
amounts) by giving written notice of such change to Buyer at least ten (10) days
prior to the Closing Date.
(c) Seller shall have the option (the "UNIT OPTION"),
exercisable upon written notice to Buyer (the "UNIT NOTICE") at least 15 days
prior to the expiration of the Inspection Period, to elect to receive units of
limited partnership interest in Buyer (the "OP UNITS") at the Closing in lieu of
cash with respect to the Allocation Amount for the Whitehorse Road Industrial
Park Property ("Cash Amount") as follows:
(i) On the Closing Date, Seller and each person
receiving OP Units shall execute an OP Unit Recipient Agreement in form and
substance reasonably satisfactory to Buyer and consistent with previous OP
Unit Recipient Agreements executed by Buyer in connection with contribution
agreements.
(ii) At the Closing, Seller shall receive that
number of OP Units equal to the Cash Amount divided by the Average Price (as
defined below).
(iii) For the purposes of this Section 2(c),
the "Average Price" shall be equal to the arithmetic average of the "Closing
Price" (as defined below) on each of the
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Trading Days (as defined below) during the 10-day period preceding the Closing
Date. The term "Closing Price" shall mean, on any Trading Day, the closing price
of a share of common stock of American Real Estate Investment Corporation
("Company"), par value $0.001 per share, on the American Stock Exchange or, if
the shares are no longer listed on the American Stock Exchange, such other
exchange or quotation system upon which the shares are then listed or quoted,
or, if not listed or quoted, the Closing Price on a Trading Day shall be
determined by the Company acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment, appropriate.
The term "Trading Day" shall mean any day on which securities are traded on the
American Stock Exchange or such other national securities exchange or quotation
system upon which the shares are then trading or quoted.
3. DISPOSITION OF DEPOSIT; DEFAULTS.
(a) The Deposit shall be held in escrow and disbursed by the
Title Company in accordance with the terms of this Agreement. Seller and Buyer
each agrees, upon request, to execute the Title Company's form of escrow
agreement with respect to the Deposit.
(b) If Buyer, without the right to do so and in default of its
obligations under this Agreement fails to complete Closing, Seller shall have
the right to be paid the Deposit as liquidated damages and not as a penalty.
Buyer and Seller acknowledge that the damages which may be incurred by Seller in
the event of Buyer's default are difficult to quantify as of the date of this
Agreement; the Deposit represents the parties' reasonable estimate of Seller's
probable future damages in the event of Buyer's default; and that the Deposit
represents fair and reasonable compensation to Seller in the event of Buyer's
default. The right of Seller to be paid the Deposit shall be Seller's exclusive
and sole remedy, and Seller waives any right to recover the balance of the
Purchase Price, or any part thereof, and the right to pursue any other remedy
permitted by law or in equity against Buyer.
(c) If Seller, without the right to do so and in default of
its obligations under this Agreement fails to complete Closing or otherwise
defaults under or breaches this Agreement, Buyer shall have the right to be paid
the Deposit, which right shall be in addition to all other rights and remedies
of Buyer under this Agreement, at law or in equity, including without limitation
the right to specific performance and injunctive relief.
(d) If Closing is completed hereunder, the Title Company shall
pay the Deposit to Seller on account of the Purchase Price.
(e) Notwithstanding anything contained in this Section 3, if
either party terminates this Agreement as a result of the other's default or
pursuant to the exercise of any right of termination conferred by this
Agreement, the Title Company shall not disburse the Deposit until the earlier to
occur of: (i) receipt by the Title Company of written instructions from Seller
and Buyer or (ii) entry of a final adjudication determining which party is
entitled to receive the Deposit, as applicable, at which time the Deposit shall
be distributed in accordance with such written instructions or adjudication. In
the event of a dispute between the parties with respect to
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<PAGE>
the Deposit, the Title Company may deposit the Deposit with a court of proper
jurisdiction and commence an interpleader action. Upon notifying Seller and
Buyer of the commencement of such action, the Title Company shall be released of
all liability with respect to the Deposit, except to the extent of accounting
for any monies previously delivered by the Title Company out of escrow. The
Title Company shall not be liable to either Seller or Buyer other than for the
performance of its duties under this Agreement, its gross negligence or
intentional wrongdoing.
4. CLOSING.
(a) The closing of this transaction ("Closing") shall take
place at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor
Packard Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102.
Closing shall commence at 10:00 a.m. on the fifteen (15th) day after the date on
which Inspection Period ends or on such earlier date as Buyer shall designate by
at least five (5) days prior written notice to Seller (the "Closing Date").
(b) If Seller does not elect the Unit Option pursuant to
Section 2(c), above, Seller shall have the right, by written notice given to
Buyer at least 15 days prior to the expiration of the Inspection Period, to
defer the Closing Date with respect to the Whitehorse Road Industrial Park
Property only to January 4, 1999; and in such event Buyer shall pay to Seller
the Allocated Amount for the Whitehorse Road Industrial Park Property on the
deferred Closing Date.
5. CONDITION OF TITLE.
(a) (i) Title to the Properties shall be good and marketable
and free and clear of all liens, restrictions, easements, encumbrances, leases,
tenancies and other title objections, except for the Permitted Encumbrances (as
defined below), and shall be insurable as such and as provided in this Agreement
at ordinary rates by the Title Company pursuant to an ALTA Owner's Policy of
Title Insurance, Form B, amended October 17, 1970 and October 17, 1984 (the
"Owner's Policy of Title Insurance").
(ii) The Owner's Policy of Title Insurance shall also
contain endorsements insuring (A) that the covenants, conditions and
restrictions included in the Permitted Encumbrances have not been violated and
that a future violation thereof will not cause a forfeiture or reversion of
title; and (B) that each of the parcels constituting the Land has direct access
to a publicly dedicated road owned and maintained by the proper governmental
authority.
(iii) The premium (at ordinary rates) for the Owner's
Policy of Title Insurance and such endorsements will be paid by Buyer.
(b) If Seller is unable to convey title to any of the
Properties to Buyer at Closing in accordance with the requirements of this
Agreement, Buyer shall have the options: (i) of taking such title to the
defective Property or defective Properties as Seller is able to convey
4
<PAGE>
with abatement of the Purchase Price in the amount (fixed or ascertainable) of
any mortgages or other monetary liens on such defective Property or defective
Properties; or (ii) of terminating Buyer's obligations under this Agreement and
being repaid the Deposit. If Buyer does not terminate this Agreement pursuant to
this Section 5(b), upon payment to Buyer of the Deposit pursuant to clause (ii)
above, this Agreement shall be null and void and neither party shall have any
further obligations hereunder. If Buyer terminates this Agreement pursuant to
this Section 5(b), Seller and Buyer shall immediately deliver to the Title
Company written instructions to pay the Deposit to Buyer.
(c) Promptly after the execution of this Agreement, Buyer
shall order from the Title Company a Commitment for Title Insurance ("Title
Commitment") with respect to the Real Property. Buyer shall give to Seller
notice ("Exception Notice") of any exceptions to title set forth in the Title
Commitment which are not acceptable to Buyer ("Unacceptable Exceptions"). Seller
shall, within five (5) days from the date of Seller's receipt of the Exception
Notice, deliver to Buyer an endorsement to the Title Commitment issued by the
Title Company stating which, if any, of the Unacceptable Exceptions the Title
Company has or will commit to remove from the Title Commitment; and if the Title
Company has not issued an endorsement to the Title Commitment removing (or
committing to remove) all of the Unacceptable Exceptions from the Title
Commitment within five (5) days from the date of Seller's receipt of the
Exception Notice, Buyer shall have the right to terminate this Agreement. If
Buyer does not terminate this Agreement pursuant to the provisions of this
Section 5(c), then the exceptions remaining on Schedule B, Section 2 of the
Title Commitment which are not liens securing payment of monetary sums
("Monetary Liens") shall be the "Permitted Encumbrances". Seller agrees to pay
all Monetary Liens and cause all Monetary Liens to be released and satisfied of
record prior to the completion of Closing.
6. POSSESSION. Possession of the Property shall be given to Buyer at
Closing, subject only to the right of occupancy of the Tenants under the Tenant
Leases, by delivery of Seller's Warranty Deeds (the "Deeds") and Bills of Sale
(the "Bills of Sale"), duly executed and acknowledged by Seller and in proper
form for recording. If Buyer causes surveys to be made of the Real Property,
then at Buyer's option, the descriptions of the Real Property contained in the
Deeds shall be based upon the surveys.
7. APPORTIONMENTS; TRANSFER TAXES
(a) (i) Real estate taxes (on the basis of the actual fiscal
years for which such taxes are assessed) on the Real Property; personal property
taxes on the Personal Property; minimum water and sewer charges; minimum rent
and additional rent and other sums paid by the Tenants to the Seller prior to
Closing under the Tenant Leases; and payments due under the Service Agreements
(as defined below) which are to be assigned to Buyer, if any, shall be
apportioned pro rata between Seller and Buyer on a per diem basis as of the
Closing Date; provided, however, that there shall be no apportionment between
Buyer and Seller at Closing with respect to real estate taxes, utility charges
and other sums paid by the Tenants to the taxing authorities, utility companies
or other third parties pursuant to the Tenant Leases for a period or periods of
time from and after the Closing Date.
5
<PAGE>
(ii) If as of the Closing Date any of the Tenants has
not paid the monthly installment of minimum rent ("Delinquent Installment") due
under its Tenant Lease with respect to the month in which Closing occurs, then
at Closing Buyer shall receive a credit against the Purchase Price in an amount
equal to the portion of the Delinquent Installment applicable to the period of
time from and after the Closing Date and through the balance of the applicable
month; and upon Buyer's receipt of the Delinquent Installment from the Tenant,
Buyer shall pay the full amount thereof to Seller.
(iii) If, at Closing, the Property is affected by an
assessment which is payable in installments of which the first installment is
then a charge or lien, or has been paid, then all unpaid installments of such
assessments, including those which are to become due and payable after Closing,
shall be deemed to be due and payable and to be a lien upon the Property and
shall be paid and discharged by Seller at Closing. The term "assessment" as used
in this Section 7(a)(iii) shall not include real estate brokerage commissions.
(b) Each of Buyer and Seller shall, at Closing, pay one-half
(1/2) of all realty transfer taxes imposed upon the Deeds and/or the conveyance
of the Real Property from Seller to Buyer.
(c) The total sum of all Tenant security, utility, key and
other deposits, together with all interest earned thereon as of the Closing Date
which the Tenants are entitled to receive, shall be given to Buyer at Closing as
a credit against the Purchase Price.
(d) Seller shall obtain readings of the water, electric, gas
and other utility meters servicing the Real Property (other than meters which
exclusively measure utility consumption which is to be paid in full by any of
the Tenants under Tenant Leases) to a date no more than five (5) days prior to
the Closing Date. At or prior to Closing, Seller shall pay all charges based
upon such meter readings, adjusted to include a reasonable estimate of the
additional charges due for the period from the dates of the respective readings
until the Closing Date. If Seller is unable to obtain readings of any meters
prior to the Closing Date, Closing shall be completed without such readings and
upon the obtaining thereof, Seller shall pay the charges incurred prior to the
Closing Date as reasonably determined by Buyer based upon such readings, and at
Closing, Seller shall deposit with the Title Company an amount reasonably
estimated to represent the anticipated obligation of Seller under this sentence.
(e) Notwithstanding the assignment of the Tenant Leases by
Seller to Buyer at Closing, after Closing Seller shall continue to receive (and
Buyer shall remit to Seller upon collection) the remaining balance of the sum of
$350,000 payable in annual installments of $50,000 each from BMW pursuant to the
Lease Agreement between Seller and BMW for the Wunda Weve Property.
(f) The parties agree that any improvements on the Properties
or commissions on the Leases that come into effect or are accepted after July 8,
1998 shall be the responsibility of the Buyer (provided that Seller has given to
Buyer written notice of any such
6
<PAGE>
improvements or commissions that have come into effect or have been accepted
prior to the date of this Agreement). The Buyer shall assume at Closing any
obligation for real estate commissions due under any of the Tenant Leases to the
extent the obligations for the payment of such commissions are expressly set
forth in the face of the Tenant Leases or in a side letter disclosed to Buyer
during the Inspection Period; the obligations pursuant to this sentence being
limited to: the Lease with BMW (which requires a three percent (3%) commission
in full at the end of the expiration of the initial term of the Lease); the
Lease with R-Max (which requires the payment of a five percent (5%) monthly
commission); the Lease with Fastco Threaded Products (which requires the payment
of a three percent (3%) commission at the commencement of any extension term);
the Lease with Export Packaging (which requires the payment of a six percent
(6%) commission at the commencement of the one (1) year extension term); and the
Lease with Hitachi (which requires a commission payable monthly on 160,000
square foot building at six percent (6%)); the other commission obligations
which are listed on Schedule 5 hereto; and any other commission obligations
resulting from the execution by the Seller prior to Closing of new Tenant Leases
and the extension prior to Closing of existing Tenant Leases (provided that such
new Tenant Leases and such extensions have been approved in writing by Buyer).
8. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, to induce Buyer to
enter into this Agreement and to complete Closing, makes the following
representations and warranties to Buyer, which representations and warranties
are true and correct as of the date of this Agreement, and shall be true and
correct at and as of the Closing Date in all respects as though such
representations and warranties were made both at and as of the date of this
Agreement, and at and as of the Closing Date. The representations and warranties
of Seller set forth in Sections 8(n) through 8(cc) below are made to the best of
the actual knowledge of Seller without further investigation or obligation to do
so.
(a) The only leases or other agreement with respect to rights
of use and occupancy of the Property in effect are the leases ("Tenant Leases")
listed on Schedule 2 hereto ("Rent Roll") with the tenants ("Tenants")
designated on Schedule 2 hereto.
(b) The Tenant Leases are valid and existing and in full force
and effect; the Tenants are in actual possession of the Property; and neither
the Tenants nor the Seller are in default of their respective obligations under
the Tenant Leases.
(c) The copies of the Tenant Leases previously delivered by
Seller to Buyer are true and complete copies of the Tenant Leases; the Tenant
Leases have not been amended, modified, or supplemented; and the Tenants do not
have any right to extend or renew the terms of the Tenant Leases except as
expressly set forth in the Tenant Leases.
(d) The Tenants have not asserted any claims which could
adversely affect the right of the landlord to collect rent from the Tenants; and
no notice of default or breach on the part of landlord under the Tenant Leases
has been received by Seller from the Tenants which have not been cured.
(e) All construction, painting, repairs, alterations,
improvements and other work required to be performed by the landlord under the
Tenant Leases, and all of the other
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obligations of the landlord required to be performed under the Tenant Leases as
of the Closing Date, have been fully performed and paid for in full by Seller.
(f) The rents and other payments set forth on the Rent Roll
and in the Tenant Leases are the actual rents, income and charges presently
being collected by Seller under the Tenant Leases; all minimum rent payable
under the Tenant Leases is payable monthly in advance and there are no
restrictions upon the amount of rent which may be charged or collected under the
Tenant Leases nor upon tenants to whom space can be leased in the Property by
virtue of rent control laws, ordinances, or regulations, or by virtue of
existing agreements or regulations.
(g) Except as set forth in the Tenant Leases, the Tenants are
not entitled to any concession, allowance, rebate or refund.
(h) The Tenants have not prepaid any rent or other charges for
more than the current month under the Tenant Leases.
(i) Neither the Tenant Leases nor the rent or other amounts
payable under the Tenant Leases have been assigned, pledged or encumbered other
than to the holder of any existing mortgage as collateral security, which
assignment shall be terminated at Closing; and the Tenant Leases may be assigned
by Seller to Buyer at Closing.
(j) No security deposits have been paid by the Tenants under
the Tenant Leases, except as set forth on the Rent Roll.
(k) No brokerage or leasing commissions or other compensation
is or will be due or payable to any party with respect to or on account of the
Tenant Leases or any extensions or renewals thereof or any other actions by
Tenants thereunder; provided, however, that Seller has disclosed to Buyer, and
Buyer agrees to assume, the obligations to pay leasing commissions for the
Tenant Leases designated on Schedule 3 hereto, expressly limited to the Tenant
Leases designated on Schedule 3 hereto and limited to the monthly installments
of minimum rent payable after Closing as designated on Schedule 3 and the
exercise of renewal options as designated on Schedule 3 (herein called "Assumed
Commission Obligations").
(l) The Tenants do not have any options to purchase, right of
first refusal, right of first offer, or other similar or dissimilar right or
option to purchase or otherwise acquire all or any portion of the Property, or
any interest therein; and there are no outstanding agreements with any other
party granting any right or creating any obligation to acquire the Property or
any portion thereof or any interest therein.
(m) The Tenants do not have the right to remove from the
Property any of the currently attached heating, ventilating, air conditioning,
mechanical, electrical and other systems located within the buildings on the
Real Property.
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(n) All of the books, records, information, data and other
items supplied by Seller to Buyer are true, complete and correct in all material
respects, and fairly and accurately presented the results of operations of the
Property.
(o) Seller has not received any notice ("Defect Notice") from
any insurance company which has issued a policy with respect to the Property or
from any board of fire underwriters (or other body exercising similar functions)
claiming any defects or deficiencies in the Property or suggesting or requesting
the performance of any repairs, alterations or other work to the Property.
(p) There are no management, service, equipment, supply,
security, maintenance, construction, concession or other agreements with respect
to or affecting the Property, except for any agreements under which only the
Tenants are bound and except for the agreements listed on Exhibit D to this
Agreement (collectively, the "Service Agreements"); Seller is not in default
under the Service Agreements; each of the Service Agreements designated on
Exhibit D to be assigned to Buyer at Closing is assignable by Seller and will
not be invalidated, violated or otherwise adversely affected by the assignment
thereof or by the transfer of the Property to Buyer; the copies of the Service
Agreements previously delivered by Seller to Buyer are true and complete copies
of such Service Agreements and the same have not been amended, modified or
supplemented; and each of the Service Agreements designated on Exhibit D to be
terminated shall be terminated by Seller at or prior to Closing and all sums due
thereunder paid in full by Seller.
(q) No employee of Seller who performs services at or in
connection with the Property is covered by an employment agreement or union
contract; no demand has been made upon Seller for recognition of a union or
collective bargaining agent for the employees of Seller at the Property; and
none of the employment arrangements with respect to Seller's employees will be
binding upon Buyer or any subsequent owner of the Property after Closing.
(r) All buildings and improvements (including all roads,
parking areas, curbs, sidewalks, sewers and other utilities) included within the
Property have been completed and installed in accordance with the plans and
specifications therefor approved by the governmental authorities having
jurisdiction; no municipal or other governmental improvements affecting the
Property are in the course of construction or installation, and no such
improvement has been ordered to be made; all street paving, curbing, sanitary
sewers, storm sewers and other municipal or other governmental improvements
which have been constructed or installed have been paid for and will not
hereafter be assessed, and all assessments heretofore made have been paid in
full; and there are no private contractual obligations relating to the
installation of or connection to any sanitary sewers or storm sewers.
(s) All permanent certificates of occupancy and all other
licenses, permits, authorizations, consents, certificates and approvals required
by all governmental authorities having jurisdiction and the requisite
certificates of the local board of fire underwriters (or other body exercising
similar functions) have been issued for the Property, have been paid
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for, are in full force and effect, are assignable by Seller, and will not be
invalidated, violated or otherwise adversely affected by the assignment thereof
or by the transfer of the Property to Buyer.
(t) The construction, operation and use of the buildings and
other improvements constituting the Real Property do not violate any zoning,
subdivision, building or similar law, ordinance, order, regulation or recorded
plat or any certificate of occupancy issued for the Property; no zoning
variances, special exceptions or zoning board of adjustment certificates were
issued for the construction of the Property or for its present use; and the
buildings and improvements on the Real Property are not non-conforming uses or
structures.
(u) No portion of the Property and no method of operation of
the Property is in violation ("Violation") of any applicable law, ordinance,
code, rule, order, regulation or requirement of any governmental authority, the
requirements of any local board of fire underwriters (or other body exercising
similar functions), and there are no presently outstanding and uncured notices
of Violations.
(v) There exists no defective condition, structural or
otherwise, with respect to the Property; and the heating, ventilating and air
conditioning, plumbing, sprinkler, electrical and drainage systems, roofs, and
all other fixtures, equipment and systems at or serving the Property are in good
condition, repair and working order.
(w) Exhibit E to this Agreement sets forth the only fire and
extended coverage insurance policies ("Policies") maintained by Seller or by the
Tenants with respect to the Property; the Policies are in full force and effect
and all premiums due thereunder have been paid; and neither Seller nor any of
the Tenants has received any notice from the insurance companies which issued
the Policies, indicating that the Policies will not be renewed or will be
renewed at a higher premium than is presently payable therefor.
(x) There is no action, suit or proceeding pending or
threatened against or affecting Seller or the Property or any portion thereof or
any of the Tenant Leases or relating to or arising out of the ownership,
management or operation of the Property, in any court or before or by any
federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality.
(y) All real estate taxes currently due and payable with
respect to the Property have been paid; each Property constitutes a separate tax
parcel and is separately assessed for real estate tax purposes; there is no
proceeding pending for the adjustment of the assessed valuation of all or any
portion of the Property; the Property has been assessed and real estate taxes
have been paid on the basis of the value of all improvements as completed; and
there is no abatement, reduction or deferral in effect with respect to all or
any portion of the real estate taxes or assessments applicable to the Property.
(z) No portion of the Property is located within an area
designated as a flood hazard area or an area which will require the purchase of
flood insurance for the obtaining
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of any federally insured or federally related loan; and no portion of the Real
Property is located in any area constituting a "wetland".
(aa) Water, sanitary sewer, storm sewer, drainage, electric,
telephone, gas, and other public utility systems and lines serve the Property
with capacity and in a manner adequate for the present use of the Property and
are directly connected to the lines and/or other facilities of the respective
public authorities or utility companies providing such services or accepting
such discharge, either adjacent to the Real Property or through easements or
rights of way appurtenant to and forming a part of the Real Property; such
easements or rights-of-way have been fully granted, and all charges therefore
have been fully paid by Seller and all charges for the aforesaid utility systems
and the connection of the Real Property to such systems, including without
limitation connection fees, "tie-in" charges and other charges now or hereafter
to become due and payable, have been fully paid by Seller; and the water and
sanitary sewer service described above is supplied by public authority.
(bb) Seller has not received any notice of any condemnation
proceeding or other proceedings in the nature of eminent domain ("Taking") in
connection with the Property, and to Seller's knowledge no Taking has been
threatened.
(cc) Each Property has direct access to a public road owned
and maintained by the applicable municipal authority.
Seller shall provide to Buyer, at least fifteen (15) days prior to the
Closing Date, a statement in writing ("Update Statement") containing a
certification by Seller of any exceptions to the representations and warranties
of Seller set forth in Subparagraphs (a) to (o) of this Section 8; and if Buyer
completes Closing, Buyer shall be deemed to have accepted the exceptions to the
representations and warranties set forth in the Update Statement.
9. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement and
Closing:
(a) Seller shall, at its expense: make all repairs and
replacements, structural and non-structural, which are required with respect to
any portion of the Property to maintain it in its present condition, except only
damage by Casualty (which term is defined in, and shall be governed by, the
provisions of Section 11 below); perform all of its obligations under the Tenant
Leases and cause the Tenants to perform all of their obligations under the
Tenant Leases; and cure (or cause the Tenants to cure) all notices of any
Violations and/or Defect Notices issued prior to Closing.
(b) Seller shall not enter into any agreement to modify, amend
or otherwise alter any of the terms or provisions of the Tenant Leases or any of
the Service Agreements; and Seller shall not enter into an new lease or other
agreement with respect to the use or occupancy of the Property and/or the
maintenance or operation thereof, without the prior written consent of Buyer.
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(c) Seller shall perform all acts, and shall make all
payments, necessary to cause the representations and warranties of Seller in
this Agreement to be true and correct.
(d) (i) Buyer, its attorneys, accountants, architects,
engineers and other representatives shall be afforded access to the Property
and to all books, records and files relating thereto from time to time prior to
Closing for the purposes of inspections, preparation of plans, taking of
measurements, making of surveys, making of appraisals, and generally for the
ascertainment of the condition of the Property, including but not limited to the
physical and financial condition of the Property; and there shall be furnished
to Buyer all plans and specifications, engineering reports, feasibility studies,
operating statements, governmental permits and approvals, contracts, leases,
surveys, title information and other documentation concerning the Property in
the possession of Seller and/or Seller's management agent for the Property.
