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STOCK PURCHASE AGREEMENT
by and between
TIGER/XXXXXXXXX REAL ESTATE FUND, L.P.
and
TIGER/XXXXXXXXX REAL ESTATE CO-INVESTMENT PARTNERSHIP, L.P.,
and
ESSEX PROPERTY TRUST, INC., a Maryland corporation
dated as of
June 20, 1996
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THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of June 20,
1996, is made by and between Essex Property Trust, Inc., a Maryland corporation
(the "Company") and Tiger/Xxxxxxxxx Real Estate Fund, L.P., a Delaware limited
partnership, and Tiger/Xxxxxxxxx Real Estate Co-Investment Partnership, L.P., a
Delaware limited partnership (individually and collectively, "Buyer").
RECITALS:
WHEREAS, Buyer wishes to purchase from the Company, and the Company
wishes to issue and sell to Buyer, an aggregate of 280,000 shares of a newly
authorized series of preferred stock of the Company designated as 8.75%
Convertible Preferred Stock, Series 1996A (the "Preferred Stock"), having the
terms set forth in the form of Company's Articles Supplementary attached as
Exhibit A (the "Articles Supplementary") establishing the rights, privileges and
preferences of the Preferred Stock, at a price of $25.00 per share;
WHEREAS, an affiliate of Buyer and the Company have entered into that
certain Loan Facility Agreement (the "Loan Agreement") as of even date herewith
whereby T/W Essex Funding, L.L.C. ("Lender") has agreed to lend to the Company
and the Company has agreed to borrow from the Lender up to an aggregate of
$33,000,000 which borrowed funds shall under the circumstances set forth in the
Loan Agreement be exchangeable for additional shares of Preferred Stock or, if
the Company and Buyer so agree, Operating Partnership Units, subject to the
terms and conditions set forth herein and therein; and
WHEREAS, Buyer and the Company are entering into this Agreement to
provide for such purchase and sale of the Preferred Stock and to establish
various rights and obligations in connection therewith.
AGREEMENT:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the following
respective meanings: Capitalized terms used herein but not defined herein shall
have the meanings set forth in the Loan Agreement.
Section 1.1 "Action" shall mean any suit, arbitration, inquiry,
proceeding or injunction by or before any Government Authority, court or
arbitrator.
Section 1.2 "Additional Purchase Price" shall mean the consideration
payable by Buyer to the Company for the shares of Preferred Stock acquired by
Buyer at any Initial Exchange Closing or any Subsequent Closing, consisting of
an exchange of principal amount of the Loan, cash, or a combination thereof, as
the case may be.
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Section 1.3 "Affiliate" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the Exchange Act, and as in effect on the date
hereof.
Section 1.4 "Agreement" shall have the meaning set forth in the first
paragraph hereof.
Section 1.5 "Annual Report" shall have the meaning set forth in
Section 3.1(e).
Section 1.6 "Articles Supplementary" shall have the meaning set forth
in the second paragraph hereof.
Section 1.7 "Benefit Arrangements" shall have the meaning set forth in
Section 3.15 (b).
Section 1.8 "Blue Sky Laws" shall have the meaning set forth in
Section 3.4(e).
Section 1.9 "Buyer" shall have the meaning set forth in the first
paragraph hereof.
Section 1.10 "CERCLA" shall have the meaning set forth in Section
3.14(b).
Section 1.11 "Charter Amendment" shall mean an amendment to the
Company Charter mutually satisfactory to the Company and Buyer which provides
that the Company may issue to the Buyer the Preferred Stock under the terms and
conditions set forth herein.
Section 1.12 "Closing Agreement" shall mean a written and legally
binding agreement with a taxing authority relating to Taxes.
Section 1.13 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, including all of the rules and regulations
promulgated thereunder.
Section 1.14 "Common Stock" shall mean the common stock, par value
$.0001 per share, of the Company.
Section 1.15 "Company" shall have the meaning set forth in the first
paragraph hereof.
Section 1.16 "Company Charter" shall mean the Articles of Amendment
and Restatement of the Company, as in effect on the date hereof.
Section 1.17 "Company Leases" shall mean all ground leases residential
or shopping center leases relating to the Company Properties.
Section 1.18 "Company Plan" shall have the meaning set forth in
Section 3.15(a).
Section 1.19 "Company Properties" shall mean all real property owned
or leased by the Company or any of its Subsidiaries (collectively, and together
with all buildings, structures and other improvements and fixtures located on or
under such land and all easements, rights and other appurtenances to such land).
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Section 1.20 "Company Registration Statement" shall have the meaning
set forth in Section 3.5(a).
Section 1.21 "Company Reports" shall have the meaning set forth in
Section 3.5(a).
