SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of October 8, 1997 (the
"Agreement"), is entered into by and between ElderTrust, a real estate
investment trust organized under the laws of the State of Maryland (the
"Company"), and Xxxxxx X. Xxxxxxx, Xx., President and Chief Executive Officer of
the Company (the "Subscriber").
The Subscriber desiring to subscribe for and acquire common shares of
beneficial interest, $ 01 par value per share, of the Company (the "Common
Shares"), and the Company, desiring to issue such Common Shares to the
Subscriber, agree as follows:
1. Subscription for and Issuance of Shares. For the consideration
stated in this Section 1, the Subscriber subscribes for and agrees
to acquire, and the Company accepts such subscription and agrees to
issue to the Subscriber, Two Hundred Thousand (200,000) Common
Shares (the "Shares") at the public offering price per share in the
Company's initial public offering (the "Initial Public Offering
Price") for a total subscription price equal to the number of
Shares multiplied by the Initial Public Offering Price (the
"Subscription Price"). Payment of the Subscription Price shall be
made by Subscriber's delivery to the Company at the closing of the
Company's initial public offering (the "Closing"), of a note in the
form attached hereto as Exhibit A (the "Note"). The Company shall
acknowledge receipt from the Subscriber of the Subscription Price,
tendered by delivery of the Note to the Company and, at such time,
the Subscriber shall acknowledge receipt of the certificate or
certificates evidencing the Shares issuable to the Subscriber,
registered in the name of the Subscriber.
2. Representations and Warranties of the Company. The Company hereby
represents and warrant to the Subscriber as follows:
(a) Organization. The Company is a real estate investment trust
duly organized, validly existing and in good standing under the
laws of the State of Maryland, with full power to own its
properties and to carry on its business as proposed to be
conducted and to enter into and perform this Agreement.
(b) Authorization. All action necessary to authorize the Company to
enter into this Agreement and to perform the covenants and
agreements hereunder has been duly and validly taken. Neither
the execution of this Agreement nor the performance by the
Company of its covenants and agreements hereunder violates or
will violate any provisions of the Declaration of Trust, as
amended, or By-Laws of the Company or of any agreement,
document or instrument to which it is a party or by which it is
bound.
3. Subscriber's Representations, Warranties, Acknowledgments and
Covenants. The Subscriber acknowledges, represents and warrants to
the Company as follows:
(a) Investor Qualifications,
The Subscriber is an "accredited investor" (as defined in Rule
501 of the Regulation D promulgated under the Securities Act of
1933, as amended (the "1933 Act")), and (x) has been given an
opportunity to ask, and to the extent the Subscriber has
considered necessary, has asked questions of, and has received
answers from, representatives of the Company concerning the
terms of this investment and the affairs of the Company, and
(y) has been given or afforded access to all documents,
records, books and additional information which the Subscriber
has requested regarding such matters. In making this
investment, the Subscriber is not relying on any oral
information furnished by or oral representation made by the
Company or by any one acting on behalf of the Company.
(b) Subscriber's Awareness.
(i) The Subscriber understands that the offering and sale of
the Shares has not been registered under the 1933 Act or
under applicable state securities law in reliance upon
exemptions therefrom. The Subscriber understands that the
Shares must be held indefinitely unless the sale thereof
is subsequently registered under the 1933 Act and under
applicable state securities laws, or an exemption or
exemptions from such registration is available, and that
neither the Company nor any other person is required to
register the Shares under the 1933 Act (except as
provided in Section 4 below);
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(ii) The Shares are being purchased by the Subscriber solely
for the Subscriber's own account for investment, and not
with a view to, or for resale in connection with, any
distribution. The Subscriber acknowledges that, with the
exception of the Company, no other person has a direct or
indirect beneficial interest in such Shares, and that no
other person has furnished, directly or indirectly, any
part of the Subscription Price. The Subscriber does not
intend to dispose of all or any part of such Shares and
understands that such Shares are being offered and sold
pursuant to a specific exemption under the provisions of
the 1933 Act which exemption depends, among other things,
upon the investment intent of the Subscriber;
(iii) The Subscriber understands that no federal or state
agency has passed upon the Shares or made any finding or
determination as to the merits of this investment; and
(iv) The Subscriber further understands that the Shares shall
be subject to (i) a lock-up agreement to be entered into
by Subscriber and the representatives of the several
underwriters in connection with the Company's planned
initial public offering; and (ii) the Company's
Declaration of Trust.
(c) Authorization and Binding Obligation.
(i) The Subscriber has duly taken any and all action
necessary to authorize such Subscriber's execution and
performance of this Agreement in accordance with its
terms;
(ii) This Agreement constitutes the valid and binding
obligation of the Subscriber, enforceable in accordance
with its terms; and
(iii) Neither the execution nor the performance of this
Agreement violates or will violate the terms of any
agreement, document or instrument to which the Subscriber
is a party or by which the Subscriber may be bound.