(ii) Buyer, its attorneys, accountants and other
representatives, shall be permitted to make and are authorized to make any
searches of governmental records as they deem necessary with respect to the
Property; and Seller agrees fully to cooperate with Buyer and its attorneys and
other representatives in this regard and to issue any consents or authorizations
required therefor.
(iii) Buyer agrees to indemnify, defend and
reimburse Seller for all costs, expenses (including, without limitation,
attorney's fees, consultant and expert fees and court costs) loss and
liabilities suffered or incurred by Seller as the result of any injuries to
persons or properties caused by Buyer's entry upon the Property prior to Closing
pursuant to the provisions of this Section 9(d). The obligations of Buyer
pursuant to this Section 9(d)(iii) shall survive Closing and/or any termination
of this Agreement.
(e) Promptly after receipt thereof by Seller, Seller shall
deliver to Buyer the following:
(i) a copy of any notice of default given or received
under any of the Tenant Leases or the Service Agreements;
(ii) a copy of any tax bill, notice or statement of
value, or notice of change in a tax rate affecting or relating to the Property;
(iii) a copy of any notice of an actual or alleged
Violation; and
(iv) a copy of any notice of Taking.
(f) Seller shall complete and deliver for execution by each of
the Tenants a written certification in the form of Exhibit F-1 to this
Agreement, but modified and supplemented by Buyer's counsel to reflect the terms
and provisions of each of the respective Tenant Leases (each, "Tenant Estoppel
Certificate"); and shall use its best efforts to obtain an executed Tenant
Estoppel Certificate (dated no more than thirty (30) days prior to the Closing
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Date) from each of the Tenants. Seller shall deliver to Buyer a copy of each of
the executed Tenant Estoppel Certificates delivered to Seller promptly after
receiving each such certificate. If, notwithstanding the use of its best
efforts, Seller has been unable to obtain Tenant Estoppel Certificates from all
Tenants under the Tenant Leases, then, in lieu of each Tenant Estoppel
Certificate which Seller has not obtained from a Tenant, Seller, shall, instead,
execute and deliver to Buyer a Tenant Estoppel Certificate executed by Seller;
provided, however, that if Buyer does not choose to accept any of the Seller's
executed Tenant Estoppel Certificates, Buyer shall have the right, at Buyer's
sole option to terminate this Agreement by giving written notice of termination
to Seller on or prior to the scheduled Closing Date, in which event the Deposit
shall be returned to Buyer.
(g) Seller shall complete and deliver for execution by each of
the Tenants a Subordination, Non-Disturbance and Attornment agreement in the
form of Exhibit F-2 to this Agreement, but modified and supplemented by Buyer's
counsel to reflect the terms and provisions of each of the respective Tenant
Leases (each, "SNDA"); and Seller shall use its best efforts to obtain an
executed SNDA from each of the Tenants. Seller shall deliver to Buyer a copy of
each of the executed SNDAs delivered to Seller promptly after receiving each
such SNDA. If, notwithstanding the use of its best efforts, Seller has been
unable to obtain SNDAs from all Tenants under the Tenant Leases, then, Buyer
shall have the right, at Buyer's sole option to terminate this Agreement by
giving written notice of termination to Seller on or prior to the scheduled
Closing Date, in which event the Deposit shall be returned to Buyer.
(h) With respect to each of the Tenant Leases, if any, which
grants to the Tenant a right or option to purchase all or any portion of the
Property ("Purchase Option Rights"), Seller shall prepare and deliver for
execution by each of such Tenants a written release and termination of such
right or option in form acceptable to Buyer and to the Title Company (to induce
the Title Company to remove such option to purchase as an exception to title)
("Tenant Option Waiver").
(i) With respect to each of the Tenant Leases, if any, which
grants to the Tenant a right of first offer, right of first refusal, or similar
right to purchase all or any portion of the Property ("Right of First Refusal
Rights"), Seller shall complete and deliver for execution by each of such
Tenants, in form acceptable to Buyer and to the Title Company, a waiver and
release of such right or option with respect to the conveyance of the Property
by Seller pursuant to this Agreement (to induce the Title Company affirmatively
to insure Buyer that such Tenants' rights of first offer, rights of first
refusal or similar rights are not applicable to the conveyance of the Property
by Seller pursuant to this Agreement) and that such rights of first offer,
rights of first refusal or similar rights shall not be applicable to (and shall
not be activated by) any foreclosure of any Mortgage lien on the Property or any
Deed granted by the Mortgagor to the holder of any Mortgage in lieu of
foreclosure of such Mortgage; and that any such foreclosure sale or transaction
in connection with the delivery of the Deed in lieu of foreclosure may be
consummated without first offering to such Tenant any right to purchase the
Property pursuant to the terms and provisions of its respective Tenant Lease
("Tenant Right of First Refusal Waiver").
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(j) With respect to each of the brokers entitled to an Assumed
Commission Obligation, a written confirmation of the amount thereof ("Broker
Confirmation Letter").
10. ENVIRONMENTAL MATTERS.
(a) Seller represents and warrants to Buyer that to the best
of Seller's actual knowledge without further investigation or obligation to do
so:
(i) The Property and all activities and conditions at
the Property are in compliance with all applicable federal, state and local
environmental statutes, ordinances, regulations, orders and requirements of
common law, including without limitation: those relating to the construction,
operation, maintenance or repair of any improvements or equipment; the
discharge, emission or release of any item or substance to the air, soil,
surface water or ground water; the discharge of any dredge or fill material to a
wetland or other water of the United States; the storage, treatment, disposal or
handling of any Contaminant; or the construction, operation, maintenance or
repair of aboveground or underground storage tanks (collectively, "Environmental
Laws").
(ii) No item or substance that may require
remediation under any Environmental Law ("Contaminant") is present on, over or
under or is migrating from the Property.
(iii) Neither radon nor any radon progeny is present
at any area of the Property in excess of 4 picocuries/liter.
(iv) Neither Seller, the Tenants nor any other party
has generated, stored, treated, disposed of, discharged, released, emitted or
otherwise handled any Contaminant on, over, under, from or in any manner
affecting the Property or any premises adjacent to the Property. For the
purposes of this subsection (iv) only, "Contaminant" shall not include office
equipment, fuel and other similar products contained in vehicles and cleaning
solutions and other maintenance materials that are customarily used or stored
incidental to and are reasonably necessary for the operation or maintenance of
the Property.
(v) Neither the Property nor any adjacent premises,
is listed or proposed for listing on the National Priorities List established
pursuant to Section 105(8)(B) of CERCLA, 42 U.S.C. Section 9605(8)(B), or on any
other hazardous site list promulgated by any federal, state or local government
or governmental agency.
(vi) No underground or above ground storage tanks are
present at the Property.
(vii) Seller has provided Buyer with copies of all:
(A) permits, licenses, certificates, registrations, approvals, and any
amendments thereto required for the
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Property pursuant to or necessary for compliance with Environmental Laws; (B)
applications, reports or other materials submitted to any governmental agency in
connection with any Environmental Law; (C) records or manifests required to be
maintained pursuant to Environmental Laws or which are relevant to the issue of
compliance with Environmental Laws; (D) correspondence, notices of violation,
summonses, orders, administrative, civil or criminal complaints, requests for
information or other documents received by Seller or its agents pertaining to
compliance with Environmental Laws or the generation, storage, treatment,
handling, discharge, emission, release or migration of any Contaminant on, over,
under, from or affecting the Property; and (E) records and analyses of any
environmental tests pertaining to the Property, including without limitation the
results of any air, water or soil analyses or tank integrity testing, which are
in the possession of Seller for the Property or the existence of which is known
to Seller.
(viii) No civil, criminal or administrative
proceeding is pending or threatened relating to Environmental Laws or
Contaminants on, over, under, from or affecting the Property; neither Seller nor
any of the Tenants has received any notice of violation or potential liability
regarding the Property or activities thereon relating to Environmental Law or
Contaminants on, over, under, from or affecting the Property and Seller has no
reason to believe such notices will be received and has no reason to know of
circumstances that would give rise to such notices or proceedings in the future;
neither Seller nor any of the Tenants has entered into any consent order,
consent decree, administrative order, judicial order or settlement relating to
Environmental Laws or Contaminants on, over, under, migrating from or affecting
the Property.
(b) Seller will assist Buyer in giving notice to applicable
government agencies and in transferring or reissuing to Buyer any permit,
license, certificate, registration or other approval necessary to continue
operations at the Property, or in obtaining for Buyer any new permit, license,
certificate, registration or approval required of Buyer under any Environmental
Law.
(c) Seller agrees to indemnify, hold harmless, defend and
reimburse Buyer for, and release Buyer from, all cost, expense, loss and
liability (including without limitation common law and statutory liability)
suffered by Buyer from or in connection with any breach of any of the provisions
in this Section 10 which were known by Seller at Closing and not disclosed by
Seller to Buyer and could not reasonably have been discovered by an
environmental audit prepared by Buyer.
11. CASUALTY.
(a) Seller shall maintain the Policies in effect until the
time of Closing.
(b) (i) If at any time prior to the Closing Date any portion
of the Properties is destroyed or damaged as a result of fire or any other
casualty ("Casualty"), Seller shall promptly give written notice ("Casualty
Notice") thereof to Buyer. If any of the Properties is the subject of a
Casualty, Buyer shall have the right, at its sole option, of terminating this
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Agreement (by written notice to Seller given within ten (10) days after receipt
of the Casualty Notice from Seller) unless, (i) the cost fully to repair or
restore such damage is less than Fifty Thousand Dollars ($50,000) and sufficient
insurance proceeds are available fully to restore such damage, and (ii) the
insurance companies issuing the Policies have confirmed in writing prior to the
end of such ten (10) day period that such Casualty is covered by the Policies
and that no defense to payment of the claim exists, and (iii) such Casualty will
not result in any of the Tenants terminating any of the Tenant Leases or
asserting a right to terminate any of the Tenant Leases and (iv) any loan
commitment obtained by Buyer for financing to acquire the Property is not
canceled or suspended as a result of such Casualty. If a Casualty Notice is
given to Buyer less than ten (10) days prior to Closing, at Buyer's option
Closing shall be postponed to a date not earlier than ten (10) days after
Buyer's receipt of the Casualty Notice.
(ii) If Buyer terminates this Agreement pursuant to
this Section 11(b), Seller and Buyer shall forthwith deliver to the Title
Company written instructions to pay the Deposit to Buyer.
(iii) If this Agreement continues in effect, the
proceeds of any insurance with respect to the Property paid between the date of
this Agreement and the Closing Date together with an amount equal to Seller's
deductible under the Policies with respect to such Property, shall be paid to
Buyer at the time of Closing (except to the extent that Seller shall have used
such proceeds for repair and restoration pursuant to the provisions of Section
11(c) below), and all unpaid claims and rights in connection with losses to such
Property shall be assigned to Buyer at Closing without in any manner affecting
the Purchase Price.
(c) If the Property is the subject of a Casualty, but Buyer
does not have the right to terminate this Agreement pursuant to the provisions
of Section 11(b) above (or Buyer does not exercise such right), then Seller
shall promptly cause all temporary repairs to be made to the Property as shall
be required to prevent further deterioration and damage to the Property;
provided, however, that any such repairs in excess of Fifty Thousand Dollars
($50,000) shall first be approved by Buyer, which approval shall not be
unreasonably delayed, conditioned or withheld. Seller shall have the right to be
reimbursed from the proceeds of any insurance with respect to the Property paid
between the date of this Agreement and the Closing Date for the cost of all such
repairs made pursuant to this Section 11(c). Except for the obligation of Seller
to repair the Property set forth in this Section 11(c), Seller shall have no
other obligation to repair any Casualty damage in the event Buyer does not elect
to terminate this Agreement pursuant to the provisions of Section 11(b), and in
such event, Buyer shall accept the Property at Closing as damaged or destroyed
by the Casualty and Buyer shall have the right to enter the Real Property prior
to Closing for the purpose of performing such repairs thereto as are reasonably
necessary to protect the Property against further damage prior to the Closing
Date.
12. EMINENT DOMAIN.
(a) If at any time prior to the Closing Date: a Taking affects
all or any part of the Property, or if any proceeding for a Taking is commenced,
or if notice of the contemplated commencement of a Taking is given, Seller shall
promptly give written notice
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("Taking Notice") thereof to Buyer. If any of the Properties is Taken, Buyer
shall have the right, at its sole option, of terminating this Agreement. If a
Taking Notice is given to Buyer less than ten (10) days prior to Closing, at
Buyer's option Closing shall be postponed to a date not earlier than ten (10)
days after Buyer's receipt of the Taking Notice.
(b) If Buyer terminates this Agreement pursuant to this
Section 12, Seller and Buyer shall forthwith deliver to the Title Company
written instructions to pay the Deposit to Buyer.
(c) If this Agreement continues in effect, the Purchase Price
shall be reduced by the total of any awards or damages received by Seller with
respect to the Property and Seller shall, at Closing, be deemed to have assigned
to Buyer all of Seller's right, title and interest in and to any awards or
damages with respect to the Property to which Seller may have become entitled or
may thereafter be entitled by reason of any exercise of the power of eminent
domain or condemnation with respect to or for the Taking of such Property or any
portion thereof. Provided, however, the condemnation award for Building 1 -
Buncombe Road - in the amount of Nine Thousand Dollars ($9,000) shall remain the
property of Seller.
13. CONDITIONS OF BUYER'S OBLIGATIONS.
(a) The obligations of Buyer under this Agreement are subject
to the satisfaction at the time of Closing of each of the following conditions
(any one of which may be waived in whole or in part in writing by Buyer at or
prior to Closing):
(i) all of the representations and warranties by
Seller set forth in this Agreement shall be true and correct;
(ii) no representation or warranty by Seller
contained in this Agreement shall contain any untrue statement or shall omit a
material fact necessary to make the statement of fact therein recited not
misleading;
(iii) Seller shall have performed all covenants,
agreements and conditions required by this Agreement to be performed by Seller
prior to or as of the Closing Date;
(iv) there shall have been no material adverse change
in the financial condition of any of the Tenants during the period from the date
of this Agreement to the Closing Date;
(v) Buyer shall have received the executed Tenant
Estoppel Certificates and the SNDAs from the Tenants under the Tenant Leases;
(vi) Buyer shall have received the executed Tenant
Option Waivers and the Tenant Right of First Refusal Waivers from any of the
Tenants under the Tenant Leases which contain Purchase Option Rights and/or
Right of First Refusal Rights;
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(vii) Buyer shall have received the executed Brokers
Confirmation Letters Agreements from the Brokers ; and
(viii) Buyer shall have received written confirmation
that the Tenant Leases have been amended or renewal options contained therein
have been exercised by the Tenants thereunder to provide for the extensions of
the Tenant Leases designated on Schedule 4 hereto.
(b) In the event any of the conditions set forth in Section
13(a) are not satisfied as of the Closing Date, Buyer shall have the right (in
addition to all other rights and remedies available to Buyer under this
Agreement, at law or equity), at Buyer's sole option (by written notice to
Seller) to (i) terminate Buyer's obligations under this Agreement and have the
Deposit returned to Buyer, or (ii) complete Closing notwithstanding the
unsatisfied condition, or (iii) if such condition is not fulfilled by reason of
Seller's intentional act or omission and can be remedied by the payment of an
ascertainable sum, Buyer may complete Closing and deduct such sum from the
Purchase Price.
14. INSPECTION PERIOD.
(a) Buyer shall, during the period ("Inspection Period") which
shall commence as of the date of this Agreement and which shall end at 11:59 PM
on the 45th day after the date of this Agreement, have the opportunity to
examine the Property, the Tenant Leases, the Service Agreements, the Policies,
the Permitted Encumbrances and any items to be delivered by Seller to Buyer, and
to conduct such other inspections of the Property (including, without
limitation, environmental surveys and inspections and engineering surveys and
inspections) as Buyer, in its discretion, may elect.
(b) (i) Seller acknowledges that Buyer may commission,
prior to Closing, at Buyer's sole cost and expense, an investigation of (without
limitation): compliance with Environmental Laws, the presence of Contaminants
on, over, under, migrating from or affecting the Property including without
limitation in connection with the use and operation of any Personal Property,
and the presence of conditions that may affect Buyer's intended use.
(ii) Seller will cooperate with Buyer and Buyer's
agents in Buyer's investigation, including without limitation: (A) complying
with requests for information and records; (B) warranting that responses to such
requests are true and complete; (C) assisting Buyer in obtaining governmental
agency or other records and upon Buyer's request communicating directly with any
governmental agencies; (D) granting Buyer access to the Property including,
without limitation, access for collecting surface or subsurface samples of soil,
vegetation or water, or samples from buildings and other improvements and
Personal Property located on the Property, including samples from walls, floors,
ceilings, plenums, paved areas and other areas the taking of which samples may
necessitate some damage to the buildings, other improvements or the Personal
Property, and installing groundwater monitoring wells; and (E) delivering to
Buyer any communications, letters, inquiries or notices received by Seller from
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any regulatory body dealing with environmental matters, water quality, air
quality, life safety and OSHA and with all reports which may have been prepared
within the past five years addressing the presence of PCB emissions, asbestos or
other hazardous materials or waste. Buyer's investigations shall in no way limit
or otherwise affect Seller's representations and warranties under this
Agreement. If Buyer does not complete Closing, Buyer will repair any invasive
testing to the condition of the Property which had reasonably existed prior to
such testing or sampling.
(c) Buyer shall have the right, at Buyer's sole option, to
elect to terminate this Agreement (for any reason whatsoever) by giving notice
of such termination to Seller on or prior to 11:59 P.M. on the second business
day to occur after the date on which the Inspection Period ends. If Buyer
terminates this Agreement pursuant to this Section 14(c), this Agreement shall
be null and void and neither party shall have any further obligations under this
Agreement.
15. ITEMS TO BE DELIVERED AT CLOSING.
(a) At Closing, Seller shall deliver to Buyer the following:
(i) The Deeds. Each of the Deeds shall be
substantially in the form attached hereto as Exhibit G-1.
(ii) The Bills of Sale. Each of the Bills of Sale
shall be substantially in the form attached hereto as Exhibit G-2.
(iii) Assignments in the form of Exhibits G-3 and
G-4, respectively, of the Tenant Leases and the Service Agreements designated on
Exhibit D to be assigned to Buyer, duly executed and acknowledged by Seller and
in proper form for recording, assigning to Buyer all of the lessor's and
Seller's rights, title and interest in the Tenant Leases and such Service
Agreements; together with all correspondence between Seller and the Tenants; an
original executed copy of each of the Tenant Leases and each such Service
Agreement; a letter in the form of Exhibit G-5 duly executed by Seller,
addressed to each of the Tenants and other parties under the Service Agreements
informing it of the assignments. Seller shall also deliver to Buyer at Closing
evidence of Seller's termination of those Service Agreements not assigned to
Buyer and payment of all sums owing to the parties to such Service Agreements.
(iv) An assignment in the form of Exhibit G-6, duly
executed and acknowledged by Seller, of (and delivery to Buyer of originals or
copies of): all permanent certificates of occupancy and all other licenses,
permits, authorizations, consents, certificates and approvals required by all
governmental authorities having jurisdiction over the Property; all fees, escrow
and/or security funds, deposits and other sums heretofore paid by Seller to any
governmental authority in connection with the Property; all certificates issued
by the local Board of Fire Underwriters (or other body exercising similar
functions); all plans, specifications and project manuals for the Property in
Seller's possession; and all guarantees, bonds and warranties with respect to
the Property (together with original counterparts of such instruments).
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(v) An original counterpart of each of the Tenant
Estoppel Certificates and each of the SNDAs; and an original counterpart of each
of the required Tenant Option Waivers and Tenant Right of First Refusal Waivers.
(vi) Such resolutions and certificates as the Title
Company shall require to evidence the due authorization of the execution and
performance of this Agreement and the documents to be delivered pursuant hereto;
and all affidavits, indemnities and other agreements required by the Title
Company to permit it to issue to Buyer the Owner's Policy of Title Insurance
required pursuant to Section 5(a).
(vii) A statement, certified by Seller (and
accompanied with all relevant back-up documentation) setting forth all
information necessary or required to permit Buyer to calculate and collect after
Closing all payments of additional rent and other charges due under the Tenant
Leases.
(viii) All proper instruments for the conveyance of
the awards referred to in Sections 1(a), 1(b) and 12.
(ix) A Uniform Commercial Code search against Seller,
as debtor, in the relevant offices of the State in which the Property is located
and the County in which the Property is located, revealing no security interests
or liens on the Personal Property, or releases of any which are disclosed.
(x) Duplicate copies of all books, records and
operating reports in Seller's possession which are necessary to insure
continuity of operation of the Property.
(xi) An original executed counterpart of each of the
Broker Confirmation Letters.
(xii) A Guaranty Agreement in the form attached
hereto as Exhibit C wherein Seller shall guaranty to Buyer the obligations of
American Home Ensembles to pay all rent due under its lease for a period of 12
months from and after the Closing Date.
(xiii) Any other documents required to be delivered
by Seller pursuant to any other provisions of this Agreement.
(b) At Closing, Buyer shall deliver to Seller the following:
(i) The portion of the Purchase Price payable
pursuant to Section 2(a)(ii).
(ii) Assumption agreements, in the form of Exhibits
G-3 and G-4 and respectively, of the Tenant Leases and of the Service Agreements
designated on Exhibit D to be assigned to Buyer (including Buyer's Assumption of
the Assumed Commission Obligations), duly executed and acknowledged by Buyer and
in proper form for recording.
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(iii) Any other document required to be delivered by
Buyer pursuant to any other provisions of this Agreement.
16. INDEMNITY BY SELLER. Seller agrees to indemnify, defend and hold
harmless Buyer from and against, and to reimburse Buyer with respect to, any and
all claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including without limitation reasonable attorney's fees and court
costs) asserted against or incurred by Buyer by reason of or arising out of (a)
a breach of any representation or warranty of Seller as set forth in this
Agreement, and (b) the failure of Seller to perform any obligation required by
this Agreement to be performed by it. Notwithstanding any provision of this
Agreement to the contrary, it is understood and agreed that the remedy of
indemnity pursuant to this Section 16 and Buyer's remedies at law may be
inadequate in the case of any breach by Seller of its representations,
warranties and obligations under this Agreement, and Seller agrees that Buyer
shall be entitled to equitable relief and the remedy of specific enforcement
with respect thereto.
17. BROKERAGE. Each of Seller and Buyer represents and warrants to the
other that it has dealt with no broker, finder or other intermediary in
connection with this sale, other than Gelcor Realty and Grubb & Ellis/The Furman
Company. In reliance upon the representation and warranty of each of Seller and
Buyer set forth in the preceding sentence, Seller agrees to pay all brokerage
commissions due to Grubb and Ellis/The Furman Company and Buyer agrees to pay
all brokerage commissions due to Gelcor Realty.
18. NO OTHER REPRESENTATIONS; AS IS.
(a) Buyer acknowledges that neither Seller nor anyone acting,
or purporting to act, on behalf of Seller, has, except as expressly set forth in
this Agreement, made any representation or warranty with respect to the
Property.
(b) PROVIDED, HOWEVER, THAT IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT BUYER HAS THE RIGHT TO PERFORM EXAMINATIONS AND INSPECTIONS OF THE
PROPERTY PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD AND THAT, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER IS PURCHASING THE PROPERTY "AS IS"
AND "WHERE IS".
19. SUCCESSORS AND ASSIGNS. Buyer may assign its rights under this
Agreement (including an assignment to an intermediary in a tax-free exchange)
without the prior consent of Seller, but such assignment shall not relieve or
release Buyer of its obligations under this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns. Notwithstanding the provisions of Section 17,
Buyer agrees that if this Agreement is assigned by Buyer to Liberty Property
Trust or First Industrial, Buyer agrees to pay the real estate commission which
may be due to Realtors who represented Seller in the aborted sales to Liberty
Property Trust or First Industrial.
