<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1997
LEXINGTON CORPORATE PROPERTIES, INC.
(Exact Name of Registrant as specified in its charter)
MARYLAND 1-12386 13-3717318
(State or other jurisdiction (Commission File IRS Employer
of incorporation) Number) Identification No.)
355 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code:
(212) 692-7260
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Events
Pursuant to an Investment Agreement dated as of December 31, 1996
between Lexington Corporate Properties, Inc., a real estate investment trust
(the "Registrant") and Five Arrows Realty Securities L.L.C. (the "Investor"),
the Registrant has agreed to sell to the Investor, and the Investor has agreed
to purchase, on the terms and subject to the conditions set forth in the
Investment Agreement, an aggregate of up to 2,000,000 shares of the Registrant's
Class A Senior Cumulative Convertible Preferred Stock (the "Preferred Stock") at
a price of $12.50 per share, for an aggregate purchase price of $25,000,000.
Each Preferred Share is convertible into one (1) share of common stock of the
Registrant, subject to adjustment. References to the Investment Agreement and
Operating Agreement (as herein defined) are qualified in their entirety by
reference to such actual agreements which are attached hereto as Exhibits.
Under the Investment Agreement, the Registrant may designate up to
three closings for the sale of the Preferred Stock, all of which must occur by
December 31, 1997. The first closing for an aggregate of 700,000 shares of
Preferred Stock occurred on January 21, 1996 (the "First Closing"). Under the
Investment Agreement, the Investor may cancel subsequent closings in the event
of a Change of Control or a Put Event (each as defined in the Articles
Supplementary Classifying 2,000,000 Shares of Preferred Stock of as Class A
Senior Cumulative Convertible Preferred Stock of the Registrant (the "Articles
Supplementary")). In addition, the Registrant may determine not to sell any or
all of the remaining shares of Preferred Stock to the Investor; provided that in
the event that the Investor determines not to sell such remaining shares, the
Registrant shall pay to the Investor an availability fee based on the number of
shares it has determined not to sell. Under the Investment Agreement, the
Investor may not sell, transfer, assign, pledge or otherwise dispose of the
Preferred Stock or any interest therein for the one (1) year period commencing
December 31, 1996 and ending December 31, 1997.
In connection with the Investment Agreement and simultaneous with the
First Closing, the Registrant entered into an Operating Agreement (the
"Operating Agreement") and Agreement and Waiver (waiving certain ownership
restrictions contained in the charter documents of the Registrant relating to
the Investor's ownership of the capital stock of the Registrant) (the "Waiver")
with the Investor, each dated as of January 21, 1997. The Operating Agreement
provides the Investor with both demand and piggyback registration rights with
respect to the shares of Preferred Stock and the common stock of the Registrant
issued or issuable upon conversion of the Preferred Stock. In addition, in
connection with the Investment Agreement, the Company filed the Articles
Supplementary with the State Department of Assessment and Taxation of Maryland
which contain certain restrictions relating to ownership of the shares of
capital stock of the Registrant and are attached hereto as Exhibit 5.3.
Holders of the Registrant's Preferred Stock are entitled to
cumulative preferential dividends at a quarterly rate equal to the greater of
(i) $0.295 per share, per quarter and (ii) the product of 1.05 and the per share
quarterly dividend paid in respect of the Registrant's common stock, par value
$.0001 per share (subject to adjustment) and upon
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liquidation shall be entitled to receive $12.50 per share, plus any accrued and
unpaid dividends. The shares of Preferred Stock are redeemable by the Registrant
at any time on or after the fifth anniversary of the original date of issuance
thereof upon the payment to the holder of the liquidation value per share plus a
premium which declines over time.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(c) Exhibits
5.1 Investment Agreement dated as of December 31, 1996, between
Lexington Corporate Properties Inc. and Five Arrows Realty
Securities L.L.C.
5.2 Operating Agreement dated as of January 21, 1997, between
Lexington Corporate Properties, Inc. and Five Arrows Realty
Securities L.L.C.
5.3 Articles Supplementary Classifying 2,000,000 Shares of
Preferred Stock of as Class A Senior Cumulative Convertible
Preferred Stock and 2,000,000 Shares of Excess Stock as Excess
Class A Preferred Stock of Lexington Corporate Properties,
Inc.
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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 hereunto duly authorized.
LEXINGTON CORPORATE PROPERTIES, INC.
By: /s/T. Wilson Eglin
T. Wilson Eglin
President and Chief Operating Officer
Date: January 31, 1997
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EXHIBIT INDEX
Exhibit No. Description
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5.1 Investment Agreement dated as of December 31, 1996 between
Lexington Corporate Properties, Inc. and Five Arrows Realty
Securities L.L.C.
5.2 Operating Agreement dated as of January 21, 1997 between
Lexington Corporate Properties, Inc. and Five Arrows Realty
Securities L.L.C.
5.3 Articles Supplementary Classifying 2,000,000 Shares of
Preferred Stock of as Class A Senior Cumulative Convertible
Preferred Stock and 2,000,000 Shares of Excess Stock as Excess
Class A Preferred Stock of Lexington Corporate Properties,
Inc.
5
<PAGE> 1
INVESTMENT AGREEMENT
between
LEXINGTON CORPORATE PROPERTIES, INC.
and
FIVE ARROWS REALTY SECURITIES L.L.C.
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Dated as of December 31, 1996
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TABLE OF CONTENTS
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ARTICLE 1 DEFINED TERMS............................................................................... 1
Section 1.1 Defined Terms........................................................... 1
Section 1.2 Terms Defined Herein.................................................... 7
ARTICLE 2 SALE AND PURCHASE OF PREFERRED SHARES....................................................... 7
Section 2.1 Sale of Preferred Shares................................................ 7
Section 2.2 Payment for the Preferred Shares........................................ 8
Section 2.3 Transfer Taxes.......................................................... 8
ARTICLE 3 CLOSINGS.................................................................................... 8
Section 3.1 Closings................................................................ 8
Section 3.2 Closing Dates........................................................... 8
Section 3.3 Cancellation of Subsequent
Closings................................................................ 9
Section 3.4 Availability Fee........................................................ 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 10
Section 4.1 Due Incorporation and Status of the
Company................................................................. 10
Section 4.1.1 Due Incorporation....................................................... 10
Section 4.1.2 REIT Status............................................................. 11
Section 4.2 Authority............................................................... 11
Section 4.3 Valid Agreement of the Company.......................................... 11
Section 4.4 No Default.............................................................. 11
Section 4.5 No Required Consents.................................................... 12
Section 4.6 Reservation of Shares .................................................. 12
Section 4.7 Validity of Preferred Shares............................................ 12
Section 4.8 Transferability......................................................... 12
Section 4.9 Disclosure.............................................................. 13
Section 4.9.1 No Misstatement or Omission............................................. 13
Section 4.9.2 Financial Statements.................................................... 13
Section 4.9.3 Subsequent Events....................................................... 13
Section 4.10 Capitalization.......................................................... 14
Section 4.11 Litigation.............................................................. 14
Section 4.12 ERISA................................................................... 15
Section 4.13 Environmental Matters................................................... 15
Section 4.14 Investment Company...................................................... 16
Section 4.15 Taxes................................................................... 16
Section 4.16 Insurance............................................................... 17
Section 4.17 Affiliated Transactions................................................. 17
Section 4.18 Liabilities............................................................. 17
Section 4.19 Limited Waiver of Ownership
Limitations............................................................. 18
Section 4.20 No Event of Default..................................................... 18
Section 4.21 No Brokers.............................................................. 18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.............................................. 19
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Section 5.1 Organization............................................................ 19
Section 5.2 Accredited Investor..................................................... 19
Section 5.3 Valid Agreements of the Investor........................................ 19
Section 5.4 No Default.............................................................. 19
Section 5.5 Opportunity for Inquiry................................................. 19
Section 5.6 Materials............................................................... 20
Section 5.7 Knowledge and Experience................................................ 20
Section 5.8 No Brokers.............................................................. 20
Section 5.9 Investment Company...................................................... 20
ARTICLE 6 COVENANTS AND UNDERTAKINGS.................................................................. 20
Section 6.1 Closings................................................................ 20
Section 6.2 Expenses of Rothschild Realty Inc....................................... 20
Section 6.3 Fees and Expenses of Schulte Roth &
Zabel LLP............................................................... 21
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
INVESTOR TO CLOSE........................................................................ 21
Section 7.1 Representations and Covenants........................................... 21
Section 7.2 Good Standing Certificates.............................................. 22
Section 7.3 Governmental Permits and
Approvals............................................................... 22
Section 7.4 Legislation............................................................. 22
Section 7.5 Legal Proceedings....................................................... 22
Section 7.6 Third Party Consents.................................................... 23
Section 7.7 Stock Certificates...................................................... 23
Section 7.8 Approval of Counsel to the
Investor................................................................ 23
Section 7.9 Appointment of Director................................................. 23
Section 7.10 Certificate of Designation.............................................. 23
Section 7.11 Operating Agreement..................................................... 23
Section 7.12 Agreement and Waiver.................................................... 24
Section 7.13 Opinion of Counsel...................................................... 24
Section 7.14 Expenses of Rothschild Realty Inc....................................... 24
Section 7.15 Fees and Expenses of Schulte Roth &
Zabel LLP............................................................... 24
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO CLOSE......................................................................... 24
Section 8.1 Representations and Covenants........................................... 24
Section 8.2 Governmental Permits and
Approvals............................................................... 25
Section 8.3 Legal Proceedings....................................................... 25
Section 8.4 Third Party Consents.................................................... 25
Section 8.5 Purchase Price.......................................................... 25
Section 8.6 Approval of Counsel to the
Company................................................................. 25
Section 8.7 Opinion of Counsel...................................................... 25
ARTICLE 9 ASSIGNMENT.................................................................................. 25
Section 9.1 Assignability by Investor............................................... 25
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Section 9.2 Assignability by the Company............................................ 26
Section 9.3 Binding Agreement....................................................... 26
ARTICLE 10 MISCELLANEOUS.............................................................................. 26
Section 10.1 Applicable Law.......................................................... 26
Section 10.2 Notices................................................................. 26
Section 10.3 Entire Agreement; Amendments............................................ 27
Section 10.4 Remedies for Breaches of This
Agreement............................................................... 27
Section 10.4.1 Survival of Certain Provisions.......................................... 27
Section 10.4.2 Indemnification Provisions for Benefit
of the Investor......................................................... 27
Section 10.4.3 Matters Involving Third Parties......................................... 27
Section 10.5 Confidentiality......................................................... 29
Section 10.6 Lock-Up................................................................. 30
Section 10.7 Termination............................................................. 30
Section 10.8 Counterparts............................................................ 30
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INVESTMENT AGREEMENT
INVESTMENT AGREEMENT dated as of December 31, 1996
between Lexington Corporate Properties, Inc., a corporation organized under the
laws of the State of Maryland (the "Company"), and Five Arrows Realty Securities
L.L.C., a limited liability company organized under the laws of the State of
Delaware (the "Investor").
WHEREAS, the Company wishes to issue the Preferred
Shares (as defined herein) to the Investor, and the Investor wishes to purchase,
acquire and accept the Preferred Shares from the Company (the "Investment").
NOW THEREFORE, in consideration of the promises and
the mutual covenants herein contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1 DEFINED TERMS.
Section 1.1 Defined Terms. The following terms shall,
unless the context otherwise requires, have the meanings set forth in this
Section 1.1.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and disbursements.
"Affiliate" means, with respect to any Person, (a)
any member of the Immediate Family of such Person or a trust established for the
benefit of such member, (b) any beneficiary of a trust described in (a), (c) any
Entity which, directly or indirectly though one or more intermediaries, is
deemed to be the beneficial owner of 10% or more of the voting equity of the
Person for the purposes of Section 13(d) of the Exchange Act, (d) any officer of
the Person or any member of the Board of Directors of the Person or (e) any
Entity which, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person,
including such Person or Persons referred to in the preceding clauses (a) or
(d); provided, however, that none of the Investor, Rothschild Realty Inc. or
their respective Affiliates nor any of their respective officers, directors,
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partners, members or Affiliates nor any Preferred Director (as such term is
defined in the Certificate of Designation) shall be considered an Affiliate of
the Company or its Subsidiaries for purposes of this Agreement.
"Agreement" means this Investment Agreement, as
originally executed and as hereafter from time to time supplemented, amended
and restated.
"Agreement and Waiver" means the Agreement and
Waiver, dated as of the date of the first Closing, between the Company and the
Investor.
"Benefit Plan" means a defined benefit plan as
defined in Section 3(35) of ERISA that is subject to Title IV of ERISA (other
than a Multiemployer Plan) and in respect of which the Company or any ERISA
Affiliate is or within the immediately preceding six (6) years was an "employer"
as defined in Section 3(5) of ERISA.
"Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day in which banking institutions in New York
City are authorized or obligated by law or executive order to close.
"Certificate of Designation" means the Articles
Supplementary classifying 2,000,000 shares of preferred stock as Class A Senior
Cumulative Convertible Preferred Stock of the Company and 2,000,000 shares of
excess stock, par value $.01 per share, as Excess Class A Preferred Stock of the
Company, in the form of Exhibit A attached hereto.
"Charter" means the Articles of Amendment and
Restatement of the Company as currently in effect.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time or any successor statute thereto.
"Common Stock" means the shares of the common stock,
par value $.01 per share, of the Company.
"Confidential Information" means the identity of the
Company in the context of the Investment, the existence and contents of
discussions regarding the Investment and information concerning the assets,
operations, business, records, projections and prospects of the Company;
provided, however, that the term "Confidential Information" does not include
information that (i) is or becomes available to the public other than as a
result of disclosure by any of the
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Investor or Rothschild Realty Inc. or any of their respective representatives,
(ii) was available to the Investor or Rothschild Realty Inc. or was within their
respective knowledge on a non-confidential basis prior to its disclosure by the
Company to them, (iii) becomes available to the Investor or Rothschild Realty
Inc., on a non-confidential basis from a source other than the Company, provided
that such source is not known by them to be bound by a confidentiality agreement
with the Company or its representative or (iv) is independently developed by the
Investor or Rothschild Realty Inc. without reference to the Confidential
Information.
"Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or association.
"Environmental Claim" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter or other communication from any
governmental agency, department, bureau, office or other authority, or any third
party involving material violations of Environmental Laws or Releases of
Hazardous Materials.
"Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA), 42
U.S.C. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as
amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq.,
and any other federal, state, local or municipal laws, statutes, regulations,
rules or ordinances imposing liability or establishing standards of conduct for
protection of the environment.
"Environmental Liabilities" means any monetary
obligations, losses, liabilities (including strict liability), damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable out-of-pocket fees, disbursements and expenses of counsel,
reasonable out-of-pocket expert and consulting fees and reasonable out-of-pocket
costs for environmental site assessments, remedial investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim filed by any governmental authority or any third party which
relate to any violations of Environmental Laws, Remedial Actions, Releases of
Hazardous Materials from
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or onto (i) any assets, properties or businesses presently or formerly owned by
the Company, its Subsidiaries or a predecessor in interest, or (ii) any facility
which received Hazardous Materials generated by the Company, its Subsidiaries or
a predecessor in interest.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Company, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Company, any corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"52-Week Trading High" means, for any date, the highest
per share closing price of the Common Stock for the 52-calendar week period
immediately preceding such date.
"GAAP" means United States Generally Accepted Accounting
Principles, as in effect from time to time.
"Hazardous Materials" means (a) any element, compound, or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous
substance or chemical, hazardous waste, medical waste, biohazardous or
infectious waste, special waste, or solid waste under Environmental Laws; (b)
petroleum, petroleum-based or petroleum-derived products; (c) polychlorinated
biphenyls; and (d) asbestos-containing materials.
"Immediate Family" means, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters- in-law.
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"Lien" means and includes any lien, security interest,
pledge, charge, option, right of first refusal, claim, mortgage, lease, easement
or any other encumbrance whatsoever.
"Material Adverse Effect," when used with reference
to events, acts, failures or omissions to act, or conduct of a specified Person,
means that such events, acts, failures or omissions to act, or conduct would
have a material adverse effect on (i) the condition (financial or otherwise),
earnings, or business affairs of such Person and its consolidated subsidiaries,
considered as one enterprise, or (ii) the ability of such Person to perform its
obligations under the Operative Instruments.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA and subject to Title IV of ERISA which
is, or within the immediately preceding six (6) years was, contributed to by the
Company or any ERISA Affiliate.
"Operating Agreement" means the Operating Agreement,
dated as of the initial Closing Date, between the Company and the Investor, in
the form of Exhibit B attached hereto.
"Operative Instruments" means this Agreement, the
Certificate of Designation, and the Operating Agreement.
"Permit" means a permit, license, consent, order or
approval by any federal, state or local governmental agency.
"Person" means any individual or Entity.
"Plan" means an employee benefit plan defined in
Section 3(3) of ERISA in respect of which the Company or any ERISA Affiliate is,
or within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"Preferred Shares" means the shares of the Company
designated in the Certificate of Designation as Class A Senior Cumulative
Convertible Preferred Stock.
"REIT" means a real estate investment trust described in
Code Section 856.
"Release" means any spilling, leaking, pumping, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, dumping, or
disposing of Hazardous
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Materials (including the abandonment or discarding of barrels, containers or
other closed receptacles containing Hazardous Materials) into the environment.
"Remedial Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment; (ii) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post- remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Reportable Event" means any of the events described in
Section 4043(b) of ERISA (other than events for which the notice requirements
have been waived).
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, representatives (including, but not
limited to, financial advisors, attorneys and accountants), agents or potential
sources of financing of such person.
"SDAT" means the State Department of Assessment and
Taxation of Maryland.
"SEC" means the Securities and Exchange Commission or any
successor regulatory authority responsible for enforcement and oversight of the
federal securities laws.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" of any Person or Entity means an Entity in
which such Person or Entity has the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation or the trustees of a real
estate investment trust, to select the managing partner of a partnership, or
otherwise to select, or have the power to remove and then select, a majority of
those persons exercising governing authority over such Entity. In the case of a
limited partnership, the sole general partner, all of the general partners to
the extent each has equal management control and authority, or the managing
general partner or managing general partners thereof shall be deemed to have
control of such partnership and, in the case of a trust other
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than a real estate investment trust, any trustee thereof or any Person having
the right to select any such trustee shall be deemed to have control of such
trust.
"Termination Event" means (i) a Reportable Event
with respect to any Benefit Plan; (ii) the withdrawal of the Company or any
ERISA Affiliate from a Benefit Plan during a plan year in which the Company or
any ERISA Affiliate was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the imposition of an obligation on the Company or any
ERISA Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination described
in Section 4041(c) of ERISA; or (iv) the institution by the PBGC of proceedings
to terminate a Benefit Plan.
Section 1.2 Terms Defined Herein. In addition to
the terms defined in Section 1.1 above, the following terms shall, unless the
context otherwise requires, have the meanings set forth in this Agreement in the
section set forth next to such term.
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Defined Term Section
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accredited investor 5.2
Breach 4.20
Closing 2.1
Excess Stock 4.10
Indemnified Party 10.4.3
Indemnifying Party 10.4.3
Liabilities 4.18
NYSE 3.2
1996 10-Qs 4.9
1995 10-K 4.2
1996 Proxy Statement 4.9
Preferred Stock 4.10
Purchase Price 2.1
Third Party Claim 10.4.3
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ARTICLE 2 SALE AND PURCHASE OF PREFERRED SHARES.
Section 2.1 Sale of Preferred Shares. At the
closings provided for, and subject in all respects to the terms and conditions
set forth, in Article 3 and Section 10.7 hereof (each a "Closing"): (i) the
Company shall issue and sell an aggregate of 2,000,000 Preferred Shares to the
Investor, and shall deliver to the Investor a stock certificate or certificates
representing all of the Preferred Shares, registered in the Investor's or its
nominee's name;
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and (ii) the Investor shall purchase, acquire and accept such Preferred Shares
for $12.50 per share (the "Purchase Price") or an aggregate, if all such
2,000,000 Preferred Shares shall be issued, of approximately twenty-five million
dollars ($25,000,000.00).
Section 2.2 Payment for the Preferred Shares.
At the Closings and in accordance with, and subject
to, the provisions set forth in Article 3, the Purchase Price shall be paid by
the Investor to the Company in United States dollars by wire transfer of funds
immediately available in New York City to such account(s) as the Company shall
designate in a written notice delivered to the Investor not less than five (5)
Business Days prior to the applicable Closing Date.