4. Registration Rights. The Company hereby grants to Subscriber the
same registration rights granted to holders of Registrable Securities as are set
forth in Section 3 of the Registration Rights Agreement to be entered into by
the Company with holders of limited partnership interests in the ElderTrust
Limited Operating Partnership at the Closing. Upon Subscriber's acquisition of
the Shares, Subscriber shall be deemed to have agreed to the same obligations as
holders of Registrable Securities, and shall be entitled to the same benefits as
holders of Registrable Securities, as are set forth in the Registration
Agreement, as if Subscriber was a party to the Registration Agreement and
Subscribers' Shares were Registrable Securities thereunder.
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5. Notices. Any notices or other communications shall be in writing and
shall be deemed given if sent by certified or registered mail, return receipt
requested, postage prepaid as follows:
(a) if to the Company, to its then principal office;
(b) if to the Subscriber, to the Subscriber's then last known
principal residence address; or
(c) to such other persons or at such other addresses as shall be
furnished by either party by like notice to the other, and such
notice or communication shall be deemed to have been given or
made as of the date so delivered or mailed.
6. Binding Agreement. This Agreement shall bind and inure to the
benefit of the respective parties hereto, their successors and assigns.
7. Heading. The headings and descriptive titles contained in this
Agreement are for convenience of reference only, and do not modify, limit or in
any way define the interpretation or construction of the provisions of this
Agreement.
8. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and the Subscriber and supersedes all prior
agreements or understandings relating to the subject matter hereof.
9. Governing Law. This Agreement is made in the State of Maryland and
shall be governed by, and construed in accordance with, the internal laws of
said State without reference to any principles of conflicts of laws.
10. Amendments. This Agreement may not be altered or amended except by
a writing executed by any party against whom such alteration or amendment is
sought to be enforced.
11. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which together
shall constitute one and the same instrument
12. Severability. Should any one or more of the provisions of this
Agreement be determined to be illegal, invalid or unenforceable, all of the
other provisions of this Agreement shall be given effect separately from such
provision or provisions and shall not be affected by any such determination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
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ELDERTRUST
By: /s/ D. Xxx XxXxxxxx, Xx.
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Name: D. Xxx XxXxxxxx, Xx.
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Title: Chief Financial Officer
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SUBSCRIBER:
/s/ Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxx X. Xxxxxxx, Xx.
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Exhibit A
PROMISSORY NOTE
October __, 1997
$__________
Kennett Square, Pennsylvania
FOR VALUE RECEIVED, the undersigned, Xxxxxx X. Xxxxxxx, Xx. ("Maker"),
promises to pay to the order of ElderTrust ("ElderTrust"), a Maryland real
estate investment trust ("Holder," which term shall include ElderTrust and any
subsequent holder or assignee of this Note), with an office at 000 XxXxxxxx
Xxxx, Xxxxx 000, Xxxxxxx Xxxxxx, XX 00000, the principal sum of _____________
Dollars ($_____________) with interest on the unpaid principal balance from time
to time outstanding, at the rate set forth below, with payment of principal and
interest to be made in lawful money of the United States, in immediately
available funds, as follows:
1. Payment Terms.
(a) Interest shall be computed on the basis of a three hundred
sixty-five (365) day year, and for the actual number of days outstanding,
at a rate per annum equal to seven percent (7.0%). Interest shall be
payable quarterly in arrears, commencing on January 1, 1998, and continuing
thereafter upon either: (a) the fifth (5th) business day after the
scheduled quarterly dividend payment on ElderTrust common stock is made by
ElderTrust, or if , for any quarter, no such dividend is paid, then (b) on
the first day of each annualized quarterly period subsequent to the quarter
ending January 1, 1998 (specifically, each April 1, July 1, October 1, and
January 1) until the Maturity Date (as such term is hereinafter defined).
The total unpaid principal balance and all accrued and unpaid interest
shall be due and payable on the Maturity Date. All payment of principal or
interest shall be made to the Holder of this Note not later than 1:00 p.m.
on the date and at the place of payment designated by the Holder hereof as
aforesaid (or at such other place as the Holder hereof may from time to
time designate), and any payment received on such date but after such hour
shall be deemed to have been paid to and received by the holder hereof on
the next succeeding business day. If the date on which any payment is
required to be made pursuant to this Note is not a business day, then such
payment shall be due and payable on the next succeeding day which is not a
Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania.