20. FIRPTA.
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(a) Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code") provides that a transferee of a United States real property
interest must withhold tax if the transferor is a foreign person. To inform
Buyer that withholding of tax is not required upon the disposition by Seller of
a United States real property interest, the undersigned parties executing this
Agreement on behalf of Seller hereby certify the following on behalf of Seller:
(i) Seller is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Code and Income Tax Regulations);
(ii) Seller's U.S. employer identification number is
as follows: __________; and
(iii) Seller's office address is:
252 S. Pleasantburg Drive
5th Floor - Suite A
McAlister Office Park
Greenville, South Carolina 29607
Seller, and the parties executing this Agreement on behalf of Seller, understand
that this certification may be disclosed to the Internal Revenue Service by
Buyer and that any false statement made here could be punished by fine,
imprisonment, or both. Under penalties of perjury, the undersigned parties
executing this Agreement on behalf of Seller declare that they have examined
this certification and to the best of their knowledge and belief, it is true,
correct and complete; and they further declare that they have authority to sign
this document on behalf of Seller.
(b) Seller, and the parties executing this Agreement on behalf
of Seller, shall deliver to Buyer at Closing, a restatement of the above
certifications of Seller and of the parties executing this Agreement on behalf
of Seller in the form attached to this Agreement as Exhibit I.
21. NOTICES.
(a) All notices, demands, requests or other communications
from each party to the other required or permitted under the terms of this
Agreement shall be in writing and, unless and until otherwise specified in a
written notice by the party to whom notice is intended to be given, shall be
sent to the parties at the following respective addresses:
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if intended for Buyer:
Plymouth Meeting Executive Campus
620 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Attn: Stephen J. Butte
Fax: (610) 834-9560
if intended for Seller:
252 S. Pleasantburg Drive
5th Floor - Suite A
McAlister Office Park
Greenville, South Carolina 29607
Notices may be given on behalf of any party by its legal counsel.
(b) Each such notice, demand, request or other communication
shall be given (i) against a written receipt of delivery, or (ii) by registered
or certified mail of the United States Postal Service, return receipt requested,
postage prepaid, or (iii) by a nationally recognized overnight courier service
for next business day delivery, or (iv) via telecopier or facsimile transmission
to the facsimile number listed above, provided, however, that if such
communication is given via telecopier or facsimile transmission, an original
counterpart of such communication shall concurrently be sent in either the
manner specified in clause (i) or (iii) above.
(c) Each such notice, demand, request or other communication
shall be deemed to have been given upon the earliest of (i) actual receipt or
refusal by the addressee if sent pursuant to Section (b)(i) or (b)(iv) or (ii)
deposit thereof at any main or branch United States post office if sent in
accordance with section (b)(ii) above or (iii) deposit thereof with the courier
if sent pursuant to section (b)(iii) above.
22. MISCELLANEOUS.
(a) CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only; they form no part of this Agreement and shall not
affect its interpretation.
(b) ENTIRE AGREEMENT; GOVERNING LAW. This Agreement contains
the entire understanding of the parties with respect to the subject matter
hereof, supersedes all prior or other negotiations, representations,
understandings and agreements (including, without limitation, the letter of
intent between Seller and Buyer dated July 8, 1998) of, by or among the parties,
express or implied, oral or written, which are fully merged herein. The express
terms of this Agreement control and supersede any course of performance and/or
customary practice
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inconsistent with any such terms. Any agreement hereafter made shall be
ineffective to change, modify, discharge or effect an abandonment of this
Agreement unless such agreement is in writing and signed by the party against
whom enforcement of such change, modification, discharge or abandonment is
sought. This Agreement shall be governed by and construed under the laws of the
State of South Carolina.
(c) PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other provision may be invalid or unenforceable in whole or in part.
(d) WAIVER OF TENDER OF DEED AND PURCHASE MONIES. The tender
of an executed Deed by Seller and the tender by Buyer of the Purchase Price are
mutually waived, but nothing in this Agreement shall be construed as a waiver of
Seller's obligation to deliver the Deed and/or of the concurrent obligation of
Buyer to pay the portion of the Purchase Price payable at Closing.
(e) GENDER, ETC. Words used in this Agreement, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is appropriate.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall be binding when one
or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected on this Agreement as the signatories.
(g) EXHIBITS. All exhibits attached to this Agreement are
incorporated by reference into and made a part of this Agreement.
(h) NO WAIVER. Neither the failure nor any delay on the part
of either party to this Agreement to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of any such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
(i) INTERPRETATION. No provision of this Agreement is to be
interpreted for or against either party because that party or that party's legal
representative or counsel drafted such provision.
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(j) TIME. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period provided in this
Agreement shall fall on a Saturday, Sunday or legal holiday, then the final day
shall extend to 5:00 p.m. of the next full business day. For the purposes of
this Section, the term "holiday" shall mean a day other than a Saturday or
Sunday on which banks in the State of South Carolina are or may elect to be
closed.
(k) ATTORNEY'S FEES. In connection with any litigation arising
out of this Agreement, the prevailing party shall be entitled to recover all
costs incurred, including reasonable attorney's fees. However, the provisions of
this section are expressly subject to the limitation on the Buyer's liability
specified in Section 3.
(l) BUYER'S EXERCISE OF RIGHT TO TERMINATE. If Buyer desires
to terminate its obligations under this Agreement pursuant to any of the
provisions of this Agreement, Buyer shall do so by delivering written notice of
termination to Seller. Upon any such termination the Deposit shall be paid to
Buyer, and except as otherwise expressly provided herein, this Agreement shall
be and become null and void and neither party shall have any further rights or
obligations under this Agreement.
(m) SURVIVAL. Except as otherwise expressly provided in
Section 8, the representations, warranties and agreements of Seller set forth in
Sections 8, 9 and 10 of this Agreement shall survive a termination of this
Agreement, or Closing for a period of 24 months, and thereafter shall survive to
the extent that Buyer shall have given to Seller written notice of breach
thereof. The obligations of Seller and Buyer pursuant to Sections 7, 10, 16, 17,
20, 21, 22(k), 22(n), 23, 24 and 25 of this Agreement shall survive Closing.
Except as otherwise provided in the preceding two sentences of this Section
22(m), the agreements of Seller and Buyer set forth in this Agreement shall not
survive Closing and shall merge into the delivery of the Deed at Closing.
(n) FURTHER ASSURANCES. After Closing, each party shall
execute, acknowledge and deliver, for no further consideration but at the cost
of the requesting party, all documents and instruments as the other party may
reasonably request to further evidence or effectuate the purposes of this
Agreement.
23. TAX FREE EXCHANGE. Each of Seller and Buyer shall cooperate with
the other in effecting an exchange described in Section 1031 of the Internal
Revenue Code ("Tax Free Exchange"), provided, that: (a) the Tax Free Exchange
shall not impose additional financial or legal obligations in addition to those
set forth elsewhere in this Agreement; (b) neither Seller nor Buyer shall have
any obligation to take title to any exchange property; (c) the exchanging party
shall indemnify, defend and save and hold the other party harmless of and from
all expenses, liabilities, claims, losses or actions as a result of
participation in the Tax Free Exchange; and (d) the other party shall have no
obligation to modify any of the provisions of this Agreement to effect the Tax
Free Exchange.
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24. REPORTS. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing Date, and
without limitation of the other document production otherwise required of Seller
hereunder, Seller shall, from time to time, upon reasonable advance written
notice from Buyer, provide to Buyer and its representatives: (i) access to all
financial and other information pertaining to the period of Seller's ownership
and operation of the Property, which information is relevant and reasonably
necessary, in the opinion of Buyer's outside, third party accountants
("Accountants") to enable Buyer and its Accountants to prepare financial
statements in compliance with any and all of (a) Rule 3-05 or Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission (the "Commission"), as
applicable to Buyer; (b) any other rule issued by the Commission and applicable
to Buyer; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of Buyer; and (ii) a representation
letter, in form specified by, or otherwise satisfactory to the Accountants,
signed by the individual(s) responsible for Seller's financial reporting, as
prescribed by generally accepted auditing standards promulgated by the Auditing
Standards Division of the American Institute of Certified Public Accountants,
which representation letter may be required by the Accountants in order to
render an opinion concerning Seller's financial statements.
25. ADDITIONAL OBLIGATIONS OF SELLER AND BUYER. At Closing, Seller and
all then identifiable Seller Parties and Buyer shall execute, acknowledge and
deliver an Agreement (prepared by counsel for Buyer) in recordable form,
providing, INTER ALIA, as follows:
(a) SELLER. The term "Seller" shall mean T. Walter Brashier,
the children and grandchildren of T. Walter Brashier, any partnership,
corporation, limited liability company or other entity in which T. Walter
Brashier or the children or grandchildren of T. Walter Brashier has (have) a
controlling interest; and all subsidiaries and affiliates of any such
partnership, corporation, limited liability company or other entity.
(b) SUBJECT PROPERTY. The term "Subject Property" shall mean
any real property situate within the State of South Carolina owned or controlled
by any of the Seller Parties on which any building or other improvements now or
hereafter exist which are intended to be used for manufacturing, warehouse, or
other industrial purposes.
(c) RIGHT OF FIRST REFUSAL. The Seller agrees that during the
period of three (3) years from the Closing Date, the Seller will not sell,
assign, transfer or convey all or any portion of the Subject Property except in
accordance with the following right of first refusal. If at any time during the
period of three (3) years from the Closing Date, Seller desires to sell, assign,
transfer or otherwise convey all or any portion of the Subject Property
("Offered Property"), Seller shall obtain a bona fide written offer ("Offer")
from an unrelated third party ("Offeror") setting forth the terms and provisions
pursuant to which the Offeror will purchase the Offered Property. The Offer must
contain the purchase price, the terms on which the purchase price is payable,
and the condition pursuant to which title to the Offered Property is to be
conveyed. Buyer shall have the right to purchase the Offered Property (in
accordance with the terms of the Offer) by giving to Seller written notice
within ten (10) days after the date on which Buyer shall have received the Offer
from Seller. If Buyer elects to purchase the Offered Property pursuant to the
terms of the Offer, Buyer shall thereafter have a 30-day Inspection Period; and
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<PAGE>
Buyer shall have the right to elect not to purchase the Offered Property by
giving written notice of such election to Seller on or prior to the expiration
of the 30-day Inspection Period. If Buyer does not elect not to purchase the
Property by the end of the 30-day Inspection Period, then Seller and Buyer shall
complete closing on the sale and purchase of the Offered Property within thirty
(30) days after the expiration of the 30-day Inspection Period.
(d) NONCOMPETITION.
(i) The term "Property" shall mean the real property
conveyed as of this date by Seller to Buyer; and the term "Prospect" shall mean
any party which is an occupant or user of any space within the Property (whether
as a tenant or subtenant).
(ii) Seller and the Seller Parties agree that neither
Seller nor any of the Seller Parties, shall, at any time during the period of
three years from the date of this Agreement, negotiate to lease, or enter into
any lease, for any space within the Subject Property with any Prospect.
Notwithstanding the foregoing, during the period of three years from the date of
this Agreement the Seller Parties shall have the right to negotiate to lease or
enter into a lease for space within the Subject Property: (A) with any Prospect
if Buyer has previously given to such Prospect written notice that Buyer does
not intend to enter into a lease with such Prospect for space within the
Property; and (B) with any Prospect, if such Prospect has given to Buyer written
notice that such Prospect desires to remain in possession of its premises in the
Property and to expand into additional space in the Property and such additional
space is not available to the Prospect in the Property.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns; and shall run with and burden and benefit,
respectively, the Subject Property and the Property.
(g) DESCRIPTIONS. To the extent then identifiable, legal
descriptions of the Subject Property and of the Property shall be attached as
Exhibits to the Agreement.
(h) NOTICES. The Agreement will specify addresses for notices
and the method for the giving of notices; in a manner similar to the provisions
of Section 21 above.
IN WITNESS WHEREOF, intending to be legally bound, the parties have
executed this Agreement as a sealed instrument as of the day and year first
above written.
Witness/Attest: SELLER:
/S/ FAYE B. BROWN /S/ T. WALTER BRASHIER
- -------------------- ----------------------
Name: Faye B. Brown Name: T. Walter Brashier
/S/ FAYE B. BROWN /S/ MARTIN TIMOTHY BRASHIER
- ------------------- ---------------------------
Name: Faye B. Brown Name: Martin Timothy Brashier
(signatures continued on next page)
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Witness/Attest: SELLER (signatures continued):
HOPEWELL PROPERTIES, INC.
/S/ FAYE B. BROWN By:/S/ T. WALTER BRASHIER
- ------------------- -------------------------
Name: Faye B. Brown Name: T. Walter Brashier
Title: President
TTT PARTNERSHIP
/S/ FAYE B. BROWN By: /S/ JAMES TED BRASHIER
- ----------------- --------------------------
Name: Faye B. Brown Name: James Ted Brashier
Title: General Partner
STONELEDGE, INC.
/S/ FAYE B. BROWN By: /S/ T. WALTER BRASHIER
- ----------------- --------------------------
Name: Faye B. Brown Name: T. Walter Brashier
Title: President
/S/ FAYE B. BROWN /S/ WILLIAM BENJAMIN DUNCAN
- ----------------- ---------------------------
Name: Faye B. Brown Name: William Benjamin Duncan
/S/ FAYE B. BROWN /S/ JAMES BRIAN DUNCAN
- ----------------- ----------------------
Name: Faye B. Brown Name: James Brian Duncan
<PAGE>
Witness/Attest SELLER (signatures continued):
KIDCO
/S/ FAYE B. BROWN By: /S/ JAMES TED BRASHIER
- ----------------- --------------------------
Name: Faye B. Brown Name: James Ted Brashier
Title: Managing Partner
/S/ FAYE B. BROWN /S/ THOMAS WALTER BRASHIER, JR
- ----------------- ------------------------------
Name: Faye B. Brown Name: Thomas Walter Brashier, Jr.
/S/ FAYE B. BROWN /S/ KATHY B. DUNCAN
- ----------------- -------------------
Name: Faye B. Brown Name: Kathy B. Duncan
/S/ FAYE B. BROWN /S/ JAMES TED BRASHIER
- ----------------- ----------------------
Name: Faye B. Brown Name: James Ted Brashier
BUYER:
AMERICAN REAL ESTATE
INVESTMENT, L.P.
By: American Real Estate Investment
Corporation, its General Partner
By:/S/ STEPHEN J. BUTTE
----------------------
Name: Stephen J. Butte
Title: Vice President
<PAGE>
EXHIBIT 10.2
TWELFTH AMENDMENT TO AGREEMENT
OF SALE AND PURCHASE
THIS TWELFTH AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (the "Twelfth
Amendment") is made as of this 22 nd day of December, 1998, by and between the
persons and entities that are signatories to this Twelfth Amendment
(collectively, "Seller") and AMERICAN REAL ESTATE INVESTMENT, L.P., a Delaware
limited partnership ("Buyer").
WITNESSETH:
WHEREAS, Seller and Buyer have entered into that certain Agreement of
Sale and Purchase, dated as of August 7, 1998, with respect to certain real
property situated in the State of South Carolina (the "Agreement"); and
WHEREAS, the Agreement was amended by that certain First Amendment,
dated as of September 24, 1998 (the "First Amendment"); and
WHEREAS, the Agreement was further amended by that certain Second
Amendment, dated as of October 1, 1998 (the "Second Amendment"); and
WHEREAS, the proposed Third Amendment to the Agreement was never
executed; and
WHEREAS, the Agreement was further amended by that certain Fourth
Amendment, dated as of October ____, 1998 (the "Fourth Amendment"); and
WHEREAS, the Agreement was further amended by that certain Fifth
Amendment, dated as of October ____, 1998 (the "Fifth Amendment"); and
WHEREAS, the Agreement was further amended by that certain Sixth
Amendment, dated as of October 23, 1998 (the "Sixth Amendment"); and
WHEREAS, the Agreement was further amended by that certain Seventh
Amendment, dated as of October 30, 1998 (the "Seventh Amendment"); and
WHEREAS, the Agreement was further amended by that certain Eighth
Amendment, dated as of November 6, 1998 (the "Eighth Amendment"); and
WHEREAS, the Agreement was further amended by that certain Ninth
Amendment, dated as of November 20, 1998 (the "Ninth Amendment"); and
<PAGE>
WHEREAS, the Agreement was further amended by that certain Tenth
Amendment, dated as of December __, 1998 (the "Tenth Amendment"); and
WHEREAS, the Agreement was further amended by that certain Eleventh
Amendment, dated as of December 18, 1998 (the "Eleventh Amendment"); and
WHEREAS, the terms which have a defined meaning in the Agreement, the
First Amendment, the Second Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the
Ninth Amendment, the Tenth Amendment and the Eleventh Amendment shall have the
same meaning when used in this Twelfth Amendment; and
WHEREAS, Seller and Buyer desire to further amend the Agreement in the
following respects.
NOW, THEREFORE, each of Seller and Buyer, intending legally to be
bound hereby, agrees as follows:
1. Section 1(a) of the Agreement is hereby amended and restated to
provide as follows:
(a) REAL PROPERTY. All those certain tracts of land designated on
Schedule 1 hereto known as the Whitehorse Road Industrial Park, Buncombe Road
Industrial Park, Piedmont Highway Industrial Park, Augusta Road Industrial Park,
Wunda Weve Building, Rocky Creek Business Park, and South Highway 14 Industrial
Park (except for the building located at 1629 South Highway, 14 Industrial Park,
the "Jotan Real Property"), which are more fully described by metes and bounds
on Exhibit A-1 to Exhibit A-7 hereto (herein collectively called the "Land");
together with all improvements on the Land, including, without limitation, the
26 buildings containing in the aggregate containing approximately 2,000,000
square feet of enclosed floor area and each containing the number of square feet
of enclosed floor area which is designated on Schedule 1 herein; together with
all appurtenances thereto (including, without limitation, all easements, rights
of way, water rights, mineral and timber rights, development rights, privileges,
licenses and other rights and benefits belonging to, running with the owner of,
or in any way relating to the Land); and together with all rights, title and
interest of Seller in and to all land lying in the bed of any street, open or
proposed, abutting the Land, and all right, title and interest of Seller in and
to any unpaid award for the taking by eminent domain of any part of the Land or
for damages to the Land by reason of a change of grade of any street (all of the
property, rights and privileges described in this Section 1(a) herein being
collectively called the "Real Property"). Provided, the condemnation award on
Building 1 - Buncombe Road - of approximately Nine Thousand and 00/100 Dollars
($9,000.00) shall remain the property of Seller.
2
<PAGE>
2. Section 1(d) of the Agreement is hereby inserted as follows:
(d) (i) Buyer shall have the option to purchase the Standing
Springs Industrial Park in accordance with the terms of this Section 1(d),
consisting of five (5) buildings, which are more fully described by metes and
bounds on Exhibit A-9 hereto (herein collectively called the "Standing Springs
Land") containing in the aggregate approximately _____ square feet of enclosed
floor area and containing the number of square feet of enclosed floor area which
is designated on Schedule 1A hereto; together with all appurtenances thereto
(including, without limitation, all easements, rights of way, water rights,
mineral and timber rights, development rights, privileges, licenses and other
rights and benefits belonging to, running with the owner of, or in any way
relating to the Standing Springs Land); and together with all rights, title and
interest of Seller in and to all land lying in the bed of any street, open or
proposed, abutting the Standing Springs Land, and all right, title and interest
of Seller in and to any unpaid award for the taking by eminent domain of any
part of the Standing Springs Land or for damages to the Standing Springs Land by
reason of a change of grade of any street (all of the property, rights and
privileges described in this Section 1(d) herein being collectively called the
"Standing Springs Real Property").
(ii) All fixtures, equipment and other personal property
attached or appurtenant to the Standing Springs Real Property; all furniture,
supplies, and other unattached items of personal property located in or on, or
used in connection with, the Standing Springs Real Property which are not owned
by Tenants (as defined below); and all intangible personal property used in the
ownership, operation or maintenance of the Standing Springs Real Property, which
is not owned by the Tenants; including, without limitation, the items set forth
on Exhibit B-1 hereto (all of the foregoing items of property being herein
collectively called "Standing Springs Personal Property").
(iii) PROPERTY. The Standing Springs Real Property and the
Standing Springs Personal Property are sometimes collectively called the
"Standing Springs Property" or the "Standing Springs Properties"; and the
Standing Springs Real Property and the Standing Springs Personal Property with
respect to each individual property listed on Schedule 1A hereto are sometimes
individually called the "Standing Springs Property". No Standing Springs
Property may be deleted from this sale without mutual consent of the parties.
(iv) For the one (1) year period following the Closing,
Buyer shall have the option to purchase the Standing Springs Property at the
Allocation Amount (as defined in the Agreement), provided that the South
Carolina Department of Health and Environmental Control ("DHEC") has issued a No
Further Action Letter ("NFA") with respect to the Standing Springs Property
within that period. If DHEC fails to issue the NFA within one (1) year following
the Closing, Buyer shall retain the option to purchase the Standing Springs
Property at the Allocation Amount within two (2) years of the date of Closing,
provided DHEC has issued the NFA in that second year. Seller shall utilize its
best efforts to obtain the NFA. Buyer shall cooperate with Seller as reasonably
necessary. If Seller timely obtains the NFA as provided herein and Buyer
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elects to purchase the Standing Springs Property pursuant to the terms herein,
Buyer shall so notify Seller of its intent to exercise its option within the
respective time periods provided herein. Buyer shall thereafter have a thirty
(30) day inspection period; and Buyer shall have the right to elect not to
purchase the Standing Springs Property by giving written notice of such election
to Seller on or prior to the expiration of the thirty (30) day inspection
period. If Buyer elects not to purchase said property or fails to so timely
notify Seller, the option shall expire.
(v) Buyer's option shall survive Closing and delivery of the
deeds. Buyer shall have the right to record a memorandum in form satisfactory to
it in order to memorialize its rights hereunder.
3. Section 1(e) of the Agreement is hereby inserted as follows:
(e) (i) Buyer shall have the option to purchase the Jotan
Property, which is more fully described by metes and bounds on Exhibit A-10
(herein collectively called the "Jotan Land"); together with all improvements on
the Jotan Land, including, without limitation, the building containing in the
aggregate approximately 45,000 square feet of enclosed floor area and containing
the number of square feet of enclosed floor area which is designated on Schedule
1A hereto; together with all appurtenances thereto (including, without
limitation, all easements, rights-of-way, water rights, mineral and timber
rights, development rights, privileges, licenses and other rights and benefits
belonging to, running with the owner of, or in any way relating to the Jotan
Land); and together with all rights, title and interest of Seller in and to all
land lying in the bed of any street, opened or proposed, abutting the Jotan Land
and all right, title and interest of Seller in and to any unpaid award for the
taking by eminent domain of any part of the Jotan Land or for damages to the
Jotan Land by reason of a change of grade of any street (all of the property,
rights and privileges described in this Section 1(e) herein being collectively
called the "Jotan Real Property").
(ii) All fixtures, equipment and other personal property
attached or appurtenant to the Jotan Real Property; all furniture, supplies, and
other unattached items of personal property located in or on, or used in
connection with, the Jotan Real Property which are not owned by Tenants (as
defined below); and all intangible personal property used in the ownership,
operation or maintenance of the Jotan Real Property, which is not owned by the
Tenants; including, without limitation, the items set forth on Exhibit B-2
hereto (all of the foregoing items of property being herein collectively called
"Jotan Personal Property").
(iii) PROPERTY. The Jotan Real Property and the Jotan
Personal Property are sometimes collectively called the "Jotan Property" or the
"Jotan Properties"; and the Jotan Real Property and the Jotan Personal Property
are sometimes individually called the "Jotan Property".
(iv) For the one (1) year period following the Closing,
Buyer shall have the option to purchase the Jotan Property at the Allocation
Amount (as defined in the Agreement). If Buyer elects to purchase the Jotan
Property within said option period, Buyer shall give written
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notice to Seller prior to the expiration of the one (1) year period and Buyer
shall thereafter have a thirty (30) day inspection period. Buyer shall have the
right to elect not to purchase the Jotan Property by giving written notice of
such election to Seller on or prior to the expiration of the thirty (30) day
inspection period. If Buyer elects not to purchase said property or fails to so
timely notify Seller, the option shall expire.
(v) Buyer's option shall survive Closing and delivery of the
deeds. Buyer shall have the right to record a memorandum in form satisfactory to
it in order to memorialize its rights hereunder.