Section 1.22 "Debt Instruments" shall mean all notes, mortgages, deeds
of trust or similar instruments which evidence or secure any indebtedness.
Section 1.23 "Election" shall have the meaning set forth in Section
3.10(b).
Section 1.24 "Employee Benefit Plans" shall have the meaning set forth
in Section 3.15(b).
Section 1.25 "Employees" shall have the meaning set forth in Section
3.15(b).
Section 1.26 "Environment" shall have the meaning set forth in Section
3.14(b).
Section 1.27 "Environmental Laws" shall have the meaning set forth in
Section 3.14(b).
Section 1.28 "EPA" shall have the meaning set forth in Section
3.14(a).
Section 1.29 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.30 "ERISA Affiliates" shall mean, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 1.31 "Exchange Act" shall have the meaning set forth in
Section 3.4(e).
Section 1.32 "GAAP" shall have the meaning set forth in Section
3.5(b).
Section 1.33 "Government Authority" shall mean any government or state
(or any subdivision thereof) of or in the United States, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal thereof.
Section 1.34 "Hazardous Substance" shall have the meaning set forth in
Section 3.14(b).
Section 1.35 "HSR Act" shall have the meaning set forth in Section
3.4(e).
Section 1.36 "Indemnified Party" shall mean Buyer or the Company, as
the context may require.
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Section 1.37 "Initial Closing" shall mean the consummation of the
purchase and sale of shares of Preferred Stock pursuant to Section 2.1.
Section 1.38 "Initial Closing Date" shall have the meaning set forth
in Section 2.1.
Section 1.39 "Initial Exchange Closing" shall mean any of the closings
with respect to the issuance of Preferred Stock contemplated by Section 2.10 of
the Loan Agreement.
Section 1.40 "Initial Purchase Price" shall have the meaning set forth
in Section 2.1.
Section 1.41 "IRS" shall mean the Internal Revenue Service.
Section 1.42 "Leases" shall have the meaning set forth in Section
3.15(h).
Section 1.43 "Liabilities" shall mean, as to any person, all debts,
adverse claims, liabilities and obligations, direct, indirect, absolute or
contingent of such person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by GAAP to be reflected, in such person's or entity's
balance sheets or other books and records, including (i) obligations arising
from non-compliance with any law, rule or regulation of any Government Authority
or imposed by any court or any arbitrator of any kind, (ii) all indebtedness or
liability of such person for borrowed money, or for the purchase price of
property or services (including trade obligations), (iii) all obligations of
such person as lessee under leases, capital or other, (iv) liabilities of such
person in respect of plans covered by Title IV of ERISA, or otherwise arising in
respect of plans for employees or former employees or their respective families
or beneficiaries, (v) reimbursement obligations of such person in respect of
letters of credit, (vi) all obligations of such person arising under acceptance
facilities, (vii) all liabilities of other persons or entities, directly or
indirectly, guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse by such person or with
respect to which the person in question is otherwise directly or indirectly
liable, (viii) all obligations secured by any Lien on property of such person,
whether or not the obligations have been assumed, and (ix) all other items which
have been, or in accordance with GAAP would be, included in determining total
liabilities on the liability side of the balance sheet.
Section 1.44 "Liens" shall mean all liens, mortgages, deeds of trust,
deeds to secure debt, security interests, pledges, claims, charges, easements
and other encumbrances of any nature whatsoever.
Section 1.45 "Loan" shall have the meaning set forth in the Loan
Agreement.
Section 1.46 "Loan Agreement" shall have the meaning set forth in
Section 2.1.
Section 1.47 "Material Adverse Effect" shall mean a material adverse
effect on the financial condition, results of operations or business of the
Company and its Subsidiaries (to the extent of the Company's interests therein)
taken as a whole.
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Section 1.48 "NYSE Advice" shall mean such advice as may be requested
by, and reasonably acceptable to, Buyer and/or the Company regarding the
Company's compliance with New York Stock Exchange listing requirements regarding
the issuance of Preferred Stock in accordance with the transactions contemplated
hereby.
Section 1.49 "OP Subscription Agreement" shall mean an agreement
mutually satisfactory to the Company and Buyer pertaining to Buyer's possible
purchase of preferred Operating Partnership Units and reflecting the terms and
conditions of an amendment to the Partnership Agreement mutually satisfactory to
the Company and Buyer in accordance with Section 7.2.
Section 1.50 "Operating Partnership" shall mean Essex Portfolio, L.P.,
a California limited partnership, or any successor thereto.
Section 1.51 "Other Filings" shall have the meaning set forth in
Section 5.1(b).