Section 2.3 Transfer Taxes. The Company shall
pay all stock transfer taxes, recording fees and other sales, transfer, use,
purchase or similar taxes resulting from the Investment.
ARTICLE 3 CLOSINGS.
Section 3.1 Closings. Subject to the provisions
of Section 3.2 and Section 10.7, the Company shall be entitled to designate up
to three Closings, the first two of which shall provide, in the Company's
discretion, for the sale to the Investor of at least 400,000 Preferred Shares
each, and the last of which shall provide for the sale to the Investor of the
remaining Preferred Shares, if any. Each Closing of the sale and purchase of the
Preferred Shares shall take place at the offices of Schulte Roth & Zabel LLP,
900 Third Avenue, New York, New York 10022 at 10:00 a.m. New York City time.
Section 3.2 Closing Dates. The first Closing
shall occur on or before January 21, 1996, and each subsequent Closing, if
required, shall occur on a date designated by the Company upon not less than ten
(10) Business Days notice to the Investor, or, in either case, at such other
time and place as the Company and the Investor mutually agree in writing (each,
a "Closing Date"); provided, however, that if the sale of all of the Preferred
Shares as provided for herein shall not have occurred before the one year
anniversary date of this Agreement, the Closing for such Preferred Shares as
shall not have been previously so sold, subject to the provisions of this
Article 3 and Section 10.7, shall occur on such anniversary date; provided,
further, that, without reducing the availability fee under Section 3.4, the
Company shall not be required to sell and the Investor shall not be required to
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purchase, that number of Preferred Shares that would cause the Company to
violate Section 312 of the New York Stock Exchange ("NYSE") Listed Company
Manual.
Section 3.3 Cancellation of Subsequent Closings.
In the event that a Change of Control or a Put Event (each as defined in the
Certificate of Designation) occurs after any Closing Date, but prior to the sale
by the Company to the Investor of all 2,000,000 Preferred Shares to be sold
pursuant to this Agreement, and the Investor notifies the Company that it will
tender into the Put Offer (as defined in the Certificate of Designation), any
further Closings shall be canceled and the Company shall, within ten (10) days
after receipt of such notice, pay to the Investor by wire transfer in
immediately available funds an amount equal to the product of (i) $0.25,
multiplied by (ii) the difference between (x) 2,000,000 and (y) the number of
Preferred Shares which the Company has sold to the Investor pursuant to this
Agreement prior to the consummation of such Change of Control or occurrence of
such Put Event. In the event that a REIT-Put Event (as defined in the
Certificate of Designation) occurs after any Closing Date, but prior to the sale
by the Company to the Investor of all 2,000,000 Preferred Shares to be sold
pursuant to this Agreement, and the Investor notifies the Company that it will
tender into the REIT-Put Offer (as defined in the Certificate of Designation),
any further Closings shall be canceled and the Company shall, within ten (10)
days after receipt of such notice, pay to the Investor by wire transfer in
immediately available funds an amount equal to the product of (1) the greater of
(x) $1.25, (y) the product of 0.05 multiplied by the Current Market Price (as
defined in the Certificate of Designation) referred to in Section 8(c)(ii) of
the Certificate of Designation, and (z) the difference between the 52-Week
Trading High and $12.50, multiplied by (2) the difference between (x) 2,000,000
and (y) the number of Preferred Shares which the Company has sold to the
Investor pursuant to this Agreement prior to the consummation of such Change of
Control or occurrence of such Put Event.
Section 3.4 Availability Fee. In the event that
the Company has determined not to sell all 2,000,000 Preferred Shares to the
Investor on or prior to April 1, 1997, the Company shall pay, on each of April
1, 1997, May 1, 1997 and June 1, 1997, to the Investor by wire transfer in
immediately available funds, an amount equal to the product of (i) 0.0015,
multiplied by (ii) the difference between (x) $25,000,000, multiplied by (y) the
aggregate Purchase Price paid by the Investor in respect of Preferred Shares
which the Company has
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sold to the Investor pursuant to this Agreement prior to each such date. In the
event that the Company has determined not to sell all 2,000,000 Preferred Shares
to the Investor on or prior to July 1, 1997, the Company shall pay, on each of
July 1, 1997, August 1, 1997 and September 1, 1997, to the Investor by wire
transfer in immediately available funds, an amount equal to the product of (i)
0.0025, multiplied by (ii) the difference between (x) $25,000,000 and (y) the
aggregate Purchase Price paid by the Investor in respect of Preferred Shares
which the Company has sold to the Investor pursuant to this Agreement prior to
each such date. In the event that the Company has determined not to sell all
2,000,000 Preferred Shares to the Investor on or prior to October 1, 1997, the
Company shall pay, on each of October 1, 1997, November 1, 1997 and December 1,
1997, to the Investor by wire transfer in immediately available funds, an amount
equal to the product of (i) 0.0035, multiplied by (ii) the difference between
(x) $25,000,000 and (y) the aggregate Purchase Price paid by the Investor in
respect of Preferred Shares which the Company has sold to the Investor pursuant
to this Agreement prior to each such date. No availability fee shall be required
to be paid on any date after which (i) the Company shall have sold all such
2,000,000 Preferred Shares to the Investor pursuant to this Agreement, (ii) all
subsequent Closings have been canceled pursuant to Section 3.3 of this Agreement
(iii) this Agreement shall have been terminated pursuant to Section 10.7, or
(iv) the fee contemplated by Section 8.7 of the Operating Agreement shall have
been paid.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The Company hereby represents and warrants to the
Investor as follows:
Section 4.1 Due Incorporation and Status of the
Company.
Section 4.1.1 Due Incorporation. The Company
and each of its Subsidiaries have been duly incorporated or formed, as the case
may be, and are validly existing and in good standing under the laws of their
respective states of organization and are qualified or licensed, and in good
standing, as a foreign corporation authorized to do business in each other
jurisdiction in which their ownership of properties or their conduct of business
requires such qualification or licensing, except where the failure to be so
qualified or licensed, or in good standing, as a foreign
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corporation would not have a Material Adverse Effect on the Company.
Section 4.1.2 REIT Status. As of the date
hereof, the Company qualifies as a REIT under the Code and has taken no action
or omitted to take any action, the effect of which could reasonably be likely to
disqualify the Company as a REIT under the Code.
Section 4.2 Authority. The Company has the power
and authority to own, lease and operate its properties, directly or indirectly,
and to conduct its business as presently conducted and as described in the
Annual Report on Form 10-K as filed by the Company under the Exchange Act for
the year ended December 31, 1995 (the "1995 10-K").
Section 4.3 Valid Agreement of the Company. The
execution, delivery and performance of this Agreement, the Agreement and Waiver
and the Operating Agreement have each been duly authorized by the Company. This
Agreement has been, and the Agreement and Wavier and the Operating Agreement,
upon the Closing, will be duly executed and delivered by the Company. This
Agreement represents and the Agreement and Waiver and the Operating Agreement,
upon the Closing will represent, the valid and binding obligations of the
Company, each enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether enforcement is sought by proceedings in equity or at law).
Section 4.4 No Default. The execution and
delivery of the Operative Instruments by the Company and the performance by the
Company of its obligations thereunder do not (or if not yet executed, upon the
execution and delivery thereof will not) (a) violate the Charter or By-Laws of
the Company; (b) violate or constitute a breach of or default under any
mortgage, indenture, loan agreement, promissory note or other material agreement
to which the Company or any of its Subsidiaries is a party, or by which any of
them is bound, or to which any property of the Company or any of its
Subsidiaries is subject; or (c) conflict with or violate any law or any
regulation, rule, order or decree of any governmental body, court or
administrative agency having jurisdiction over the Company or any of its
Subsidiaries or the properties of any of them; except that Preferred Shares
representing in excess of 20% of the Company's voting power outstanding at the
time of issuance or 20% of the number of
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shares of Common Stock before such issuance may not be sold to the Investor
hereunder without violating Section 312 of the NYSE Listed Company Manual unless
the approval of the holders of a majority of the Common Stock is obtained prior
thereto.
Section 4.5 No Required Consents. The execution
and delivery of the Operative Instruments by the Company and the performance by
the Company of its obligations thereunder do not legally or contractually
require any filing or registration with, or the receipt of any consent by, any
governmental or regulatory authority by the Company or its Subsidiaries other
than any which have already been obtained or waived.
Section 4.6 Reservation of Shares . The Company
has duly reserved solely for purposes of issuance upon conversion of the
Preferred Shares the shares of Common Stock into which the Preferred Shares may
be converted from time to time.
Section 4.7 Validity of Preferred Shares. The
Company has duly authorized the issuance and delivery of 2,000,000 shares of
Preferred Stock pursuant to this Agreement and, upon delivery thereof and
receipt by the Company of the Purchase Price therefor, such shares of Preferred
Stock will be duly authorized, validly issued, fully paid and nonassessable. The
Preferred Shares have the dividend, conversion, voting and other terms set forth
in the Certificate of Designation and, to the extent not inconsistent therewith,
as set forth in the Charter and By-Laws of the Company and the Maryland General
Corporation Law.
Section 4.8 Transferability. Upon the issuance
and sale of the Preferred Shares by the Company to the Investor pursuant to this
Agreement, the Preferred Shares shall be fully-registered shares under the
Securities Act. Upon such issuance and sale, such Preferred Shares shall be
freely transferable by the Investor without the requirement that (i) such
Preferred Shares be registered or qualified pursuant to any federal or state
securities law or (ii) the Investor comply with the prospectus delivery
requirements of the Securities Act; provided, however, that the transfer of such
Preferred Shares may be subject to the restrictions on transferability imposed
by the Securities Act on "affiliates" or "control persons" (as such terms are
defined by the Securities Act). Upon the conversion of the Preferred Shares into
shares of Common Stock, pursuant to the provisions of the Certificate of
Designation, such shares of Common Stock shall be fully-registered shares under
the Securities Act. Upon
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such conversion, such shares of Common Stock shall be freely transferable by the
Investor without the requirement that (i) such shares of Common Stock be
registered or qualified pursuant to any federal or state securities law or (ii)
the Investor comply with the prospectus delivery requirements of the Securities
Act; provided, however, that the transfer of such shares of Common Stock may be
subject to the restrictions on transferability imposed by the Securities Act on
"affiliates" or "control persons" (as such terms are defined by the Securities
Act).
Section 4.9 Disclosure. The Company has
heretofore delivered to the Investor the Proxy Statement relating to its 1996
Annual Meeting of Shareholders (the "1996 Proxy Statement"), the 1995 10-K, and
the Quarterly Reports on Form 10-Q as filed by the Company under the Exchange
Act for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996
(the "1996 10-Qs").
Section 4.9.1 No Misstatement or Omission. At the
time of filing, the 1996 Proxy Statement, the 1995 10-K and the 1996 10-Qs
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated by the SEC thereunder. The 1996 Proxy
Statement, the 1995 10-K and the 1996 10-Qs do not, as of their respective
dates, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Section 4.9.2 Financial Statements. The financial
statements, including the notes thereto, and supporting schedules included in
the 1995 10-K and the 1996 10-Qs have been prepared in conformity with GAAP
applied on a consistent basis (except as otherwise noted therein and except that
the quarterly statements are subject to standard year-end adjustments) and
present fairly the financial position of the Company and its Subsidiaries as of
the dates indicated and the results of their operations for the periods shown.
Section 4.9.3 Subsequent Events. Since the
respective dates as of which information is given in the 1995 10-K and the 1996
10-Qs, except as otherwise stated therein or in the press releases listed on
Schedule 4.9.3 hereto and other than changes in general economic conditions or
industry conditions, there has not been any change in the condition (financial
or otherwise) or in the earnings or business
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affairs of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, which could
reasonably be likely to have a Material Adverse Effect on the Company.
Section 4.10 Capitalization. The authorized
capital stock of the Company consists of: (i) 40,000,000 shares of Common Stock;
(ii) 10,000,000 shares of preferred stock, par value $.0001 per share (the
"Preferred Stock"); and (iii) 40,000,000 shares of excess stock, par value
$.0001 per share (the "Excess Stock"). As of the date hereof, (i) 9,426,900, 0,
and 0 shares of the Common Stock, the Preferred Stock and the Excess Stock,
respectively, were validly issued and outstanding, fully paid and nonassessable;
and (ii) 3,820,443, 0, and 0 shares of the Common Stock, the Preferred Stock and
the Excess Stock, respectively, were reserved for issuance as set forth on
Schedule 4.10 hereto. Except as set forth in the preceding sentence of this
Section 4.10 or as set forth on Schedule 4.10 hereto, as of the date hereof
there are no other shares of capital stock of the Company outstanding and no
other outstanding options, warrants, convertible or exchangeable securities,
subscriptions, rights (including preemptive rights), stock appreciation rights,
calls or commitments of any character whatsoever to which the Company is a party
or may be bound requiring the issuance or sale of shares of any capital stock of
the Company, and there are no contracts or other agreements by which the Company
is or may become bound to issue additional shares of its capital stock or any
options, warrants, convertible or exchangeable securities, subscriptions, rights
(including preemptive rights), stock appreciation rights, calls or commitments
of any character whatsoever relating to such shares.
Section 4.11 Litigation. Except as set forth on
Schedule 4.11 hereto or in the 1995 10-K or the 1996 10-Qs, the Company has not
received any written notice of any outstanding judgments, rulings, orders,
writs, injunctions, awards or decrees of any court or any foreign, federal,
state, county or local government or any other governmental, regulatory or
administrative agency or authority or arbitral tribunal against or involving the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is a party to, or to the knowledge of the Company, threatened with,
any litigation or judicial, governmental, regulatory, administrative or
arbitration proceeding which, if decided adversely to their respective interests
could be reasonably likely to have an adverse effect upon the transactions
contemplated hereby or a Material Adverse Effect on the Company.
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Section 4.12 ERISA. (i) Each Plan is in
substantial compliance with the applicable provisions of ERISA and the Code,
(ii) no Termination Event has occurred nor is reasonably expected to occur with
respect to any Benefit Plan, (iii) the most recent annual report (Form 5500
Series) with respect to each Plan, including Schedule B (Actuarial Information)
thereto, copies of which have been filed with the Internal Revenue Service, is
complete and correct in all material respects and fairly presents the funding
status of such Benefit Plan, and since the date of such report there has been no
material adverse change in such funding status, (iv) no Benefit Plan had an
accumulated or waived funding deficiency or permitted decreases which would
create a deficiency in its funding standard account within the meaning of
Section 412 of the Code at any time during the previous 60 months, and (v) no
Lien imposed under the Code or ERISA exists or is likely to arise on account of
any Benefit Plan within the meaning of Section 412 of the Code. Neither the
Company nor any of its ERISA Affiliates has incurred any withdrawal liability
under ERISA with respect to any Multiemployer Plan, and the Company is not aware
of any facts indicating that the Company or any of its ERISA Affiliates may in
the future incur any such withdrawal liability. Except as required by Section
4980B of the Code, the Company does not maintain a welfare plan (as defined in
Section 3(1) of ERISA) which provides benefits or coverage after a participant's
termination of employment. Neither the Company nor any of its ERISA Affiliates
has incurred any liability under the Worker Adjustment and Retraining
Notification Act. All Plans in existence as of the date hereof are set forth on
Schedule 4.12 hereto.
Section 4.13 Environmental Matters. Except as set
forth in Schedule 4.13 hereto, to the knowledge of the
Company:
(a) The operations and properties of the Company
and its Subsidiaries are in material compliance with
Environmental Laws;
(b) There has been no Release (i) at any assets,
properties or businesses currently owned or operated by the Company, any of its
Subsidiaries or any predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received Hazardous
Materials generated by the Company, any of its Subsidiaries or any predecessor
in interest, in each case that would result in any Environmental Liabilities
affecting the Company;
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(c) No Environmental Claims have been asserted
against the Company, any of its Subsidiaries or any predecessor in interest
which is or has been an Affiliate of the Company and neither the Company nor any
of its Subsidiaries has notice of any threatened or pending Environmental
Claims;
(d) No Environmental Claims have been asserted
against any facilities that may have received Hazardous Materials generated by
the Company, any of its Subsidiaries or any predecessor in interest which is or
has been an Affiliate of the Company;
(e) The Company or its predecessors have conducted
Phase 1 Environmental Site Assessments on all of the assets, properties and
businesses owned or operated by the Company and its Subsidiaries and the Company
has delivered to the Investor true and complete copies of all material
environmental reports, studies or investigations in their possession regarding
any Environmental Liabilities at the assets, properties or businesses of the
Company or any of its Subsidiaries; and
(f) None of the assets, properties or businesses
owned or operated by the Company or any of its Subsidiaries are located in
"wetlands" regulated under Environmental Laws and no dredged or fill materials
have been placed, discharged or deposited in any wetlands located at any asset,
property or business owned or operated by the Company or any of its Subsidiaries
except in either case where such was in compliance, in all material respects,
with Environmental Laws.
Section 4.14 Investment Company. The Company is
not, and upon the issuance and sale of the Preferred Shares as herein
contemplated will not be, an "investment company" or an Entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
Section 4.15 Taxes. The Company has filed all
federal, state, local or foreign tax returns that are required to be filed or
has duly requested extensions thereof and has paid all taxes required to be paid
by it and any related assessments, fines or penalties, except for any such tax,
assessment, fine or penalty that is being contested in good faith and by
appropriate proceedings or where the failure to make any such filing or payment
would not be reasonably expected to have a Material Adverse Effect on the
Company; and adequate charges, accruals and reserves have been provided for
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in the financial statements of the Company in respect of all material federal,
state, local and foreign taxes for all periods as to which the tax liability of
the Company has not been finally determined or remains open to examination by
applicable taxing authorities. The Company is not currently under review by any
federal or state taxing authority.
Section 4.16 Insurance. The Company carries or is
entitled to the benefits of insurance in such amounts and covering such risks as
is reasonably sufficient under the circumstances and is consistent with
comparable businesses and all such insurance is in full force and effect.
Section 4.17 Affiliated Transactions. Except as
disclosed in the 1995 10-K, the 1996 10-Qs or the 1996 Proxy Statement or as
generally described on Schedule 4.17, Schedule 4.17 sets forth a description of
all transactions with, or payments to, any Affiliate in excess of $30,000 in the
aggregate (other than reimbursement of expenses and compensation payable to
employees or officers or directors' fees payable to the Company's directors).
Except as set forth on Schedule 4.17 or as disclosed in the 1995 10-K, the 1996
10-Qs or the 1996 Proxy Statement, neither the Company, nor any officer or
director of the Company, nor any of its Subsidiaries, or any Affiliate of any of
the foregoing, or, to the knowledge of the Company, any member of the Immediate
Family of any of the foregoing: (i) owns, directly or indirectly, any interest
in (excepting not more than five (5) percent stock holdings held solely for
investment purposes in securities of any Person which are listed on any national
securities exchange or regularly traded in the over-the-counter market) or is an
owner, sole proprietor, shareholder, partner, director, officer, employee,
consultant or agent of any person which is a competitor, lessor, lessee,
customer or supplier of the Company or any of its Subsidiaries; (ii) owns,
directly or indirectly, in whole or in part, any property, patent, trademark,
service mark, trade name, copyright, franchise, invention, permit, license or
secret or confidential information which the Company or any of its Subsidiaries
is using or the use of which is necessary for the business of the Company or any
of its Subsidiaries; or (iii) has any cause of action or other suit, action or
claim whatsoever against, or owes any amount to, the Company or any of its
Subsidiaries, in each case (i) through (iii) except for those in the ordinary
course of business.
Section 4.18 Liabilities. Except as set forth on
Schedule 4.18 or as disclosed in the 1995 10-K, the 1996 10-Qs or the 1996 Proxy
Statement and except for obligations which
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the Company may have under the terms of its leases with tenants, to the
knowledge of the Company, the Company and its Subsidiaries, as of the date of
this Agreement, do not have any material direct or indirect indebtedness,
liability, claim, loss, damage, deficiency or obligation, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured,
subordinated or unsubordinated, matured or unmatured, accrued, absolute,
contingent or otherwise, including, without limitation, liabilities on account
of taxes, other governmental, regulatory or administrative charges or lawsuits
brought, whether or not of a kind required by GAAP to be set forth on a
financial statement (collectively, "Liabilities"), that were not adequately
reflected or reserved against on the Balance Sheet of the Company (less
Liabilities that have been discharged in the ordinary course of business since
the date of the Balance Sheet of the Company).