4. Section 2 of the Agreement is hereby amended and restated to
provide as follows:
2. PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") for the Property,
subject to adjustments and allocation as provided in this
Agreement, shall be Forty Nine Million Six Hundred Twelve
Thousand Dollars ($49,612,000) and shall be paid as follows:
(i) One Hundred Thousand Dollars ($100,000) (such sum,
plus all interest which accrues thereon, being herein called
the "Deposit") shall be paid by Buyer to Commonwealth Land
Title Insurance Company ("Title Company") on or prior to the
third business day to occur after the date on which the
Inspection Period (as defined below) ends. The Deposit shall
be held by the Title Company in one or more
federally-insured money market accounts acceptable to both
Seller and Buyer, or in short-term United States Government
obligations having a maturity date which is not later than
the Closing Date (as defined below); plus
(ii) Seven Million Five Hundred Thousand Dollars
($7,500,000) of Series B Preferred Units of limited
partnership interest in Buyer (the "Preferred Units") at a
price per Preferred Unit of $25, with such rights,
preferences and designations as are set forth in Schedule I
to the Preferred Unit Recipient Agreement (as defined
below), shall be issued by Buyer to, and in the name of, T.
Walter Brashier (the "Preferred Unit Recipient"), in lieu of
the payment of cash in such amount to Seller, at the
Closing; plus
(iii) The balance of the Purchase Price shall be paid
in cash at Closing by wire transfer of immediately available
funds to the account or accounts designated by Seller.
(b) The Purchase Price shall be allocated among each respective
Property as set forth on Schedule 1 hereto (each of the allocated
amounts set forth on Schedule 1
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being herein called an "Allocation Amount"). Provided, however,
Seller retains the right to change allocations (in reasonable
amounts) by giving written notice of such change to Buyer at
least ten (10) days prior to the Closing Date.
5. Section 13 of the Agreement is hereby amended to include the
following:
(ix) Buyer shall have received a duly executed Preferred Unit
Recipient Agreement and such other documents as may be required
under the Partnership Agreement and the Preferred Unit Recipient
Agreement in connection with the admission of the Preferred Unit
Recipient as an additional limited partner of Buyer.
6. Section 15(a) of the Agreement is hereby amended to include the
following as Item (xiii), and the prior Item (xiii) shall be renumbered as Item
(xiv):
(xiii) A Preferred Unit Recipient Agreement, in substantially the
form of EXHIBIT A attached hereto (the "Preferred Unit Recipient
Agreement"), such Preferred Unit Recipient Agreement to be duly
executed by the Preferred Unit Recipient.
7. Section 15(b) of the Agreement, is hereby amended to include the
following as Items (i) and (ii), and the prior Item (i) shall be deleted and the
prior Items (ii) and (iii) shall be renumbered as Items (iii) and (iv),
respectively:
(i) The portion of the Purchase Price payable in Preferred Units,
which Preferred Units shall be issued in the name of the
Preferred Unit Recipient pursuant to Section 2(a)(ii).
(ii) The portion of the Purchase Price payable in cash to Seller
pursuant to Section 2(a)(iii).
8. Schedule 3 of the Agreement is hereby revised in the form attached
hereto as EXHIBIT B and Schedule 5 of the Agreement is hereby revised in the
form attached hereto as EXHIBIT C.
9. In the event of a conflict between the terms of this Twelfth
Amendment and the terms of the Agreement, the First Amendment, the Second
Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the
Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth
Amendment and/or the Eleventh Amendment with respect to the matters set forth
herein, the terms of this Twelfth Amendment shall control.
10. Except as modified by the terms and provisions of this Twelfth
Amendment, the Agreement, as previously amended, shall remain in full force and
effect in accordance with its terms and provisions.
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IN WITNESS WHEREOF, intending to be legally bound, the parties have executed
this Twelfth Amendment as a sealed instrument as of the day and year first above
written.
Witness/Attest SELLERS:
/S/ MARGARET ESTRIDGE /S/ T. WALTER BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: T. Walter Brashier
/S/ MARGARET ESTRIDGE /S/ MARTIN TIMOTHY BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: Martin Timothy Brashier
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Witness/Attest HOPEWELL PROPERTIES, INC.
/S/ MARGARET ESTRIDGE By:/S/ T. WALTER BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: T. Walter Brashier
Title: President
TTT PARTNERSHIP
/S/ MARGARET ESTRIDGE By: /S/ JAMES TED BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: James Ted Brashier
Title: General Partner
STONELEDGE, INC.
/S/ MARGARET ESTRIDGE By: /S/ T. WALTER BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: T. Walter Brashier
Title: President
/S/ MARGARET ESTRIDGE /S/ WILLIAM BENJAMIN DUNCAN
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: William Benjamin Duncan
/S/ MARGARET ESTRIDGE /S/ JAMES BRIAN DUNCAN
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: James Brian Duncan
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Witness/Attest
KIDCO
/S/ MARGARET ESTRIDGE By: /S/ JAMES TED BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: James Ted Brashier
Title: Managing Partner
/S/ MARGARET ESTRIDGE /S/ THOMAS WALTER BRASHIER, JR
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: Thomas Walter Brashier, Jr.
/S/ MARGARET ESTRIDGE /S/ KATHY B. DUNCAN
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: Kathy B. Duncan
/S/ MARGARET ESTRIDGE /S/ JAMES TED BRASHIER
- ------------------------------- -------------------------------
Name: Margaret Estridge Name: James Ted Brashier
BUYER:
AMERICAN REAL ESTATE
INVESTMENT, L.P.
By: American Real Estate Investment
Corporation, its General Partner
By:/S/ STEPHEN J. BUTTE
-------------------------------
Name: Stephen J. Butte
Title: Vice President
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EXECUTION COPY
EXHIBIT 10.3
PREFERRED UNIT RECIPIENT AGREEMENT
This PREFERRED UNIT RECIPIENT AGREEMENT (this "AGREEMENT") is made by
and among American Real Estate Investment, L.P., a Delaware limited partnership
(the "PARTNERSHIP"), American Real Estate Investment Corporation, a Maryland
corporation, as the sole general partner of the Partnership (the "COMPANY" and,
together with the Partnership, the "ACQUIROR"), Hopewell Properties, Inc. a
South Carolina corporation (the "PREFERRED UNIT RECIPIENT"), who is (directly or
indirectly, as a partner in partnerships or a member of limited liability
companies) contributing all or a portion of certain properties (the "CONTRIBUTED
ASSETS") to the Partnership in exchange for the issuance by the Partnership of
Series B preferred units of limited partner interests with the rights,
preferences and designations set forth on Annex I attached hereto (the
"PREFERRED UNITS") in the Partnership, pursuant to an Agreement of Sale and
Purchase made and entered into as of the 7th day of August, 1998, as amended
from time to time (as amended, the "AGREEMENT OF SALE AND PURCHASE"), among the
Partnership and the parties reflected on the signature pages thereto. Except as
otherwise noted herein, all capitalized terms used in this Agreement and not
otherwise defined in this Agreement shall have the meaning ascribed to them in
the Agreement of Sale and Purchase.
In consideration of the Partnership's agreement to offer Preferred
Units to the undersigned (the "OFFERING") as contemplated by the Agreement of
Sale and Purchase, the undersigned agrees and represents to the Partnership as
follows:
Section 1. ACCEPTANCE OF PARTNERSHIP AGREEMENT.
(a) The undersigned hereby agrees to receive from the Partnership the
number of Preferred Units indicated on the counterpart signature page hereof. In
respect of this Agreement, the undersigned herewith delivers to the Partnership
(i) two executed original signature pages of this Agreement, (ii) two executed
original signature pages of the exhibit to the Partnership Agreement and (iii) a
fully completed Investor Information Sheet, Account Information Sheet, and
Accredited Investor Questionnaire, attached as Exhibits A, B and C,
respectively.
(b) The undersigned acknowledges that the Preferred Units will be
issued to the undersigned (although the Preferred Units will not be
certificated).
(c) The undersigned agrees that upon receipt of Preferred Units by the
undersigned and admission of the undersigned as a limited partner in the
Partnership, the undersigned will be bound by the terms and conditions of the
Partnership's Amended and Restated Agreement of Limited Partnership, as amended
from time to time (the "PARTNERSHIP AGREEMENT"), except that the provisions of
Article XV of the Partnership Agreement shall not apply to the undersigned, and
with reference to the undersigned, shall be deemed to be replaced in their
entirety by the provisions of SECTION 3 of this Agreement which sets forth the
entire agreement between the parties with respect to registration rights under
the Securities Act of 1933, as amended (the "SECURITIES ACT").
(d) The Partnership agrees that it will admit the undersigned as a
limited partner in the Partnership upon receipt of Preferred Units by the
undersigned pursuant to this Agreement.
<PAGE>
Section 2. INVESTOR REPRESENTATIONS AND WARRANTIES. The undersigned
hereby acknowledges, represents and warrants to, and agrees with the Partnership
as follows, which acknowledgments will be true and correct as of the closing of
the transaction whereby the Partnership acquires the Contributed Assets (the
"CLOSING DATE"):
(a) AUTHORIZATION. This Agreement has been duly executed and delivered
by the undersigned and constitutes a legal, valid and binding agreement of the
undersigned, enforceable in accordance with its terms. The undersigned
represents that it has full power and authority to enter into this Agreement. If
the undersigned is a corporation, partnership, trust or other entity, it
represents that: (i) it is duly organized, validly existing and in good standing
in its jurisdiction of incorporation or organization and has all the requisite
power and authority to invest in the securities as provided herein; (ii) such
investment does not result in any violation of, or conflict with, any term or
provision of the charter, bylaws or other governing documents of the undersigned
or any other instrument or agreement to which it is subject; (iii) such
investment has been duly authorized by all necessary action on behalf of the
undersigned; and (iv) this Agreement has been duly executed and delivered on
behalf of the undersigned and constitutes a legal, valid and binding agreement
of the undersigned.
(b) NO ADVERTISEMENT OR SOLICITATION. The undersigned acknowledges
that the offer and sale of the Preferred Units to it has not been accomplished
by any form of general solicitation or general advertising, including, but not
limited to, (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media, or broadcast over
television or radio and (ii) any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
(c) INVESTOR INFORMATION. All information which the undersigned has
heretofore furnished and furnishes herewith to the Partnership, including,
without limitation, the Investor Questionnaire and the certification as to the
undersigned's status as an Accredited Investor, as such term is defined in
Regulation D promulgated under the Securities Act, and any other information
with respect to the undersigned and the undersigned's financial position and
business experience is true, correct and complete as of the date of this
Agreement, and shall be true, correct and complete as of the date of the
acceptance hereof by the Partnership and the acquisition of the Preferred Units
by the undersigned, and if there should be any material change in such
information prior to the acquisition of the Preferred Units by the undersigned,
the undersigned will immediately furnish such revised or corrected information
to the Partnership.
(d) ACCREDITED INVESTOR. The undersigned is an Accredited Investor, as
such term is defined in Regulation D promulgated under the Securities Act.
(e) INVESTMENT EXPERIENCE. The undersigned represents that it has such
knowledge and experience in financial and business matters as to be capable of
evaluating alone, or together with its purchaser representative or personal
advisor, the merits and risks of an investment in the Preferred Units. The
undersigned acknowledges that the undersigned has the financial ability to bear
the economic risk of its investment in the Partnership (including its possible
loss), has adequate means for providing for its current needs and personal
contingencies and has no need for liquidity with respect to the investment in
the Partnership. If other than an individual, the undersigned also represents it
has not been organized solely for the purpose of acquiring the Preferred Units.
(f) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the
undersigned in reliance upon its representation to the Partnership, which by the
undersigned's execution of this Agreement it hereby confirms, that the Preferred
Units to be received by the undersigned will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that it has no present intention
of selling, granting any
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participation in, or otherwise distributing the same. By executing this
Agreement, the undersigned further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Preferred Units.
(g) DISCLOSURE OF INFORMATION. The undersigned and/or the
undersigned's purchaser representative or personal advisor, as the case may be:
(i) has received a copy of the Agreement of Sale and Purchase, the
Partnership Agreement and the Charter and Bylaws of the Company, and has
read and is familiar with these documents and their terms;
(ii) has received and read the following documents filed by the
Company with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"): (a)
the Company's Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1997; (b) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998; and (c)
the Company's Current Reports on Form 8-K and 8-K/A filed January 23, 1998,
February 24, 1998, April 10, 1998, May 15, 1998, June 10, 1998, July 7,
1998, July 14, 1998, August 13, 1998, September 3, 1998 and November 13,
1998;
(iii) has been provided an opportunity to obtain any additional
information requested concerning the Preferred Units, the Partnership and
the Company;
(iv) has been provided, by the Company and the Partnership, with
all documents that it has requested relating to an investment in the
Preferred Units, has been given the opportunity to ask questions of, and
receive answers from, the Company and the Partnership concerning the terms
and conditions of this Agreement, the Partnership Agreement and other
matters pertaining to this investment, and has been given the opportunity to
obtain such additional information necessary to verify the accuracy of the
information provided in order to allow it to evaluate the merits and risks
of an investment in the Partnership to the extent the Company or the
Partnership possesses such information or can acquire it without
unreasonable effort or expense, and has not been furnished with or relied
upon any representations or other information (whether oral or written)
other than as set forth in this Agreement, the Agreement of Sale and
Purchase, or as contained in any documents or answers to questions furnished
to the undersigned by the Company or the Partnership; and
(v) has evaluated the risks of an investment in the Preferred
Units and has determined that such investment is suitable for it and that at
this time it can bear the economic risk of the investment.
(h) RESTRICTIONS ON TRANSFER.
(i) The undersigned understands and acknowledges that the
Preferred Units have not been registered under the Securities Act, by reason
of a specific exemption from the registration provisions thereof which
exemption depends upon, among other things, the bona fide nature of the
investment intent of the undersigned as expressed herein and the other
representations of the undersigned set forth herein.
(ii) The undersigned understands and acknowledges that none of the
Preferred Units or the securities into which Preferred Units may be
exchanged have been registered under the Securities Act or registered or
qualified under the securities laws of any state and none may be sold,
transferred, assigned, pledged or hypothecated absent an effective
registration thereof under such Securities Act or an
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opinion of counsel, which opinion is satisfactory in form and substance to
the Partnership and its counsel, to the effect that such registration is not
required under said Securities Act or such states or that such transaction
complies with the rules promulgated by the SEC under said Securities Act or
such states. The undersigned understands and acknowledges that the
undersigned must bear the economic risks of this investment resulting from
such limitations.
(iii) The undersigned understands and acknowledges that the sale,
transfer or other disposition of the Preferred Units is further restricted
by the provisions of this Agreement and the Partnership Agreement.
(iv) The undersigned understands and acknowledges that subject to
certain conditions and in accordance with the Partnership Agreement, at any
time after the Closing Date, the Preferred Units shall be convertible at any
time or from time to time upon 10 days notice to the Company, for shares
("REGISTRABLE SECURITIES") of the common stock, par value $.001 per share,
of the Company ("COMMON STOCK") on a 1:1.5151515 basis (subject to the
anti-dilution provisions set forth in the Partnership Agreement), or for
cash as provided in and subject to the conditions and restrictions contained
in the Partnership Agreement. The Common Stock also will not have been
registered under the Securities Act. The Company will also rely upon the
representations of the undersigned as to investment intent and otherwise
with respect to the issuance of any Common Stock. The restrictions referred
to as being applicable to unregistered Preferred Units in clauses (i)
through (iii) of this paragraph (h) will also apply to any unregistered
Common Stock.
(v) The undersigned is aware of the provisions of Rule 144
promulgated under the Securities Act, pursuant to which the undersigned may
be able to sell Common Stock, subject to certain exceptions, one year after
it receives such Common Stock so long as certain current public information
is available about the issuer, the sale is through a broker in an
unsolicited "broker's transaction" and the undersigned does not sell, in any
three-month period, more than the greater of 1% of the outstanding Common
Stock or the average weekly trading volume of Common Stock for the four-week
period preceding the sale. The undersigned generally will be able to sell
the Common Stock without regard to any volume or other limitations discussed
above beginning two years after it receives the Common Stock, unless it is
an affiliate of the Company (I.E., a person controlling, controlled by or
under common control with the Company). Affiliates of the Company will
continue to be subject to the volume limitations on unregistered sales
following the expiration of the two-year period. Under strict interpretation
the one-year and two-year periods are measured from the date shares of
Common Stock are received, not from the date Preferred Units are received.
The preceding description is a general summary of the restrictions of Rule
144, and the undersigned should consult with its own legal advisor to ensure
compliance with all of the requirements of applicable federal and state
securities laws and regulations. In this connection, the undersigned
understands Rule 144 may or may not be available for the resale of the
Preferred Units and the undersigned should consult an attorney with regard
to the availability of Rule 144. The Common Stock is subject to the
reporting requirements under the Exchange Act, and upon notice of issuance
will be listed for trading on the American Stock Exchange or such other
exchange or quotation system on which the Common Stock is listed at such
time. The undersigned further understands and acknowledges that, with
respect to the Common Stock, while the Company believes that it satisfies
the conditions of Rule 144 on the date it accepts this subscription, and
will continue to use its commercially reasonable efforts to satisfy such
conditions, there can be no assurance that it will meet such conditions one
year following the issuance of Common Stock (the first date when sales under
this rule would be permitted). In the event not all of the requirements of
Rule 144 are met, registration under the Securities Act or some other
registration exemption will be required for any disposition of Common Stock.
The undersigned understands that although Rule 144 is not exclusive, the SEC
has expressed its opinion that persons proposing to sell restricted
securities received in an offering other than a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is
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available for such offers or sales that such persons and the brokers who
participate in the transactions do so at their own risk.
(i) GUARANTEED PAYMENT DATE. The undersigned understands that with
respect to the first Guaranteed Payment Date (as defined below) on or after the
Closing, for distributions by Acquiror as contemplated by the Partnership
Agreement, distributions payable with respect to the Preferred Units issued
pursuant to this Agreement shall be made to the Preferred Unit Recipient on a
PRO RATA basis based upon the number of days during the calendar quarter
preceding such Guaranteed Payment Date that the Preferred Unit Recipient held
such Preferred Units. "GUARANTEED PAYMENT DATE" shall mean the last calendar day
of March, June, September and December in each year.
(j) INDEMNIFICATION. The undersigned understands and acknowledges that
the Partnership and the Company are relying on representations, warranties and
agreements made by the undersigned to the Partnership and the Company herein and
in the Investor Questionnaire, and thus, hereby agrees to indemnify the
Partnership and the Company and their respective partners, directors, officers,
affiliates, agents and employees, and hold each of them harmless against any and
all loss, damage, liability or expense, including reasonable attorneys' fees,
which they or any of them may suffer, sustain or incur by reason of or in
connection with any misrepresentation or breach of warranty or agreement made by
the undersigned under this Agreement, the Investor Questionnaire or in
connection with the sale or distribution by the undersigned of the Preferred
Units subscribed for by the undersigned pursuant hereto, or the Common Stock
into which the Preferred Units may be exchanged, in violation of the Securities
Act or any other applicable law.
(k) INVESTOR AWARENESS. The undersigned acknowledges, agrees and is
aware that:
(i) no federal or state agency has passed upon the Preferred Units
or the Common Stock or made any finding or determination as to the fairness
of this investment nor any recommendation or endorsement of the investment;
(ii) there are substantial risks of loss of investment incidental
to the purchase of the Preferred Units;
(iii) except as provided in the Partnership Agreement, the
investment in the Partnership or the Common Stock is an illiquid investment
and the undersigned must bear the economic risk of investment in the
Preferred Units or the Common Stock for an indefinite period of time;
(iv) this Agreement and the Partnership Agreement contain
substantial restrictions on transferability of the Preferred Units and
Common Stock;
(v) neither the Company, the Partnership, nor any of their
affiliates or representatives has provided the undersigned with any
investment, tax, legal, regulatory or accounting advice with respect to the
investment in or ownership of Preferred Units or Common Stock;
(vi) the representations, warranties, agreements, undertakings and
acknowledgments made by the undersigned in this Agreement (including,
without limitation, the exhibits thereto) are made with the intent that they
be relied upon by the Partnership and the Company in determining the
undersigned's suitability as a purchaser of the Preferred Units, and shall
survive its admission as a limited partner in the Partnership; and
(vii) this Agreement may not be cancelled, revoked or withdrawn by
the undersigned, and that this Agreement and the documents submitted
herewith shall survive (A) changes in the
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transaction, documents and instruments described in the Agreement of Sale
and Purchase that are not material; and (B) death, disability or dissolution
of the undersigned.
(l) LEGENDS. To the extent applicable, any certificate issued in
respect of any Preferred Units or Common Stock issued in exchange for Preferred
Units, shall be endorsed with the legends substantially in the form set forth
below, and the undersigned covenants that, except to the extent such
restrictions are waived by the Partnership, the undersigned shall not transfer
any Preferred Units or Common Stock received in exchange therefor without
complying with the restrictions on transfer described in such legends; PROVIDED,
HOWEVER, that the legend described in Section 2(l)(ii) shall only apply to the
Preferred Units and not the Common Stock issued in exchange for Preferred Units,
and shall be endorsed only on the certificates, if any, issued in respect of the
Preferred Units:
(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE, HAVE BEEN ISSUED PURSUANT TO A CLAIM OF
EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY
STATE SECURITIES LAW WHICH MAY BE APPLICABLE, AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED WITHOUT COMPLIANCE WITH THE REGISTRATION PROVISIONS
OF THE SECURITIES ACT AND ANY OTHER APPLICABLE FEDERAL OR STATE SECURITIES
LAWS OR COMPLIANCE WITH APPLICABLE EXEMPTIONS THEREFROM."
(ii) "THIS CERTIFICATE IS NOT NEGOTIABLE. THE SALE, TRANSFER OR
ASSIGNMENT OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO RESTRICTIONS
CONTAINED IN THAT CERTAIN PREFERRED UNIT RECIPIENT AGREEMENT ENTERED INTO
BETWEEN THE HOLDER HEREOF AND THE PARTNERSHIP AND THE PARTNERSHIP'S AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (THE "PARTNERSHIP AGREEMENT"),
AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS AND TO
THE EXTENT PERMITTED BY, AND IN ACCORDANCE WITH, THE PROVISIONS OF SUCH
PREFERRED UNIT RECIPIENT AGREEMENT AND THE PARTNERSHIP AGREEMENT."
(m) AUTHORITY.
(i) The undersigned has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered
the filing of any involuntary petition by its creditors, suffered the
appointment of a receiver to take possession of all, or substantially all,
of its assets, suffered the attachment or other judicial seizure of all, or
substantially all, of its assets, admitted in writing its inability to pay
its debts as they come due or made an offer of settlement, extension or
composition to its creditors generally.
(ii) Neither the execution and delivery of this Agreement by the
undersigned nor the performance by the undersigned of the transactions
contemplated hereby will: (a) violate or conflict with any of the provisions
of the partnership agreement or certificate of limited partnership (or
similar organizational and governing documents), if any, of the undersigned;
(b) violate, result in a breach of, conflict with, result in the
acceleration of, or entitle any party to accelerate the maturity or the
cancellation of the performance of any obligation arising out of any
agreement binding on the undersigned, or result in the creation or
imposition of any lien, encumbrance, pledge, claim, security interest,
demand, easement, covenant, condition, restriction and encroachment of any
kind or nature (collectively, "LIENS") in or upon any of the undersigned's
Preferred Units or constitute a default (or an event which might, with the
passage of time or the giving of notice, or both, constitute a default)
under any mortgage, indenture, deed of trust, lease, contract (including any
Service Agreement), loan or credit
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agreement, license or other instrument to which the undersigned is a party
or by which it or any of its assets may be bound or affected; or (c) violate
or conflict with any provision of any statute, law, rule, regulation, code
or ordinance or any judgment, decree, order, writ, permit or license
applicable to the undersigned or the undersigned's Contributed Assets. Other
than those which have been obtained or made prior to the date hereof, no
consent or approval or action of, filing with or notice to any governmental
or regulatory authority, any creditor, investor, member, partner,
shareholder, or tenant-in-common of the undersigned is necessary or required
for the execution, delivery and performance by the undersigned of this
Agreement or the consummation of the transactions contemplated hereby.
Section 3. REGISTRATION RIGHTS. All capitalized terms used in this
Section 3 and not otherwise defined in this Agreement shall have the meanings
ascribed to them in the Partnership Agreement.