Section 1.52 "Partnership Agreement" shall mean that certain Agreement
of Limited Partnership of the Operating Partnership, dated as of March 15, 1994
as amended on April 15, 1994.
Section 1.53 "Pension Plans" shall have the meaning set forth in
Section 3.15(b).
Section 1.54 "Permitted Liens" shall mean (i) Liens (other than Liens
imposed under ERISA or any Environmental Law or in connection with any
Environmental Claim) for taxes or other assessments or charges of Governmental
Authorities that are not yet delinquent or that are being contested in good
faith by appropriate proceedings, in each case, with respect to which adequate
reserves or other appropriate provisions are being maintained by the Company or
its Subsidiaries to the extent required by GAAP, (ii) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens (other
than Liens imposed under ERISA or any Environmental Law or in connection with
any Environmental Claim) imposed by law and created in the ordinary course of
business for amounts not yet overdue or which are being contested in good faith
by appropriate proceedings, in each case, with respect to which adequate
reserves or other appropriate provisions are being maintained by the Company or
its Subsidiaries to the extent required by GAAP and which do not exceed $750,000
in the aggregate, (iii) the Company Leases, (iv) easements, rights-of-way,
covenants and restrictions which are customary and typical for commercial or
residential properties similar to the commercial and residential Company
Properties, as the case may be, and which do not (x) interfere materially with
the ordinary conduct of any Company Property or the business of the Company and
its Subsidiaries as a whole or (y) detract materially from the value or
usefulness of the Company Property to which they apply, (v) the other Liens
relating to the Company's Camarillo property and (vi) such imperfections of
title and encumbrances, if any, as would not, individually, or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
Section 1.55 "Per Unit Purchase Price" shall have the meaning set
forth in Section 2.3.
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Section 1.56 "Per Share Purchase Price" shall mean the price of $25.00
per share for the Preferred Stock.
Section 1.57 "person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.58 "Preferred Stock" shall have the meaning set forth in the
second paragraph hereof.
Section 1.59 "Proxy Statement" shall have the meaning set forth in
Section 5.1(b).
Section 1.60 "Registration Rights Agreement" shall have the meaning
set forth in Section 2.2(a).
Section 1.61 "Regulatory Filings" shall have the meaning set forth in
Section 3.4(e).
Section 1.62 "REIT" shall have the meaning set forth in Section
3.10(b).
Section 1.63 "Release" shall have the meaning set forth in Section
3.14(c).
Section 1.64 "REOC" shall have the meaning set forth in Section
3.15(h).
Section 1.65 "REOC Qualification Date" shall have the meaning set
forth in Section 3.14(d).
Section 1.66 "SEC" shall have the meaning set forth in Section 3.5(a).
Section 1.67 "Securities Act" shall mean the Securities Act of 1933,
as amended.
Section 1.68 "Securities Laws" shall have the meaning set forth in
Section 3.5(a).
Section 1.69 "Stockholders Agreement" shall have the meaning set forth
in Section 2.2(a).
Section 1.70 "Subsidiaries" shall mean, collectively, the Operating
Partnership and any other company of which the Company is the direct or indirect
general partner or as to which the Company has the right or power, direct or
indirectly, to elect a majority of the board of directors or other persons
performing similar functions or as to which the Company, directly or indirectly,
has a majority economic ownership interest.
Section 1.71 "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether
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disputed or not. The term "Tax" also includes any amounts payable pursuant to
any tax sharing agreement to which any relevant entity is liable as a successor
or pursuant to contract.
Section 1.72 "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Section 1.73 "Tax Ruling" shall mean a written ruling of a taxing
authority relating to Taxes.
Section 1.74 "Welfare Plans" shall have the meaning set forth in
Section 3.15(b).
ARTICLE 2
Purchase and Sale of Securities; Closings
Section 2.1 "Initial Closing." Subject to the terms and conditions
hereof, on the Initial Closing Date, the Company will sell, convey, assign,
transfer and deliver, and Buyer will purchase and acquire from the Company,
280,000 shares of Preferred Stock at a price of $25.00 per share for an
aggregate purchase price in immediately available funds of $7,000,000 (the
"Initial Purchase Price"). The Initial Closing shall take place at the offices
of Xxxxxxxx & Xxxxxxxx LLP, 755 Page Mill Road, Palo Alto, California, at 10:00
a.m. on such date as the parties hereto may mutually agree (the "Initial Closing
Date").
Section 2.2 "Initial Closing Deliveries."