Section 4.19 Limited Waiver of Ownership
Limitations. Subject to the terms and conditions set forth in the Agreement and
Waiver, the Board of Directors of the Company, acting pursuant to Section
subparagraph (a)(9) of Article NINTH of the Charter, has properly voted to
exempt the Investor, and has agreed to exempt any successor in interest to the
Investor that is an Affiliate of the Investor, from the Ownership Limit imposed
by the Charter; provided, however, that such waiver shall not be effective,
unless the terms and conditions of the Agreement and Waiver have been satisfied,
or to exempt any Person from such ownership limits imposed by the Charter if the
ownership of such interest by such Person would cause the Company to fail to
qualify as a REIT.
Section 4.20 No Event of Default. No event has
occurred and is continuing and no condition exists which constitutes a material
breach, an event of default, or otherwise gives any other party the rights to
accelerate or require payment of any obligation, or with the passage of time
would constitute such an event (a "Breach"), under any material agreement or
instrument to which the Company or any of its Subsidiaries is a party; provided,
however, that to the extent that a Breach exists with respect to an immaterial
agreement or instrument, which under a cross-default, cross-acceleration or
comparable provision creates a Breach under a material agreement, such Breach
shall be deemed to be material for purposes of this Section 4.20.
Section 4.21 No Brokers. In connection with the
Investment, the Company has not retained or become obligated to any broker or
finder other than Rothschild Realty Inc.
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR.
In order to induce the Company to enter into this
Agreement and to consummate the transactions contemplated hereby, the Investor
hereby represents and warrants to, and covenants with, the Company as follows:
Section 5.1 Organization. The Investor has been
duly organized and is validly existing and in good standing under the laws of
the State of Delaware.
Section 5.2 Accredited Investor. The Investor is
an "accredited investor," as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
Section 5.3 Valid Agreements of the Investor.
The Investor has all right, power and authority to enter into this Agreement,
the Agreement and Waiver and the Operating Agreement and to consummate the
transactions contemplated hereby and thereby. Each of the Operative Instruments
to which the Investor is a party has been duly authorized, executed and
delivered by the Investor, and constitutes a legal, valid and binding obligation
of the Investor, enforceable against the Investor in accordance with its terms.
Section 5.4 No Default. The execution and
delivery of this Agreement and the Operating Agreement by the Investor and the
performance by the Investor of its obligations thereunder do not (or if not yet
executed, upon the execution and delivery thereof will not) (a) violate the
organizational documents of the Investor; (b) violate or constitute a breach of
or default under any mortgage, indenture, loan agreement, promissory note or
other agreement to which the Investor is a party, or by which the Investor is
bound, or to which any property of the Investor is subject; or (c) conflict with
or violate any law or any regulation, rule, order or decree of any governmental
body, court or administrative agency having jurisdiction over the Investor or
its properties except with respect to clauses (b) and (c) where such conflict,
breach, default or violation would not reasonably be expected to have a Material
Adverse Effect on the Investor.
Section 5.5 Opportunity for Inquiry. The
Investor has had a reasonable opportunity to ask questions of and to receive
answers from representatives of the Company regarding the business, management
and financial affairs of the Company; it being understood that no inquiry or
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investigation shall affect the Investor's ability to rely on any representation
or warranty of the Company or the conditions to the obligations of the Investor
under this Agreement.
Section 5.6 Materials. The Investor acknowledges
that all documents, agreements, instruments, records, and books that it has
requested pertaining to the Company and its businesses and financial affairs
have been made available to the Investor and the Investor's attorneys,
accountants and advisors for inspection. The Investor further acknowledges that
it has received copies of the 1996 Proxy Statement, the 1995 10-K and the 1996
10-Qs.
Section 5.7 Knowledge and Experience. The
Investor has such knowledge and experience in financial and business matters
that the Investor is capable of evaluating the merits and risks involved in
connection with the Investment.
Section 5.8 No Brokers. In connection with the
Investment, the Investor has not retained or become obligated to any broker or
finder.
Section 5.9 Investment Company. The Investor is
not, and upon the purchase of the Preferred Shares as herein contemplated, will
not be, an "investment company" or an Entity "controlled" by and "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
ARTICLE 6 COVENANTS AND UNDERTAKINGS.
Section 6.1 Closings. The Company shall use its
reasonable best efforts to comply with all conditions precedent to the Closings,
including, without limiting the foregoing, causing the Certificate of
Designation to have been filed with the SDAT and become effective.
Section 6.2 Expenses of Rothschild Realty Inc.
The Company agrees to reimburse Rothschild Realty Inc. at each Closing for its
reasonable out-of-pocket expenses incurred in connection with this transaction
documented to the reasonable satisfaction of the Company. All such amounts paid
pursuant to this Section 6.2 shall be paid by wire transfer of funds immediately
available in New York City to such account(s) as Rothschild Realty Inc. shall
designate in a written notice delivered to the Company not less than two
Business Days prior to the initial Closing Date; provided, however, that the
Investor, on behalf of the Company, may directly pay out of
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the Purchase Price payable hereunder such fees and expenses to Rothschild Realty
Inc.; provided, further, that the aggregate of all such expenses including,
without limitation, the fees and expenses of Schulte Roth & Zabel LLP provided
for in Section 6.3 hereof, shall not exceed $100,000 through the initial Closing
Date, $15,000 (plus any amount of the $100,000 remaining) through the second
Closing Date, if applicable, and $15,000 (plus any amount of the $100,000 or
$15,000 remaining) through the third Closing Date, if applicable.
Section 6.3 Fees and Expenses of Schulte Roth &
Zabel LLP. Subject to the limitation set forth in Section 6.2, the Company
agrees to pay to Schulte Roth & Zabel LLP, counsel to the Investor, at each
Closing reasonable fees and expenses in connection with services rendered and
expenses incurred in connection with the issuance and sale of Preferred Shares
to the Investor. All such amounts paid pursuant to this Section 6.3 shall be
paid by wire transfer of funds immediately available in New York City to such
account(s) as Schulte Roth & Zabel LLP shall designate in a written notice
delivered to the Company not less than two Business Days prior to each Closing
Date; provided, however, that the Investor, on behalf of the Company, may
directly pay out of the Purchase Price hereunder such fees and expenses to
Schulte Roth & Zabel LLP.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE INVESTOR TO CLOSE.
The obligation of the Investor to complete each
Closing is subject, at its option, to the fulfillment on or prior to the related
Closing Date (unless otherwise provided) the following conditions, any one (1)
or more of which may be waived by it in its sole discretion:
Section 7.1 Representations and Covenants. The
representations and warranties of the Company contained in this Agreement shall
be true, complete and accurate in all material respects on and as of the related
Closing Date with the same force and effect as though made on and as of the
related Closing Date, except for changes contemplated or permitted by this
Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case, such representation and warranty shall be
true and correct in all material respects as of such date. The Company shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Company on or prior to the related Closing Date. The Company shall have
delivered to
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the Investor a certificate, dated the related Closing Date and signed by the
President and Chief Financial Officer of the Company, to the foregoing effect
and stating that all conditions to the Investor's obligations hereunder have
been satisfied.
Section 7.2 Good Standing Certificates. The
Company shall have delivered to the Investor: (i) copies of its Charter,
including all amendments thereto, certified by the SDAT; (ii) a certificate from
the SDAT to the effect that the Company is in good standing and subsisting in
such jurisdiction and listing all charter documents of the Company on file in
such state; (iii) a certificate from the Secretary of State or other appropriate
official in each State in which the Company is qualified to do business to the
effect that the Company is in good standing in such State; and (iv) a
certificate as to the Tax status of the Company from the appropriate official in
Maryland and each State in which the Company is qualified to do business, in
each case, dated as of a date within reasonable proximity to the related Closing
Date.
Section 7.3 Governmental Permits and Approvals.
Any and all Permits necessary for the consummation of the transactions
contemplated hereby shall have been obtained and a copy thereof shall have been
delivered to the Investor.
Section 7.4 Legislation. No legislation shall
have been proposed or enacted, and no statute, law, ordinance, code, rule or
regulation shall have been adopted, revised or interpreted, by any foreign,
federal, state, county or local government or any other governmental, regulatory
or administrative agency or authority, which would require, upon or as a
condition to the acquisition of the Preferred Shares by the Investor, the
divestiture or cessation of the conduct of any business presently conducted by
the Company, on the one hand, or by the Investor, on the other hand, or which,
in the good faith judgment of the Investor, may, individually or in the
aggregate, have a Material Adverse Effect on it or on the Company in the event
that the transactions contemplated hereby are consummated.
Section 7.5 Legal Proceedings. No suit, action,
claim, proceeding or investigation shall have been instituted or threatened by
or before any court or any foreign, federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority
seeking to restrain, prohibit or invalidate the issuance or sale of the
Preferred Shares to the Investor hereunder or the consummation
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of the transactions contemplated hereby or to seek damages in connection with
such transactions.
Section 7.6 Third Party Consents. All consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Company which may be required in
connection with the performance by the Company of its obligations under this
Agreement or to assure such contracts and other agreements continue in full
force and effect after the consummation of the transactions contemplated hereby
(without any Breach by the Company or any of its Subsidiaries) shall have been
obtained.
Section 7.7 Stock Certificates. The Company
shall have delivered to the Investor the stock certificate or certificates
representing the Preferred Shares to be purchased on such Closing Date in
accordance with Section 3.1 hereof, registered in the Investor's or it's
nominee's name.
Section 7.8 Approval of Counsel to the Investor.
The Company shall furnish to counsel for the Investor such certificates and
documents as may reasonably be requested by counsel to the Investor to enable
such counsel to pass on or evaluate the satisfaction of the conditions set forth
in this Article 7. All actions and proceedings hereunder and all documents and
other papers required to be delivered by the Company hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall have been reasonably approved by Schulte Roth & Zabel
LLP, counsel to the Investor, as to their form and substance.
Section 7.9 Appointment of Director. Prior to or
concurrent with the initial Closing, the nominee designated by the Investor as a
director of the Company shall have been elected and qualified to become a member
of the Board of Directors of the Company, and prior to and concurrent with any
second Closing or third Closing, the nominee designated by the Investor as a
director of the Company shall be continuing to serve as a member of the Board of
Directors of the Company.
Section 7.10 Certificate of Designation. The
Certificate of Designation shall be effective.
Section 7.11 Operating Agreement. The Company
shall have executed and delivered to the Investor the
Operating Agreement.
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Section 7.12 Agreement and Waiver. The Company
shall have executed and delivered to the Investor the
Agreement and Waiver.
Section 7.13 Opinion of Counsel. The Investor
shall have received favorable opinion letters from Paul Hastings, Janofsky &
Walker LLP and Piper & Marbury to the effect of the matters contained in
Sections 4.1.1, 4.1.2, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, the first sentence of
4.10, 4.11, 4.14, and 4.19 hereof.
Section 7.14 Expenses of Rothschild Realty Inc.
Rothschild Realty Inc. shall have been reimbursed for the
expenses to be paid by the Company as described under Section
6.2.
Section 7.15 Fees and Expenses of Schulte Roth &
Zabel LLP. Schulte Roth & Zabel LLP shall have received the fees and
disbursements to be paid by the Company as described under Section 6.3.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE COMPANY TO CLOSE.
The obligation of the Company to complete each
Closing is subject, at its option, to the fulfillment on or prior to the related
Closing Date of the following conditions, any one (1) or more of which may be
waived it in its sole discretion:
Section 8.1 Representations and Covenants. The
representations and warranties of the Investor contained in this Agreement shall
be true, complete and accurate in all material respects on and as of the related
Closing Date with the same force and effect as though made on and as of the
related Closing Date, except for changes contemplated or permitted by this
Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case, such representation and warranty shall be
true, complete and accurate in all material respects as of such date. The
Investor shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the related Closing Date. The Investor shall have
delivered to the Company a certificate, dated the related Closing Date and
signed by an officer of the Investor to the foregoing effect and stating that
all conditions to the Company's obligations hereunder have been satisfied.
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<PAGE> 29
Section 8.2 Governmental Permits and Approvals.
Any and all Permits necessary for the consummation of the transactions
contemplated hereby shall have been obtained.
Section 8.3 Legal Proceedings. No suit, action,
claim, proceeding or investigation shall have been instituted or threatened
before any court or any foreign, federal, state, county or local government or
any other governmental, regulatory or administrative agency or authority seeking
to restrain, prohibit or invalidate the sale of the Preferred Shares to the
Investor hereunder or the consummation of the transactions contemplated hereby
or to seek damages in connection with such transactions.
Section 8.4 Third Party Consents. All consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Investor which may be required in
connection with the performance by the Investor of its obligations under this
Agreement shall have been obtained.
Section 8.5 Purchase Price. The Investor shall
have tendered payment for the Preferred Shares in the amount and in the manner
specified in Section 3.1 hereof.
Section 8.6 Approval of Counsel to the Company.
The Investor shall furnish to counsel for the Company such certificates and
documents as may reasonably be requested by counsel to the Company to enable
such counsel to pass on or evaluate the satisfaction of the conditions set forth
in this Article 8. All actions and proceedings hereunder and all documents or
other papers required to be delivered by the Investor hereunder or in connection
with the consummation of the transactions contemplated hereby, and all other
related matters, shall be subject to the reasonable approval of Paul Hastings,
Janofsky & Walker LLP counsel to the Company, as to their form and substance.
Section 8.7 Opinion of Counsel. The Company
shall have received a favorable opinion letter from Schulte Roth & Zabel LLP to
the effect of the matters contained in Section 5.1, 5.3, 5.4(a) and 5.9 hereof.
ARTICLE 9 ASSIGNMENT.
Section 9.1 Assignability by Investor. The
Investor may, without the consent or approval of the Company, assign its rights
and obligations under this Agreement to a
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<PAGE> 30
Person to whom the Investor assigns its interest in the Preferred Shares, in
proportion to the percentage of Preferred Shares transferred, provided that (i)
such assignee agrees in writing to be bound by the terms of this Agreement and
(ii) no such assignment shall be valid as to any Person who purchases less than
ten percent (10%) of the outstanding Preferred Shares.
Section 9.2 Assignability by the Company.
Without the prior written consent of the Investor, in the sole and absolute
discretion of the Investor, the Company may not assign or delegate its rights or
obligations hereunder.
Section 9.3 Binding Agreement. Subject to the
provisions of Sections 9.1 and 9.2, this Agreement shall be binding upon the
heirs, successors and assigns of the parties.
ARTICLE 10 MISCELLANEOUS.
Section 10.1 Applicable Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York as applied between residents of that State entering into contracts to be
performed wholly within that State.
Section 10.2 Notices. All notices hereunder shall
be in writing and shall be given: (a) if to the Company, at 355 Lexington
Avenue, New York, New York 10017, Attention: T. Wilson Eglin, or such other
address or addresses of which the Investor shall have been given notice, with
copies to Paul Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New
York 10022, Attention: Barry A. Brooks, or such other address of which the
Investor shall have been given notice; and (b) if to the Investor, at Rothschild
Realty Inc., 1251 Avenue of the Americas, New York, New York 10020, Attn:
Matthew Kaplan, or such other address of which the Company shall have been given
notice, with copies to Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New
York 10022, Attention: Andre Weiss, Esq., or such other address of which the
Company shall have been given notice. Any notice shall be deemed to have been
given if personally delivered or sent by United States mail or by commercial
courier or delivery service or by telegram or telex and shall be deemed
received, unless earlier received, (i) if sent by certified or registered mail,
return receipt requested, three business days after deposit in the mail, postage
prepaid, (ii) if sent by United States Express Mail or by commercial courier or
delivery service, one Business Day after delivery to a United States Post Office
or delivery service, postage prepaid, (iii)
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if sent by telegram, telex or facsimile transmission, when receipt is
acknowledged by answerback, and (iv) if delivered by hand, on the date of
receipt.
Section 10.3 Entire Agreement; Amendments. This
Agreement and other agreements referred to herein set forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
and this Agreement shall not be amended except by an instrument in writing
executed by the Company and the Investor.
Section 10.4 Remedies for Breaches of This
Agreement.
Section 10.4.1 Survival of Certain Provisions.
All of the representations and warranties of the Company contained in Article 4
above and all of the covenants and undertakings of the Company contained in
Article 6 above, shall survive the Closings hereunder and continue in full force
and effect until April 1, 1998 (subject to any applicable statutes of
limitations).
Section 10.4.2 Indemnification Provisions for
Benefit of the Investor. In the event the Company breaches any of its
representations, warranties, and covenants contained herein, provided that the
Investor makes a written claim for indemnification against the Company pursuant
to Section 10.2, then the Company agrees to indemnify the Investor from and
against the entirety of any Adverse Consequences the Investor may actually
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences the Investor, its members or Rothschild Realty Inc. may
suffer after the end of any applicable survival period, provided that notice of
any claim is delivered prior to the end of such survival period) resulting from,
arising out of, relating to, or caused by such material breach; provided,
however, that the Company's obligation to so indemnify the Investor shall not
exceed the amount of funds invested by the Investor in the Company at any time a
claim is made. In addition to the indemnification rights provided for herein,
the Investor shall also have the right to all such remedies to which it is
entitled as a matter of law or equity.
Section 10.4.3 Matters Involving Third Parties.
(i) If any third party shall notify any party
entitled to be indemnified hereunder (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give
rise to a claim for
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<PAGE> 32
indemnification against the Company (the "Indemnifying Party")
under this Section 10.4, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right
to assume the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party at any
time within 15 days after the Indemnified Party has given written
notice of the Third Party Claim; provided, however, that the
Indemnifying Party must conduct the defense of the Third Party
Claim actively and diligently thereafter in order to preserve its
rights in this regard; and provided further that the Indemnified
Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim.
(iii) So long as the Indemnifying Party has
assumed and is conducting the defense of the Third Party Claim in
accordance with Section 10.4.3(ii) above, the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages by one or more of the
Indemnifying Parties and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iv) So long as the Indemnifying Party has
assumed and is conducting the defense of the Third Party Claim in
accordance with Section 10.4.3(ii) above, the Indemnified Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably).
(v) In the event none of the Indemnifying
Parties assumes and conducts the defense of the Third Party Claim
in accordance with Section 10.4.3(ii) above, (A) the Indemnified
Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third Party
Claim in any manner he or it reasonably may deem appropriate (and
the
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<PAGE> 33
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith) and (B) the
Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, or caused by the Third Party Claim to
the fullest extent provided in this Section 10.4.
Section 10.5 Confidentiality. The Investor and
Rothschild Realty Inc. agree not to use, and that their respective
representatives will not use, any Confidential Information for any purpose other
than in connection with evaluating the Investment. The Investor and Rothschild
Realty Inc. agree that the Confidential Information will be kept confidential by
them and their respective representatives; provided, however, that (i) any of
such information may be disclosed to such of their respective representatives
for the purpose of evaluating the Investment (it being understood that such
representatives shall be informed by us of the confidential nature of such
information and the Investor and Rothschild Realty Inc. agree to be responsible
for any breach of the provisions of this Section 10.5 by such representatives),
(ii) the Company may make such disclosure as is necessary under applicable
securities laws, including the filing of a Current Report on Form 8-K and (iii)
any disclosure of such information may be made if the Company shall consent
thereto.
In the event that the Investor, Rothschild Realty
Inc. or any of their respective representatives are requested or required (by
oral question, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, the Investor, Rothschild Realty Inc. will, to the extent permitted
by law, promptly notify the Company of such request or requirement so that the
Company may seek an appropriate protective order. In the event that such
protective order is not obtained, the Company agrees that the Investor,
Rothschild Realty Inc. or such representative may furnish that portion (and only
such portion) of the Confidential Information that they are advised by counsel
is legally required to be disclosed.
Without the prior written consent of the other party
or until such time as a mutually agreeable public announcement is made, none of
the Company, the Investor or Rothschild Realty Inc. will disclose to any person
either the fact that discussions or negotiations are taking place concerning the
Investment or any of the terms, conditions or other facts with
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<PAGE> 34
respect to the Investment, including the status thereof, nor that the
Confidential Information has been made available to the Investor.
Section 10.6 Lock-Up. The Investor agrees that
for a period of one year, commencing on the date of this Agreement, it shall not
sell, transfer, assign, pledge or otherwise dispose of any interest in any of
the Preferred Shares or any shares of Common Stock obtained upon conversion of
any such Preferred Shares.
Section 10.7 Termination. This Agreement may be
terminated at any time prior to the date on which all of the Preferred Shares
have been sold hereunder:
(a) by the mutual written consent of the Investor
and the Company; or
(b) by the Company or the Investor if the first
Closing has not occurred on or prior to January ___, 1997, or if the remaining
amount of Preferred Shares to be sold by the Company to the Investor pursuant to
this Agreement following the initial Closing Date have not been sold by the
Company to the Investor on or prior to January 1, 1998; provided that the party
attempting to terminate this Agreement is not in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement. In the event of termination by the Company or the Investor pursuant
to this Section 10.7, written notice thereof shall forthwith be delivered to the
other party.