(a) SHELF REGISTRATION UNDER THE SECURITIES ACT.
(i) FILING OF SHELF REGISTRATION STATEMENT. Within 90 days
following the Closing Date, the Company shall cause to be filed with the SEC
a shelf registration statement and related prospectus, including any
preliminary prospectus and documents incorporated by reference (the "SHELF
REGISTRATION STATEMENT") that complies as to form in all material respects
with applicable SEC rules providing for the sale by the Preferred Unit
Recipient of its Registrable Securities, and agrees to use its commercially
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable thereafter. The
Preferred Unit Recipient agrees to provide in a timely manner information
regarding its proposed distribution of the Registrable Securities and such
other information reasonably requested by the Company in connection with the
preparation of and for inclusion in the Shelf Registration Statement. The
Company agrees to use its commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act until
the earlier of (i) the first date on which the Preferred Unit Recipient has
consummated the sale of all of its Registrable Securities registered under
the Shelf Registration Statement, (ii) the date on which all of the
Registrable Securities are eligible for sale pursuant to Rule 144(k) (or any
successor provision) or in a single transaction pursuant to Rule 144(e) (or
any successor provision) under the Securities Act or (iii) the second
anniversary of the date of this Agreement and, further agrees to supplement
or amend the Shelf Registration Statement, if and 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 by
any other rules and regulations thereunder for Shelf Registration. By
selling Common Stock as part of the Shelf Registration, the Preferred Unit
Recipient shall be deemed to have agreed to all of the terms and conditions
of this SECTION 3 and to have agreed to perform any and all obligations
relating to it hereunder.
(ii) EXPENSES. The Company shall pay all expenses incident to the
performance by it of its registration obligations under this Section 3,
including (i) all stock exchange, SEC and state securities registration,
listing and filing fees, (ii) all expenses incurred in connection with the
preparation, printing and distributing of the Shelf Registration Statement
and prospectus (including all expenses incurred in connection with the
delivery to the Preferred Unit Recipient of such number of copies of any
prospectus as it may reasonably request), and (iii) fees and disbursements
of counsel for the Company and of the independent public accountants of the
Company ("Registration Expenses"). The Preferred Unit Recipient shall pay
all underwriting discounts and commissions, brokerage or dealer fees, the
fees and disbursements of its counsel, accountants or other representatives
and transfer taxes, if any, relating to the sale or disposition of its
Registrable Securities pursuant to the Shelf Registration Statement or Rule
144 under the Securities Act.
(iii) INCLUSION IN SHELF REGISTRATION STATEMENT. The Company shall
include Registrable Securities held by the Preferred Unit Recipient at the
Closing in the Shelf Registration
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Statement. The provisions of this SECTION 3, and the obligations of the
Company hereunder, apply only to the Preferred Unit Recipient, and its
permitted transferees and assignees.
(b) REGISTRATION PROCEDURES. In connection with the obligations of the
Company with respect to the Shelf Registration Statement pursuant to SECTION
3(A) hereof, the Company shall:
(i) prepare and file with the Commission, within the time period
set forth in SECTION 3(a)(i) hereof, a Shelf Registration Statement, which
Shelf Registration Statement (A) shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution by the Preferred Unit Recipient and (B) shall comply as to form
in all material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed therewith;
(ii) subject to the last three sentences of this SECTION 3(b)(ii)
and to SECTION 3(b)(ix) hereof, (A) prepare and file with the SEC such
amendments and post-effective amendments to the Shelf Registration Statement
as may be necessary to keep the Shelf Registration Statement effective for
the applicable period; (B) cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 or any similar rule that may be adopted under the Securities
Act; (C) respond promptly to any comments received from the SEC with respect
to the Shelf Registration Statement, or any amendment, post-effective
amendment or supplement relating thereto; and (D) comply with the provisions
of the Securities Act with respect to the disposition of all securities
covered by the Shelf Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
Preferred Unit Recipient. Notwithstanding anything to the contrary contained
herein, the Company shall not be required to take any of the actions
described in clauses (A), (B) or (C) above with respect to the Preferred
Unit Recipient unless and until the Company has received either a written
notice (a "REGISTRATION NOTICE") from the Preferred Unit Recipient that it
intends to make offers or sales under the Shelf Registration Statement as
specified in such Registration Notice or a written response from it of the
type contemplated by SECTION 3(a)(iii); provided, however, that the Company
shall have ten business days to prepare and file any such amendment or
supplement after receipt of a Registration Notice. The Preferred Unit
Recipient also shall notify the Company in writing upon completion of such
offer or sale or at such time as the Preferred Unit Recipient no longer
intends to make offers or sales under the Shelf Registration Statement;
(iii) furnish to the Preferred Unit Recipient when it has
delivered a Registration Notice to the Company and is holding Registered
Securities, without charge, as many copies of each applicable Prospectus,
including each preliminary Prospectus and any amendment or supplement
thereto, and such other documents as the Preferred Unit Recipient may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; the Company consents to the use
of such Prospectus, including each preliminary Prospectus, by the Preferred
Unit Recipient in connection with the offering and sale of the Registrable
Securities covered by such Prospectus or the preliminary Prospectus;
(iv) use its reasonable best efforts to register or qualify the
Registrable Securities by the time the Shelf Registration Statement is
declared effective by the SEC under all applicable state securities or "blue
sky" laws of such jurisdictions as the Preferred Unit Recipient shall
reasonably request in writing, keep each such registration or qualification
effective during the period the Shelf Registration Statement is required to
be kept effective or during the period offers or sales are being made by the
Preferred Unit Recipient (if it has delivered a Registration Notice to the
Company), whichever is shorter, and do any and all other acts and things
which may be reasonably necessary or advisable to enable the Preferred Unit
Recipient to consummate the disposition in each such jurisdiction of
Registrable Securities owned by the Preferred Unit Recipient; 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
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where it would not be required so to qualify or register but for this
SECTION 3(b)(iv), (B) to subject itself to taxation in any such jurisdiction
or (C) to submit to the general service of process in any such jurisdiction;
(v) notify the Preferred Unit Recipient when the Shelf
Registration Statement has become effective and notify the Preferred Unit
Recipient if it is holding Registrable Securities and has delivered a
Registration Notice to the Company promptly and, if requested by the
Preferred Unit Recipient, confirm such advice in writing (A) when any
post-effective amendments and supplements to the Shelf Registration
Statement become effective, (B) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of any proceedings for that
purpose, (C) if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose and
(D) of the happening of any event during the period the Shelf Registration
Statement is effective as a result of which the Shelf Registration Statement
or a related Prospectus contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading;
(vi) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment; (vii) furnish to the Preferred Unit Recipient
holding Registrable Securities that has delivered a Registration Notice to
the Company, without charge, at least one conformed copy of the Shelf
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(viii) cooperate with the Preferred Unit Recipient when it is
holding Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any Securities Act legend; and enable certificates for such
Registrable Securities to be issued for such numbers of shares and
registered in such names as the Preferred Unit Recipient may reasonably
request at least two business days prior to any sale of Registrable
Securities;
(ix) subject to the last three sentences of SECTION 3(b)(ii)
hereof, upon the occurrence of any event contemplated by SECTION 3(b)(v)(d)
hereof, use its reasonable best efforts promptly to prepare and file a
supplement or prepare, file and obtain effectiveness of a post-effective
amendment to the Shelf Registration Statement or a related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not 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 the light of
the circumstances under which they were made, not misleading;
(x) a reasonable time prior to the filing of any Prospectus, any
amendment to the Shelf Registration Statement or amendment or supplement to
a Prospectus, provide copies of such document (not including any documents
incorporated by reference therein unless requested) to the Preferred Unit
Recipient holding Registrable Securities if it has provided a Registration
Notice to the Company;
(xi) use its reasonable best efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar
securities issued by the Company are then listed;
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(xii) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder; and
(xiii) use its reasonable best efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable
the Preferred Unit Recipient, having delivered a Registration Notice to the
Company, to consummate the disposition of such Registrable Securities.
The Company may require the Preferred Unit Recipient, if it is holding
Registrable Securities, to furnish to the Company in writing such information
regarding the proposed distribution by the Preferred Unit Recipient as the
Company may from time to time reasonably request in writing.
In connection with and as a condition to the Company's obligations with
respect to the Shelf Registration Statement pursuant to SECTION 3(a) hereof and
this SECTION 3(b), the Preferred Unit Recipient agrees that (A) it will not
offer or sell its Registrable Securities under the Shelf Registration Statement
until (1) it has either (I) provided a Registration Notice pursuant to SECTION
3(b)(ii) hereof or (II) had Registrable Securities included in the Shelf
Registration Statement at the time it became effective pursuant to SECTION
3(a)(iii) hereof and (2) it has received copies of the supplemented or amended
Prospectus contemplated by SECTION 3(b)(ii) hereof and receives notice that any
post-effective amendment has become effective; (B) upon receipt of any notice
from the Company of the happening of any event of the kind described in SECTION
3(b)(ii)(D) hereof, the Preferred Unit Recipient will forthwith discontinue
disposition of Registrable Securities pursuant to the Shelf Registration
Statement until the Preferred Unit Recipient receives copies of the supplemented
or amended Prospectus contemplated by SECTION 3(b)(ix) hereof and receives
notice that any post-effective amendment has become effective, and, if so
directed by the Company, the Preferred Unit Recipient will deliver to the
Company (at the expense of the Company) all copies in its possession, other than
permanent file copies then in the Preferred Unit Recipient's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice; and (C) all offers and sales under the Shelf Registration
Statement shall be completed within forty-five (45) days after the first date on
which offers or sales can be made pursuant to clause (A) above (a "Sale
Period"), and upon expiration of such forty-five (45) day period the Preferred
Unit Recipient will not offer or sell its Registrable Securities under the Shelf
Registration Statement until it has again complied with the provisions of clause
(A)(2) above, except that if the applicable Registration Notice was delivered to
the Company at a time which was not part of a Sale Period, such forty-five (45)
day period shall be the next succeeding Sale Period.
(c) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
The Preferred Unit Recipient agrees with the Company that:
(i) If the Board of Directors of the Company determines in its
good faith judgment that the filing of the Shelf Registration Statement
under SECTION 3(a) hereof 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 bona fide business purpose
for preserving as confidential or the disclosure of which would impede the
Company's ability to consummate a significant transaction, upon written
notice of such determination by the Company, the right of the Preferred Unit
Recipient 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
pursuant to the Shelf Registration Statement (including any action
contemplated by SECTION 3(b) hereof) will be suspended until the date upon
which the Company notifies
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the Preferred Unit Recipient in writing that suspension of such rights for
the grounds set forth in this SECTION 3(c)(i) is no longer necessary, but in
any event, no such period shall extend for longer than 45 days; PROVIDED the
Company may deliver only two such notices in any twelve month period.
(ii) In the case of the registration of any underwritten equity
offering proposed by the Company (other than any registration by the Company
on Form S-8, or a successor or substantially similar form, of (A) an
employee stock option, stock purchase or compensation plan or of securities
issued or issuable pursuant to any such plan or (B) a dividend reinvestment
plan), the Preferred Unit Recipient agrees, if requested in writing by the
managing underwriter or underwriters administering such offering, not to
effect any offer, sale or distribution of Registrable Securities (or any
option or right to acquire Registrable Securities) during the period
commencing on the seventh day prior to the expected effective date (which
date shall be stated in such notice) of the registration statement covering
such underwritten primary equity offering and ending on the date specified
by such managing underwriter in such written request to the Preferred Unit
Recipient, which date shall not be later than 45 days after such expected
dated of effectiveness or the commencement of the offering, as the case may
be.
(iii) In the event that the Preferred Unit Recipient uses a
Prospectus in connection with the offering and sale of Registrable
Securities covered by such Prospectus, the Preferred Unit Recipient will use
only the latest version of such Prospectus provided to it by the Company.
(d) INDEMNIFICATION; CONTRIBUTION.
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Preferred Unit Recipient and, if applicable,
its officers and directors and each person, if any, who controls any
Preferred Unit Recipient within the meaning of Section 15 of the Securities
Act as follows:
(A) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(B) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(C) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (A) or (B) above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this
SECTION 3(d)(ii) does not apply to the Preferred Unit Recipient
with respect to any loss, liability, claim, damage or expense to
the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with written information
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furnished to the Company by the Preferred Unit Recipient expressly
for use in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus.
(ii) INDEMNIFICATION BY PREFERRED UNIT RECIPIENT. The Preferred
Unit Recipient agrees to indemnify and hold harmless the Company, and each
of its directors and officers (including each director and officer of the
Company who signed the Shelf Registration Statement), and each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act, to the same extent as the indemnity contained in SECTION
3(d)(i) hereof (except that any settlement described in SECTION 3(d)(i)(B)
shall be effected with the written consent of the Preferred Unit Recipient),
but only insofar as such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or omission, or alleged untrue
statement or omission, made in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus in reliance upon and in conformity with
written information furnished to the Company by the Preferred Unit Recipient
expressly for use in the Shelf Registration Statement (or any amendment
thereto) or such Prospectus. In no event shall the liability of the
Preferred Unit Recipient under this SECTION 3(d)(ii) be greater in amount
than the dollar amount of the proceeds received by the Preferred Unit
Recipient upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(iii) Each indemnified party shall give reasonably prompt notice
to each indemnifying party of any action or proceeding commenced against it
in respect of which indemnity may be sought hereunder, but failure so to
notify an indemnifying party (A) shall not relieve it from any liability
which it may have under the indemnity agreement provided in SECTION 3(d)(i)
OR (ii) unless and to the extent it did not otherwise learn of such action
and the lack of notice by the indemnified party significantly impairs the
indemnifying party's rights and defenses and (B) shall not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided under SECTION 3(d)(i) OR
(ii). If the indemnifying party so elects within a reasonable time after
receipt of such notice, the indemnifying company may assume the defense of
such action or proceeding at such indemnifying party's own expense with
counsel chosen by the indemnifying party; PROVIDED, HOWEVER, that, if such
indemnified party or parties reasonably determine that a conflict of
interest exists where it is advisable for such indemnified party or parties
to be represented by separate counsel or that, upon advice of counsel, there
may be legal defenses available to them which are different from or in
addition to those available to the indemnifying party, then the indemnifying
party shall not be entitled to assume such defense and the indemnified party
or parties in the aggregate shall be entitled to one separate counsel at the
indemnifying party's expense. If an indemnifying party is not so entitled to
assume the defense of such action or does not assume such defense, after
having received the notice referred to in the first sentence of this SECTION
3(d)(iii), the indemnifying party or parties will pay the reasonable fees
and expenses of counsel for the indemnified party or parties. In such event
however, no indemnifying party will be liable for any settlement effected
without the written consent of such indemnifying party. If an indemnifying
party is entitled to assume, and assumes, the defense of such action or
proceeding in accordance with this paragraph, such indemnifying party shall
not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
(iv) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this SECTION
3(d) is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the Preferred Unit Recipient
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by
the Company and the Preferred Unit Recipient, in such proportion as is
appropriate to reflect the relative fault of and benefits to the Company on
the one hand and the Preferred Unit Recipient on the other, in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other things,
the total proceeds received by the indemnifying party and indemnified
parties in connection with the offering to which such losses, liabilities,
claims, damages, or expenses relate. The relative fault of the indemnifying
party and indemnified parties shall be
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determined by reference to, among other things, whether the action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or the
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The Company and the Preferred Unit Recipient agree that it would not be
just or equitable if contribution pursuant to this SECTION 3(d)(iv) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this SECTION
3(d)(iv), the Preferred Unit Recipient shall not be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of the Preferred Unit Recipient were sold to the public exceeds the
amount of any damages which the Preferred Unit Recipient is otherwise required
to pay by reason of such untrue statement or omission.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this SECTION 3(d)(iv), each
director of the Company, each officer of the Company who signed the Shelf
Registration Statement and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
(e) RULE 144 SALES.
(i) The Company covenants that it will file the reports required
to be filed by the Company under the Securities Act and the Exchange Act, so
as to enable the Preferred Unit Recipient to sell Registrable Securities
pursuant to Rule 144 under the Securities Act.
(ii) In connection with any sale, transfer or other disposition by
the Preferred Unit Recipient of any Registrable Securities pursuant to Rule
144 under the Securities Act, the Company shall cooperate with the Preferred
Unit Recipient to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any Securities Act legend, and enable certificates for such Registrable
Securities to be for such number of shares and registered in such names as
the Preferred Unit Recipient may reasonably request at least two business
days prior to any sale of Registrable Securities.
Section 4. MISCELLANEOUS.
(a) MODIFICATION. Neither this Agreement nor any provisions hereof
shall be waived, modified, discharged or terminated except by an instrument in
writing signed by the party against whom any waiver, change, discharge or
termination is sought.
(b) NOTICES. All notices, payments, demands or other communications
given hereunder shall be deemed to have been duly given and received (i) upon
personal delivery or (ii) in the case of notices sent within, and for delivery
within, the United States, as of the date shown on the return receipt after
mailing by registered or certified mail, return receipt requested, postage
prepaid, or (iii) the second succeeding business day after deposit with Federal
Express or other equivalent air courier delivery service, unless the notice is
held or retained by the customs service, in which case the date shall be the
fifth succeeding business day after such deposit.
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(c) BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns. If the undersigned is more than one person, the obligation of the
undersigned shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and its heirs, executors, administrators
and successors.
(d) THIRD-PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other person.
(e) ENTIRE AGREEMENT. This Agreement, the Agreement of Sale and
Purchase and the Partnership Agreement contain the entire agreement of the
parties with respect to this subscription, and there are no representations,
covenants or other agreements except as stated or referred to herein or therein.
(f) ASSIGNABILITY. This Agreement is not transferable or assignable by
the undersigned other than to Permitted Transferees pursuant to SECTION 2(h)(v)
hereof, or as otherwise permitted by the terms and conditions of this Agreement.
(g) APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of law principles thereof.
(h) GENDER. All pronouns contained herein and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the parties hereto may require.
(i) COUNTERPARTS. This Agreement may be executed through the use of
separate signature pages or in counterparts, and each of such counterparts
shall, for all purposes, constitute one agreement binding on the parties hereto,
notwithstanding that the parties hereto are not signatories to the same
counterpart.
(j) FURTHER ASSURANCES. The undersigned will, from time to time,
execute and deliver to the Company or the Partnership all such other and further
instruments and documents and take or cause to be taken all such other and
further action as the Company or the Partnership may reasonably request in order
to effect the transactions contemplated by this Agreement.
* * * * *
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AMERICAN REAL ESTATE INVESTMENT, L.P.
PREFERRED UNIT RECIPIENT AGREEMENT
COUNTERPART SIGNATURE PAGE
The undersigned, desiring to enter into this Preferred Unit Recipient
Agreement for the subscription of the number of Preferred Units indicated below,
hereby agrees to all of the terms and provisions of this Preferred Unit
Recipient Agreement and agrees to be bound by all such terms and provisions.
The undersigned has executed this Preferred Unit Recipient Agreement as
of the 22nd day of December, 1998.
Number of Preferred Units: 300,000
HOPEWELL PROPERTIES, INC.
By:/S/ T. WALTER BRASHIER
----------------------
Name: T. Walter Brashier
Title: President
Agreed and Accepted this 22 nd day of December, 1998.
AMERICAN REAL ESTATE INVESTMENT, L.P.,
a Delaware limited partnership
By: American Real Estate Investment Corporation,
a Maryland corporation
By: /S/ STEPHEN J. BUTTE
---------------------
Name: Stephen J. Butte
Title: Vice-President
AMERICAN REAL ESTATE INVESTMENT CORPORATION,
a Maryland corporation
By: /S/STEPHEN J. BUTTE
--------------------
Name: Stephen J. Butte
Title: Vice-President
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Exhibit 10.4
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of December 23, 1998 by and
between American Real Estate Investment Corporation, a Maryland corporation (the
"REIT"), and AEW Targeted Securities Fund, L.P. (the "Purchaser"). Unless
otherwise defined, capitalized terms used in this Agreement are defined in
Section 7; references to an "Exhibit" are, unless otherwise specified, to an
Exhibit attached to this Agreement; references to a "Section" are, unless
otherwise specified, to a section of this Agreement.
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the REIT and the Purchaser
respectively agree, as follows:
1. AGREEMENT TO SELL AND PURCHASE THE SHARES.
1.1. At the Closing provided for in Section 2, subject to the
terms and conditions of this Agreement, the REIT will issue and sell to the
Purchaser and the Purchaser will purchase from the REIT, 800,000 shares (the
"Shares") of the REIT's Series A Convertible Preferred Stock, par value $.001
per share (the "Preferred Stock"), having the rights, restrictions, privileges
and preferences set forth in the form of Articles Supplementary attached as
EXHIBIT A hereto.
1.2. The cash purchase price (the "Purchase Price") for the Shares
is set forth on the signature page hereto.
2. CLOSING OF SALE OF SHARES. The purchase and delivery of the Shares
to be purchased by the Purchaser shall take place at the offices of Goodwin,
Procter & Hoar LLP, Exchange Place, Boston, Massachusetts, at a closing (the
"Closing") on December __, 1998 or at such other place or on such other date as
the Purchaser and the REIT may mutually agree (such date on which the Closing
shall have actually occurred, the "Closing Date"). At the Closing, the REIT will
deliver or cause to be delivered to the Purchaser the Shares to be purchased by
it against payment of the Purchase Price. Payment of the Purchase Price by the
Purchaser shall be by wire transfer of immediately available funds to such
account(s) designated by the REIT to the Purchaser in writing at least one
business day prior to the Closing. If at the Closing (i) the REIT fails to
tender to the Purchaser any of the Shares to be purchased as provided in this
Section 2 or (ii) the Purchaser fails to tender the cash Purchase Price for the
Shares to the REIT, the Purchaser or the REIT, as the case may be, shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights each may have by reason of such failure or such
non-fulfillment.
3. CONDITIONS TO CLOSING.
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3.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER ON
THE CLOSING DATE. The Purchaser's obligation to purchase and pay for the Shares
to be sold to it at the Closing is subject to the fulfillment prior to or at the
Closing of the following conditions, any or all of which may be waived in
writing at the option of the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the REIT contained in Section 4 hereof (other than those that
relate to a particular date or period earlier than the Closing Date) shall be
correct in all material respects when made and at the time of the Closing, after
giving effect to the sale of the Shares and the other transactions contemplated
to be consummated at the Closing by this Agreement and the other Transaction
Documents, except that any representation or warranty that relates to a
particular date or period earlier than the Closing Date shall have been true in
all material respects as of such date or period.
(b) PERFORMANCE. The REIT shall have performed and
complied with, in all material respects, all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing.
(c) CLOSING CERTIFICATES. The REIT shall have delivered
to the Purchaser an Officer's Certificate, dated the Closing Date, certifying
that the conditions specified in Section 3.1(a) and (b) have been fulfilled.
(d) OPINIONS OF COUNSEL. The Purchaser shall have
received from REIT Counsel their opinions substantially in the forms set forth
in EXHIBIT B, addressed to the Purchaser, dated the Closing Date.
(e) INTENTIONALLY OMITTED.
(f) LEGAL INVESTMENT. On the Closing Date, the
Purchaser's purchase of the Shares shall be permitted by the laws and
regulations of the jurisdiction to which the Purchaser is subject (including,
without limitation, Section 5 of the Securities Act) and shall not be enjoined
(temporarily or permanently) under, prohibited by or contrary to any injunction,
order or decree applicable to the Purchaser.
(g) PROCEEDINGS AND DOCUMENTS. All corporate,
partnership and other proceedings contemplated by this Agreement and the other
Transaction Documents shall be reasonably satisfactory to the Purchaser in form
and substance, and the Purchaser shall have received all such counterpart
originals or certified or other copies of such documents as the Purchaser may
reasonably request.
(h) REGISTRATION RIGHTS AGREEMENT. Simultaneously with
or prior to the issuance and sale to the Purchaser of the Shares to be purchased
by the Purchaser at the Closing, the REIT and the Purchaser shall have duly
entered into the Registration Rights Agreement substantially in the form of
EXHIBIT D, the Purchaser shall have received a fully-executed counterpart of the
Registration Rights Agreement and such agreement shall be in full force and
effect.