(a) At the Initial Closing, and as a condition to the
parties' obligations hereunder to effect the transactions contemplated hereby at
the Initial Closing, the Company and Buyer shall enter into a registration
rights agreement substantially in the form attached as Exhibit C (the
"Registration Rights Agreement"), the Company, Buyer and Messrs. Marcus and
Guericke each shall enter into a stockholders agreement substantially in the
form attached as Exhibit D (the "Stockholders Agreement").
(b) In addition to the other things required to be
done hereby including the delivery of the Diligence Fee, at the Initial Closing,
the Company shall deliver, or cause to be delivered, to Buyer the following: (i)
certificates representing the number of shares of Preferred Stock to be issued
and delivered at the Initial Closing, free and clear of all Liens (unless
created by Buyer or any of its Affiliates) with all necessary stock transfer and
other documentary stamps attached, (ii) a certificate, dated the Initial Closing
Date and validly executed by an appropriate officer of the Company, as
contemplated by Section 7.1(a), (iii) evidence or copies of any consents,
approvals, orders, qualifications or waivers required pursuant to Section 7.1,
(iv) all certificates and other instruments and documents required by this
Agreement to be delivered by the Company to Buyer at or prior to the Initial
Closing, and (v) such other instruments reasonably requested by Buyer, as may be
necessary or appropriate to confirm or carry out the provisions of this
Agreement.
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(c) In addition to the delivery of the Initial
Purchase Price and the other things required to be done hereby, at the Initial
Closing, Buyer shall deliver, or cause to be delivered, to the Company the
following: (i) a certificate, dated the Initial Closing Date and validly
executed by Buyer, as contemplated by Section 7.3(a), (ii) if not previously
delivered to the Company, all other certificates, documents, instruments and
writings required pursuant hereto to be delivered by or on behalf of Buyer at or
before the Initial Closing, and (iii) such other instruments reasonably
requested by the Company, as may be necessary or appropriate to confirm or carry
out the provisions of this Agreement.
Section 2.3 "Initial Exchange Closings and Subsequent Closings."
(I) "Initial Exchange Closings"
(a) Option A. If Option A is applicable, effective as
of the Option A Maturity Date, (i) Buyer shall, or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the antidilution and "Organic Change"
provisions of the Loan Agreement).
(b) Option B. If Option B is applicable, effective as
of the Option B Maturity Date, (i) Buyer shall, or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the anti-dilution and "Organic Change"
provisions of the Loan Agreement).
(c) Option C. If Option C is applicable, effective as
of the Option C Maturity Date, Buyer shall, or cause the Lender to, exchange up
to $1,500,000 principal amount of the Loan for 60,000 shares of Preferred Stock
to be issued by the Company at an Additional Purchase Price of $25.00 per share
(subject to the antidilution and "Organic Change" provisions of the Loan
Agreement).
(d) Option D. If Option D is applicable, effective as
of the Option D Maturity Date, Buyer (i) shall or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the antidilution and "Organic Change"
provisions of the Loan Agreement) and (ii) shall have the option to acquire up
to an additional 240,000 shares of Preferred Stock to be issued by the Company
at a per share Additional Purchase Price of $25.00 (subject to the antidilution
and "Organic Change" provisions of the Loan Agreement).
(II) "Subsequent Closings." If Option A or B is applicable, Buyer
shall purchase from the Company an additional 800,000 shares of Preferred Stock
at an Additional Purchase Price of $25.00 per share prior to June 20, 1997
(subject to the antidilution and "Organic Change" provisions of the Loan
Agreement), pursuant to no more than three Subsequent Closings each involving
the purchase of not less than 200,000 shares of Preferred Stock.
(III) "Place of Closing." The consummation of each Subsequent Closing
shall take place at the Palo Alto offices of Xxxxxxxx & Xxxxxxxx LLP at 10:00
a.m. on the Subsequent Closing Date or such other place as agreed upon by the
parties.
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Section 2.4 "Initial Exchange Closing and Subsequent Closing
Deliveries."
(a) At each Initial Exchange Closing and Subsequent
Closing, the Company shall deliver or cause to be delivered, to Buyer the
following (i) such documentation as may be reasonably required to be delivered
by the Company pursuant to the terms of the Loan Agreement, (ii) certificates
representing the number of shares of Preferred Stock free and clear of all Liens
(unless created by Buyer or any of its Affiliates) with all necessary stock
transfer and other documentary stamps attached, (iii) a certificate dated such
Subsequent Closing Date and validly executed by an appropriate officer of the
Company, as contemplated by Section 7.2(a), (iv) as to Subsequent Closings,
evidence or copies of any consents, approvals, orders, qualifications or waivers
required pursuant to Section 7.2, (v) all certificates and other instruments and
documents required by this Agreement or the Loan Agreement to be delivered by
the Company to Buyer at or prior to each Subsequent Closing, and (vi) such other
instruments reasonably requested by Buyer as may be necessary or appropriate to
confirm or carry out the provisions of this Agreement.