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<PAGE> 35
Section 10.8 Counterparts. This Agreement may be
executed in more than one counterpart, each of which may be executed by fewer
than all the parties, with the same effect as if the parties executed one
counterpart as of the day and year first above written.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals as of the day and year first above
written.
LEXINGTON CORPORATE PROPERTIES, INC.
By:_________________________________
Name:
Title:
FIVE ARROWS REALTY SECURITIES L.L.C.
By:________________________________
Name: Matthew W. Kaplan
Title: Manager
<PAGE> 36
Schedule 4.9.3
Subsequent Events
None
<PAGE> 37
Schedule 4.10
Capital Stock
1. The Company has reserved 800,000 shares of
its Common Stock for issuance under the Company's 1993 Stock
Option Plan.
2. The Company has reserved 2,520,443 shares of
its Common Stock for issuance to holders of units (convertible or exchangeable
into Common Stock) in subsidiary partnerships upon conversion or exchange of
such partnership units into Common Stock.
3. The Company has reserved 250,000 shares of
its Common Stock for issuance under the Company's 1994
Outside Director Stock Plan.
4. The Company has reserved 250,000 shares of
its Common Stock for issuance under the Company's 1994
Employee Stock Purchase Plan.
<PAGE> 38
Schedule 4.11
Litigation
None
<PAGE> 39
Schedule 4.12
Benefits Plans
1. The Company's 401(k) Plan.
<PAGE> 40
Schedule 4.17
Affiliate Transaction
1. Mr. E. Robert Roskind owns approximately
$50,000 of furniture and equipment used by the Company.
<PAGE> 41
Schedule 4.18
Liabilities
None
<PAGE> 1
OPERATING AGREEMENT
OPERATING AGREEMENT, dated as of January __, 1997, between
Lexington Corporate Properties, Inc., a Maryland corporation (the "Company"),
and Five Arrows Realty Securities L.L.C., a limited liability company organized
under the laws of the State of Delaware (the "Investor"), for the benefit of the
Investor and any Holder (as hereinafter defined).
This Agreement is executed pursuant to the Investment
Agreement, dated as of December 31, 1996, between the Company and the Investor
(the "Investment Agreement"). In order to induce the Investor to enter into the
Investment Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings
set forth below:
"Affiliate" means, with respect to any Person, (a) any member
of the Immediate Family of such Person or a trust established for the
benefit of such member, (b) any beneficiary of a trust described in
(a), (c) any Entity which, directly or indirectly though one or more
intermediaries, is deemed to be the beneficial owner of 10% or more of
the voting equity of the Person for the purposes of Section 13(d) of
the Exchange Act, (d) any officer of the Person or any member of the
Board of Directors of the Person or (e) any Entity which, directly or
indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with, such Person, including such Person
or Persons referred to in the preceding clauses (a) or (d); provided,
however, that none of the Investor, Rothschild Realty Inc. or their
respective Affiliates, nor any of their respective officers, directors,
partners, or members nor a Preferred Director (as such term is defined
in the Certificate of Designation) shall be considered an Affiliate of
the Company or any of its Subsidiaries for the purposes of this
Agreement.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in New York
City are authorized or obligated by law or executive order to close.
<PAGE> 2
"Certificate of Designation" means the Articles
Supplementary classifying 2,000,000 shares of preferred stock as
Class A Senior Cumulative Convertible Preferred Stock of the
Company, and 2,000,000 shares of Excess Stock, par value $.01 per
share, as Excess Class A Preferred Stock of the Company.
"Commission" means the Securities and Exchange Commission
or any successor regulatory authority responsible for enforcement
and oversight of the federal securities laws.
"Common Stock" means the Common Stock, par value $.01 per
share of the Company.
"Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, business trust,
real estate investment trust, limited liability company,
cooperative or association.
"equity security" means common stock, preferred stock and
any other security that is treated as an equity security either
under the Exchange Act or under generally accepted accounting
principles by the issuer thereof or any other security convertible
into, exercisable into, or exchangeable for any equity security.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Governmental Body" means any foreign, federal, state,
municipal or other government, or any department, commission,
investigative body, board, bureau, agency, public authority or
instrumentality thereof or any court, mediator, arbitrator or
other tribunal.
"Holders" and "Holders" means a Person or Persons who is,
or are, the owner of record of Registrable Securities.
"Immediate Family" means, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
stepchildren, sons-in- law and daughters-in-law.
"Majority Holders" means (a) the Investor, so long as the
Investor holds at least 25% of the outstanding Registrable
Securities and (b) otherwise, the Holder or
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<PAGE> 3
Holders at the relevant time (excluding the Company or any of its
Subsidiaries) of more than 50% of the Registrable Securities then
outstanding.
"Person" means any individual or Entity.
"Preferred Shares" means the Class A Senior Cumulative
Convertible Preferred Stock issued by the Company to the Investor,
pursuant to the Investment Agreement.
"Prospectus" means the Prospectus included in any
Registration Statement, 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 in such Prospectus.
"Registrable Securities" means (i) all Preferred Shares
and all shares of Common Stock that have been issued, or are
issuable on conversion, in respect of the Preferred Shares
pursuant to the provisions of Section 7 of the Certificate of
Designation of the Company, dated the date hereof, (ii) any other
securities that are received by the Holders pursuant to Section 7
of the Certificate of Designation, and (iii) any other securities
into which or for which any of the securities described in clauses
(i) and (ii) above may be or have been converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise, until such time as (a) they have been
effectively registered pursuant to this Agreement and sold under
the Securities Act, or (b) they are distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act and are not subject to any stop transfer
order delivered by or on behalf of the Company and no other
restriction on transfer exists under any federal securities law.
"Registration Statement" means any registration statement
of the Company which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
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<PAGE> 4
"Securities Act" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Underwriters Maximum Number" means for any underwritten
Demand Registration, Piggyback Registration or other registration,
that number of shares of securities to which such registration
should, in the written opinion of the managing underwriter or
underwriters of such registration in light of market factors, be
limited.
"underwritten registration" or "underwritten offering"
means a registration in which securities of the Company are sold
to an underwriter for reoffering to the public.
2. DEMAND REGISTRATION
2.1 Right to Demand Registration. (a) Subject to
Section 2.5 and Section 10.6 of the Investment Agreement, at any time, any
Holder or Holders holding an aggregate of not less than 20% of the Registrable
Securities then outstanding (the "Demand Requesting Holders") may make a written
request to the Company for registration with the Commission (a "Demand
Registration") under and in accordance with the provisions of the Securities Act
of all or part of its Registrable Securities; provided, however, that the
Company (i) shall be required to effect no more than one such Demand
Registration pursuant to this Section 2 (other than the "shelf" registration
provided for under Section 2.1(c)) and (ii) shall not be required to effect a
Demand Registration if less than $5 million in market value of Registrable
Securities would be registered. The Shelf Registration (as defined under Section
2.1(c) shall qualify as the Demand Registration to which the Holders are
entitled hereunder if the Shelf Registration (i) subject to Section 2.5, is
maintained effective continuously for a three (3) year period or until all such
shares have been distributed thereunder and (ii) contemplates distributions
through at least one underwritten offering in which the Holders have exclusive
priority as to the inclusion of Registrable Securities.
(b) Each Demand Registration shall be in the form of
an underwritten offering managed by an underwriter or underwriters selected by
the Company.
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<PAGE> 5
(c) At the election of the Majority Holders (in their
sole discretion), the Company shall promptly file with the Commission a "shelf"
registration statement with respect to all of their Registrable Shares, on an
appropriate Form, pursuant to Rule 415 under the Securities Act or any similar
rule that may be adopted by the Commission (the "Shelf Registration"). The
Company shall use its reasonable best efforts to have the Shelf Registration
declared effective as soon as practicable after such filing and, notwithstanding
anything to the contrary herein, shall use reasonable best efforts to keep the
Shelf Registration continuously effective for a period of three years from the
date such Shelf Registration is declared effective (to the extent permitted by
the Commission) or until all shares registered on such "shelf" registration
statement have been sold. Such "shelf" registration may provide for
distributions other than through underwritten offerings. Any Holder shall be
required to comply with the rules of the New York Stock Exchange or any other
stock exchange on which the Common Stock is then listed. In no event shall the
Company be required to file more than one Shelf Registration Statement at the
request of the Majority Holders.
(d) Within ten days after receipt of any request by
the Demand Requesting Holders under Section 2.1(a) or the Majority Holders under
Section 2.1(c), the Company will give written notice (the "Other Holders
Notice") of such registration request to all other Holders, if any, and, subject
to Section 2.3, shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein from the Holders thereof within 15 days after such notice by the
Company.
2.2 Effective Registration and Expenses. A registration will
qualify as a Demand Registration or a Shelf Registration when it has become
effective; provided, however, that (i) if the Demand Requesting Holders with
regard to a Demand Registration, or the Majority Holders with regard to a Shelf
Registration, withdraw their Registrable Securities after the filing with the
Commission of the initial Registration Statement related thereto, such demand
will count as a Demand Registration or a Shelf Registration unless such Demand
Requesting Holders or Majority Holders, as the case may be, agree severally to
pay all of the Registration Expenses of the Company incurred through the date
that notice of such withdrawal is given and (ii) an effective Demand
Registration will not count as the sole Demand Registration if the Demand
Requesting Holders have not been permitted to register and
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<PAGE> 6
sell all of the Registrable Securities requested to be included in such
registration by such Demand Requesting Holders.
2.3 Priority on Underwritten Demand Registrations. Subject to
the rights granted pursuant to the agreements set forth on Schedule 10.2 or as
otherwise contemplated by Section 4.1(b), if the managing underwriter or
underwriters of any underwritten Demand Registration advise the Company and the
Holders in writing of an Underwriters Maximum Number, the Company will be
obligated and required to include in such registration (i) first, the
Registrable Securities requested to be included in such Demand Registration by
the Holders, pro rata in proportion to the number of Registrable Securities
requested to be included in such registration by each of them until all such
Registrable Securities have been so included, (ii) second, the Registrable
Securities requested to be included in such Demand Registration by the Company
and other Persons having contractual rights thereto, in accordance with the
priorities that exist among them, and (iii) third, any other securities of the
Company to be registered on behalf of any other Person. Neither the Company nor
any of its securityholders (other than Holders of Registrable Securities) shall
be entitled to include any securities in any Demand Registration unless the
Company or such securityholders (as the case may be) shall have agreed in
writing to sell such securities on the same terms and conditions as shall apply
to the Registrable Securities to be included in such Demand Registration.
2.4 Selection of Underwriters. The managing underwriter and
any additional investment bankers and managers for use in connection with any
underwritten Demand Registration will be selected by the Company from a list of
five choices provided by the Investor; provided, that the Investor shall be
required to select such five firms from the list attached hereto as Schedule
2.4; provided, further, that in the event the Company desires to make a
selection other than from the list of five choices provided by the Investor, the
Investor shall have the right to approve such selection, which approval shall
not be unreasonably withheld.
2.5 Limitations Regarding Registration at the Request of
Holders. (a) The Company shall not be required to effect a Demand Registration
or a Shelf Registration under Section 2.1 and the Holders of Registrable
Securities will discontinue the disposition of their securities covered by a
Shelf Registration during any Blackout Period (as defined below) (i) if the
Board of Directors of the Company determines
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in good faith that effecting such a registration or continuing such disposition
at such time would have a material adverse effect upon a proposed sale of all
(or substantially all) of the assets of the Company or a merger, reorganization,
recapitalization or similar current transaction materially affecting the capital
structure or equity ownership of the Company, (ii) if the Company is in
possession of material information which the Board of Directors of the Company
determines in good faith it is not in the best interests of the Company to
disclose in a registration statement at such time, or (iii) if the Company has
delivered a notice pursuant to Section 3.1 that it is undertaking an
underwritten offering in which the Holders will be entitled to exercise their
piggyback rights; provided, however, that the Company may only delay a Demand
Registration or the filing of a new Shelf Registration pursuant to this Section
2.5 by delivery of a Blackout Notice (as defined below) within thirty (30) days
of delivery of the notice requesting a Demand Registration or such new Shelf
Registration and, in any case, only for a period not exceeding three (3) months
(or until such earlier time as such transaction is consummated or no longer
proposed or the material information has been made public) (the "Blackout
Period"). There shall not be more than one Blackout Period in any twelve (12)
month period.
(b) The Company shall promptly notify the Holders in
writing (a "Blackout Notice") of any decision not to effect a Demand
Registration or a Shelf Registration or to discontinue sales of Registrable
Securities pursuant to this Section 2.5, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information) and
shall include an undertaking by the Company promptly to notify the Holders as
soon as a Demand Registration or a Shelf Registration may be effected or sales
may resume.
(c) The Company shall not be required to effect a
Demand Registration or Shelf Registration under Section 2.1 during any period
the Company is restricted from filing a registration statement or from making
any public sale or distribution of its equity securities pursuant to any
agreement on Schedule 10.2 or as contemplated by Section 4.1(b).
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3. PIGGYBACK REGISTRATION
3.1 Right to Include Registrable Securities. Subject to
Section 3.3, if the Company or any other issuer of Registrable Securities at any
time or from time to time proposes to register shares of its equity securities
or Registrable Securities under the Securities Act (other than in a registration
on Form S-4 or S-8 or any successor form to such forms or in connection with an
exchange offer or an offering of securities solely to the existing stockholders
or employees of the Company and other than in connection with a "roll-up" of
partnerships which are Affiliates of the Company), whether or not for sale for
its own account, the Company shall deliver prompt written notice to all Holders
of Registrable Securities of its intention to undertake such registration and of
such Holders' rights to participate in such registration under this Section 3 as
hereinafter provided. The Company shall use its reasonable best efforts to
effect the registration under the Securities Act of all Registrable Securities
with respect to which the Company receives a request for registration from the
Holders thereof by written notice to the Company within 30 days after the date
of the Company's notice to Holders of its intended registration (which notice by
Holders shall specify the amount of Registrable Securities to be registered and
the intended method of disposition thereof), to the extent necessary to permit
the disposition in accordance with the intended methods thereof of all such
Registrable Securities by including such Registrable Securities in the
registration statement pursuant to which the Company proposes to register the
shares of Common Stock (a "Piggyback Registration"); provided, however, that if
such registration involves an underwritten offering, all Holders requesting
inclusion in the registration shall be required to sell their Registrable
Securities to the underwriters selected by the Company at the same price and on
the same terms of underwriting applicable to the Company and any other Persons
selling shares of Common Stock. The Holders requesting inclusion in a
registration pursuant to this Section 3 may, at any time prior to the effective
date of the registration statement relating to such registration, revoke such
request by delivering written notice to the Company revoking such requested
inclusion. All requests for Piggyback Registration under this Section 3 shall be
without prejudice to the rights of the Holders to request, and shall not be
counted, as the sole Demand Registration or Shelf Registration under Section 2
above.
3.2 Priority in Piggyback Registration. Subject to any rights
granted pursuant to the agreements set forth on
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<PAGE> 9
Schedule 10.2 or contemplated by Section 4.1(b), if any of the Registrable
Securities registered pursuant to any Piggyback Registration are to be sold in
one or more firm commitment underwritten offerings, and the managing
underwriters advise in writing the Company and the Holders of such Registrable
Securities of an Underwriters Maximum Number, or, in the case of a Piggyback
Registration not being underwritten, the Company shall reasonably determine (and
notify the Holders of Registrable Securities of such determination), after
consultation with an investment banker of nationally recognized standing, that
the number of shares of Common Stock (including Registrable Securities) proposed
to be sold in such offering exceeds the number of shares of Common Stock which
can be sold in such offering within a price range acceptable to the Company, the
Company shall include in such registration only such number of shares of Common
Stock (including Registrable Securities) which in the opinion of such
underwriter or underwriters or the Company, as the case may be, can be sold
within such price range, selected in the following order of priority: (i) first,
all of the shares of Common Stock that the Company proposes to register (but
solely to the extent that the proceeds thereof shall not be used to purchase
Common Stock or other securities of the Company or any subsidiary operating
partnership), and the shares requested by any other Person having demand
registration rights and having made demand for the subject registration, (ii)
second, the Registrable Securities requested to be included in such registration
by Holders that have requested their Registrable Securities to be included
therein, pro rata in proportion to the number of Registrable Securities
requested to be included in such registration by each of them, (iii) third,
other Registrable Securities requested to be included in such registration by
any other Persons, and (iv) fourth, other securities of the Company to be
registered on behalf of any other Person.
3.3. Limitations Regarding Piggyback Registrations. If the
Company, at any time after giving written notice under Section 3.1 of its
intention to register Common Stock and prior to the effectiveness of the
registration statement filed in connection with such registration, determines
for any reason consistent herewith either not to effect such registration or to
delay such registration, the Company may, at its election, by the delivery of
written notice to each Holder, (i) in the case of a determination not to effect
registration, relieve itself of its obligation to register the Registrable
Securities in connection with such registration, or (ii) in the case of a
determination to delay the registration, delay the registration of such
Registrable
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<PAGE> 10
Securities for the same period as the delay in the registration of such other
shares of Common Stock.
4. HOLD-BACK AGREEMENTS
4.1 Restrictions on Public Sale by Holder of Registrable
Securities. (a) Each Holder of Registrable Securities agrees, if requested by
the managing underwriter or underwriters in an underwritten offering of any
Registrable Securities, not to effect any public sale or distribution or any
other sale pursuant to the exemption from the registration requirements of the
Securities Act, of its remaining equity securities of the Company, including a
sale pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act (except as part of such underwritten registration), during the
14-day period prior to, and during the 90-day period (or such shorter period as
may be agreed to by the parties hereto) beginning on, the effective date of such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriter or underwriters, unless the underwriters managing
the registered offering and the Company otherwise agree.
(b) Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities not to effect any public sale or
distribution or any other sale pursuant to any exemption from the registration
requirements of the Securities Act of any equity securities of the Company,
including a sale pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act (except as part of such underwritten registration),
during the period that a holder of securities registrable under any of the
agreements set forth on Schedule 10.2 or any agreement entered into in
accordance with the terms provided pursuant to Section 4.2(ii) hereunder is
prohibited from making any such sale or distribution as a result of a
underwritten public offering pursuant to such agreement.
4.2 Restriction on Public Sale by the Company. The Company
agrees (i) not to effect any public sale or distribution of any of its equity
securities (for its own account or the account of any third party) during the
14-day period prior to, and during the 90-day period beginning on, the effective
date of a Registration Statement filed pursuant to underwritten offering under
Section 2 or Section 3 or such longer periods as may be required in the
reasonable judgment of the managing underwriter or underwriters (except as part
of such underwritten registration or pursuant to registrations on Forms S-4 or
S-8 or any successor form to such forms or in
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<PAGE> 11
connection with an exchange offer or an offering of securities solely to the
existing stockholders or employees of the Company or upon conversion of
outstanding securities), and (ii) that it will cause each holder of equity
securities of the Company purchased from the Company at any time after the date
of this Agreement (other than in a registered public offering) who as a result
of such purchase, owns more than 5% of the Common Stock on a fully diluted
basis, to agree not to effect any public sale or distribution or any other sale
pursuant to the exemption from the registration requirements of the Securities
Act available for private placements, of any such securities during such period,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration, if permitted).