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(i) MANAGEMENT RIGHTS LETTER. Simultaneously with or
prior to the issuance and sale to the Purchaser of the Shares to be purchased by
the Purchaser at the Closing, the REIT and the Purchaser shall have duly entered
into the Management Rights Letter substantially in the form of EXHIBIT E, the
Purchaser shall have received a fully-executed counterpart of the Management
Rights Letter and such agreement shall be in full force and effect.
(j) RELATED MATTERS. As of the Closing, none of the
REIT's Charter Documents shall have been modified or amended since the date such
documents were delivered to the Purchaser by the REIT except for any such
amendment to the REIT's Articles of Incorporation as is contemplated or
necessitated by this transaction, substantially in the form of EXHIBIT A. The
REIT shall have executed and delivered to the Purchaser the Ownership Limit
Waiver Letter substantially in the form of EXHIBIT H.
(k) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any decision of any court of competent jurisdiction within the
United States have been rendered which, in the Purchaser's reasonable judgment,
could have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis. There shall be no action, suit, investigation or proceeding
pending or threatened, against or affecting the Purchaser, any of its properties
or rights, or any of its Affiliates, associates, officers or directors, before
any court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions, and there shall be no valid basis for any such action, proceeding
or investigation.
(l) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
The REIT shall have duly applied for and obtained all approvals, orders,
licenses, consents and other authorizations (collectively, the "Approvals") from
each federal, state and local government and governmental agency, department or
body, or pursuant to any agreement to which the REIT is a party or to which it
or any of its assets is subject, which may be required in connection with this
Agreement and the other Transaction Documents.
(m) AMERICAN STOCK EXCHANGE LISTING. As of the Closing,
the listing of shares of the Common Stock on the American Stock Exchange shall
not have been terminated, nor shall the REIT have been notified that such
listing may be terminated or that any termination is contemplated.
(n) ADDITIONAL CERTIFICATES. The Purchaser shall have
received a certificate, dated the Closing Date, from the Secretary (or Assistant
Secretary) of the REIT, substantially in the form of EXHIBIT F.
3.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE REIT ON THE
CLOSING DATE. The REIT's obligation to issue the Shares at the Closing is
subject to the fulfillment prior to or at
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the Closing of the following conditions, any or all of which may be waived in
writing at the option of the REIT:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Purchaser in Section 5 hereof (other than those that
relate to a particular date or period earlier than the Closing Date) shall be
correct in all material respects on the Closing Date and any representations or
warranty that relates to a particular date or period earlier than the Closing
Date shall have been true in all material respects as of such earlier date or
period.
(b) PERFORMANCE. The Purchaser shall have performed and
complied with, in all material respects, all agreements and conditions contained
in this Agreement required to be performed or complied with prior to or at the
Closing.
(c) CLOSING CERTIFICATE. The Purchaser shall have
delivered to the REIT a General Partner's Certificate, dated the Closing Date,
certifying that the conditions specified in Section 3.2(a) and (b) have been
fulfilled.
(d) RELATED MATTERS. At the Closing, the REIT shall have
received payment in full for the Shares issued pursuant to this Agreement.
(e) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any decision of any court of competent jurisdiction within the
United States have been rendered which, in the REIT's reasonable judgment, could
have a Material Adverse Effect on the REIT and its Subsidiaries on a
consolidated basis. There shall be no action, suit, investigation or proceeding
pending or threatened against or affecting the REIT, any of its properties or
rights, or any of its Affiliates, associates, officers or directors, before any
court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the Other Transaction Documents,
or (ii) questions the validity or legality of any such transactions or seeks to
recover damages or to obtain other relief in connection with any such
transactions, and there shall be no valid basis for any such action, proceeding
or investigation.
(f) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
The Purchaser shall have duly applied for and obtained all Approvals from each
federal, state and local government and governmental agency, department or body,
or pursuant to any agreement to which the Purchaser is a party or to which it or
any of its assets is subject, which are be required in connection with this
Agreement and the other Transaction Documents.
(g) PROCEEDING AND DOCUMENTS. All corporate, partnership
and other proceedings contemplated by this Agreement and the other Transaction
Documents shall be reasonably satisfactory in form and substance to the REIT and
the REIT shall have received all such counterpart originals or certified or
other copies of such documents as the REIT may reasonably request.
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(h) ADDITIONAL CERTIFICATES. The REIT shall have
received a certificate, dated the Closing Date, from the Secretary (or Assistant
Secretary) of the General Partner of the Purchaser, substantially in the form of
EXHIBIT G.
(i) LEGAL INVESTMENT. On the Closing Date, the
Purchaser's purchase of the Shares shall be permitted by the laws and regulation
of the jurisdiction to which Purchaser is subject (including, without
limitation, Section 5 of the Securities Act) and shall not be enjoined
(temporarily or permanently) under, prohibited by or contrary to any injunction,
order or decree applicable to the Purchaser.
(j) AMERICAN STOCK EXCHANGE LISTING. As of the Closing,
the listing of shares of Common Stock on the American Stock Exchange shall not
have been terminated, nor shall the REIT have been notified that such listing
may be terminated or that any termination is contemplated.
4. REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE REIT. In
order to induce the Purchaser to purchase the Shares, the REIT hereby represents
and warrants that, with such exceptions as are specifically set forth in a
letter delivered by the REIT to the Purchaser prior to the execution of this
Agreement (the "Disclosure Letter," which Disclosure Letter shall be deemed to
be part of this Agreement):
4.1. ORGANIZATION AND QUALIFICATION; AUTHORITY. Each of the
REIT and the Subsidiaries, whether wholly or indirectly owned, (i) is a
corporation duly incorporated, or a partnership, limited partnership or limited
liability company duly formed, and is validly existing and in good standing
under the laws of its jurisdiction of its incorporation or formation; (ii) has
full corporate, partnership or limited liability company power and authority to
own and lease its respective properties and carry on its respective business as
presently conducted; and (iii) is duly qualified, registered or licensed as a
foreign corporation, partnership, limited partnership or limited liability
company to do business and is in good standing in each jurisdiction in which the
ownership or leasing of its respective properties or the character of its
present operations makes such qualification, registration or licensing
necessary, except where the failure so to qualify or be in good standing would
not reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), assets, business or results of operations (a "Material
Adverse Effect") of the REIT and the Subsidiaries on a consolidated basis. The
REIT has heretofore made available to Purchaser's Counsel complete and correct
copies of the Articles of Incorporation, the Articles Supplementary, and the
by-laws or equivalent document of the REIT, each as amended and restated to date
and as presently in effect (collectively, the "Charter Documents").
4.2. LICENSES. Each of the REIT and the Subsidiaries holds
all licenses, franchises, permits, consents, registrations, certificates and
other approvals (individually, a "License" and collectively, "Licenses")
required for the conduct of its business as presently conducted, and operates in
substantial compliance therewith, except where the failure to hold any such
License or to operate in compliance therewith would not reasonably be expected
to have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis. Each of the REIT and each of the Subsidiaries are in
compliance with all applicable laws, regulations, orders
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and decrees, except in each case where the failure so to comply would not
reasonably be expected to have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis, or a Material Adverse Effect on the
ability of the REIT to perform on a timely basis any obligation that the REIT
has or will have under any Transaction Document to which it is a party.
4.3. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the REIT of the
Transaction Documents and all other instruments or agreements to be executed in
connection herewith or therewith and the issuance and sale to (and the purchase
hereunder by) the Purchaser of the Shares pursuant to this Agreement (a) are
within the REIT's corporate powers; (b) have been duly authorized by all
necessary corporate action on the part of the REIT; (c) do not require any
License or Approval (except such as have been obtained), except where the
failure to obtain any such License or Approval would not reasonably be expected
to have a Material Adverse Effect on the REIT and the Subsidiaries on a
consolidated basis; (d) do not contravene or constitute a default under or
violation of or do not or will not result in the creation or imposition of any
Lien on any asset of the REIT or any of its Subsidiaries (i) any provision of
applicable law or regulation of any Governmental Authority, (ii) the Charter
Documents or similar documents of any Subsidiary, (iii) any agreement (or
require the consent of any Person under any agreement that has not been made or
obtained) to which the REIT or any of the Subsidiaries are a party, or (iv) any
judgment, injunction, order, decree or other instrument binding upon the REIT,
any of the Subsidiaries or any of their respective properties, except where such
contravention, default or violation or creation or imposition of Liens in this
Section 4.3(d) would not reasonably be expected to have a Material Adverse
Effect on the REIT and the Subsidiaries on a consolidated basis. The REIT does
not have any shareholder rights plan or other "poison pill." The REIT has opted
out of Subtitle 7 of Title 3 of the Maryland General Corporation Law and its
Board of Directors has duly adopted a resolution exempting the Purchaser and
certain other persons from the applicability of Subtitle 6 thereof in the form
attached to the Disclosure Letter.
4.4. VALIDITY AND BINDING EFFECT. Each of the Transaction
Documents, when executed and delivered in accordance with this Agreement, will
be duly executed and delivered by the REIT and will be a valid and binding
agreement of the REIT, enforceable against the REIT in accordance with its
terms.
4.5. CAPITALIZATION.
(a) As of December 18, 1998, the REIT had authorized
65,000,000 shares of capital stock, all of which were designated as Common
Stock, and 7,354,523 shares of Common Stock were issued and outstanding. As of
the Closing, the Shares will be duly authorized and validly issued and, upon
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable and free of any preemptive or similar rights or of
any encumbrances, equities or claims of any nature whatsoever except as created
in favor of the Purchaser.
(b) Except as disclosed in the SEC Filings, as of the
Closing Date, there are no outstanding subscriptions, options, warrants, rights,
convertible or exchangeable securities or other agreements or commitments of any
character obligating the REIT or the
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Subsidiaries to issue any securities. As of the Closing Date, there are no
voting trusts or other agreements or understandings in favor of any person other
than the REIT or the Subsidiaries to which the REIT or the Subsidiaries are a
party with respect to the voting of the Capital Stock or partnership interests
of the REIT or the Subsidiaries, as the case may be.
4.6. LITIGATION; DEFAULTS. There is no action, suit,
proceeding or investigation pending or, to the knowledge of the REIT, threatened
against or affecting the REIT or any of the Subsidiaries, or any properties of
any of the foregoing, before or by any court or arbitrator or any governmental
body, agency or official which (individually or in the aggregate) could
reasonably be expected to (i) have a Material Adverse Effect on the REIT and the
Subsidiaries on a consolidated basis, or (ii) impair the ability of the REIT, to
perform fully any material obligation which the REIT, has or will have under any
Transaction Document. Neither the REIT nor any Subsidiary is in violation of, or
in default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), any
term of its Charter Documents or similar documents of any Subsidiary or of any
term of any agreement, instrument, judgment, decree, order, statute, injunction,
governmental regulation, rule or ordinance (including without limitation, those
relating to zoning, city planning or similar matters) applicable to the REIT or
any Subsidiary or to which the REIT or any Subsidiary is bound, or to any
properties of the REIT and any Subsidiary, except in each case to the extent
that such violations or defaults, individually or in the aggregate, would not
reasonably be expected to (a) affect the validity of any Transaction Document,
(b) have a Material Adverse Effect on the REIT and any Subsidiary on a
consolidated basis, or (c) impair the ability of the REIT to perform fully any
material obligation which the REIT has or will have under any Transaction
Document.
4.7. PUBLIC REPORTS; NO MATERIAL ADVERSE CHANGE. As of their
respective dates, each SEC Filing filed since December 31, 1997 complied as to
form in all material respects with the requirements of the Securities Act and
the 1934 Act and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein, in light of the
circumstances under which they were made, or necessary to make the statements
therein not misleading. The Company has made all of the SEC Filings required to
be made by it since December 31, 1997. Except as disclosed in the SEC Filings or
any press releases issued by the REIT and attached to the Disclosure Letter,
there has been since December 31, 1997 no adverse change in the condition
(financial or other), assets, business, or results of operations of the REIT or
any of the Subsidiaries which could reasonably be expected to have a Material
Adverse Effect on the REIT and the Subsidiaries on a consolidated basis, other
than those occurring as a result of general economic or financial conditions or
other developments which are not unique to the REIT or any Subsidiary but also
generally affect other Persons who participate or are engaged on the lines of
business in which the REIT or any Subsidiary participate or are engaged. Except
as for matters reflected or reserved against in the balance sheet included in
the REIT's most recent 10-Q as filed with the Commission, and except as
disclosed in the SEC Filings or any press release issued by the REIT and
attached to the Disclosure Letter (in each case as filed with the Commission or
as issued since the date of filing of the REIT's most recent 10-Q), since the
date of such balance sheet there has been no obligation or liability (contingent
or otherwise) incurred by the REIT or any of the Subsidiaries, except
liabilities or obligations (i) which were incurred in the ordinary course of
business consistent with past practice or (ii) which could not have been, and
could not be, reasonably
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expected to have a Material Adverse Effect on the REIT and its Subsidiaries on a
consolidated basis.
4.8. PRIVATE OFFERING. No form of general solicitation or
general advertising, including, but not limited to, advertisements, articles,
notices or other communications, published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising,
was used by the REIT or any of the REIT's representatives, or, to the knowledge
of the REIT, any other Person acting on behalf of the REIT in connection with
the offering of the Shares. The REIT further represents to the Purchaser that,
assuming the accuracy of the representations of the Purchaser as set forth in
Section 5 hereof, neither the REIT nor any Person acting on the REIT's behalf
has knowingly taken or will take any action which would subject the issue and
sale of the Shares to the provisions of Section 5 of the Securities Act, except
as contemplated by the Registration Rights Agreement.
4.9. BROKER'S OR FINDER'S COMMISSIONS. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by the REIT directly with the Purchaser without the intervention of
any person on behalf of the REIT in such manner as to give rise to any valid
claim by any Person against the Purchaser for a finder's fee, brokerage
commission or similar payment.
4.10. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY;
U.S. ENTITY. The REIT (i) is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), (ii) is not an
"investment company" for purposes of 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.
4.11. ERISA REQUIREMENTS. At or promptly following the Closing
and annually thereafter within 30 days of the end of the REIT's fiscal year, but
only if requested by the Purchaser with respect to such fiscal year, the
Purchaser shall receive from the REIT a certificate substantially in the form of
EXHIBIT C certifying certain information which the Purchaser reasonably
determines to be necessary to conclude whether the REIT is a "real estate
operating company" within the meaning of 29 C.F.R. Section 2510.3-101(e) (the
"Plan Assets Regulation") and otherwise satisfactory in substance and form to
the Purchaser to enable the Purchaser to make such a conclusion.
4.12. TAX MATTERS.
(a) The REIT has been, for each year ending on or after
December 31, 1993, organized and operated in conformity with the requirements
for qualification and taxation as a "real estate investment trust" under the
Code and the Treasury Regulations promulgated thereunder.
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(b) To the best knowledge of the REIT, the REIT is not
currently a "pension-held REIT" within the meaning of Code Section 856(h)(3)(D)
and the Treasury Regulations promulgated thereunder.
(c) American Real Estate Investment, L.P., a Delaware
limited partnership (the "Operating Partnership"), and each of the REIT's
Subsidiaries that is eligible to be classified as a partnership for federal
income tax purposes is so classified and taxed.
(d) The REIT will use reasonable efforts not to take any
action or not to permit any action to be taken (to the extent the action is
within the control of the REIT) that would cause any of the representations set
forth in this Section 4.12 to be incorrect or incomplete if made as of any date
following the Closing. In the event of the taking or proposed taking of any
action that would cause the representation set forth in Section 4.12(b) to be
incorrect if made as of any date following the Closing, the REIT shall use
reasonable efforts to notify the Purchaser prior to the taking of such action.
4.13. BOARD OF DIRECTORS MATTERS; CERTAIN APPROVAL RIGHTS.
(a) On or before December 31, 2000, the REIT will
nominate, or will cause to be nominated, for election to the Board of Directors
of the REIT, one individual who shall (i) be independent of the REIT and its
investors and affiliates, (ii) have served in the management or been a director
of a publicly held real estate investment trust or other public real estate
operating company, and (iii) be reasonably acceptable to the Purchaser; and the
REIT will use reasonable efforts to obtain stockholder approval of such
individual's election to the Board of Directors of the REIT.
(b) None of the REIT or any Subsidiary shall enter into
any capital-raising transaction or financing, including any merger or
acquisition, without the consent of holders of a majority in interest of the
Shares; provided, however, that such consent shall not be required if, in each
case, (i) such capital raising transaction or financing represents a
replacement, renewal, refinancing or extension of outstanding indebtedness or
any portion thereof of the REIT or of any Subsidiary; PROVIDED that any such
replacement, renewal, refinancing or extension shall not exceed the sum of the
principal amount of such indebtedness being replaced, renewed, refinanced or
extended plus the amount of accrued interest thereon and the amount of any
reasonably determined prepayment premium necessary to accomplish such
replacement, renewal refinancing or extension and such reasonable fees and
expenses incurred in connection therewith; or (ii) the Fixed Charge Ratio for
the REIT's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
capital-raising transaction or financing is entered into would have been more
than 1.5 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if such capital-raising
transaction or financing had been entered into at the beginning of such
four-quarter period.
4.14. NO OTHER REPRESENTATIONS. The REIT shall not be deemed
to have made to the Purchaser any representation or warranty other than as
expressly made by the REIT in this Agreement and in the other Transaction
Documents. Without limiting the generality of the foregoing, and notwithstanding
any otherwise express representations and warranties made by
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the REIT in this Section 4, the REIT makes no representation or warranty to the
Purchaser with respect to any projections, estimates or budgets heretofore
delivered to or made available to the undersigned of future revenues, expenses
or expenditures or future results of operations.
50 REPRESENTATIONS AND WARRANTIES, COVENANTS, ETC. OF THE PURCHASER.
In order to induce the REIT to sell the Shares, the Purchaser hereby represents
and warrants that:
5.1. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS.
(a) The Purchaser is an accredited investor as defined
in Regulation D under the Securities Act and that it is purchasing the Shares
for its own account or for one or more separate accounts maintained by it or for
the account of one or more institutional investors on whose behalf the Purchaser
has authority to make this representation for investment and not with a view to
the distribution thereof or with any present intention or plan of distributing
or selling any of the Shares except in compliance with the Securities Act
provided that the disposition of the Purchaser's Property shall at all times be
within its control.
(b) The Purchaser has full power and authority and has
taken all action necessary to authorize it to enter into and perform its
obligations under the Transaction Documents and all other documents or
instruments contemplated hereby. The Transaction Documents are legal, valid and
binding obligations of the Purchaser and are enforceable in accordance with
their terms.
5.2. ERISA MATTERS. None of the funds proposed to be used by
the Purchaser to purchase the Shares constitutes assets of an employee benefit
plan within the meaning of ERISA.
5.3. NO ADVERTISEMENT OR SOLICITATION. The Purchaser
acknowledges that the offer and sale of the Shares to it has not been
accomplished by any form of general solicitation or general advertising,
including, but not limited to, (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media, or
broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
5.4. RESTRICTIONS ON TRANSFER. The Purchaser understands and
acknowledges that, except as provided for by the Registration Rights Agreement,
none of the Shares or the Common Stock issuable on conversion of the Shares have
been registered under the Securities Act or registered or qualified under the
securities laws of any state by reason of a specific exemption from the
registration provisions thereof which exemption depends upon, among other
things, the bona fide nature of the investment intent of the Purchaser as
expressed herein and the accuracy and completeness of the other representations
of the Purchaser set forth herein. The Purchaser understands and acknowledges
that the Shares may not be sold, assigned or transferred absent effective
registration thereof under the Securities Act and applicable state securities
laws, or (ii) absent compliance with Section 6.2 and that it must bear the
economic risks of this investment resulting from such limitations. The Purchaser
understands and acknowledges that it must comply with the provisions of Section
6.2.9 of the Articles of Incorporation and Section 7.1
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of the REIT's bylaws, as amended on December 12, 1997. The REIT acknowledges,
however, that the Shares will be subject to a pledge to the Purchaser's lender
and agrees to cooperate reasonably with the Purchaser and the lender in
effecting such pledge and any transfer thereunder.
5.5. DISCLOSURE OF INFORMATION. The Purchaser:
(i) has been furnished with and has carefully read and
reviewed the SEC Filings, and has been afforded access to all
information necessary to evaluate the merits and risks of the
acquisition of the Securities, and has relied solely (except as
indicated in subsections (ii) and (iii) below) on such materials
or documents and on the representations, warranties, covenants and
other agreements of the REIT contained in the Transaction
Documents;
(ii) has been provided an opportunity to obtain any
additional information requested concerning the Shares, the Common
Stock, the REIT and the Subsidiaries;
(iii) has been given the opportunity to ask questions
of, and receive answers from, the REIT and the Subsidiaries, or a
person or persons acting on the behalf of the REIT and the
Subsidiaries, concerning the terms and conditions of the
Transaction Documents and other matters pertaining to this
investment, and has been given the opportunity to obtain such
additional information necessary to verify the accuracy of the
materials or documents that were provided in order for it to
evaluate the merits and risks of an investment in the REIT to the
extent the REIT or the Subsidiaries, as the case may be, possess
such information or can acquire it without unreasonable effort or
expense, and has not been furnished any other offering literature
or prospectus on which it is entitled to rely except as mentioned
herein; and
(iv) has determined that the Shares and the Common Stock
are a suitable investment for it and that at this time it can bear
the economic risk of the investment.
5.6. INVESTMENT EXPERIENCE. The Purchaser represents that it
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Shares and
the Common Stock and protecting its own interests in connection with the
investment and has obtained sufficient information from the REIT and the
Subsidiaries to evaluate the merits and risks of an investment in the Shares and
the Common Stock. The undersigned has not utilized any person as its purchaser
representative or professional advisor in connection with evaluating such risks
and merits. The Purchaser has not been organized solely for the purpose of
acquiring the Shares and the Common Stock.
5.7. INVESTOR AWARENESS. The Purchaser acknowledges, agrees
and is aware that:
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(i) no federal or state agency has passed upon the
Shares or the Common Stock or made any finding or determination as
to the fairness of this investment nor any recommendation or
endorsement of the investment;
(ii) there are substantial risks of loss of investment
incidental to the purchase of the Shares and the Common Stock; and
(iii) neither the REIT, the Subsidiaries nor any of
their affiliates or representatives has provided the Purchaser
with any investment, tax, legal, regulatory or accounting advice
with respect to the investment in or ownership of the Shares and
the Common Stock; provided, however that the REIT confirms the
representations, warranties, covenants and other agreements of the
REIT contained in the Transaction Documents.
5.8. BROKER'S OR FINDER'S COMMISSIONS. All negotiations relative
to this Agreement and the transactions contemplated hereby have been carried out
by Purchaser directly with the REIT without the intervention of any person on
behalf of Purchaser in such manner as to give rise to any valid claim by any
Person against the REIT for a finder's fee, brokerage commission or similar
payment.
60 RESTRICTIONS ON TRANSFER.
6.1. RESTRICTIVE LEGENDS. In addition to the legend required
by Section 6.2.9 of the Articles of Incorporation and the statements required by
Section 7.1 of the REIT's by-laws, as amended on December 12, 1997, to the
extent applicable, any certificate or other document issued in respect of any
Shares shall be endorsed with the legend set forth below, as appropriate:
(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED (1) ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT (2) ABSENT AN OPINION OF
COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE REIT AND ITS COUNSEL, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR SUCH STATES OR THAT
SUCH TRANSACTION COMPLIES WITH THE RULES PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION UNDER SAID ACT OR SUCH STATES
OR, (3) EXCEPT IN A TRANSACTION IN COMPLIANCE WITH RULE 144 UNDER
THE SECURITIES ACT"
and
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(ii) any legend required by any applicable state
securities law.
The REIT shall maintain a copy of this Agreement and any amendments
thereto on file in its principal offices, and will make such copy available
during normal business hours for inspection to any party thereto or will provide
such copy to the Purchaser or any transferee upon its or their request.
Whenever the legend requirements imposed by this Section 6.1 shall
terminate, as provided in Section 6.2, the respective holders of Shares for
which such legend requirements have terminated shall be entitled to receive from
the REIT, at the REIT's expense, certificates representing the Shares without
such legend.