(b) Buyer shall deliver to the Company, by wire
transfer of immediately available funds in U.S. dollars to an account designated
by the Company, the amount of the Additional Purchase Price in excess of the
principal amount of the Loan exchanged therefore together with all interest or
fees due to the Lender under the Loan Agreement, if any. In addition to the
delivery of the Additional Purchase Price and the other things required to be
done hereby, at the Initial Exchange Closing and each Subsequent Closing, Buyer
shall deliver, or cause to be delivered, to the Company the following: (i) at
each Subsequent Closing a certificate, dated such Subsequent Closing Date and
validly executed by Buyer, as contemplated by Section 7.3(a), (ii) at the
Initial Exchange Closing and each Subsequent Closing, if not previously
delivered to the Company, all other certificates, documents, instruments and
writings required pursuant hereto to be delivered by or on behalf of Buyer at or
before each such closing, and (iii) such other instruments reasonably requested
by the Company, as may be necessary or appropriate to confirm or carry out the
provisions of this Agreement.
Section 2.5 "Operating Partnership Units." Notwithstanding the
foregoing, provided that the Company and Buyer shall have previously entered
into the OP Subscription Agreement, Buyer may purchase such number of Operating
Partnership Units in lieu of any shares of Preferred Stock on any Subsequent
Closing Date on economically equivalent terms. At any Subsequent Closing at
which Operating Partnership Units are to be purchased, Buyer shall deliver to
the Company the Purchase Price for such Operating Partnership Units upon such
terms and together with such other documentation set forth in Section 2.4(b) and
the Company shall deliver to Buyer an amended and restated Partnership Agreement
(in form and substance satisfactory to both Company and Buyer) and any other
appropriate documents evidencing the Operating Partnership Units, such Operating
Partnership Units to be free and clear of all Liens (unless created by Buyer or
any of its Affiliates) together with such other appropriate documentation set
forth in Section 2.4(a).
Section 2.6 "Exchange of Preferred Stock for Units; Units for
Preferred Stock." Provided that the Company and Buyer shall have previously
entered into the OP Subscription Agreement, at any time and from time to time
after the later of the Stockholder Approval Date and
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the date on which the Partnership Agreement shall have been amended in
accordance with Section 7.2:
(a) Buyer shall have the right to exchange its shares
of Preferred Stock into such number of Operating Partnership Units as is equal
to the product of (i) the number of shares of Preferred Stock held by Buyer
multiplied by (ii) the quotient of (x) the Per Share Purchase Price divided by
(y) the Per Unit Purchase Price then in effect. Any accrued and unpaid dividends
on Buyer's Preferred Stock may be exchanged into such number of Operating
Partnership Units achieved by dividing the aggregate amount of such dividend
accrued on the Preferred Stock by the Per Unit Purchase Price then in effect;
(b) Buyer shall have the right to exchange its
Operating Partnership Units into such number of shares of Preferred Stock as is
equal to the product of (i) the number of Operating Partnership Units then held
by Buyer multiplied by (ii) the quotient of (x) the Per Unit Purchase Price then
in effect divided by (y) the Per Share Purchase Price.
ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Buyer as follows:
Section 3.1 "Organization and Qualification; Subsidiaries."
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Maryland.
The Company has all requisite corporate power and authority to enter into this
Agreement, the Registration Rights Agreement, the Stockholders Agreement, the
Loan Agreement and the Promissory Note and to perform its obligations hereunder
and thereunder. The Company has all requisite governmental licenses,
authorizations, consents and approvals to own, operate, lease and encumber its
properties and carry on its business as now conducted, except where the failure
to so have could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(b) The Operating Partnership is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of California. The Operating Partnership has all requisite
partnership power and authority to enter into the Guarantee. The Operating
partnership has all requisite governmental licenses, authorizations, consents
and approvals to own, operate, lease and encumber its properties and carry on
its business as now conducted, except where the failure to do so could not have,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(c) Each of the Subsidiaries of the Company is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the corporate or partnership power and
authority to own its properties and carry on its business as it is now being
conducted. Each of the Subsidiaries has all requisite governmental licenses,
authorizations, consents and
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approvals , except where the failure to could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(d) Each of the Company and its Subsidiaries is duly
qualified to do business and in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for any failures to be so qualified or to be in good
standing as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(e) The Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995 (as amended, together with all
information incorporated by reference therein, the "Annual Report") sets forth
all information regarding the Company's Subsidiaries required to be stated
therein. All of the outstanding shares of capital stock of, or other equity
interest in, each of the Subsidiaries owned by the Company or the Operating
Partnership are duly authorized, validly issued, fully paid and nonassessable,
and are owned, directly or indirectly, by the Company free and clear of all
Liens. Except as described in the Company Reports, there are no existing
options, warrants, calls, subscriptions, convertible securities or other rights,
agreements or commitments which obligate the Company or any of the Subsidiaries
to issue, transfer or sell any shares of capital stock or equity interests in
any of the Subsidiaries.