5. REGISTRATION PROCEDURES
Upon the Company incurring registration obligations
under Section 2 or 3 and subject thereto, the Company will use its reasonable
best efforts to effect such registrations to permit the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Company will, at its expense, as expeditiously
as reasonably possible:
(a) prepare and file with the Commission a
Registration Statement relating to such registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities by the Holders thereof in accordance with the intended
method or methods of distribution thereof, and use its reasonable best efforts
to cause such Registration Statement to become effective; provided, however,
that before filing a Registration Statement or Prospectus, the Company will
furnish to the Holders of the Registrable Securities covered by such
Registration Statement, their counsel and the underwriters, if any, copies of
all such documents proposed to be filed sufficiently in advance of filing to
provide them with a reasonable opportunity to review such documents and comment
thereon;
(b) prepare and file with the Commission such
amendments and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for a period of not less
than 180 days (or such shorter period which shall terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn,
but not prior to the expiration of the 90-day period referred to in Section
4(3) of the Securities Act
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<PAGE> 12
and Rule 174 thereunder, if applicable); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to such
Prospectus;
(c) notify each Holder of Registrable Securities
included in the Registration Statement, their counsel and the managing
underwriters, if any, at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, promptly, and (if requested by any
such Person) confirm such notice in writing, (1) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (2) of any request by the Commission for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contained in agreements contemplated by Section 5(n)
cease to be true and correct in all material respects, (5) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (6) of the
happening of any event as a result of which the Prospectus included in the
Registration Statement (as then in effect) 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 or
any preliminary Prospectus, in light of the circumstances under which they were
made) not misleading and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate or
that there exist circumstances not yet disclosed to the public which make
further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment;
(d) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the occurrence of any
event contemplated by Section
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<PAGE> 13
5(c)(2)-(7), prepare a supplement or post-effective amendment to the
Registration Statement or 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 being sold thereunder,
which Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
(e) use reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction required pursuant to Section
5(i), as soon as reasonably possible;
(f) if requested by a managing underwriter or any
Holder of Registrable Securities, immediately incorporate in a prospectus
supplement or post-effective amendment such information concerning such Holder
of Registrable Securities, the managing underwriter or underwriters or the
intended method of distribution as the managing underwriter or underwriters or
the Holder of Registrable Securities reasonably requests to be included therein
and as is appropriate in the reasonable judgment of the Company, including,
without limitation, information with respect to the number of shares of the
Registrable Securities being sold to such underwriter or underwriters, the
purchase price being paid therefor by such underwriter or underwriters and with
respect to any other terms of the underwritten (or best efforts underwritten)
offering of the Registrable Securities to be sold in such offering; make all
required filings of such Prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(g) furnish to each Holder of Registrable Securities
included in such Registration Statement and each managing underwriter, if any,
without charge, one copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, and, upon
request, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(h) deliver to each Holder of Registrable Securities
included in such Registration Statement, their counsel and the underwriters, if
any, without charge, as many copies of the Prospectus or Prospectuses (including
each
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<PAGE> 14
preliminary Prospectus) and any amendment or supplement thereto as such Persons
may reasonably request; the Company consents to the use of such Prospectus or
any amendment or supplement thereto by each Holder of Registrable Securities
included in the Registration Statement and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto;
(i) prior to any public offering of Registrable
Securities use its reasonable best efforts to register or qualify, or cooperate
with the Holders of Registrable Securities included in the Registration
Statement, the underwriters, if any, and their respective counsel in connection
with the registration or qualification of, such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
Holder or underwriter reasonably requests in writing; use its reasonable best
efforts to keep each such registration or qualification effective, including
through new filings or amendments or renewals, during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, however, that the Company will not be required
to qualify to do business or take any action that would subject it to taxation
or general service of process in any jurisdiction where it is not then so
qualified or subject;
(j) cooperate with the Holders of Registrable
Securities included in the Registration Statement and the managing underwriter
or underwriters, if any, to facilitate, at the election of the Majority Holders,
(x) the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be sold under the
Registration Statement or (y) the timely transfer of beneficial ownership of
such Registrable Securities in machine book-entry fashion under the auspices of
The Depository Trust Company or other similar organization; and cause 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
at least two business days prior to any sale of Registrable Securities;
(k) use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such Governmental Bodies consistent with the provisions of
Section
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<PAGE> 15
5(i) as may be necessary to enable the seller or sellers thereof or the managing
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(l) cause all Registrable Securities included in such
Registration Statement to be (1) listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on each
securities exchange on which the Common Stock is then listed or proposed to be
listed thereon, if any, or (2) quoted on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or the National Market System of
NASDAQ if the Common Stock is then quoted thereon; provided, however, that the
Company shall not be required to effect the listing of any Preferred Shares on
or prior to January 1, 1999 pursuant to this Section 5(l) and this Section 5(l)
shall, in any event, cease to be applicable to the Preferred Shares after the
last to occur of the following: (1) the aggregate Current Market Value (as
defined in the Articles Supplementary governing the Preferred Shares), as of any
date, of the Common Stock is at least $250 million and (2) the Common Stock into
which the Preferred Shares are convertible represent less than 10% of the Common
Stock after taking into account all securities of the Company (other than
operating partnership units) which at the time of any such determination are
then currently convertible or exercisable into or exchangeable for Common Stock
without any restrictions and are then "in the money." "In the money" means that
the conversion or exercise price or exchange ratio, as applicable, provides for
conversion or exercise at a price, or exchange at a ratio, that is less than the
then Current Market Value (as defined in the Certificate of Designation) of the
Common Stock.
(m) provide a transfer agent and registrar for the
Registrable Securities not later than the effective date of such Registration
Statement;
(n) enter into such agreements and take all such
other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, in the case of an underwritten offering, (1) enter into an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings by such underwriter and use its reasonable best efforts
to obtain opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the managing underwriter or underwriters) addressed to each selling Holder and
the underwriters, if any, covering the
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<PAGE> 16
matters customarily covered in opinions requested in underwritten offerings and
such other related matters as may be reasonably requested by such Holders and
underwriters, (2) use its reasonable best efforts to obtain a "cold comfort"
letter and updates thereof from the Company's independent certified public
accountants addressed to each Holder of Registrable Securities included in the
Registration Statement (to the extent permitted by applicable accounting
standards) and the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
given by accountants in connection with underwritten offerings, (3) the
underwriting agreement shall set forth in full the indemnification provisions
and procedures of Section 7 with respect to all parties to be indemnified
pursuant to said Section (or such other indemnification provisions as the
underwriter may request and which is reasonably acceptable to the Holders
included in such registration), and (4) the Company shall deliver such documents
and certificates as may be reasonably requested by the managing underwriter or
underwriters, if any, to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The above shall be done at each closing under such underwriting or
similar agreement or as and to the extent required thereunder;
(o) make available for inspection by a representative
of the Holders of Registrable Securities included in the Registration Statement,
any underwriter participating in any disposition pursuant to such Registration
Statement and any lawyer, accountant or other advisors retained by such selling
Holders or underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company as they may reasonably
request, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
lawyer, accountant or other advisors in connection with such Registration
Statement, provided, however, that any records, information or documents that
are furnished by the Company and that are non-public shall be used only in
connection with such registration and shall be kept confidential by such Persons
except to the extent disclosure of such records, information or documents is
required by law; and
(p) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission and make
generally available to its security holders earnings statements satisfying the
provisions of
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Section 11(a) of the Securities Act, no later than 90 days after the end of any
12-month period (1) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or best efforts
underwritten offering and (2) beginning with the first day of the Company's
first fiscal quarter next succeeding each sale of Registrable Securities after
the effective date of a Registration Statement, which statements shall cover
said 12-month periods.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish promptly to
the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities that (i) such Holder will sell its
securities covered by any Registration Statement in accordance with the plan of
distribution provided for therein and (ii) upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
5(c)(2)-(7), such Holder will forthwith discontinue disposition of Registrable
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(d), or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in such Prospectus, and, if so directed by the Company, such Holder
will, or will request the managing underwriter or underwriters, if any, to,
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period mentioned in
Section 5(b) during which a Registration Statement is required to be kept
effective shall be extended by the number of days during the time period from
and including the date of the giving of such notice pursuant to Section 5(c) to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 5(d). The Company shall be
obligated to use its reasonable best efforts to cause such Registration
Statement and Prospectus to conform to all legal requirements and to notify the
Holders that the use of the applicable Prospectus may be resumed. Nothing in
this paragraph shall limit the
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obligations of the Company under Section 2.5 of this Agreement.
6. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expense of compliance with state securities or blue
sky laws, including reasonable fees and disbursements of counsel for the
underwriters or one counsel for the selling Holders in connection with blue sky
qualifications of the Registrable Securities under the laws of such
jurisdictions as the managing underwriter or underwriters or Holders of a
majority of the shares of the Registrable Securities being sold may reasonably
designate, printing expenses, messenger, telephone and delivery expenses, and
fees and disbursements of counsel for the Company and one counsel for the
Holders and of all independent certified public accountants of the Company
(including the expenses of any special audit and "cold comfort" letters required
by or incident to such performance), and of underwriters (to the extent that the
Company and/or the selling Holders are required to bear such expense), but
excluding the following expenses none of which shall be paid by the Company:
transfer taxes, discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, securities acts liability insurance
if the Company so desires and fees and expenses of other Persons retained by the
Company (all such expenses other than the expenses expressly excluded being
herein called "Registration Expenses") will, subject to Section 2.2, be borne by
the Company whether or not the Registration Statement becomes effective. The
Company will, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by the
Company are then listed and the fees and expenses of any Person, including
special experts, retained by the Company.
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7. INDEMNIFICATION
7.1 Indemnification by the Company. The Company agrees to
indemnify, defend, exonerate and hold harmless, to the full extent permitted by
law, each Holder of Registrable Securities registered pursuant to any
registration hereunder and each of its Affiliates or partners, each of their
respective members, officers, directors, employees, agents, representatives,
successors and assigns and each Person who controls such Holder, Affiliate or
partner (within the meaning of the Securities Act) against any and all actions,
causes of action, suits, losses, liabilities, obligations, damages,
deficiencies, demands, claims, judgments, taxes, assessments, settlement costs,
court costs and other costs and expenses, including, without limitation,
interest, penalties, fines, costs of investigation, discovery, case preparation,
defense or appeal, expert witness fees and expenses and reasonable attorneys'
and paralegal fees and disbursements (collectively, "Losses") incurred by any
such Person in any capacity and caused by any untrue statement of a material
fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
Prospectus or any preliminary Prospectus, in the light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such Holder or its representative expressly for use therein. The Company will
also indemnify underwriters, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the Holders;
provided, however, that if pursuant to an underwritten public offering of
Registrable Securities, the Company and any underwriters enter into an
underwriting or purchase agreement relating to such offering which contains
provisions relating to indemnification and contribution between the Company and
such underwriters, such provisions shall be deemed to govern indemnification and
contribution as between the Company and such underwriters.
7.2 Indemnification by Holders. In connection with any
registration hereunder, each Holder participating in such registration will
promptly furnish to the Company in writing such information and affidavits with
respect to such Holder as the Company reasonably requests for use in connection
with any Registration Statement or Prospectus (limited, in each case, to such
Holder's identity, organization, domicile, securities
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of the Company held and intended method of distribution) and agrees to
indemnify, defend, exonerate and hold harmless, to the full extent permitted by
law, the Company, its directors, officers, employees, agents and representatives
and each Person who controls the Company (within the meaning of the Securities
Act) against any Losses incurred by any such Person in any capacity and caused
by any untrue statement of a material fact or any omission of a material fact
required to be stated in any Registration Statement or Prospectus or preliminary
Prospectus or necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information or affidavit with respect to such
Holder so furnished in writing by such Holder or its representatives to the
Company specifically for inclusion in such Registration Statement or Prospectus.
The Company shall be entitled to receive indemnities from underwriters to the
same extent as provided above with respect to information so furnished in
writing by such persons or their representatives to the Company specifically for
inclusion in any Prospectus or Registration Statement. In no event shall the
liability of any selling Holder hereunder be greater in amount than the net
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
7.3 Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. Notwithstanding the
foregoing, any Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of such claim, but
the reasonable fees and expenses of such counsel shall be at the expense of such
Person unless (a) the indemnifying party has agreed in writing to pay such fees
or expenses, (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such Person or (c) a
conflict of interest may exist between such Person and the indemnifying party
(as confirmed in writing by counsel to such Person) or such Person is entitled
to a defense not permitted to be used by the indemnifying party with respect to
such claims (as confirmed in writing by counsel to such Person) (it being
understood that (x) in the case of each of (a), (b) and (c) above, the
reasonable fees and expenses of such separate counsel to such
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<PAGE> 21
Person shall be paid by the indemnifying party and (y) in the case of (c) above,
if the Person notifies the indemnifying party in writing that such Person elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld or delayed). No indemnifying party will be required to consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of a release from all liability in respect to such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the reasonable fees
and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels. The Company may not enter
into any settlement of any claim relating to the offer and sale of Registrable
Securities that does not provide for the complete and unconditional release of
such Person.
7.4 Contribution. If the indemnification provided
for in this Section 7 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expense referred to therein, then the indemnifying party in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, 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 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 indemnified parties, and the parties'
relative intent, knowledge, access to
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<PAGE> 22
information and opportunity to correct or prevent such action; provided,
however, that in no event shall the liability of any selling Holder hereunder be
greater in amount than the difference between the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such contribution obligation and all amounts previously contributed by such
Holder with respect to such losses, claims, damages, liabilities and expenses.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 7.4 were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
paragraph. 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.
8. COVENANTS AND UNDERTAKINGS
8.1 Rule 144. The Company will use its reasonable
best efforts to file the 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, and it will take such further action as any Holder of Registrable
Securities may reasonably 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 similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
information and requirements
8.2 Reservation of Shares. The Company will
maintain as reserved those shares of Common Stock reserved in accordance with
Section 4.6 of the Investment Agreement and shall take all such action as may be
required from time to time in order that it may validly and legally issue fully
paid and non-assessable shares of Common Stock in accordance herewith and
therewith.
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<PAGE> 23
8.3 Affiliate Transactions. So long as the
Investor or an Affiliate of the Investor, or one of their respective members or
partners, is the holder of either (A) all of the Preferred Shares outstanding or
(B) an amount of the voting securities of the Corporation which if converted
into shares of Common Stock would exceed 7.5% of the outstanding Common Stock on
a fully diluted basis (determined on the basis of then convertible, exercisable
or exchangeable securities, warrants or options issued by the Company), the
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into any transaction or series of transactions (including,
without limitation, the sale, purchase, exchange or lease of any assets or
properties or the rendering of any services) with any Affiliate (other than
among the Company or its Subsidiaries) (an "Affiliate Transaction") unless (i)
such transaction or series of related transactions is on terms that are no less
favorable to the Company or its Subsidiaries, as the case may be, than would
available in a comparable transaction in arm's-length dealings with an unrelated
third party and (ii) with respect to any one transaction or series of related
transactions involving aggregate payments in excess of $1,000,000, the Company
delivers a certificate, certified by an officer of the Company, to the Investor
certifying that such transaction or series of related transaction complies with
clause (i) above and such transaction or series of related transactions has
received the approval of a majority of the disinterested members of the Board of
Directors of the Company; provided, however, that such provision shall not apply
to any transaction arising out of any agreement existing on the date hereof or
any transaction in which all holders of any class or series of outstanding
capital stock of the Company have the right to participate on a pro rata basis.
8.4 Inspection Rights. So long as the Investor or
an Affiliate of the Investor, or one of their respective members or partners, is
the holder of either (A) all of the Preferred Shares outstanding or (B) an
amount of the outstanding voting securities of the Company which if converted
into shares of Common Stock would exceed 7.5% of the Common Stock on a fully
diluted basis (determined on the basis of then convertible, exercisable or
exchangeable securities, warrants or options issued by the Company), the Company
shall permit, and cause its Subsidiaries to permit, the Investor or any agents
or representatives thereof to examine and inspect the books and records of the
Company and take copies and extracts therefrom on reasonable prior notice and at
reasonable times and during normal business hours.
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8.5 Insurance for Directors. So long as the Investor
or an Affiliate of the Investor, or one of their respective members or partners,
is the holder of either (A) all of the Preferred Shares outstanding or (B) an
amount of the outstanding voting securities of the Company which if converted
into shares of Common Stock would exceed 7.5% of the Common Stock on a fully
diluted basis (determined on the basis of then convertible, exercisable or
exchangeable securities, warrants or options issued by the Company), the Company
shall obtain and maintain such directors' and officers' reimbursement and
liability insurance in the name of each Preferred Director (as such terms is
defined in the Certificate of Designation) in an amount not less than the amount
provided to other outside directors of the Company or less than the amount of
the current policy therefor; provided that such directors supply the information
required by the Company's insurance carrier and meet the qualifications
established by such carrier, if any, which shall not be more burdensome than
those of the Company's then current policy; and provided, further, that if such
insurance is a claims based or equivalent policy, each such Preferred Director
shall be entitled to such insurance for an additional six years.
8.6 Fees and Expenses. In the event that the Company
shall request that the Investor consent to any action by the Company that is
otherwise prohibited, or amend any of the Operative Instruments, the Company
shall pay all reasonable legal fees and expenses incurred by the Investor in
connection with the Investor's review of such request.
8.7 Proxy Solicitation. The Company shall include,
and recommend the approval by its shareholders of, a proposal, in its proxy
statement relating to the next annual meeting of shareholders of the Company,
approving the issuance and sale of the Preferred Shares by the Company to the
Investor. In the event that such proposal is not adopted by the shareholders,
the Company shall immediately pay to the Investor by wire transfer in
immediately available funds an amount equal to the product of (i) $0.25 and (ii)
the number of Preferred Shares which the Company is prohibited from selling to
the Investor pursuant to Section 312 of the New York Stock Exchange Listed
Company Manual.
9. EFFECTIVENESS. This Agreement shall be effective
upon the execution and delivery of a counterpart by each of the parties hereto.
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<PAGE> 25
10. MISCELLANEOUS
10.1 No Adequate Remedy at Law. In the event of a
breach by the Company of its obligations under this Agreement, each Holder, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages may not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate. The
failure to file a Registration Statement within 60 days of a written request
delivered under Section 2.1 shall constitute, in the absence of an injunction or
a Blackout Period having been imposed, a breach thereof entitling the Holders to
remedies hereunder.
10.2 No Inconsistent Agreement. (a) Except for the
registration rights contained in the agreements set forth on Schedule 10.2
hereto, the Company has not previously entered into any agreement with respect
to its capital stock granting any registration rights to any Person.
(b) The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities,
which grants registration rights to anyone so as to treat such party as having
any priority to or equal consideration with the Holders in determining
preference for inclusion in a Registration Statement prepared by the Company;
provided, however, that the Company may within six (6) months of the date hereof
enter into an agreement substantially on the terms heretofore discussed with the
Investor with Merrill Lynch Asset Management Company or an Affiliate ("Merrill")
whereby the Company grants registration rights to Merrill which are pari passu
with the Holders in determining preference for inclusion in a Registration
Statement prepared by the Company.
10.3 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 the Majority Holders (other than Section 10.2(b) which can be
amended, modified or supplemented and waivers or consents to depart from the
provisions thereof with the written consent of the Investor). Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to
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<PAGE> 26
a matter which relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and which does not directly or indirectly affect the rights of other Holders may
be given by Holders owning a majority of the shares of the Registrable
Securities being sold by such Holders, provided that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
10.4 Notices. Any notice or other communication
required or permitted hereunder shall be deemed to be delivered if in writing
(or in the form of a telecopy) addressed as provided below and if either (a)
actually delivered or telecopied to said address, (b) in the case of overnight
delivery of a notice, the next business day after properly posted with postage
prepaid, or (c) in the case of a letter, 3 business days shall have elapsed
after the same shall have been deposited in the United States mails, postage
prepaid and registered or certified:
If to the Company, then to Lexington Corporate Properties,
Inc., 355 Lexington Avenue, New York, New York 10017, Attention:
President, or such other address or addresses of which the
Investor shall have been given notice, with a copy to Barry A.
Brooks, Paul Hastings, Janofsky & Walker LLP, 399 Park Avenue, New
York, New York 10022.
If to any Holder of Registrable Securities, to it at its
address set forth on the books and records of the Company.
The failure to deliver a copy of any notice to any party's
counsel shall not affect the validity of such notice.
10.5 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, including, without limitation, subsequent
Holders of Registrable Securities agreeing to be bound by all of the terms and
conditions of this Agreement.
10.6 Counterparts. This Agreement and any
amendments, waivers, consents or supplements may be executed in two or more
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
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<PAGE> 27
constitute one and the same instrument. This Agreement shall become effective
upon the execution of a counterpart by each of the parties hereto.
10.7 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
10.9 Consent to Jurisdiction; Waiver of Jury Trial. (a) Any
action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby may be instituted in any federal court of the
Southern District of New York or any state court located in New York County,
State of New York, and each party agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim that it
is not subject personally to the jurisdiction of such court, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. The parties irrevocably
submit to the exclusive jurisdiction of such court in any such action, suit or
proceeding. Any and all service of process and any other notice in any such
action, suit or proceeding shall be effective against any party if given
personally or by registered or certified mail, return receipt requested, or by
any other means of mail that requires a signed receipt, postage prepaid, mailed
to such party as herein provided. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law or
to commence legal proceedings or otherwise proceed against any other party in
any other jurisdiction to enforce judgments obtained in any action, suit or
proceeding brought pursuant to this Section 10.9.