(b) As used in the Note, the term "Maturity Date" shall mean the date
which is the first to occur of (i) _________ ___, 2007, which is 10 years
from the closing of ElderTrust's initial public offering; or (ii) the date
on which the Maker is no longer employed, for any reason whatsoever other
than death or the Onset of Disability (hereinafter defined), by ElderTrust
or an affiliate thereof. For purposes of this subparagraph, "Onset of
Disability" shall mean the first day on which Employee shall be unable to
attend to the regular affairs of ElderTrust on a full time basis by reason
of physical or mental incapacity, sickness or infirmity, which continues
for more than six (6) months or for periods aggregating more than nine (9)
months during any twenty-four (24) month period.
(c) All payments hereof shall be made without reduction, and shall not
be subject to any claim or offset of any kind or nature whatsoever.
1. Permitted Prepayments.
Provided Maker is not in default under this Note or under any other
document relating to or executed in connection with this Note (collectively, the
"Documents"), the principal amount of this Note or any other amounts owed under
this Note at any time, and from time to time, may be prepaid in whole or in
part, together with interest accrued thereon to the date of such prepayment,
without premium, upon not less than ten (10) days' prior written notice to the
Holder at the place of payment designated above.
2. Events of Default.
At the option of Holder, the principal amount of this Note shall be
accelerated, and shall become immediately due and payable, without notice or
demand, upon the occurrence at any time of any of the following ("Events of
Default"):
(a) failure to pay when due, as set forth herein, any principal
or interest payments; or
(b) the commencement of any case action or proceeding whether
voluntary or involuntary (which, in the case of an involuntary
proceeding, is not dismissed within sixty (60) days from the date it
is filed), under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute, or
any assignment for the benefit of creditors; or
(c) the occurrence of any other default or breach by Maker of any
other term or condition of this Note which remains uncured for more
than ten (10) days; or
(d) the occurrence of any other default or Event of Default under
any other Document executed in connection herewith which is not cured
within any cure period that may be provided for under any such Loan
Document.
(e) any representation or warranty made by Maker herein or in any
Document executed in connection herewith which shall have been
incorrect in any material respect when made.
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For purposes of subparagraphs (c), (d) and (e) hereof, provided Maker
has shown evidence satisfactory to Holder in its sole discretion of Maker's good
faith efforts to cure any default or Event of Default set forth in such
subparagraph, then Holder agrees to forbear from exercising its rights hereunder
until the earlier of an additional ninety (90) days or such time as Holder is no
longer satisfied with Maker's good faith efforts to cure any such default or
Event of Default.
3. Remedies.
(a) If any payment, including each quarterly interest payment, required
by this Note, is not made when due, such unpaid amount shall, itself, accrue
interest. Additionally, upon any Event of Default under this Note, including any
such payment default, the interest rate provided for herein shall immediately,
without notice, increase to two percent (2%) over the interest rate set forth in
paragraph (a) on page one hereof (the `"Default Interest Rate").
(b) Upon the occurrence of an Event of Default, Holder may exercise any
remedy provided hereunder, or at law, and subject to the provisions of paragraph
2.
(c) Maker promises to pay all costs of collection, including without
limitation, attorneys' fees, and all expenses in connection with the protection
or realization on the collateral securing this Note, whether or not suit is
brought hereon. Such costs and expenses shall include, without limitation, all
fees, costs, attorneys' fees and expenses incurred by the Holder hereof in
connection with any suit to enforce any Document, any insolvency, bankruptcy,
reorganization, arrangement or other similar proceedings involving Maker, which
in any way affects the rights of the Holder to exercise its rights and remedies
under this Note.
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4. Miscellaneous.
(a) Maker hereby expressly waives presentment, demand, protest, notices
of protest, dishonor and non-payment of this Note and all notices of every kind.
To the extent permitted by applicable law, the defense of the statute of
limitations hereby is waived by Maker.
(b) No single or partial exercise of any power hereunder or under any
Document executed in connection herewith shall preclude other or further
exercise thereof or the exercise of any other right or power in connection with
the enforcement of this Note. No delay or omission on the part of the Holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other right under this Note.
(c) This Note shall be governed by and construed under the laws of, the
Commonwealth of Pennsylvania. Maker hereby submits to personal jurisdiction in
said State for the enforcement of Maker's obligations hereunder, and waives any
and all rights to object to jurisdiction within such State in connection with
litigation to enforce rights under this Note or any other Document executed in
connection herewith. In the event such litigation is commenced, Maker agrees
that service of process may be made and personal jurisdiction over Maker
obtained, by service of a copy of the summons, complaint and other pleadings
required to commence such litigation upon Maker at his place of business or
last-known place of residence. Maker may designate a substitute agent, or change
the address to which said copies shall be sent, by notice to Holder at the place
designated for payment hereof by Holder.
MAKER:
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Xxxxxx X. Xxxxxxx, Xx.
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