(f) The financial statements to the Annual Report set
forth a description of all allocations among the Company and any Subsidiary of
the material expenses incurred by the Company and its Subsidiaries, taken as a
whole as are required to be stated therein.
Section 3.2 "Authority Relative to Agreements; Board Approval."
(a) The execution, delivery and performance by the
Company of this Agreement, the Registration Rights Agreement, the Stockholders
Agreement, the Articles Supplementary, the Loan Agreement and the Promissory
Note and the issuance and delivery of shares of Common Stock upon conversion of
shares of Preferred Stock in accordance with the provisions of the Articles
Supplementary and Bylaws of the Company, have been duly and validly authorized
(or by the Initial Closing Date will have been authorized) by all necessary
corporate action on the part of the Company. Each of this Agreement, the
Registration Rights Agreement, the Stockholders Agreement, the Loan Agreement
and the Promissory Note has been duly executed and delivered by the Company and
constitutes the valid and legally binding obligations of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity, subject to the approval of
the Board of Directors to recommend to the stockholders that they approve the
issue to Buyer of the Preferred Stock under the terms and conditions set forth
herein, including approval of amendments to the Charter and Bylaws of the
Company and the recommendation of any action to be taken by the stockholders.
Upon issuance of any shares of Preferred Stock, the Articles Supplementary will
constitute a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
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(b) The Executive Committee has determined to
recommend to the Board of Directors of the Company that it recommend that the
stockholders of the Company vote in favor of and approve the issuance to Buyer
of Preferred Stock under the terms and conditions set forth herein.
(c) The shares of Preferred Stock to be acquired
pursuant to this Agreement have been duly authorized for issuance, and upon
issuance and delivery by the Company in accordance with this Agreement will be
duly and validly issued, fully paid and nonassessable. The shares of Common
Stock issuable upon conversion of the Preferred Stock to be acquired pursuant to
this Agreement will, upon issuance, be duly and validly issued, fully paid and
nonassessable.
(d) The conversion of the Preferred Stock pursuant to
the terms of the Articles Supplementary, will not give any stockholder of the
Company the right to demand payment for his shares under the Corporations &
Associations Code of Maryland.
(e) The Guaranty has been duly executed and delivered
by the Operating Partnership and constitutes the valid and legally binding
obligations of the Operating Partnership enforceable against the Operating
Partnership in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or similar laws relating to creditors' rights or general
principals of equity.
Section 3.3 "Capital Stock and Voting Rights."
(a) The authorized capital stock of the Company on
the date hereof consists of 670,000,000 shares of Common Stock, and 330,000,000
shares of excess stock. As of the date hereof, there are 6,275,000 shares of
Common Stock issued and outstanding, and no shares of any other class or series
of stock issued and outstanding. All such issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. The Company has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities the holders of which have the
right to vote) with the stockholders of the Company on any matter. Other than as
set forth in the Company Reports, there are no existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company to issue, transfer or sell directly or
indirectly any shares of capital stock or other equity interests of the Company
or which entitle any person to acquire from the Company any shares of capital
stock or other equity interest of the Company.
(b) Except for interests in the Subsidiaries of the
Company, and except as set forth in the Company Reports, none of the Company or
any of its Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than investments in short-term investment
securities), which would have a material effect on the business prospects and
condition (financial or otherwise) and operations of the Company;
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(c) The outstanding shares of Common Stock have been
issued in accordance with the registration or qualification provisions of the
Securities Act and relevant state securities laws or pursuant to valid
exemptions thereto;
(d) Except as set forth in the Company Reports, the
Company is not obligated to register under the Securities Act any of its
currently outstanding securities or any of its securities that may subsequently
be issued.