(b) Each of the parties hereby irrevocably waives
trial by jury in any action, suit, proceeding or counterclaim, whether at law or
equity, brought by either of them in connection with this Agreement or the
transactions contemplated hereby.
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<PAGE> 28
10.10 Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Agreement shall not affect or impair the validity, legality and
enforceability of the remaining provisions or obligations under this Agreement
or of such provision or obligation in any other jurisdiction.
10.11 Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein, other than the
provisions of any other documents specifically referred to herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
10.12 Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its reasonable costs and
expenses and any other available remedy.
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<PAGE> 29
10.13 Construction. The Company and the Investor
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Company and the Investor.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
LEXINGTON CORPORATE PROPERTIES,
INC.
By:
----------------------------
Name: T. Wilson Eglin
Title: President
FIVE ARROWS REALTY SECURITIES
L.L.C.
By:
----------------------------
Name: Matthew W. Kaplan
Title: Manager
<PAGE> 30
SCHEDULE 2.4
LIST OF UNDERWRITER CHOICES
AG Edwards
Alex Brown & Sons
Bankers Trust
Bear Stearns & Co. Inc.
CS First Boston Corporation
Dean Witter Reynolds Inc.
Donaldson Lufkin Jenrette Securities Corporation
Furman Selz Incorporated
Goldman Sachs & Co.
JP Morgan Securities
Lehman Brothers
Merrill Lynch
Montgomery Securities
Morgan Stanley Co. Incorporated
NatWest Securities
Nomura Securities
Oppenheimer Securities
Paine Webber
Prudential Securities
Robinson Humphrey
Robertson Stephens
Salomon Brothers
Smith Barney
<PAGE> 31
SCHEDULE 10.2
REGISTRATION RIGHTS AGREEMENTS
<PAGE> 1
ARTICLES SUPPLEMENTARY
CLASSIFYING 2,000,000 SHARES OF PREFERRED
STOCK AS CLASS A SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK AND 2,000,000
SHARES OF EXCESS STOCK AS EXCESS CLASS A
PREFERRED STOCK
OF
LEXINGTON CORPORATE PROPERTIES, INC.
Pursuant to Section 2-105 of the Maryland General Corporation
Law (the "M.G.C.L."), Lexington Corporate Properties, Inc., a corporation
organized and existing under the M.G.C.L. (the "Corporation"), and having its
principal office in the State of Maryland located at c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202.
DOES HEREBY CERTIFY TO THE STATE DEPARTMENT OF ASSESSMENT AND
TAXATION OF MARYLAND THAT:
Pursuant to authority granted to and vested in the Board of
Directors of the Corporation (the "Board") by the Charter of the Corporation
(the "Charter"), and pursuant to the provisions of Section 2-105 of the
M.G.C.L., the Board, at a meeting duly convened and held on December 30, 1996,
adopted resolutions classifying 2,000,000 shares of Preferred Stock of the
Corporation into a single series of Preferred Stock to be designated as "Class A
Senior Cumulative Convertible Preferred Stock, par value $.0001 per share," and
classifying 2,000,000 shares of Excess Stock of the Corporation into a single
series of Excess Preferred Stock to be designated as "Excess Class A Preferred
Stock, par value $.0001 per share," which resolution is as follows:
"RESOLVED that a series of Preferred Stock of this
Corporation, to be designated "Class A Senior Cumulative Convertible
Preferred Stock," be and hereby is created to consist of 2,000,000
shares, and that a series of Excess Preferred Stock of this Corporation
to be designated "Excess Class A Preferred Stock," be and hereby is
created to consist of 2,000,000 shares; and
<PAGE> 2
FURTHER RESOLVED that the preferences, conversion or other
rights, voting powers, limitations as to dividends, qualifications and
terms and conditions of redemption of each such series, shall be as
follows:
Section 1. Preferred Shares -- Designation and Amount. The
shares of such class of Preferred Stock shall be designated as "Class A Senior
Cumulative Convertible Preferred Stock" and the number of shares constituting
the series so designated shall be 2,000,000 (the "Preferred Shares").
Section 2. Preferred Shares -- Dividends.
(a) General. Subject to Section 9, the Corporation shall pay
in cash, when, as and if declared by the Board, out of funds legally available
therefor as provided by Section 2-304 of the M.G.C.L and limited by Section
2-311 of the M.G.C.L. (the "Legally Available Funds"), dividends at the
quarterly rate equal to the Applicable Dividend Rate (as defined below) per
Preferred Share, per quarter. Such dividends shall be cumulative, shall be paid
for each of the quarters ending March 30, June 30, September 30 and December 31
of each year, and shall be paid quarterly on each February 15, May 15, August 15
and November 15, with respect to the prior quarter, commencing May 15, 1997
(except that if such date is not a Business Day (as defined below), then such
dividend will be payable on the next succeeding Business Day) to the holders of
record at the close of business on the date specified by the Board at the time
such dividend is declared no more than thirty (30) days prior to the date fixed
for payment thereof. Dividends shall begin to accrue and be cumulative from the
date of issuance of such Preferred Share to and including the first to occur of
(i) the date on which the Liquidation Value (as defined herein) of such
Preferred Share (plus all accrued and unpaid dividends thereon whether or not
declared) is paid to the holder thereof in connection with the liquidation of
the Corporation or the redemption of such Preferred Share by the Corporation,
(ii) the last day of the quarter preceding the quarter in which such Preferred
Shares are converted into shares of Common Stock hereunder if such date is after
the record date for the Regular Quarterly Dividend (as defined herein) on the
Common Stock for the quarter in which such conversion takes place, (iii) the
last day of the quarter second preceding the quarter in which such Preferred
Shares are converted into shares of Common Stock hereunder if such date is prior
to the record date for the Regular Quarterly Dividend on the Common Stock for
the quarter in which such conversion takes place, or (iv) the date on which such
share is otherwise acquired and paid for by the Corporation.
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<PAGE> 3
(b) Cumulative Dividends. Each of such dividends shall be
fully cumulative, to the extent not previously paid. Any accrued dividend that
is not paid, or made available for payment, on the date set forth in Section
2(a) above shall accrue dividends at the Applicable Dividend Rate until such
amount has been paid. Any dividend payment with respect to the Preferred Shares
shall first be credited against any prior accrued and unpaid dividend. No
dividends shall be set apart for or paid upon the Common Stock or any other
shares of stock ranking junior in respect of dividends and distributions of
assets upon liquidation to the Preferred Shares unless all such cumulative
dividends on the Preferred Shares have been paid.
(c) Applicable Dividend Rate. With respect to any Preferred
Share issued and outstanding, the "Applicable Dividend Rate" shall be the
greater of (i) $0.295 per Preferred Share, per quarter, and (ii) the product of
1.05 and the per share quarterly dividend paid in that quarter in respect of the
common stock, par value $.0001 per share, of the Corporation (the "Common
Stock") (adjusted to reverse the effect of any event set forth in Section 7 that
would require an adjustment to the Conversion Ratio (as defined herein)). The
Applicable Dividend Rate shall be pro rated for the actual number of days in any
partial quarter.
(d) Pro Rata Distribution. All dividends paid with respect to
Preferred Shares pursuant to this Section 2 shall be paid pro rata in respect of
each Preferred Share entitled thereto. In the event that the Legally Available
Funds available for the payment of dividends shall be insufficient for the
payment of the entire amount of dividends payable with respect to Preferred
Shares on any date on which the Board has declared the payment of a dividend or
otherwise, the amount of any available surplus shall be allocated for the
payment of dividends with respect to the Preferred Shares and any other shares
of capital stock that are pari passu as to dividends pro rata based upon the
amount of accrued and unpaid dividends of such shares of capital stock.
(e) Business Day. For purposes hereof, the term "Business Day"
shall mean any Monday, Tuesday, Wednesday, Thursday or Friday which is not a day
on which banking institutions in New York City are authorized or obligated by
law or executive order to close.
Section 3. Preferred Shares -- Certain Restrictions. Unless
the dividends (including accrued and unpaid dividends in arrears whether or not
declared) described above in Section 2, which pursuant to their terms should
have been paid, have been paid in full or declared and set apart for payment,
the Corporation shall be prohibited from paying dividends on, making any other
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<PAGE> 4
distributions on, or redeeming or purchasing or otherwise acquiring for
consideration any capital stock of the Corporation (without regard to its rank,
either as to dividends or upon liquidation, dissolution or winding up). The
Corporation shall not permit any subsidiary or subpartnership of the Corporation
to purchase or otherwise acquire for consideration or make any payment with
respect to any shares of capital stock of the Corporation if the Corporation is
prohibited from purchasing or otherwise acquiring for consideration or making
any payment with respect to such shares at such time and in such manner pursuant
to the prior sentence, provided, however, that the Corporation shall not be
prohibited from making a capital contribution of capital stock of the
Corporation to any of its subsidiaries or subpartnerships or from issuing shares
of Common Stock upon conversion of any operating partnership units or similar
securities issued by any subsidiary or subpartnership.
Section 4. Preferred Shares -- Voting Rights.
(a) General. Except as limited by law or as specifically
provided herein, the holders of the Preferred Shares shall be entitled to vote
or consent on all matters submitted to the holders of Common Stock, together
with the holders of the Common Stock and the holders of any other classes or
series of stock which are entitled to vote on such matter, as a single class and
not as a separate class.
(b) Calculation of Votes. For the purposes of calculating the
votes cast for a particular matter when voting or consenting pursuant to Section
4(a), each Preferred Share will entitle the holder thereof to one vote for each
share of Common Stock into which such Preferred Share is convertible as provided
in Section 7 herein as of the record date for such vote or consent or, if no
record date is specified, as of the date of such vote or consent.
(c) Section 4(c) Directors. In addition to the other voting
rights described herein, so long as Five Arrows Realty Securities L.L.C., an
affiliate thereof, a successor in which the current members of Five Arrows
Realty Securities L.L.C. own greater than a majority interest of such successor,
or a member of Five Arrows Realty Securities L.L.C., is the holder of either (A)
all of the outstanding Preferred Shares or (B) an amount of the voting
securities of the Corporation which, if converted into shares of Common Stock,
would exceed 7.5% of the outstanding Common Stock on a fully diluted basis
(determined on the basis of then convertible, exercisable or exchangeable
securities, warrants or options issued by the Corporation (such amount as set
forth in clauses (A) and (B) above, the "Minimum Threshold"), then in each such
case, (i) the
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<PAGE> 5
number of directors constituting the Board shall be automatically increased by
one (1) member and (ii) upon the occurrence of any of (x) the payment of the
Regular Quarterly Dividend on the Common Stock for any quarter of less than $.28
per share (adjusted to reverse the effect of any event set forth in Section 7
that would require an adjustment to the Conversion Ratio (the "Dividend
Reduction Default"), (y) the Corporation's ratio of its Consolidated EBITDA to
its reported interest expense (as described in clause (2) under the definition
of Consolidated EBITDA below) for each of three consecutive fiscal quarters was
less than 1.25 to 1.00 (the "Earnings Default"), or (z) the Corporation fails to
pay in full the quarterly dividend payable hereunder (whether or not declared)
at any time in respect of the Preferred Shares (the "Dividend Payment Default"),
then, in the case of any of the events described in clauses (x), (y), or (z),
the Board shall be automatically increased by an additional one (1) member for
an aggregate increase of two (2) directors pursuant to clauses (i) and (ii) of
this Section 4(c). The position on the Board established pursuant to clause (i)
of this Section 4(c) shall remain available until the Minimum Threshold is no
longer satisfied and shall not be available at any time thereafter. The position
on the Board established pursuant to clause (ii) of this Section 4(c) shall
remain available until the earlier of (i) the date on which the Minimum
Threshold fails to be satisfied and (ii) the Dividend Reduction/Earnings Cure
(as defined herein). Any director elected pursuant to this section shall be
deemed to have resigned upon the position created hereby not being available and
shall promptly tender a written resignation if so requested.
The term "Regular Quarterly Dividend" means any cash dividend
or dividends paid in any calendar quarter that do not in the aggregate exceed
the Corporation's reported Funds From Operations (as defined by the National
Association of Real Estate Investment Trusts prior to 1996) for the quarter
relating to such dividend.
The term "Consolidated EBITDA" means the consolidated net
income of the Corporation (before extraordinary income or gains) as reported in
its Quarterly Report on Form 10-Q under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or otherwise furnished to holders of Preferred
Shares pursuant to Section 4(m) increased (to the extent deducted in determining
consolidated net income) by the sum of the following (without duplication):
(1) all income and state franchise taxes paid or
accrued according to Generally Accepted Accounting Principals
("GAAP") for such period (other than income taxes attributable
to extraordinary, unusual or non-
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<PAGE> 6
recurring gains or losses except to the extent that such
gains were not included in Consolidated EBITDA),
(2) all interest expense paid or accrued in
accordance with GAAP for such period (including financing fees
and amortization of deferred financing fees and amortization
of original issue discount),
(3) depreciation and depletion reflected in such
reported net income,
(4) amortization reflected in such reported net
income including, without limitation, amortization of
capitalized debt issuance costs (only to the extent that such
amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to clause (2) above), and
(5) any other non-cash charges or discretionary
prepayment penalties, to the extent deducted from consolidated
net income (including, but not limited to, income allocated to
minority interests).
(d) Section 4(d) Directors. If, at any time, (i) the rights
granted pursuant to Section 4(c) shall no longer be available, (ii) any persons
designated to serve on the Board pursuant to Section 4(c) shall have resigned as
required by the terms of Section 4(c) and (iii) a Dividend Payment Default shall
have occurred for three consecutive quarters, the number of directors
constituting the Board shall be automatically increased by two (2) members. The
position on the Board created pursuant to this Section 4(d) shall continue to be
available until the earlier of (i) the date on which there are no Preferred
Shares of the Corporation outstanding and (ii) the date on which the Dividend
Payment Cure (as defined herein) is effected. Any director elected pursuant to
this section shall be deemed to have resigned upon the position created hereby
not being available and shall promptly tender a written resignation if so
requested.
(e) Election of Preferred Directors. The holders of the
Preferred Shares shall have the special right, voting separately as a single
class, to elect as soon as practical, a director to fill each vacancy created
pursuant to Section 4(c) or 4(d) and to elect their respective successors at
each succeeding annual meeting of the Corporation thereafter at which such
successor is to be elected. The director so elected from time to time in respect
of clause (i) of Section 4(c) shall be referred to herein as the "Section
4(c)(i) Director." The director so elected from time to time in respect of
clause (ii) of Section 4(c) shall be referred to
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<PAGE> 7
herein as the "Section 4(c)(ii) Director." The directors so elected from time to
time in respect of Section 4(d) shall be referred to herein as the "Section 4(d)
Directors." As used herein, the term "Preferred Director" shall refer to each of
the Section 4(c)(i) Director, the Section 4(c)(ii) Director or a Section 4(d)
Director, as appropriate, and the term "Preferred Directors" shall refer to all
such directors.
(f) Classification of Board. Each vacancy created upon the
Board from time to time pursuant to clause (i) or (ii) of Section 4(c) or
Section 4(d), as the case may be, shall if the Corporation shall have a
classified board of directors, be apportioned among the classes of directors in
nearly as equal a number as possible.
(g) Cure. Upon the occurrence of a Dividend Reduction Default
or an Earnings Default, the same shall be deemed to continue to exist until such
time as (the "Dividend Reduction/Earnings Cure") (i) the Regular Quarterly
Dividend paid in the immediately preceding quarter on the Common Stock shall be
greater than $.28 per share (adjusted to reverse the effect of any event set
forth in Section 7 that would require an adjustment to the Conversion Ratio),
(ii) the Corporation reports for the prior three consecutive fiscal quarters
that the ratio of its Consolidated EBITDA to its reported interest expense (as
described in clause (2) under the definition of Consolidated EBITDA above) for
each such quarter was greater than 1.25 to 1.00, and (iii) all accrued and
unpaid dividends, whether or not declared, on the Preferred Shares have been
paid or made available for payment. Upon the occurrence of the Dividend Payment
Default, the same shall be deemed to continue and exist until (the "Dividend
Payment Cure") such time as the earlier to occur of (i) none of the Preferred
Shares shall remain outstanding and (ii) all accrued and unpaid dividends,
whether or not declared, on the Preferred Shares have been paid or made
available for payment.
(h) Board Committees. The 4(c)(i) Director shall be designated
as a member of every committee of the Board.
(i) Voting Procedures. At each meeting of the stockholders of
the Corporation at which the holders of the Preferred Shares shall have the
right to vote as a single class, as provided in this Section 4, the presence in
person or by proxy of the holders of record of a majority of the total number of
Preferred Shares then outstanding shall be necessary and sufficient to
constitute a quorum of such class for such election by such stockholders as a
class. At any such meeting or adjournment thereof, (x) the absence of a quorum
of holders of Preferred Shares shall not prevent the election of directors other
than the
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<PAGE> 8
Preferred Directors, and the absence of a quorum of the holders of any other
class or series of stock for the election of such other directors shall not
prevent the election of any Preferred Directors by the holders of the Preferred
Shares, and (y) in the absence of a quorum of the holders of the Preferred
Shares, a majority of the holders present or by proxy shall, subject to
applicable law, have the power to adjourn the meeting after all other business
has been conducted from time to time and place to place without notice other
than announcement at the meeting until a quorum shall be present.
(j) Vacancy. In case any vacancy shall occur among the
Preferred Directors such vacancy shall be filled by the vote of holders of a
majority of the Preferred Shares, voting as a single class, present and voting,
in person or by proxy, at a special meeting of such stockholders called for that
purpose.
(k) Written Consent. Notwithstanding the foregoing, any action
required or permitted to be taken by holders of Preferred Shares at any meeting
of stockholders may be taken without a meeting, without prior notice and without
a vote, if a consent, in writing, setting forth the action so taken, shall be
signed by the holders of Preferred Shares who would have been sufficient to
approve such action at a meeting duly held and shall be executed and delivered
to the Secretary of the Corporation for placement among the minutes of
proceedings of the stockholders of the Corporation.
(l) Restrictions. So long as any Preferred Shares of the
Corporation are outstanding, without the consent of the holders of at least a
majority of the Preferred Shares at the time outstanding, given in person or by
proxy, at a meeting called for that purpose at which the holders of the
Preferred Shares shall vote separately as a class, or by the unanimous consent
in writing of all of the holders of the Preferred Shares, the Corporation may
not (i) effect or validate the amendment, alteration or repeal of any provision
of these Articles Supplementary, (ii) effect or validate the amendment,
alteration or repeal of any provision of the Charter of the Corporation which
would adversely effect the rights of the holders of the Preferred Shares as
such, (iii) other than as required to maintain the status of the Corporation as
a real estate investment trust (or to prevent the Company from becoming a
Pension-held REIT) as described in Section 856 of the Internal Revenue Code of
1986, as amended, effect or validate the amendment, alteration or repeal of any
provision of the Charter of the Corporation which would increase in any respect
the restrictions or limitations on ownership applicable to the Preferred Shares
pursuant thereto, (iv) effect or validate the amendment, alteration or repeal of
any provision of the Charter of the Corporation or By-Laws of the Corporation in
a manner which
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<PAGE> 9
would make the right to indemnification provided to any present or future
Preferred Director materially different from that provided to other members of
the Board, (v) other than the 2,000,000 Preferred Shares authorized herein,
issue Preferred Shares (or a series of preferred stock that would vote as a
class with the Preferred Shares with respect to the election of any Preferred
Director) or shares of stock ranking senior or equal to the Preferred Shares (as
to dividends or upon liquidation, dissolution or winding up), or (vi) effect or
validate the amendment, alteration or repeal of any provision of the Charter of
the Corporation or By-Laws of the Corporation so as to increase the number of
members of the Board beyond twelve (12) members (not including any Preferred
Directors). Nothing in this Section 4(l) shall prevent the Corporation from (i)
issuing any shares of stock of the Corporation which rank junior (as to
dividends and upon liquidation, dissolution or winding up) to the Preferred
Shares upon such terms as the Board shall authorize from time to time, (ii)
changing the domicile of the Corporation, or (iii) changing the Corporation's
form from a corporation to a statutory business trust.
(m) Reports. The Corporation shall mail to each holder of
record of Preferred Shares, at such holder's address in the records of the
Corporation, within 45 days after the end of the first three fiscal quarters of
each fiscal year and within 90 days after the end of each fiscal year, its
financial reports for such fiscal period in such form and containing such
independent accountants report as set forth under the rules of the Securities
and Exchange Commission (the "Commission") (together with the report of the
Corporation's independent accountants with respect to such fiscal period)
irrespective of whether the Corporation is then required to file reports under
such rules; provided, however, that (i) such independent accountants report need
only be provided in connection with the fiscal year end report and (ii) in the
event that the Corporation has duly filed a Form 12b-25 under the Exchange Act
with the Commission in respect of any financial report, the Corporation may
provide such financial report to the holders of the Preferred Shares within the
time period specified by Rule 12b-25 under the Exchange Act.