6.2. NOTICE OF TRANSFER; OPINIONS OF COUNSEL. Each holder of
the Shares bearing the restrictive legend set forth in Section 6.1 above (a
"Restricted Security"), agrees with respect to any transfer of such Restricted
Security to give to the REIT (a) written notice describing the transferee and
the circumstances, if any, necessary to establish the availability of an
exemption from the registration requirements of the Securities Act or any state
law and (b) upon reasonable request by the REIT to such transferring holder, an
opinion of counsel (at the expense of such holder), which is knowledgeable in
securities law matters (including in-house counsel), in form and substance
reasonably satisfactory to the REIT to the effect that the proposed transfer of
such Restricted Security may be effected without registration of such Restricted
Security under the Securities Act or any state law. If for any reason the REIT
(after having been furnished with the opinion required to be furnished pursuant
to this Section 6.2), shall fail to notify such holder within ten business days
after such holder shall have delivered such notice of opinion to the REIT that,
in its or its counsel's opinion, the transfer may not be legally effective (the
"Illegal Transfer Notice"), such holders shall thereupon be entitled to transfer
the Restricted Security as proposed. If the holder of the Restricted Security
delivers to the REIT an opinion of counsel (including in-house counsel or
regular counsel to such Purchaser or its investment adviser) which is in form
and substance reasonably satisfactory to the REIT that subsequent transfers of
such Restricted Security will not require registration under the Securities Act
or any state law, and the REIT does not provide the holders with an Illegal
Transfer Notice as set forth above, the REIT will within a reasonable period
after such contemplated transfer, at the expense of such holder, deliver new
certificates for such Restricted Security which do not bear the Securities Act
legend set forth in Section 6.1(i) above. The restrictions imposed by this
Section 6 upon the transferability of any particular Restricted Security shall
cease and terminate when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 promulgated under the Securities Act. The holder of any
Restricted Security as to which such restrictions shall have terminated shall be
entitled to receive from the REIT at the expense of such holder, a new security
of the same type but not bearing the restrictive Securities Act legend set forth
in Section 6.1 and not containing any other reference to the restrictions
imposed by this Section 6. Notwithstanding any of the foregoing, no opinion of
counsel will be required to be rendered pursuant to this Section 6.2 with
respect to the transfer of any securities on which the restrictive legend has
been removed in accordance with this Section 6.2. As used in this Section 6.2,
the term "transfer" encompasses any sale, transfer or other disposition of any
securities referred to herein.
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70 DEFINITIONS. As used herein the following terms have the following
respective meanings:
"1934 ACT," means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder, as from time to
time amended.
"AFFILIATE," except as otherwise defined in this Agreement, means
with respect to any Person any other Person directly or indirectly controlling
or controlled by or under common control with such first Person or any of its
Subsidiaries; PROVIDED, HOWEVER, that, for purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"AGREEMENT" means this Agreement, as amended, modified or
supplemented from time to time, together with any exhibits, schedules,
appendices or other attachments thereto.
"APPROVALS" has the meaning ascribed thereto in Section 3.1(l)
hereof.
"ARTICLES OF INCORPORATION" means the Articles of Incorporation of
the REIT, as amended to date and presently in effect.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participation, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrant or options exchangeable for
or convertible into such capital stock.
"CHARTER DOCUMENTS" has the meaning ascribed thereto in Section
4.1 hereof.
"CLOSING" has the meaning ascribed thereto in Section 2 hereof.
"CLOSING DATE" has the meaning ascribed thereto in Section 2
hereof.
"COMMISSION" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the common stock, par value $.001 per share,
of the REIT.
"DISCLOSURE LETTER" has the meaning ascribed thereto in Section 4
hereof.
"EBITDA" means earnings before interest, taxes, depreciation, and
amortization, determined in accordance with Generally Accepted Accounting
Principles ("GAAP").
14
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, as amended from time to time.
"FIXED CHARGE COVERAGE RATIO" means the ratio of EBITDA to the
Fixed Charges of the Company for a given period. In the event that the REIT
incurs, issues, assumes or retires any indebtedness or preferred stock prior to
the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such transaction, as if the such transaction had
occurred at the beginning of the given period for which the Fixed Charge
Coverage Ratio is calculated.
"FIXED CHARGES" means the sum of (i) the consolidated interest
expense of the REIT and the Subsidiaries for a given period, determined in
accordance with GAAP, and (ii) all accrued dividend payments on any series of
preferred equity of the REIT and the Subsidiaries. Fixed Charges shall not
include intercompany interest or dividends.
"GENERAL PARTNER'S CERTIFICATE" means a certificate executed on
behalf of the Purchaser by its general partner.
"GOVERNMENTAL AUTHORITY" means any governmental or
quasi-governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"ILLEGAL TRANSFER NOTICE" has the meaning ascribed thereto in
Section 6.2 hereof.
"INDEMNIFIED PARTY" means either a REIT Indemnified Party or a
Purchaser Indemnified Party, as the context requires.
"INDEMNIFYING PARTY" has the meaning ascribed thereto in Section
8.1(c) hereof.
"LICENSE" or "LICENSES" has the meaning ascribed thereto in
Section 4.2 hereof.
"LIEN" means any mortgage, lien (statutory or otherwise), charge,
pledge, hypothecation, conditional sales agreement, adverse claim, title
retention agreement or other security interest, encumbrance or other title
defect in or on any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale, trust receipt or
other title retention agreement with respect to any Property or asset of such
Person.
"LOSSES" has the meaning ascribed thereto in Section 8.1(a)
hereof.
"MANAGEMENT RIGHTS LETTER" mean the Management Rights Letter by
and between the Purchaser and the REIT.
"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in
Section 4.1(a) hereof.
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<PAGE>
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of
the REIT by the Chief Financial Officer of the REIT.
"PERSON" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"PLAN ASSETS REGULATION" has the meaning set forth in Section 4.11
hereof.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PURCHASER" has the meaning ascribed thereto in the introduction
hereof.
"PURCHASER'S COUNSEL" means Goodwin, Procter & Hoar LLP.
"PURCHASER INDEMNIFIED PARTY" or "PURCHASER INDEMNIFIED PARTIES"
has the meaning ascribed thereto in Section 8.1(a) hereof.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement by and between the REIT and the Purchaser, as amended or supplemented
from time to time in accordance with the terms thereof.
"REIT" has the meaning ascribed thereto in the introduction
hereof.
"REIT COUNSEL" means Rogers & Wells LLP and Piper & Marbury L.L.P.
"REIT INDEMNIFIED PARTY" has the meaning ascribed thereto in
Section 8.1(b) hereof.
"RESTRICTED SECURITY" has the meaning ascribed thereto in Section
6.2 hereof.
"RULE 144" means Rule 144 as promulgated by the Commission under
the Securities Act, and any successor rule or regulation thereto.
"RULE 144A" means Rule 144A as promulgated by the Commission under
the Securities Act, and any successor rule or regulation thereto.
"SEC FILINGS" means official filings made by the REIT filed with
the Commission in accordance with the Securities Act and the 1934 Act with
respect to events occurring, or periods ending on or after December 31, 1996.
"SECURITIES ACT" means the Securities Act of 1933, and the rules
and regulations of the Commission promulgated thereunder, as from time to time
amended.
"SHARES" has the meaning ascribed thereto in Section 1 hereof.
16
<PAGE>
"SUBSIDIARIES" means subsidiary corporations, partnerships,
limited partnerships, joint ventures and limited liability companies which are
directly or indirectly and wholly or majority owned by the REIT, including,
unless the context requires otherwise, the Operating Partnership.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Articles Supplementary, the Registration Rights Agreement, the Ownership Limit
Waiver Letter, the Management Rights Letter and any and all agreements,
certificates, instruments and other documents of the REIT required thereby or
executed and delivered pursuant hereto.
80 MISCELLANEOUS.
8.1. INDEMNIFICATION; EXPENSES, ETC.
(a) In addition to any and all obligations of the REIT
to indemnify the Purchaser hereunder or under the other Transaction Documents,
the REIT agrees, without limitation as to time, to indemnify and hold harmless
the Purchaser, its Affiliates and the employees, officers, directors, trustees,
direct and indirect partners, members, agents and investment advisors of the
Purchaser and its Affiliates (individually, a "Purchaser Indemnified Party" and,
collectively the "Purchaser Indemnified Parties") from and against any and all
losses, claims, damages, liabilities, costs (including the costs of preparation
and reasonable attorneys' fees) and reasonable expenses (including expenses of
investigation) (collectively, "Losses") incurred or suffered by a Purchaser
Indemnified Party in connection with or arising out of any material breach by
the REIT of any warranty or representation made by the REIT in this Agreement;
PROVIDED, HOWEVER, that the REIT shall not be liable for any Losses resulting
from action on the part of any Purchaser Indemnified Party which is finally
determined in such proceeding to be wrongful or which is an act of gross
negligence, recklessness or willful misconduct by such Purchaser Indemnified
Party. The REIT agrees as promptly as practicable to reimburse any Purchaser
Indemnified Party for all such Losses as they are incurred or suffered by such
Purchaser Indemnified Party following the receipt of a reasonably detailed
invoice setting forth the amount of such Losses.
Except as otherwise provided herein, the REIT agrees (for the
benefit of each Purchaser) to pay, and to hold the Purchaser harmless from and
against, all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees, expenses and disbursements), if any, in connection
with the enforcement against the REIT or the Subsidiaries, as the case may be,
of this Agreement or any other Transaction Document in connection herewith or
therewith in any action in which the Purchaser attempts to enforce any of the
foregoing, PROVIDED, that the Purchaser shall prevail in such action.
(b) In addition to any and all obligations of the
Purchaser to indemnify the REIT hereunder or under the other Transaction
Documents, the Purchaser agrees, without limitation as to time, to indemnify and
hold harmless the REIT, its Affiliates, and the employees, officers, directors,
trustees, direct and indirect partners, members and agents of the REIT and its
Affiliates (individually, a "REIT Indemnified Party" and collectively the "REIT
Indemnified
17
<PAGE>
Parties") from and against any and all Losses, incurred or suffered by a REIT
Indemnified Party in connection with or arising out of any material breach by
the Purchaser of any warranty or representation made by the Purchaser in this
Agreement; PROVIDED, HOWEVER, that the Purchaser shall not be liable for any
Losses resulting from action on the part of any REIT Indemnified Party which is
determined in such proceeding to be wrongful or which is an act of gross
negligence, recklessness, or willful misconduct by such REIT Indemnified Party.
The Purchaser agrees as promptly as practicable to reimburse any REIT
Indemnified Party for all such Losses as they are incurred or suffered by such
REIT Indemnified Party following the receipt of a reasonably detailed invoice
setting forth the amount of such Losses.
Except as otherwise provided herein, the Purchaser agrees (for the
benefit of the REIT) to pay, and to hold the REIT harmless from and against, all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, expenses and disbursements), if any, in connection with the
enforcement against the Purchaser of this Agreement or any other Transaction
Document in any action in which the REIT attempts to enforce any of the
foregoing, PROVIDED, that the REIT shall prevail in such action.
(c) If any Indemnified Party is entitled to
indemnification hereunder, such Indemnified Party or its representative shall
give prompt notice to the REIT or the Purchaser, as the case may be (each, for
purposes of this Section 8.1(c), an "Indemnifying Party") of any claim or of the
commencement of any proceeding against such Indemnified Party brought by any
third party with respect to which such Indemnified Party seeks indemnification
pursuant hereto; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent the Indemnifying Party is prejudiced by such
failure. The Indemnifying Party shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such claim or proceeding, to assume, at
the expense of the Indemnifying Party, the defense of any such claim or
proceeding with counsel reasonably satisfactory to such Indemnified Party. The
Indemnified Party or Parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). The Indemnifying Party shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by claimant or plaintiff to such Indemnified Party or
Parties of a release, in form and substance satisfactory to the Indemnified
Party or Parties, from all liability in respect of such claim, litigation or
proceeding.
8.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
SEVERABILITY. All representations and warranties contained in this Agreement or
the Transaction Documents or made in writing by or on behalf of the REIT or the
Purchaser in connection with the transactions contemplated by this Agreement or
the Transaction Documents shall survive, for the duration of any statutes of
limitation applicable thereto, the execution and delivery of this Agreement, any
investigation at any time made by the REIT, the Purchaser or on such party's
behalf, the purchase of the Shares by the Purchaser under this Agreement and any
disposition of or payment on the Shares. All statements contained in any
certificate or other instrument delivered to the Purchaser by or on behalf of
the REIT or delivered to the REIT by or on behalf of the Purchaser pursuant to
this Agreement or the other Transaction Documents shall be deemed
representations
18
<PAGE>
and warranties of the REIT or the Purchaser, as applicable, under this
Agreement. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
8.3. EXCLUSIVITY. After the Closing, to the extent permitted
by law, the indemnities set forth in Section 8.1 shall be the exclusive remedies
of the Purchaser Indemnified Parties and the REIT Indemnified Parties for any
Losses incurred or suffered for which indemnification may be sought pursuant to
Section 8.1 and the parties shall not be entitled to a rescission of this
Agreement or to any further indemnification rights or claims of any nature
whatsoever in respect of such Losses for which indemnification may be sought
pursuant to Section 8.1, all of which the parties hereto hereby waive.
8.4. AMENDMENT AND WAIVER. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing and signed
by the Purchaser and the REIT.
8.5. NOTICES, ETC. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be sent by facsimile, with receipt confirmed, or delivered or
mailed by registered or certified mail, return receipt requested, or by a
nationally recognized overnight courier, postage prepaid, addressed, (a) if to
the Purchaser, at the address set forth on the Purchaser's signature page hereto
or such other address as the Purchaser shall have furnished to the REIT in
writing, or (b) if to any other holder of any Shares, at such address as such
other holder shall have furnished to the REIT in writing, or, until any such
other holder so furnishes to the REIT an address, then to and at the address of
the last holder of such Shares who has furnished an address to the REIT, or (c)
if to the REIT, at the address set forth at the beginning of this Agreement, to
the attention of President, or at such other address, or to the attention of
such other officer, as the REIT shall have furnished to the Purchaser and each
such other holder in writing. This Agreement and the other Transaction Documents
and all documents delivered in connection herewith or therewith embody the
entire agreement and understanding between the Purchaser and the REIT and
supersede all prior agreements and understandings relating to the subject matter
hereof, including the confidentiality agreement embodied in a letter dated
August 28, 1998 by and between the REIT and AEW Capital Management, L.P., which
agreement shall be terminated effective as of the Closing.
8.6. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto are referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the respective parties which are contained in this
Agreement shall bind and inure to the benefit of the successors and assigns of
all other parties. Except as otherwise provided herein, the terms and provisions
of this Agreement and the other Transaction Documents shall inure to the benefit
of and shall be binding upon any assignee or transferee of the Purchaser, and in
the event of such transfer or assignment, the rights and privileges herein
conferred upon the Purchaser shall automatically extend to and be vested in, and
become an obligation of, such transferee or assignee, all subject to the terms
and conditions hereof.
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8.7. DESCRIPTIVE HEADINGS. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
8.8. SATISFACTION REQUIREMENT. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to a particular party, the determination
of such satisfaction shall be made by such party, as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
8.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAW.
8.10. EXPENSES. The REIT will pay at the Closing (or on such
later date as one or more invoices may be submitted to the REIT) the reasonable
legal fees of Purchaser's Counsel incurred in connection with this Agreement and
consummation of the transactions contemplated hereby; provided, that in no event
shall such legal fees exceed $75,000.
8.11. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
8.12. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20
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SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date first set forth above.
AMERICAN REAL ESTATE
INVESTMENT CORPORATION, a
Maryland corporation
By: /S/ TIMOTHY A. PETERSON
-------------------------
Name: Timothy A. Peterson
Title: Senior Vice-President
COPIES OF NOTICES TO:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Robert E. King, Jr. and
Bonnie A. Barsamian
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
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<PAGE>
SECURITIES PURCHASE AGREEMENT PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Number and Manner of Payment
date first written above: of Purchase Price of Shares to be
Purchased:
800,000 Shares of Series A
Convertible Preferred Stock of
American Real Estate Investment
Corporation
AEW TARGETED SECURITIES FUND, L.P.
By: AEW TSF, L.L.C., its General Partner
Purchase Price: $20,000,000
By: AEW TSF, INC., its Managing Member
By: /S/ ROBERT G. GIFFORD
----------------------
Name: Robert G. Gifford
Title: 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 are to be
registered, if different than name
of Purchaser):
- -------------------------------------------
(Nominee's Name)
COPIES OF NOTICES TO:
Tax I.D. Number: 04-3436657 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
Laura Hodges Taylor, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Telephone No.: 617-570-1536
Telecopier No.: 617-523-1231
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Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of December
23, 1998, by and between American Real Estate Investment Corporation, a Maryland
corporation (the "Company"), and AEW Targeted Securities Fund, L.P. (the
"Purchaser").
This Agreement is made pursuant to a certain Securities Purchase
Agreement (the "Securities 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 Convertible Preferred Stock, par value $.001
per share, of the Company (the "Preferred Stock"), which are convertible into
shares of Common Stock, par value $.001 per share, of the Company (the
"Securities"). In order to induce the purchasers to enter into the Securities
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 Securities 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 $.001 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).
"DAMAGES" has the meaning set forth in Section 6(a).
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"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.
"INSPECTORS" has the meaning set forth in Section 4(k).
"NASD" has the meaning set forth in Section 4(m).
"NASDAQ" has the meaning set forth in Section 4(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.
"QUALIFYING OFFERING" means the sale of Common Stock in an underwritten
public offering (in which no person acquires more than 10% of the Common Stock
to be sold) at a price of at least $16.50 per share which results in net
proceeds to the Company of at least $150 million.
"RECORDS" has the meaning set forth in Section 4(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 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), (iii) such
Securities shall have ceased to be outstanding or (iv) such Securities are
eligible for sale pursuant to Rule 144 under the Securities Act and could be
sold in one
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transaction in accordance with the volume limitations contained in Rule
144(e)(1)(i) under the Securities Act.
"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" has the meaning set forth in the introduction.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"SECURITIES PURCHASE AGREEMENT" has the meaning set forth in the
introduction.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in Section
2(a).
"SUSPENSION NOTICE" has the meaning set forth in Section 4.
"SUSPENSION PERIOD" has the meaning set forth in Section 4.
"TARGET EFFECTIVE DATE" means the date 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.
"TARGET EFFECTIVE PERIOD" means the period of time between the date of
this Agreement and the later of (A) (i) the date which is 24 months following
the date hereof, (ii) the first date on which all Holders have consummated the
sale of all of such Holders' Registrable Securities registered under the Shelf
Registration Statement, or (iii) the date on which all of the Registrable
Securities are eligible for sale pursuant to Rule 144(k) (or any successor
provision) or in a single transaction pursuant to Rule 144(e) (or any successor
provision) under the Securities Act, whichever of (i), (ii) or (iii) is earlier,
or (B) the date which is three months after the date on which all Holders cease
to be an Affiliate of the Company.
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SECTION 2. SHELF REGISTRATION.
(a) FILING; EFFECTIVENESS. As soon as practicable but not
later than the sixtieth (60th) day following the closing of the transactions
contemplated by the Securities 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 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 the Target Effective Period.
Any Holder of Registrable Securities shall be permitted to withdraw all or any
part of the Registrable Securities from a Shelf Registration Statement at any
time prior to the effective date of such Shelf Registration Statement, but the
Company shall be under no further obligation to register such Securities.
(b) 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.
(c) 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 be 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.
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 commercially reasonable
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method of distribution thereof as quickly as
practicable (provided, however, that the Holders shall not be entitled to effect
such distribution through any underwriter until the earlier to occur of (i) the
consummation by the Company of a Qualifying Offering or (ii) 3 1/2 years from
the date hereof), and in connection therewith:
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(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 commercially
reasonable 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 during the Target Effective Period; (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 the Shelf Registration Statement or any
amendment thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all 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 best
efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or "blue sky" laws of each of the 50
states of the United States or obtain appropriate exemptions therefrom; (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;
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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 4(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, and (if requested by any such Person) confirm such notice 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 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.
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(g) The Company shall use its commercially reasonable 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 commercially reasonable 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 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 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 in customary form) 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.
(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
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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 commercially reasonable efforts
to cause the Registrable Securities included in a Registration Statement (if the
Company and the Registrable Securities so qualify) (i) to be listed on each
national securities exchange, if any, on which similar securities 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, 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 Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
(p) 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.
(q) 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.
In the case of a Shelf Registration Statement, each Holder, upon
receipt of any notice (a "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 the event that the Company shall give any
Suspension Notice, the Company shall use its commercially reasonable 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.
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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 to 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 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 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 45 days; PROVIDED the
Company may deliver only two such notices in any twelve month period.
(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 7th 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 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),
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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 4(l)), Securities Act liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and expenses of
any special experts or other Persons retained by the Company in connection with
any registration, and the reasonable fees and disbursements up to a maximum of
$5,000 of the Holders' legal counsel (other than in connection with any
underwritten offering) (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 becomes effective. The Company shall not
be required to pay underwriters' discounts, commissions or expenses of stock
transfer taxes relating to the Registrable Securities.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
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(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 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,
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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 5(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 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
12
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indemnifying party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel of its
choice 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 the
reasonable fees and expenses of more than 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 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
13
<PAGE>
(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 11(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
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.
14
<PAGE>
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 is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. 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 (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. This Agreement and all documents
entered into on the date hereof in conjunction with the transactions
contemplated by the Securities Purchase Agreement and any such other documents
delivered in connection herewith or therewith embody the entire agreement and
understanding between the Holder and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five 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
15
<PAGE>
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 Maryland 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.
(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.
[Remainder of Page Intentionally Left Blank]
16
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DOCSC\693711.4
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
By: /s/ TIMOTHY A. PETERSON
-----------------------
Name: Timothy A. Peterson
Title: Senior Vice-President
Notice Information:
620 West Germantown Pike
Suite 3350
Plymouth Meeting, PA 19462
Telecopier 610-834-9560
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
Attn: Robert E. King, Jr.
Bonnie A. Barsamian
Telecopier: (212) 878-8375
AEW TARGETED SECURITIES FUND, L.P.
By: AEW TSF, L.L.C., its General Partner
By: AEW TSF, INC., its Managing-Member
By: /s/ ROBERT G. GIFFORD
---------------------
Name: Robert G. Gifford
Title: President
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<PAGE>
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
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
Attn: Laura Hodges Taylor, P.C.
Telecopier: (617) 523-1231
19
<PAGE>
Exhibit 10.6
AMERICAN REAL ESTATE INVESTMENT CORPORATION
ARTICLES SUPPLEMENTARY CLASSIFYING AND DESIGNATING A
SERIES OF PREFERRED STOCK AS
SERIES A CONVERTIBLE PREFERRED STOCK
AND FIXING DISTRIBUTION AND
OTHER PREFERENCES AND RIGHTS OF SUCH SERIES
American Real Estate Investment Corporation, a Maryland corporation,
having its 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 that:
Pursuant to authority expressly vested in the Board of Directors by
Article V of the Amended and Restated Articles of Incorporation (the "ARTICLES
OF INCORPORATION"), the Board of Directors adopted resolutions authorizing the
creation and issuance of Eight Hundred Thousand (800,000) shares, with a
liquidation preference of Twenty-Five Dollars ($25.00) per share, of Series A
Convertible Preferred Stock and adopted resolutions granting the Executive
Committee of the Board of Directors with full power and authority, subject to
the foregoing resolution, to determine the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, number of shares and
dividend rate, as determined by such duly authorized committee are as follows:
SECTION 1. NUMBER OF SHARES AND DESIGNATION. This series of Preferred
Stock shall be designated as Series A 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 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.
"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.
"Change in Control" shall mean any merger or consolidation of the
Corporation in which one or more entities which are not affiliates of the
Corporation acquire more than 50% of the Corporation's outstanding voting equity
securities or as a result of which stockholders of the
<PAGE>
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.
"Common Shares" shall mean the shares of common stock, par value
$.001 per share, of the Corporation.
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Continuation Right" shall have the meaning set forth in Section 4.
"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 7 hereof. The initial conversion price shall be
$16.50 (equivalent to a conversion rate of 1.51515 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 ten consecutive trading days ending on such date.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, the last calendar day of January, April, July and October, in each year,
commencing on January 31, 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
February 1, May 1, August 1 and November 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 January 31, 1999).
"Issue Date" shall mean the first date on which any Series A Preferred
Shares are issued and sold.
"Junior Shares" shall mean the Common Shares and any other class or
series of shares of capital stock of the Corporation constituting junior stock
within the meaning set forth in paragraph (c) of Section 9 hereof.