Section 3.4 "No Conflicts; No Defaults; Required Filings and
Consents." Except as contemplated hereby, neither the execution and delivery by
the Company hereof nor the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof, will:
(a) Violate, conflict with, or result in a breach of,
any provisions of the Company Charter or Bylaws of the Company;
(b) Result in a breach or violation of, a default
under, or the triggering of any payment or other obligations pursuant to, or
accelerate vesting under, any of the Company stock option plans or Operating
Partnership Unit option plans or similar compensation plan or any grant or award
made under any of the foregoing;
(c) Violate or conflict with any law, regulation,
judgment, order, writ, decree or injunction applicable to the Company or its
Subsidiaries except where any such violation or conflict, individually or in the
aggregate, could not result in a Material Adverse Effect;
(d) Except as set forth in Schedule 3.4, violate or
conflict with or result in a breach of any provision of, or constitute a default
(or any event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of the Company or its
Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or its Subsidiaries is a party, or by which the Company or its
Subsidiaries or any of their properties is bound or affected which could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; or
(e) Require any consent, approval or authorization
of, or declaration, filing or registration with, any Government Authority, other
than any filings required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx"), xxxxx securities laws ("Blue Sky Laws") (collectively, the
"Regulatory Filings"), and any filings required to be made with the Maryland
State Department of Assessments and Taxation, the Recorder of Deeds or similar
office in any applicable jurisdiction or any national securities exchange on
which the Common Stock is listed.
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Section 3.5 "SEC and Other Documents; Financial Statements;
Undisclosed Liabilities."
(a) The Company has delivered or made available to
Buyer the registration statement of the Company filed with the Securities and
Exchange Commission ("SEC") in connection with the Company's initial public
offering of Common Stock, and all exhibits, amendments and supplements thereto
(collectively, the "Company Registration Statement"), and each registration
statement, report, proxy statement or information statement and all exhibits
thereto prepared by it or relating to its properties since the effective date of
the Company Registration Statement, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Company Reports").
The Company Reports were filed with the SEC in a timely manner and constitute
all forms, reports and documents required to be filed by the Company under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "Securities Laws"). As of their respective dates, the Company
Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Laws and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. To the Company's
knowledge, there is no unresolved violation asserted by any Government Authority
with respect to any of the Company Reports.
(b) Each of the balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presented the financial position of the entity or entities
to which it relates as of its date and each of the statements of operations,
stockholders' equity (deficit) and cash flows included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presented the results of operations, retained earnings or cash flows, as
the case may be, of the entity or entities to which it relates for the periods
set forth therein, in each case in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as may be noted therein and except, in the case of the
unaudited statements, normal recurring year-end adjustments which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(c) Except as, and to the extent, set forth in the
Company Reports or any Schedule hereto, to the Company's knowledge, none of the
Company or any of its Subsidiaries has any Liabilities (nor do there exist any
circumstances) that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
Section 3.6 "Litigation; Compliance With Law."
(a) Except as disclosed in the Company Reports, there
are no Actions pending or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries that would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect or result in any
material change in the equity ownership of the Company, or which in any manner
question the validity of this Agreement, the Loan Agreement, the Stockholders
Agreement or the Registration Rights Agreement.
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(b) None of the Company or its Subsidiaries is in
violation of any law, rule, regulation, order, writ, decree or injunction of any
Government Authority or any body having jurisdiction over them or any of their
respective properties which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
Section 3.7 "Investment Company." The Company is not, and after giving
effect to the sale and issuance of the Preferred Stock, will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.8 "Solicitation; Access to Information." No form of general
solicitation or general advertising was used by the Company or, to the best of
its knowledge, any other person acting on its behalf, in respect of or in
connection with the offer and sale of the Preferred Stock.
Section 3.9 "Absence of Certain Changes or Events." Since March 31,
1996, the Company and each of its Subsidiaries has conducted its business only
in the ordinary course of such business and has not acquired any real estate
other than in the ordinary course of business or entered into any financing
arrangements in connection therewith other than in the ordinary course of
business, and there has not been (a) any change, circumstance or event that
could reasonably be expected to result in a Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to the Common Stock other than any publicly declared quarterly dividends
on the Common Stock, (c) any commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company or any of its Subsidiaries, other than Commitments which could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, or (d) any change in the Company's accounting principles,
practices or methods which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
Section 3.10 "Tax Matters; REIT and Partnership Status."