(n) Compensation. Except to the extent that the Board may
otherwise determine hereafter, the Preferred Directors shall not be entitled to
receive any compensation, in cash or kind, in connection with their service as a
director of the Corporation; provided, that, the indemnification or insurance
provided by the Corporation to its directors shall not be deemed "compensation"
for these purposes.
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<PAGE> 10
Section 5. Preferred Share -- Redemption.
(a) General. Subject to Section 8, the Corporation may, at its
option, to the extent it shall have Legally Available Funds therefor, redeem all
(but not less than all) of the outstanding Preferred Shares, at any time on or
after the date which is the fifth anniversary of the original date of issuance
of Preferred Shares.
(b) Notice. The option of the Corporation to redeem the
Preferred Shares pursuant to this Section 5 shall be exercised by mailing of a
written notice of election by the Corporation to the holders of the Preferred
Shares at such holder's address appearing in the records of the Corporation,
which notice shall be sent at least 30 days prior to the date specified therein
for the redemption of the Preferred Shares. Such notice shall state, at a
minimum, the date on which such redemption shall occur and the last date on
which such holder can exercise the conversion rights provided for in Section 7
herein (the "Final Conversion Date").
(c) Conversion. During the period beginning on the date on
which each holder of the Preferred Shares receives such a written notice of
election pursuant to subsection (b) above and ending on the thirtieth day
following the mailing of such notice, each holder of the Preferred Shares may
exercise its rights pursuant to Section 7 herein.
(d) Redemption Price. On the redemption date specified in the
redemption notice (which shall not be less than 30 days after the mailing of
such notice), the Corporation shall be required, unless such holder of Preferred
Shares has exercised its rights pursuant to subsection (c) above, to purchase
from such holder of Preferred Shares (upon surrender by such holder at the
Corporation's principal office of the certificate representing such Share), such
Preferred Shares, at a price equal to the product of (i) $12.50 per share plus
accrued and unpaid dividends (whether or not declared and accrued through, but
not including, the date of payment for redemption or the date payment is made
available for payment to the holder thereof), plus a premium equal to the
following percentage of $12.50:
<TABLE>
<CAPTION>
Redemption Occurs
On or After But Prior to % Premium
- ----------- ------------ ---------
<S> <C> <C>
December 31, 2001 December 31, 6.0
2003
December 31, 2003 December 31, 5.0
2005
December 31, 2005 December 31, 4.0
2007
</TABLE>
-10-
<PAGE> 11
<TABLE>
<CAPTION>
Redemption Occurs
On or After But Prior to % Premium
- ----------- ------------ ---------
<S> <C> <C>
December 31, 2007 December 31, 3.0
2009
December 31, 2009 December 31, 2.0
2010
December 31, 2010 December 31, 1.0
2011
December 31, 2011 0.0
</TABLE>
and (ii) the number of Preferred Shares held by such holder to be redeemed (the
"Redemption Price").
(e) Dividends. No Preferred Share is entitled to any dividends
accruing thereon after the date on which the payments provided by and in
accordance with Section 5(d) are paid or made available for payment to the
holder thereof. On such date all rights of the holder of such Preferred Share
shall cease, and such Preferred Share shall not be deemed to be outstanding.
(f) In addition to the redemption provisions set forth in this
Section 5, if a Change of Control occurs, the Corporation will have the right to
redeem the Preferred Shares as provided in Section 8(a).
Section 6. Preferred Shares -- Liquidation, Dissolution or
Winding Up.
(a) Liquidation Payment. In the event of any liquidation,
dissolution or winding up of the Corporation, then out of the assets of the
Corporation before any distribution or payment to the holders of shares of
capital stock of the Corporation ranking junior to the Preferred Shares (as to
dividends or upon liquidation, dissolution or winding up), the holders of the
Preferred Shares shall be entitled to be paid $12.50 per share (the "Liquidation
Value") plus accrued and unpaid dividends whether or not declared (or a pro rata
portion thereof with respect to fractional shares); provided, however, that if
such liquidation, dissolution or winding up of the Corporation occurs in
connection with or subsequent to a Change of Control (as defined in Section 8),
then the holders of the Preferred Shares shall be entitled to be paid the Put
Payment (as defined herein). Except as provided in this Section 6, the holders
of the Preferred Shares shall be entitled to no other or further distribution in
connection with such liquidation, dissolution or winding up. A merger or
consolidation alone, in which the Corporation is a constituent party, shall not
be deemed to be a liquidation, dissolution or winding up hereunder; provided
that (i) the Corporation is the surviving entity of such merger or consolidation
and (ii) the Preferred Shares shall not have been adversely affected thereby.
Additionally, a transaction, the sole purpose of which is that the
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<PAGE> 12
Corporation is seeking to change its domicile or to change its form from a
corporation to a statutory business trust shall not be deemed to be a
liquidation, dissolution or winding up hereunder.
(b) Pro Rata Distribution. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation
available for distribution to the holders of Preferred Shares shall be
insufficient to permit payment in full to such holders the sums which such
holders are entitled to receive in such case, then all of the assets available
for distribution to the holders of the Preferred Shares shall be distributed
among and paid to the holders of Preferred Shares, ratably in proportion to the
respective amounts that would be payable to such holders if such assets were
sufficient to permit payment in full.
Section 7. Preferred Shares -- Conversion.
(a) Conversion Rights. Subject to and upon compliance with the
provisions of this Section 7, a holder of Preferred Shares shall have the right,
at such holders' option, at any time to convert all or a portion of such shares
into the number of fully paid and non-assessable shares of Common Stock obtained
by dividing the number of Preferred Shares being converted by the Conversion
Ratio (as in effect at the time and on the date provided for in the last
paragraph of paragraph (b) of this Section 7) and by surrendering to the
Corporation such Preferred Shares to be converted. Such surrender shall be made
in the manner provided in Section 7, paragraph (b); provided, however, that the
right to convert any Preferred Shares called for redemption pursuant to Section
5 shall terminate at the close of business on the Final Conversion Date, unless
the Corporation shall default in making payment of any cash payable upon such
redemption under Section 5 hereof. The Conversion Ratio with respect to any
Preferred Shares will initially be equal to 1, subject to adjustment as
described below.
(b) Manner of Conversion.
(i) In order to exercise the conversion right, the
holder of each Preferred Share to be converted shall surrender to the
Corporation the certificate representing such share, duly endorsed or assigned
to the Corporation or in blank, accompanied by written notice to the Corporation
that the holder thereof elects to convert such Preferred Shares. Unless the
shares of Common Stock issuable on conversion are to be issued in the same name
as the name in which such Preferred Shares are registered, each Preferred 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.
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<PAGE> 13
(ii) Holders of Preferred Shares shall be entitled on
the date of conversion of any Preferred Shares to receive all accumulated and
unpaid dividends provided for pursuant to Section 2.
(iii) As promptly as practicable after the surrender
of certificates of Preferred Shares as aforesaid, the Corporation shall issue
and shall deliver at such office to such holder, or on such holder's written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such Preferred Shares in accordance with
the provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (c) of this Section 7 and shall pay the amounts provided under
Section 7(b)(ii).
(iv) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which
certificates for Preferred Shares 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 shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Ratio in effect at such time on
such date unless the stock transfer books of the Corporation shall be closed on
that date, in which event such conversion shall have been deemed to have been
effected and such person or persons shall be deemed to have become the 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 Ratio in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation.
(c) Fractional Shares. No fractional shares or scrip
representing fractions of shares of Common Stock shall be issued upon conversion
of the Preferred Shares. Instead of any fractional interest in a share of Common
Stock that would otherwise be deliverable upon the conversion of Preferred
Shares, the Corporation shall pay to the holder of such share an amount in cash
based upon the Current Market Price (as defined herein) of Common Stock on the
Trading Day (as defined herein) immediately preceding the date of conversion. If
more than one Preferred Share shall be surrendered for conversion at one time by
the share holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Preferred Shares so surrendered.
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<PAGE> 14
(d) Adjustment of Conversion Ratio. The Conversion Ratio shall
be adjusted from time to time as follows:
(i) If the Corporation shall, while any Preferred
Shares are outstanding, (A) pay a dividend or make a distribution with respect
to its capital stock in shares of its Common Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares, (C) combine its
outstanding Common Stock into smaller number of shares or (D) issue any shares
of capital stock by reclassification of its Common Stock, the Conversion Ratio
in effect at the opening of business on the day next 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 Preferred Shares thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock that such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such Preferred
Shares 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 after the opening of
business on the day next following the record date (except as provided in
paragraph (h) below) in the case of a dividend or distribution and shall become
effective immediately after 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, while any Preferred
Shares are outstanding, issue rights, options or warrants to all holders of
Common Stock entitling them (for a period expiring within 45 days after the
record date mentioned below) to subscribe for or purchase Common Stock at a
price per share less than the Current Market Price per share of Common Stock on
the record date for the determination of shareholders entitled to receive such
rights or warrants, then the Conversion Ratio in effect at the opening of
business on the day next following such record date shall be adjusted to equal
the ratio determined by multiplying (I) the Conversion Ratio in effect
immediately prior to the opening of business on the day next following the date
fixed for such determination by (II) a fraction, the numerator of which shall be
the sum of (A) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination (without giving effect to such
issuance) and (B) the number of shares that the aggregate proceeds to the
Corporation from the exercise of such rights or warrants for Common Stock would
purchase
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<PAGE> 15
at such Current Market Price, and the denominator of which shall be the sum of
(A) the number of Shares of Common Stock outstanding on the close of business on
the date fixed for such determination (without giving effect to such issuance)
and (B) the number of additional shares of Common Stock offered for subscription
or purchase pursuant to such rights or warrants. Such adjustment shall become
effective immediately after the opening of business on the day next following
such record date (except as provided in paragraph (h) below). In determining
whether any rights or warrants entitle the holders of Common Stock to subscribe
for or purchase shares of Common Stock 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 or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
(iii) If the Corporation shall distribute to all
holders of its Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidence of its indebtedness or assets (excluding
Regular Quarterly Dividends and excluding distributions referred to in (i)
above) or rights or warrants to subscribe for or purchase any of its securities
(excluding those rights and warrants issued to all holders of Common Stock
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
Stock, 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 such case each holder
of Preferred Shares shall receive concurrently with the receipt by holders of
the Common Stock the kind and amount of such Securities that it would have owned
or been entitled to receive had such Preferred Shares been converted immediately
prior to such distribution or related record date, as the case may be.
(iv) Distribution of Cash. In case the Corporation
shall pay or make a dividend or other distribution on its Common Stock
exclusively in cash (excluding Regular Quarterly Dividends), each holder of
Preferred Shares shall receive concurrently with the receipt by holders of the
Common Stock the kind and amount of any such distribution that it would have
owned or been entitled to receive had such Preferred Shares been converted
immediately prior to such distribution or related record date, as the case may
be.
(v) No adjustment in the Conversion Ratio shall be
required unless such adjustment would require a cumulative increase or decrease
of at least .5%; provided, however, that any adjustments that by reason of this
subparagraph (v) are not required to be made shall be carried forward and taken
into account
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<PAGE> 16
in any subsequent adjustment until made. Notwithstanding any other provisions of
this Section 7, the Corporation shall not be required to make any adjustment of
the Conversion Ratio for (x) the issuance of any shares of Common Stock 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 shares of Common Stock 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 shares of Common Stock under such
plan, (y) the issuance of contingent rights issued pursuant to a stockholders'
rights plan adopted by the Corporation pursuant to which the acquisition by any
third party of a specified percentage of Common Stock triggers the
exercisability of such rights to purchase Common Stock, for so long as no event
has occurred triggering such rights to exercise or the issuance of shares of
Common Stock upon conversion of currently outstanding operating partnership
units, and (z) the issuance of Common Stock or options to purchase Common Stock
pursuant to an employee benefit 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 Ratio, 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 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, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
(e) Adjustment of Conversion Ratio Upon Certain Transactions.
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 shares of Common Stock, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Stock and excluding any transaction as to which subparagraph (d) of this Section
7 applies) (each of the foregoing being referred to herein as a "Transaction"),
in each case as a result of which shares of Common Stock shall be converted into
the right to receive stock, securities or other property (including cash or any
combination thereof) of another corporation, each Preferred Share that is not
converted into the right to receive stock, securities or other property in
connection with such Transaction shall thereafter be convertible into the kind
and
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<PAGE> 17
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 shares of Common Stock into which one Preferred Share
was convertible immediately prior to such Transaction, assuming such holder of
Common Stock (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 ("Constituent Person"), or an
affiliate of a Constituent Person or (ii) failed to exercise his or her rights
of 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 share of Common Stock
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 Preferred Shares that will contain provisions
enabling the holders of the Preferred Shares that remain outstanding after such
Transaction to convert into the consideration received by holders of Common
Stock at the Conversion Ratio in effect immediately prior to such Transaction.
The provisions of this paragraph (e) shall similarly apply to successive
Transactions.
(f) Notice of Certain Events. If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than the Regular Quarterly
Dividend); or
(ii) the Corporation shall authorize the granting to
the holders of Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the
Common Stock (other than any event to which subparagraph (d)(i) of this Section
7 applies) or any consolidation or merger to which the
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Corporation is a party and for which approval of any shareholders of the
Corporation is required, or a statutory share exchange, or self tender offer by
the Corporation for all or substantially all of its outstanding shares of Common
Stock or the sale or transfer of all or substantially all of the assets of the
Corporation as an entity; or
(iv) there shall occur the involuntary liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall cause to be mailed to the holders of Preferred Shares, at the
address as shown on the stock records of the Corporation, as promptly as
possible, but at least 15 Business 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 Stock 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 Stock shall be entitled to exchange their shares
of Common Stock 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) Notice of Adjustment of Conversion Ratio. Whenever the
Conversion Ratio is adjusted as herein provided, the Corporation shall prepare a
notice of such adjustment of the Conversion Ratio setting forth the adjusted
Conversion Ratio and the effective date of such adjustment and shall mail such
notice of such adjustment of the Conversion Ratio to the holders of the
Preferred Shares at such holders' last address as shown on the stock records of
the Corporation.
(h) Timing of Adjustment. 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 Preferred Shares converted
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock 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.
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(i) No Duplication of Adjustments. There shall be no
adjustment of the Conversion Ratio in case of the issuance of any 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 Ratio 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.
(j) Other Adjustments to Conversion Ratio. If the Corporation
shall take any action affecting the Common Stock, other than action described in
this Section 7, that would materially adversely affect the conversion rights of
the holders of the Preferred Shares or the value of such conversion rights, the
Conversion Ratio for the 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) Reservation, Validity, Listing and Securities Law
Compliance With Respect to Shares of Common Stock.
(i) The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock for the purpose
of effecting conversion of the Preferred Shares, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding Preferred Shares
not therefore converted. Before taking any action which would cause an
adjustment in the Conversion Ratio such that Common Stock issuable upon the
conversion of Preferred Shares would be issued below par value of the Common
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully-paid and nonassessable shares of Common Stock at such
adjusted Conversion Ratio.
(ii) The Corporation covenants that any shares of
Common Stock issued upon the conversion of the Preferred Shares shall be validly
issued, fully paid and non-assessable.
(iii) The Corporation shall endeavor to list the
shares of Common Stock required to be delivered upon conversion of the Preferred
Shares, prior to such delivery, upon each national securities exchange, if any,
upon which the outstanding Common Stock is listed at the time of such delivery.
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(iv) Prior to the delivery of any securities that
the Corporation shall be obligated to deliver upon conversion of the Preferred
Shares, the Corporation shall endeavor to comply with all federal and state laws
and regulations thereunder requiring the registration of such securities with,
or any approval of or consent to the delivery thereof, by any governmental
authority.
(l) Transfer Taxes. The Corporation will pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock or other securities or property on
conversion of the 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 shares of Common Stock or
other securities or property in a name other than that of the holder of the
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) Certain Defined Terms. The following definitions shall
apply to terms used in this Section 7:
(1) Current Market Price. For the purpose of any computation
under this Section 7, the Current Market Price per share of
Common Stock on any date in question shall be deemed to be the
average of the daily closing prices for the five consecutive
Trading Days immediately preceding such date in question;
provided, however, that if another event occurs that would
require an adjustment pursuant to subsection (f) through (j),
inclusive, the Board may make such adjustments to the closing
prices during such five Trading Day period as it deems
appropriate to effectuate the intent of the adjustments in
this Section 7, in which case any such determination by the
Board shall be set forth in a resolution of the Board and
shall be conclusive.
(2) "Trading Day" shall mean a day on which Preferred Shares
are traded on the national securities exchange or quotation
system used to determine the closing price.
Section 8. Preferred Shares -- Change of Control, Put Option
and REIT-Put Option.
(a) In addition to the redemption provisions of Section 5, if
on or before December 31, 2001, an event or transaction will result in a Change
of Control (as defined herein), the Corporation
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may, at its option, to the extent it shall have Legally Available Funds
therefor, redeem all (but not less than all) of the outstanding Preferred Shares
on the date of such Change of Control. The right of the Corporation to redeem
the Preferred Shares pursuant to this Section 8(a) shall be exercised by mailing
a written notice of election by the Corporation to the holders of Preferred
Shares at such holder's address appearing in the records of the Corporation, to
the extent practicable, not less than 30 days prior to the date of the Change of
Control. During the period beginning on the date such notice is mailed and
ending on the date seven days prior to the date of such Change of Control, each
holder of Preferred Shares may exercise its right to convert pursuant to Section
7 herein (which exercise shall, unless otherwise indicated, be conditioned upon
the occurrence of the specified Change of Control). On the date of the Change of
Control, the Corporation shall be required, unless such holder of Preferred
Shares has exercised its right to convert pursuant to the prior sentence, to
purchase from such holder of Preferred Shares (upon surrender by such holder at
the Corporation's principal office of the certificate representing such share),
such Preferred Shares, at a price equal to the product of (i) $13.75 plus
accrued and unpaid dividends (accrued through the date of payment for redemption
or the date such payment is made available) and (ii) the number of Preferred
Shares held by such holder to be redeemed. No Preferred Share is entitled to any
dividends accruing after the date on which the payment for such share is paid or
made available for payment to the holder thereof.
(b) If a Change of Control or Put Event occurs each holder of
Preferred Shares will have the right to require that the Corporation, to the
extent the Corporation shall have Legally Available Funds therefor, to redeem
such holder's Preferred Shares at a redemption price payable in cash in an
amount equal to 102% of the Liquidation Value thereof, plus accrued and unpaid
dividends whether or not declared, if any (the "Put Payment"), to the date of
redemption or the date payment is made available (the "Put Date"), pursuant to
the offer described in subsection (d) below (the "Put Offer"). Upon the
expiration of the Put Offer holders of Preferred Shares shall have no further
right to require the Corporation to redeem such holder's Preferred Shares unless
and until another Change of Control or Put Event occurs.
(c) If a REIT-Put Event occurs each holder of Preferred Shares
will have the right to require that the Corporation, to the extent the
Corporation shall have Legally Available Funds therefor, to redeem such holder's
Preferred Shares at a redemption price payable in cash in an amount equal to the
greater of (i) 110% of the Liquidation Value thereof, plus accrued and unpaid
dividends whether or not declared, if any, (ii) 105% of the Current Market
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Price (as defined in Section 7(m), plus accrued and unpaid dividends whether or
not declared, if any, and (iii) the difference between the 52-Week Trading High
and $12.50, plus accrued and unpaid dividends whether or not declared, if any
(any of (i), (ii) or (iii), the "REIT-Put Payment"), to the date of redemption
or the date payment is made available (the "REIT-Put Date"), pursuant to the
offer described in subsection (d) below (the "REIT-Put Offer"). Upon the
expiration of the REIT-Put Offer holders of Preferred Shares shall have no
further right to require the Corporation to redeem such holder's Preferred
Shares unless and until another REIT-Put Event occurs. "52-Week Trading High"
means, for any date, the highest per share closing price of the Common Stock for
the 52-calendar week period immediately preceding such date
(d) Within 15 days following the Corporation becoming aware
that an event has occurred that has resulted in any Change of Control, Put Event
or REIT-Put Event, the Corporation shall mail a notice to each holder of
Preferred Shares, at such holder's address appearing in the records of the
Corporation, stating (i) that a Change of Control, Put Event or REIT-Put Event,
as applicable, has occurred and that such holder has the right to require the
Corporation to redeem such holder's Preferred Shares in cash, (ii) the date of
redemption (which shall be a Business Day, no earlier than 30 days and no later
than 60 days from the date such notice is mailed, or such later date as may be
necessary to comply with the requirements of the Exchange Act), (iii) the
redemption price for the redemption, and (iv) the instructions determined by the
Corporation, consistent with this subsection, that a holder must follow in order
to have its Preferred Shares redeemed.