"Liquidation" shall mean (A) a dissolution or winding up of the
Corporation, whether voluntary or involuntary, (B) a consolidation or merger of
the Corporation with and into one or more entities which are not affiliates of
the Corporation which results in a Change in Control, or (C) a sale or transfer
of all or substantially all of the Corporation's assets other than to an
affiliate of the Corporation.
"Liquidation Preference" shall have the meaning set forth in Section 4
hereof.
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<PAGE>
"Liquidation Premium" shall mean (X) on or prior to December 15, 2003,
in connection with (i) a Merger Liquidation in which the surviving entity is a
Qualified Entity, an amount equal to five percent (5%) of the Liquidation
Preference or (ii) any other Liquidation, an amount equal to ten percent (10%)
of the Liquidation Preference, or (Y) after December 15, 2003, in connection
with any Liquidation, an amount equal to the Redemption Premium set forth in
Section 5.
"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.
"Merger Liquidation" shall have the meaning set forth in Section 4.
"Non-Electing Share" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Parity Shares" shall have the meaning set forth in paragraph (b) of
Section 9 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 Stock" shall mean the preferred stock, par value $.001 per
share, of the Corporation.
"Qualified Entity" shall mean any Person that (I) either (i) is or may
be the issuer of senior unsecured debt securities which are rated no lower than
investment grade by either Standard & Poor's Rating Service, Inc., a division of
the McGraw Hill Companies, Inc. ("S&P"), or Moody's Investor Services, Inc.
("Moody's"), which rating may (A) relate to any outstanding issue of such debt
securities or (B) relate to any unissued debt securities registered on an
effective shelf registration statement or (ii) is an issuer of outstanding
preferred equity securities which are rated no lower than Ba1 by Moody's or BB+
by S&P, and (II) is the issuer of common
3
<PAGE>
equity securities the average daily trading volume of which on the principal
national securities exchange on which such common equity securities are traded
on the 30 most recent Trading Days has been equal to or greater than $2,475,000
per day.
"Qualifying Offering" shall mean the sale of Common Shares in an
underwritten public offering (in which no person acquires more than 10% of the
Common Shares to be sold) at a price of at least $16.50 per share which results
in net proceeds to the REIT of at least $150 million.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 5 hereof.
"Redemption Notice" shall have the meaning set forth in paragraph (a)
of Section 5 hereof.
"Redemption Premium" shall have the meaning set forth in paragraph (a)
of Section 5 hereof.
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section 7 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.
"Trading Day" shall mean any day on which the securities in question
are traded on the New York Stock Exchange ("NYSE"), or if such securities are
not listed or admitted for trading on the NYSE, 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 7 hereof.
"Voting Preferred Shares" shall have the meaning set forth in Section
10 hereof.
4
<PAGE>
SECTION 3. DIVIDENDS.
(a) The holders of 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) $2.25 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 or, if different, with respect to the most recent quarterly
period for which dividends with respect to the Common Shares have been declared.
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, shall compound quarterly at a rate
per annum equal to nine percent (9%) 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
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 thereon calculated and compounded at the
applicable rate to and including such date, whether or not earned or declared,
which have not been paid in cash.
(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
5
<PAGE>
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.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any Liquidation, 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 (subject to the Continuation Right of such
holders described below) to receive an amount equal to the greater of (i) (A)
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") plus (B) the
Liquidation Premium or (ii) an amount per Series A Preferred Share equal to the
amount which would have been payable had each Series A Preferred Share been
converted into Common Shares immediately prior to such Liquidation. 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 the Liquidation Preference in full, no
payment will be made to any holder of Junior Shares upon Liquidation. If, upon
any such Liquidation, 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
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<PAGE>
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.
In connection with a Merger Liquidation, the holders of Series A
Preferred Shares shall have the right (a "Continuation Right") to elect, by
delivering written notice to the Corporation not less than five Business Days
prior to the Merger Liquidation, to require the Corporation to make provision
for the Series A Preferred Shares to be assumed by the surviving entity as
described in Section 7(e); provided, however, notwithstanding the election by
the holders of the Series A Preferred Shares of the Continuation Right, the
Corporation shall have the right, in connection with any Merger Liquidation, to
elect, by delivering written notice to the holders of Series A Preferred Shares
at any time prior to the Merger Liquidation, to redeem any or all of the
outstanding Series A Preferred Shares for an amount per Series A Preferred Share
equal to the Liquidation Preference plus a premium equal to ten percent (10%) of
the Liquidation Preference. A "Merger Liquidation" shall be a Liquidation which
constitutes a consolidation or merger of the Corporation with one or more
entities that are not affiliates of the Corporation and as a result of which the
Corporation is not the Surviving Entity.
(b) Subject to the rights of the holders of any Parity Shares,
upon any Liquidation 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. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) The Series A Preferred Shares shall not be redeemable by
the Corporation prior to December 15, 2003. On and after December 15, 2003, 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.
At any time on or after December 15, 2003, 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 30 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 in the following periods:
<TABLE>
<S> <C>
From December 15, 2003 through and
including December 14, 2004 .................................................. 4.5%
From December 15, 2004 through and
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
including December 14, 2005.................................................... 3.375%
From December 15, 2005 through and
including December 14, 2006 . . . . . . . . . . ............................... 2.25%
From December 15, 2006 through and
including December 14, 2007 . . . . . . . . . . ............................... 1.125%
December 15, 2007 and thereafter............................................... 0%
</TABLE>
(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, or in Philadelphia, Pennsylvania and
that has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, 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.
SECTION 6. REACQUIRED SHARES TO BE RETIRED. All Series A Preferred
Shares which shall have been issued and reacquired in any manner by the
Corporation shall be restored to the status of authorized but unissued shares of
Preferred Stock, without designation as to series.
SECTION 7. 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 7, a holder of Series A Preferred Shares shall have the right, at his or
her 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 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 7) 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 7; provided, however, that the right
to convert Series A Preferred Shares called for redemption pursuant to Section 5
hereof shall terminate at the close of business on the Redemption Date fixed for
such redemption, unless the Corporation shall default in making payment of any
cash payable upon such redemption under Section 5 hereof.
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<PAGE>
(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 (and of any accrued and unpaid dividends to the date or
conversion) following such Dividend Payment Record Date and prior to such
Dividend Payment Date. However, Series A Preferred Shares surrendered for
conversion during the period between the close of business on any Dividend
Payment Record Date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of a Redemption Notice
with respect to a Redemption Date during such period, such Series A Preferred
Shares being entitled to such dividend on the Dividend Payment Date) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on 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, and the converting holder need not include payment of the amount of such
dividend upon surrender of Series A Preferred Shares for conversion.
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 his or her 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 7, 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 7.
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
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<PAGE>
Price in effect on the date on which such Series A Preferred Shares
shall have been surrendered and such notice received by the Corporation.
(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) 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 Current 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
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<PAGE>
purchase at such Current 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 Current 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 by the Chief Executive Officer or 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
Current 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
11
<PAGE>
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 7; 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 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 7 (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 7, 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 7 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 7 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,
12
<PAGE>
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 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 7
applies); or
(iii) there shall be any reclassification of the
Common Shares (other than an event to which subparagraph (d) (i) of this Section
7 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
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<PAGE>
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
7.
(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. 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.
(h) In any case in which paragraph (d) of this Section 7
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 7.
(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 7. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 7, only one adjustment shall be made, and such adjustment shall be the
amount of adjustment that has the highest absolute value.
14
<PAGE>
(j) If the Corporation shall take any action affecting the
Common Shares, other than action described in this Section 7, 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.
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 endeavor to 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.
(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 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.
(m) The Corporation shall provide each holder of Series A
Preferred Shares with written notice (an "Issuance Notice") of any proposed
issuance for cash of Common Shares or securities convertible into Common Shares
(other than limited partnership interests) no later than 10 business days prior
to the proposed issuance thereof. Such Issuance Notice shall specify the
purchase price, the proposed issuance date and all other material terms of such
issuance. Upon delivery to the Corporation by any such holder no more than 10
business days after such Issuance Notice is given to such holder of a notice
stating that such holder intends to acquire a
15
<PAGE>
portion of the Common Shares or convertible securities to be issued, such holder
shall be entitled, on the terms offered by the Corporation to other prospective
purchasers of the Common Shares or convertible securities to be issued, to
purchase up to an amount of the securities such that, upon consummation of the
proposed issuance, the holder would hold the same percentage of the Common
Shares as such holder holds immediately prior to such issuance (in each case on
an as-converted basis). Any such notice from any such holder shall indicate the
amount of Common Shares or convertible securities it intends to purchase and
shall constitute a binding contract to acquire such Common Shares or convertible
securities on the terms set forth in the Issuance Notice delivered to such
holder by the Corporation. Notwithstanding anything herein to the contrary, the
Corporation 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 notice delivered by a holder to the
Corporation pursuant to this paragraph (m) of Section 7 shall be revoked
automatically and (ii) such holder shall be entitled to participate in such
proposed issuance on the revised terms in accordance with this paragraph (m) of
Section 7. The provisions of this paragraph (m) of Section 7 shall no longer
apply and shall be of no further effect after the Corporation consummates a
Qualifying Offering.
SECTION 8. 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 9. 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;
(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
16
<PAGE>
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.
SECTION 10. VOTING. Except as otherwise set forth herein, the Series A
Preferred Shares shall not have any relative, participating, optional or other
special voting rights and powers, and the consent of the holders thereof shall
not be required for the taking of any corporate action.
(a) 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 number of
Directors then constituting the Board of Directors shall be increased by one and
the holders of Series A Preferred Shares, voting separately as a single class,
shall be entitled to nominate and elect the additional Director to serve on the
Board of Directors. Whenever all arrearage in dividends on the Series A
Preferred Shares then outstanding shall have been paid and full dividends
thereon for the current quarterly dividend period shall have been paid or
declared and set apart for payment, then the right of the holders of the Series
A Preferred Shares to elect such additional Director shall cease (but subject
always to the same provision for the vesting of such voting rights in the case
of any similar future arrearages in six quarterly dividends), and the term of
office of the person elected as a Director by the holders of the Series A
Preferred Shares shall forthwith terminate and the number Directors constituting
the Board of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of Series A
Preferred Shares, the Secretary of the Corporation may, and upon the written
request of any holder of Series A Preferred Shares (addressed to the Secretary
at the principal office of the Corporation) shall, call a special meeting of the
holders of the Series A Preferred Shares for the election of the additional
Director to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of such request, then any holder of Series A
Preferred Shares may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
Director elected at any such special meeting shall hold office until the next
annual meeting of the shareholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If the
Director elected by the holders of the Series A Preferred Shares shall leave the
Board of Directors, a successor shall be elected by the Board of Directors, upon
the nomination of the holders of the Series A Preferred Shares, to serve until
the next annual meeting of the shareholders or special meeting held in place
thereof if such office shall not have previously terminated as provided above.
(b) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by the Articles
of Incorporation of the Corporation, 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:
17
<PAGE>
(i) Any amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or these Articles Supplementary that
materially and adversely affects the voting powers, rights or preferences of the
holders of the Series A Preferred Shares; provided, however, that (A) the
amendment of the provisions of the Articles of Incorporation so as to authorize
or create or to increase the authorized amount of, any Junior Shares or any
shares of any class or series ranking on a parity with the Series A Preferred
Shares shall not be deemed to materially adversely affect the voting powers,
rights or preferences of the holders of Series A Preferred Shares and (B) any
filing with the State Department of Assessments and Taxation of Maryland by the
Corporation in connection with a merger, consolidation or sale of all or
substantially all of the assets of the Corporation shall not be deemed to be an
amendment, alteration or repeal of any of the provisions of the Articles this
Certificate of Designations; or
(ii) The authorization or creation of, or the increase in the
authorized amount of, any shares of any class or series or any security
convertible into shares of any class or series ranking prior to the Series A
Preferred Shares in the distribution of assets on any liquidation, dissolution
or winding up of the Corporation or in the payment of dividends;
provided, however, that, in the case of each of subparagraphs (a) and (b), no
such vote of the holders of Series A Preferred Shares shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption of all
Series A Preferred Shares, as the case may be, at the time outstanding in
accordance with Section 5 hereof.
For purposes of the foregoing provisions of this Section 10, each
Series A Preferred Share shall have one (1) vote per share.
SECTION 11. 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 12. RESTRICTIONS ON OWNERSHIP AND TRANSFER. The Series A
Preferred Shares constitute Preferred Stock, and Preferred Stock constitutes
Equity Stock of the Corporation. Therefore, the Series A Preferred Shares, being
Equity Stock, are governed by and issued subject to all the limitations, terms
and conditions of the Articles applicable to Equity Stock generally, including
but not limited to the terms and conditions (including exceptions and
exemptions) of Article VI of the Articles of Incorporation applicable to Equity
Stock. 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 Articles
of Incorporation.
18
<PAGE>
IN WITNESS WHEREOF, American Real Estate Investment Corporation has
caused these presents to be signed in its name and on its behalf by its Senior
Vice President and attested to by its Secretary of this 23rd day of December,
1998.
AMERICAN REAL ESTATE INVESTMENT CORPORATION
By: /S/ TIMOTHY A. PETERSON
------------------------
Name: Timothy A. Peterson
Title: Senior Vice President
Attest:
By: /S/WILLIAM TAYLOR, IV
---------------------
Name: William Taylor, IV
Title: Agent on behalf of the Corporation
By /S/ TIMOTHY A PETERSON
----------------------
Name: Tim A. Peterson
Title: Secretary
The UNDERSIGNED, Senior Vice President of American Real Estate
Investment Corporation, who executed on behalf of the Corporation these Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
By: /S/ TIMOTHY A. PETERSON
-----------------------
Name: Timothy A. Peterson
Title: Senior Vice President
19
<PAGE>
EXHIBIT 99.1
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PLYMOUTH MEETING EXECUTIVE CAMPUS
620 WEST GERMANTOWN PIKE, SUITE 200
PLYMOUTH MEETING, PA 19462
TEL. (610) 834-7950 FAX (610) 834-9560
HTTP://WWW.AREIC.COM
FOR IMMEDIATE RELEASE
AMERICAN REAL ESTATE INVESTMENT CORPORATION ENTERS SOUTHEAST MARKET WITH 2.4
MILLION SF INDUSTRIAL PORTFOLIO PURCHASE IN GREENVILLE, SOUTH CAROLINA
PLYMOUTH MEETING, PA, January 4, 1999. American Real Estate Investment
Corporation (AMEX: REA - NEWS) (the "Company") today announced that it has
acquired a 2.4 million square foot industrial portfolio in Greenville, South
Carolina from affiliates of T. Walter Brashier, one of the largest private
developers in the South Carolina marketplace. The portfolio is comprised of 26
buildings located in 7 industrial parks throughout the Greenville/Spartanburg
marketplace. The aggregate purchase price is approximately $49.6 million, or
$20.70 per square foot. The portfolio is currently 100% leased. Tenants include
BMW, Hitachi, General Electric, Graco and Fabri-Kal Corporation, among others.
Additionally, the Company acquired affirmative rights to purchase future
industrial buildings from the seller and entered into certain agreements which
prohibit the seller from competing for tenants of the existing portfolio. The
Company will open a regional office in Greenville, South Carolina.
As part of the consideration in the transaction, the Company issued $7.5 million
of Convertible Preferred Limited Partnership Units (the "Units"). The Units have
a conversion price of $16.50 and an initial distribution rate of 9% per annum.
The Liquidation Preference of each Unit is $25.00. The Units are convertible to
Common Stock at any time, and redeemable, at Par, by the Company at any time.
"This transaction represents not only the continued execution of our disciplined
growth strategy, but an excellent complement to our existing distribution
platform. The Greenville/Spartanburg marketplace demonstrates some of the
strongest economic fundamentals we have identified in the country, a trend which
has been underscored by the commitment of companies such as BMW, Michelin, (both
with North American Headquarters), Fluor Daniel, Hitachi, Lockheed Martin, Mita
Copier, Caterpillar and General Electric, all of whom have established
substantial operations in the area in the past five years. The market has a
terrific transportation system with superb interstate highway access and a new
14,000 foot airport runway expansion which will rival Atlanta's for
international flight capability. Through this purchase, we are gaining instant
critical mass with control of almost 10% of the local competitive inventory, and
we see ample opportunities for continued acquisitions. The purchase provides a
going-in yield of over 11% with additional near term upside, as the majority of
expiring leases are at significant discounts to current market rent," stated
John Begier, the Company's Senior Vice President of Acquisitions.
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
January 4, 1999
Page 2 of 3
"This portfolio acquisition highlights an extraordinary year for our
shareholders, during which we created a distribution network throughout the
Mid-Atlantic, Mid-West and now Southeast, comprising nearly 10 million square
feet of high yielding, well located product. We have built market share through
focused purchases of institutional quality assets and established partnerships
with top flight local sharpshooters in markets with terrific fundamentals. We
have accomplished this, despite the constrained capital markets, primarily
through the support of Blue Chip REIT investors who ascribe value to our
operating platform and strategy execution. We are very bullish on the
opportunities we see before us and feel well positioned to capitalize on them;
we look forward to continued success in 1999", stated Jeff Kelter, President of
American Real Estate.
Some 1998 highlights include:
- - Completed the transition of the Company's focus from Southwest multi-family
properties to office and industrial properties in the Eastern portion of
the country. The Company sold the last two multi-family communities
reporting a gain of $11.9 million dollars.
- - Increased total square footage owned by approximately 500% from
approximately 2.0 million square feet to approximately 12.0 million square
feet. Total industrial space owned now aggregates approximately 9.8 million
square feet, up approximately 637% from approximately 1.3 million square
feet owned on January 1, 1998. Office space now totals approximately 2.0
million square feet, up approximately 290% from approximately 514,000
square feet owned on January 1, 1998.
- - Established a regional distribution platform by substantially increasing
the Company's core holdings in Harrisburg, PA and expanding through Central
Ohio into the Indiana and South Carolina markets. Additionally, created
partnerships with established local sharpshooters in several of these
markets providing the Company an ongoing pipeline of development and
acquisition opportunities.
- - Increased total market capitalization to approximately $585
million, representing growth of approximately 130% over the approximately
$254 million that the Company started the year with. This was accomplished
despite an extremely constrained capital environment through a variety of
methods. The Company issued OP units totaling $59 million at an average
unit price of $16.67 in consideration for property acquisitions in four
transactions. The Company also exchanged debt for equity and sold both
common and convertible shares in private placements. The Company's strategy
and growth have attracted well known REIT investors such as Morgan Stanley
Asset Management, AEW Capital Management, CRA Realty Advisors and the New
York Common Fund, among others.
- - Established a $150 million line of credit through BankBoston and filed a
$500 million S-3 shelf registration.
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
January 4, 1999
Page 3 of 3
American Real Estate Investment Corporation, with headquarters in Plymouth
Meeting, Pennsylvania, and regional offices in Franklin Lakes, New Jersey,
Albany and Syracuse, New York, and Allentown, Pennsylvania, is a
fully-integrated, self-administered and self-managed real estate investment
trust (REIT) focusing on office and industrial properties located in the
Mid-Atlantic, Northeast, Mid-West and Southeastern states. The Company currently
owns 99 office and industrial properties containing an aggregate of
approximately 12 million square feet. For more information, contact Timothy A.
Peterson at 610-834-3469, send email to [email protected] or visit the Company's
web site at WWW.AREIC.COM.
THIS PRESS RELEASE MAY CONTAIN STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, INCLUDING STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS
OF THE COMPANY, ITS DIRECTORS, OR ITS OFFICERS WITH RESPECT TO THE FUTURE
OPERATING PERFORMANCE OF THE COMPANY AND THE RESULT AND THE EFFECT OF LEGAL
PROCEEDINGS. INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD LOOKING STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES,
AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. IMPORTANT FACTORS THAT COULD CAUSE
SUCH DIFFERENCES ARE DESCRIBED IN THE COMPANY'S PERIODIC FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S FORM 10-KSB AND
QUARTERLY REPORTS ON FORM 10-QSB AND 10-Q.
SOURCE AMERICAN REAL ESTATE INVESTMENT CORPORATION
WEB SITE: HTTP://WWW.AREIC.COM
CONTACT: TIMOTHY A. PETERSON OF AMERICAN REAL ESTATE INVESTMENT CORPORATION,
610-834-3469
# # #
<PAGE>
Exhibit 99.2
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PLYMOUTH MEETING EXECUTIVE CAMPUS
620 WEST GERMANTOWN PIKE, SUITE 200
PLYMOUTH MEETING, PA 19462
TEL. (610) 834-7950 FAX (610) 834-9560
HTTP://WWW.AREIC.COM
FOR IMMEDIATE RELEASE
AMERICAN REAL ESTATE INVESTMENT CORPORATION COMPLETES $20 MILLION PRIVATE
PLACEMENT OF CONVERTIBLE PREFERRED EQUITY SECURITIES WITH AEW TARGETED
SECURITIES FUND
PLYMOUTH MEETING, PA, December 24, 1998 -- American Real Estate Investment
Corporation (AMEX: REA - NEWS) ("American Real Estate" or the "Company") today
announced that it had completed a $20 million private placement of convertible
preferred equity securities with AEW Targeted Securities Fund, L.P., an
investment partnership managed by AEW Capital Management, L.P. ("AEW"). AEW
purchased 800,000 shares of Series A Convertible Preferred Stock ("Convertible
Preferred Shares"). The net proceeds of $19.6 million from the sale will be used
to repay outstanding indebtedness.
The Convertible Preferred Shares have a conversion price of $16.50, a
distribution rate of 9% per annum and are convertible at any time, at AEW's
option. The liquidation preference of each Convertible Preferred Share is
$25.00. The Company may redeem the Convertible Preferred Shares at any time on
or after December 15, 2003.
"We are delighted that AEW, one of the preeminent investment and real estate
advisory firms, has made a substantial investment in American Real Estate. This
transaction is evidence of continued institutional support for American Real
Estate's business model. The terms of the transaction will enable us to continue
implementing our aggressive growth strategy," said Timothy A. Peterson, CFO of
American Real Estate.
"The AEW Targeted Securities Fund invests in REITs with strong management and
dynamic growth prospects," said Robert G. Gifford, Managing Director of AEW
Capital Management L.P. "American Real Estate presented the Fund with a standout
opportunity to invest with an entrepreneurial and experienced management team
pursuing a focused office/industrial acquisition program in attractive
Mid-Atlantic and Northeastern markets."
Salomon Smith Barney advised American Real Estate in connection with this
transaction.
Page 1 of 2
<PAGE>
AEW Capital Management serves as investment advisor to institutional 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 (REITs, 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 $6.1 billion of capital, which is invested in more than
$13 billion of real estate nationwide.
American Real Estate Investment Corporation, with headquarters in Plymouth
Meeting, Pennsylvania, and regional offices in Franklin Lakes, New Jersey,
Albany and Syracuse, New York, and Allentown, Pennsylvania, is a
fully-integrated, self-administered and self-managed real estate investment
trust (REIT) focusing on office and industrial properties located in the
Mid-Atlantic and Northeast states. The Company currently owns 73 office and
industrial properties containing an aggregate of 9.5 million square feet. For
more information, contact Timothy A. Peterson at 610-834-3469, send email to
[email protected] or visit the Company's web site at WWW.AREIC.COM.
THIS PRESS RELEASE MAY CONTAIN STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, INCLUDING STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS
OF THE COMPANY, ITS DIRECTORS, OR ITS OFFICERS WITH RESPECT TO THE FUTURE
OPERATING PERFORMANCE OF THE COMPANY AND THE RESULT AND THE EFFECT OF LEGAL
PROCEEDINGS. INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD LOOKING STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES,
AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. IMPORTANT FACTORS THAT COULD CAUSE
SUCH DIFFERENCES ARE DESCRIBED IN THE COMPANY'S PERIODIC FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S FORM 10-KSB AND
QUARTERLY REPORTS ON FORM 10-QSB AND 10-Q.
SOURCE AMERICAN REAL ESTATE INVESTMENT CORPORATION
WEB SITE: HTTP://WWW.AREIC.COM
CONTACT: TIMOTHY A. PETERSON OF AMERICAN REAL ESTATE INVESTMENT CORPORATION,
610-834-3469
# # #
Page 2 of 2