(e) On the Put Date or the REIT-Put Date, as applicable, the
Corporation will, to the extent lawful, accept for payment Preferred Shares or
portions thereof tendered pursuant to the Put Offer or the REIT-Put Offer, as
applicable, and pay an amount equal to the Put Payment or the REIT-Put Payment,
as applicable, in respect of all Preferred Shares or portions thereof so
tendered. The Corporation shall promptly mail to each holder of Preferred Shares
to be redeemed payment in an amount equal to the redemption price for such
Preferred Shares.
(f) Notwithstanding anything else herein, to the extent they
are applicable to any Change of Control Offer, the Corporation will comply with
Section 14 of the Exchange Act and the provisions of Regulation 14D and 14E and
any other tender offer rules under the Exchange Act and any other federal and
state securities laws, rules and regulations and all time periods and
requirements shall be adjusted accordingly
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(g) "Change of Control" means each occurrence of any of the
following: (i) the acquisition, directly or indirectly, by any individual or
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act)
of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except
that such individual or entity shall be deemed to have beneficial ownership of
all shares that any such individual or entity has the right to acquire, whether
such right is exercisable immediately or only after passage of time) of more
than 30% of the aggregate outstanding voting power of capital stock of the
Corporation; (ii) other than with respect to the election, resignation or
replacement of the Preferred Directors, during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Corporation was approved by a vote of 66 2/3% of the directors of the
Corporation (excluding Preferred Directors) then still in office who were either
directors at the beginning of such period, or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Corporation then in office; and (iii)
(A) the Corporation consolidates with or merges into another entity or conveys,
transfers or leases all or substantially all of their respective assets
(including, but not limited to, real property investments) to any individual or
entity, or (B) any corporation consolidates with or merges into the Corporation,
which in either event (A) or (B) is pursuant to a transaction in which the
outstanding voting capital stock of the Corporation is reclassified or changed
into or exchanged for cash, securities (unless the holders of the exchanged
securities of the Corporation immediately prior to such transaction hold
immediately after such transaction at least a majority of the securities into
which such exchange was made) or other property; provided, however, that the
events described in clause (iii) shall not be deemed to be a Change of Control
if the sole purpose of such event is that the Corporation is seeking to change
its domicile or to change its form from a corporation to a statutory business
trust.
(h) "Put Event" means each occurrence of the Corporation
ceasing to be engaged primarily in the business of owning and managing triple
net leased properties directly, or through subsidiaries, as carried on as of the
date hereof and described in the Corporation's Annual Report on Form 10-K as
filed with the Commission for the year ended December 31, 1995.
(i) "REIT-Put Event" means each occurrence of either of (i)
the Corporation fails to qualify as a real estate investment trust as described
in Section 856 of the Internal Revenue Code of 1986, as amended, other than as a
result of any action, or
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<PAGE> 24
unreasonable failure to act, by the holders of Preferred Shares; (ii) the
Corporation becomes a "Pension-held REIT" as defined in Section 856(h)(3)(D) of
the Internal Revenue Code of 1986, as amended, other than as a result of any
action, or unreasonable failure to act, by holders of Preferred Shares.
Section 9. Preferred Shares -- Ownership Limitations.
(a) (1) For the purposes of this Section 9, the following
terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Capital Stock by a
Person who would be treated as an owner of such shares of Capital Stock
either directly or indirectly through the application of Section 544 of
the Code as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have correlative meanings:
"Beneficiary" shall mean a beneficiary of the Trust as determined
pursuant to Section 9(b)(5).
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"By-Laws" shall mean the By-Laws of the Corporation.
"Capital Stock" shall mean stock that is Common Stock, Excess Stock or
Preferred Stock, if any.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Constructive Ownership" shall mean ownership of Capital Stock by a
Person who would be treated as an owner of such shares of Capital Stock
either directly or indirectly through the application of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned"
shall have correlative meanings.
"Equity Stock" shall mean Common Stock and Preferred Stock in
the aggregate.
"Market Price" on any date shall mean, with respect to the Common
Stock, the average of the daily market price for ten consecutive
trading days immediately preceding the date. The market price for each
such trading day shall be determined as follows: (A) if the Common
Stock is listed or admitted to
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trading on any securities exchange or included for quotation on the
NASDAQ-National Market System, the closing price, regular way, on such
day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the Corporation; (B) if the Common Stock
is not listed or admitted to trading on any securities exchange or
included for quotation on the NASDAQ-National Market System, the last
reported sale price on such day or, if no sale takes place on such day,
the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the Corporation;
or (C) if the Common Stock is not listed or admitted to trading on any
securities exchange or included for quotation on the NASDAQ-National
Market System and no such last reported sale price or closing bid and
asked prices are available, the average of the reported high bid and
low asked prices on such day, as reported by a reliable quotation
source designated by the Corporation, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than ten days
prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the
ten days prior to the date in question, the Market Price of the Common
Stock shall be determined by the Corporation acting in good faith on
the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate.
"Ownership Limit" shall mean 9.8% of the value of the outstanding
Equity Stock of the Corporation.
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17)
of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the
Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also
includes a group as that term is used for purposes of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer that results in Excess Stock, the purported
beneficial transferee for whom the Purported Record Transferee would
have acquired shares of Equity Stock if such transfer had been valid
under Section 9(a)(2).
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"REIT" shall mean a Real Estate Investment Trust under Section 856 of
the Code.
"Restriction Termination Date" shall mean the first day on which the
Board of Directors of the Corporation determines that it is no longer
in the best interests of the Corporation to attempt to, or continue to,
qualify as a REIT.
"Transfer" shall mean any sale, transfer, gift, hypothecation, pledge,
assignment, devise or other disposition of Capital Stock (including (i)
the granting of any option or entering into any agreement for the sale,
transfer or the disposition of Equity Stock or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible
into or exchangeable for Capital Stock), whether voluntary or
involuntary, whether of record, constructively or beneficially and
whether by operation of law or otherwise.
"Trust shall mean the trust created pursuant to Section 9(b)(1).
"Trustee" shall mean the Corporation, acting as trustee for the Trust,
or any successor trustee appointed by the Corporation.
(2)(A) Except as provided in Section 9(a)(9), prior
to the Restriction Termination Date, no Person shall Beneficially Own
or Constructively Own shares of the outstanding Equity Stock in excess
of the Ownership Limit; (B) except as provided in Section 9(a)(9),
prior to the Restriction Termination Date, any Transfer that, if
effective, would result in any Person Beneficially Owning or
Constructively Owning Equity Stock in excess of the Ownership Limit
shall be void ab initio as to the Transfer of that number of shares of
Equity Stock which would be otherwise Beneficially or Constructively
Owned by such Person in excess of the Ownership Limit; and the intended
transferee shall acquire no rights in such excess shares of Equity
Stock; (C) except as provided in Section 9(a)(9), prior to the
Restriction Termination Date, any Transfer that, if effective, would
result in the Equity Stock's being Beneficially Owned by fewer than 100
Persons (determined without reference to any rules of attribution)
shall be void ab initio as to the Transfer of that number of shares
which would be otherwise Beneficially or Constructively Owned by the
transferee; and the intended transferee shall acquire no rights in such
excess shares of Equity Stock; and (D) prior to the Restriction
Termination Date, any Transfer of shares of Equity Stock that, if
effective, would result in the Corporation's being "closely
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held" within the meaning of Section 856(h) of the Code shall be void ab
initio as to the Transfer of that number of shares of Equity Stock
which would cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code; and the intended transferee
shall acquire no rights in such shares of Equity Stock.
(3)(A) If, notwithstanding the other provisions
contained in this Section 9, at any time prior to the Restriction
Termination Date, there is a purported Transfer or other change in the
capital structure of the Corporation such that any Person would either
Beneficially Own or Constructively Own Equity Stock in excess of the
Ownership Limit, then, except as otherwise provided in Section 9(a)(9),
such shares of Equity Stock in excess of the Ownership Limit (rounded
up to the nearest whole share) shall be automatically converted into an
equal number of shares of Excess Stock (such conversion shall be
effective as of the close of business on the business day prior to the
date of the Transfer or change in capital structure); and (B) if,
notwithstanding the other provisions contained in this Section 9, at
any time prior to the Restriction Termination Date, there is a
purported Transfer or other change in the capital structure of the
Corporation which, if effective, would cause the Corporation to become
"closely held" within the meaning of Section 856(h) of the Code, then
the shares of Equity Stock being Transferred or which are otherwise
affected by the change in capital structure and which, in either case,
would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code (rounded up to the nearest whole share)
shall be automatically converted into an equal number of shares of
Excess Stock. Such conversion shall be effective as of the close of
business on the business day prior to the date of the transfer or
change in capital structure.
(4) If the Board of Directors or its designees at any
time determine in good faith that a transfer has taken place in
violation of Section 9(a)(2) or that a Person intends to acquire or has
attempted to acquire Beneficial Ownership or Constructive Ownership of
any shares of Equity Stock in violation of Section 9(a)(2), the Board
of Directors or its designees shall take such action as it or they deem
advisable to refuse to give effect to or to prevent such Transfer,
including, but not limited to, refusing to give effect to such transfer
on the books of the Corporation or instituting proceedings to enjoin
such Transfer, provided, however, that any Transfers or attempted
Transfers in violation of Section 9(a)(2) shall be void ab initio and
automatically result in the conversion described in Section 9(a)(3),
irrespective of
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any action (or non-action) by the Board of Directors or its designees.
(5) Any Person who acquires or attempts to acquire
shares of Equity Stock in violation of Section 9(a)(2), or any Person
who is a transferee such that Excess Stock results under Section
9(a)(3), shall immediately give written notice to the Corporation of
such event and shall provide to the Corporation such other information
as the Corporation may request in order to determine the effect, if
any, of such transfer or attempted transfer on the Corporation's status
as a REIT.
(6) Prior to the Restriction Termination Date: (A)
every Beneficial Owner or Constructive Owner of 5.0% or more (during
any periods in which the number of such Beneficial Owners or
Constructive Owners exceeds 1,999) or of more than 1% (during any
periods in which the number of such Beneficial Owners or Constructive
Owners is less than 2,000), or such lower percentages as required
pursuant to regulations under the Code, of the outstanding Equity Stock
of the Corporation shall, within 30 days after January 1 of each year,
give written notice to the Corporation stating the name and address of
such Beneficial Owner or Constructive Owner, the number of shares of
Equity Stock Beneficially Owned or Constructively Owned, and a
description of how such shares are held. Each such Beneficial Owner or
Constructive Owner shall provide to the Corporation such additional
information as the Corporation may request in order to determine the
effect, if any, of such Beneficial Ownership on the Corporation's
status as a REIT and to ensure compliance with the Ownership Limit; and
(B) each Person who is a Beneficial Owner or Constructive Owner of
Equity Stock and each Person (including the stockholder of record) who
is holding Equity Stock for a Beneficial Owner or Constructive Owner
shall provide to the Corporation such information as the Corporation
may request in order to determine the Corporation's status as a REIT
and to ensure compliance with the Ownership Limit.
(7) Nothing contained in this Section 9 shall limit
the authority of the Board of Directors to take such other action as it
deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Corporation's
status as a REIT and to ensure compliance with the Ownership Limit.
(8) In the case of an ambiguity in the application of
any of the provisions of Section 9(a), including any definition
contained in Section 9(a)(1), the Board of
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Directors shall have the power to determine the application of the
provisions of Section 9(a) with respect to any situation based on the
facts known to it.
(9) The Board of Directors, upon receipt of a ruling
from the Internal Revenue Service or an opinion of counsel or other
evidence satisfactory to the Board of Directors and upon such other
conditions as the Board of Directors may direct, in each case provided
that the restrictions contained in Section 9(a)(2)(C) and/or Section
9(a)(2)(d) will not be violated, may exempt a Person from the Ownership
Limit.
(10) Legend. Each Preferred Share shall bear the
following Legend:
The shares of preferred stock represented by this certificate
are subject to restrictions on transfer for the purpose of the
Corporation's maintenance of its status as a real estate
investment trust under the Internal Revenue Code of 1986, as
amended (the "Code"). No Person may, without the consent of
the Corporation, (1) Beneficially Own or Constructively Own
shares of Equity Stock in excess of 9.8% of the value of the
outstanding Equity Stock of the Corporation; or (2)
Beneficially Own Equity Stock that would result in the
Corporation's being "closely held" under Section 856(h) of the
Code. Any Person who attempts to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the
above limitations must immediately notify the Corporation. All
capitalized terms in this legend have the meanings defined in
the Corporation's Charter, as the same may be further amended
from time to time, a copy of which including the restrictions
on transfer, will be sent without charge to each stockholder
who so requests. If the restrictions on transfer are violated,
the shares of Equity Stock represented hereby will be
automatically converted for shares of Excess Stock which will
be held in trust by the Corporation.
(b) (1) Upon any purported Transfer that results in Excess
Stock pursuant to Section 9(a)(3), such Excess Stock shall be deemed to
have been transferred to the Corporation, as Trustee of a Trust for the
exclusive benefit of such Beneficiary or Beneficiaries to whom an
interest in such Excess Stock may later be transferred pursuant to
Section 9(b)(5). Shares of Excess Stock so held in trust shall be
issued and outstanding stock of the Corporation. The Purported Record
Transferee shall have no rights in such Excess Stock except the right
to designate a transferee of
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such Excess Stock upon the terms specified in Section 9(b)(5). The
Purported Beneficial Transferee shall have no rights in such Excess
Stock except as provided in Section 9(b)(5).
(2) Excess Stock shall not be entitled to any
dividends. Any dividend or distribution paid prior to the discovery by
the Corporation that the shares of Equity Stock have been converted for
Excess Stock shall be repaid to the Corporation upon demand, and any
dividend or distribution declared but unpaid shall be rescinded as void
ab initio with respect to such shares of Equity Stock.
(3) Subject to the preferential rights of the
Preferred Stock, if any, as may be determined by the Board of Directors
of the Corporation pursuant to Article SIXTH of the Charter, in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of, or any distribution of the assets of, the Corporation,
each holder of shares of Excess Stock shall be entitled to receive,
ratably with each other holder of Common Stock and Excess Stock, that
portion of the assets of the Corporation available for distribution to
its stockholders as the number of shares of the Excess Stock held by
such holder bears to the total number of shares of Common Stock and
Excess Stock then outstanding. The Corporation, as holder of the Excess
Stock in trust or, if the Corporation has been dissolved, any trustee
appointed by the Corporation prior to its dissolution, shall distribute
ratably to the Beneficiaries of the Trust, when determined, any such
assets received in respect of the Excess Stock in any liquidation,
dissolution or winding up of, or any distribution of the assets of, the
Corporation.
(4) The holders of shares of Excess Stock shall not
be entitled to vote on any matters (except as required by the General
Corporation Laws of the State of Maryland).
(5)(A) Excess Stock shall not be transferable. The
Purported Record Transferee may freely designate a Beneficiary of its
interest in the Trust (representing the number of shares of Excess
Stock held by the Trust attributable to a purported transfer that
resulted in the Excess Stock), if (i) the shares of Excess Stock held
in the Trust would not be Excess Stock in the hands of such Beneficiary
and (ii) the Purported Beneficial Transferee does not receive a price
for designating such Beneficiary that reflects a price per share for
such Excess Stock that exceeds (x) the price per share such Purported
Beneficial Transferee paid for the Equity Stock in the purported
Transfer that resulted in the Excess Stock, or (y) if the Purported
Beneficial Transferee did not give
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value for such shares of Excess Stock (such as through a gift, devise
or other transaction), a price per share equal to the Market Price on
the date of the purported Transfer that resulted in the Excess Stock.
Upon such transfer of an interest in the Trust, the corresponding
shares of Excess Stock in the Trust shall be automatically converted to
an equal number of shares of Equity Stock, and such shares of Equity
Stock shall be transferred of record to the Beneficiary of the interest
in the Trust designated by the Purported Record Transferee as described
above if such Equity Stock would not be Excess Stock in the hands of
such Beneficiary. Prior to any transfer of any interest in the Trust,
the Purported Record Transferee must give advance notice to the
Corporation of the intended transfer, and the Corporation must have
waived in writing its purchase rights under Section 9(b)(6); (B)
notwithstanding the foregoing, if a Purported Beneficial Transferee
receives a price for designating a Beneficiary of an interest in the
Trust that exceeds the amounts allowable under Section 9(b)(5)(A), such
Purported Beneficial Transferee shall pay, or cause the Beneficiary of
the interest in the Trust to pay, such excess to the Corporation.
(6) Shares of Excess Stock shall be deemed to have
been offered for sale to the Corporation, or its designee at a price
per share equal to the lesser of (i) the price per share in the
transaction that created such Excess Stock (or, in the case of devise
or gift, the Market Price at the time of such devise or gift) and (ii)
the Market Price on the date the Corporation, or its designee, accepts
such offer. Subject to the satisfaction of any applicable requirements
of the General Corporation Laws of the State of Maryland, the
Corporation shall have the right to accept such offer for a period of
90 days after the later of (i) the date of the transfer that resulted
in such Excess Stock and (ii) the date the Board of Directors
determines in good faith that a Transfer resulting in Excess Stock has
occurred, if the Corporation does not receive a notice of such Transfer
pursuant to Section 9(a)(5).
(c) Nothing contained in this Section 9 or in any other
provision of the Charter shall limit the authority of the Board of Directors to
take such other action as it, in its sole discretion, deems necessary or
advisable to protect the Corporation and the interests of the stockholders by
maintaining the Corporation's eligibility to be, and preserving the
Corporation's status as, a qualified REIT under the Code.
(d) If any of the foregoing restrictions on transfer of
Excess Stock are determined to be void, invalid or unenforceable by
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any court of competent jurisdiction, the Purported Beneficial Transferee may be
deemed, at the option of the Board of Directors, to have acted as an agent of
the Corporation in acquiring such Excess Stock and to hold such Excess Stock on
behalf of the Corporation.
(e) Nothing in this Section 9 precludes the settlement of
transactions entered into through the facilities of the New York Stock Exchange.
Section 10. Miscellaneous.
(a) Exchange or Market Transactions. Nothing in Section 9 or
this Section 10 shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange or any other national
securities exchange or automated inter-dealer quotation system. However, as set
forth in Section 9 or this Section 10 certain transactions may be settled by
providing shares of Excess Stock.
(b) Severability. If any provision of Section 9 or this
Section 10 or any application of any such provision is determined to be invalid
by any federal or state court having jurisdiction over the issues, the validity
of the remaining provisions shall not be affected and other applications of such
provisions shall be affected only to the extent necessary to comply with the
determination of such court.
(c) Waiver. The Corporation shall have authority at any time
to waive the requirements that Excess Stock be issued or be deemed outstanding
or that the Corporation repurchase Preferred Shares in accordance with the
provisions of Section 9 if the Corporation determines, based on an opinion of
nationally recognized tax counsel, that the issuance of such Excess Stock or the
fact that such Excess Stock is deemed to be outstanding, or any such repurchase,
would not jeopardize the status of the Corporation as a REIT for federal income
tax purposes.
(d) Mailings. All mailings shall be made by overnight United
States mail or by another overnight courier service.
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IN WITNESS WHEREOF, LEXINGTON CORPORATE PROPERTIES, INC. has
caused its corporate seal to be hereunto affixed and these Articles
Supplementary to be signed by its Treasurer and Chief Financial Officer, Antonia
G. Trigiani and attested by its Secretary, Paul R. Wood, this __th day of
January, 1997.
LEXINGTON CORPORATE PROPERTIES,
INC.
By: /s/ Antonia G. Trigiani
--------------------------------
Name: Antonia G. Trigiani
Title: Treasurer and Chief
Financial Officer
THE UNDERSIGNED, Secretary of Lexington Corporate Properties,
Inc. who executed on behalf of said corporation the foregoing 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 further certify that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof or otherwise required to be
verified under oath are true in all material respects, under the penalties of
perjury.
By: /s/ Paul R. Wood
---------------------------
Name: Paul R. Wood
Title: Secretary
Corporate Seal
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