(a) The Company and each of its Subsidiaries have
timely filed with the appropriate taxing authority all Tax Returns required to
be filed by it or has timely requested extensions and such request has been
granted and has not expired. Each such Tax Return is true, complete and correct
in all material respects. Except as set forth on Schedule 3.10, the Company and
its Subsidiaries have paid, within the time and manner prescribed by law all
Taxes that are due and payable, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. The Company and each of its Subsidiaries have properly accrued
all Taxes for such periods subsequent to the periods covered by such Tax Returns
as required by GAAP. None of the Company or any of its Subsidiaries has executed
or filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. None of the
Company or any of its Subsidiaries is a party to any pending action or
proceedings by any taxing authority for assessment or collection of any Tax, and
no claim for assessment or collection of any Tax has been asserted against it
and no basis exists for any such claim or assessment. True and complete copies
of all federal, state and local income or franchise Tax Returns filed by the
Company and each of its Subsidiaries for 1994 and 1995 and all written
communications between the relevant taxing authorities and Buyer relating
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thereto have been delivered to Buyer or will be made available to
representatives of Buyer. No claim of which the Company has received notice has
been made by an authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. Except as set forth on Schedule 3.10, there are no Tax
Liens upon the assets of the Company or any Subsidiary. The Company has not
received a Tax Ruling (other than the Tax Ruling previously received by the
Company regarding its status as a REIT) or entered into a Closing Agreement with
any Tax Authority that would have a continuing adverse effect after the Initial
Closing Date. No event, transaction, act or omission has occurred which will
result in the Company becoming liable to pay or to bear any Tax as a transferee,
successor or otherwise which is primarily or directly chargeable or attributable
to any other person, firm or company, which has not been properly accrued as
required by GAAP and which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. The Company and each
Subsidiary have no actual or contingent material liability (whether by reason of
any indemnity, warranty, tax sharing agreement or otherwise) to any other person
in respect of any actual, contingent or deferred liability of such person for
Taxes. The Company and each Subsidiary have complied (and will comply) in all
respects with the provisions of the Code relating to the payment and withholding
of Taxes, including, without limitation, the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3606, and 6041
and 6049, as well as similar provisions under any other laws, and have, within
the time and in the manner prescribed by law, withheld and paid over to the
proper governmental authorities all amounts required in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party which could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(b) The Company (i) has in its federal income tax
return for its tax year ended December 31, 1994 elected to be taxed as a real
estate investment trust ("REIT") within the meaning of Section 856 of the Code
(the "Election"), such Election has remained in effect, (ii) has complied (or
will comply) with all applicable provisions of the Code relating to a REIT, for
each of its taxable years, (iii) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for each of its taxable years,
(iv) has not taken or omitted to take any action which could result in a
challenge to its status as a REIT, and, no such challenge of which the Company
has received notice is pending or threatened, and (v) will not be rendered
unable to qualify as a REIT for federal income tax purposes as a consequence of
the transactions contemplated hereby. As of the date hereof, (x) the Company is
a "domestically-controlled" REIT within the meaning of Code Section
897(h)(4)(B), and (y) all non-domestic beneficial owners of Common Stock are set
forth in Schedule 3.10 as of the date set forth therein. Except as set forth in
the Company Reports, to the Company's knowledge no person or entity which would
be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) owns or would be considered to own
(taking into account the ownership attribution rules under Section 544 of the
Code, as modified by Section 856(h) of the Code) in excess of 6% of the value of
the outstanding equity interest in the Company.
(c) Any amount or other entitlement that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated hereby by any employee, officer, or
director of the Company or the Operating Partnership or any of
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their Affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or plan currently in
effect would not be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code).
(d) The disallowance of a deduction under Section
162(m) of the Code for employee remuneration will not apply to any amount paid
or payable by the Company or any of its Subsidiaries under any contract, stock
plan, program, arrangement or understanding currently in effect.
(e) The Operating Partnership and each Subsidiary of
the Company and the Operating Partnership organized as a partnership (and any
other Subsidiary that files Tax Returns as a partnership for federal income tax
purposes) have at all times been classified as partnerships for federal income
tax purposes.
Section 3.11 "Agreements, Etc."
(a) Neither the Company nor any of its Subsidiaries
is in default under or in violation of any provision of the Company Charter, the
Bylaws of the Company or the Partnership Agreement (or equivalent documents) or
any agreement filed as an exhibit to the Company Reports except where such
default or violation would not result in a Material Adverse Effect.
(b) Other than agreements relating to the Camarillo
refinancing, all material agreements, as of the date hereof, entered into by the
Company or any of its Subsidiaries, except for agreements entered into in the
ordinary course of business, relating to the indebtedness of the Company, the
development or construction of, additions or expansions to, or management or
leasing services for commercial or residential buildings or other real
properties which are currently in effect and under which the Company or any of
its Subsidiaries currently has, or expects to incur, any material obligation and
which are required to be described in the Company Reports, are described in the
Company Reports. No payment, if any thereunder, are delinquent and no notice of
such delinquency thereunder has been received by the Company, except where such
default or violation would not result in a Material Adverse Effect. True and
complete copies of such agreements with all amendments and supplements thereto
have been delivered to Buyer.
Section 3.12 "Financial Records; Company Charter and Bylaws; Corporate
Records."
(a) The books of account and other financial records
of the Company and each of its Subsidiaries are in all material respects true
and complete, have been maintained in accordance with good business practices,
and are accurately reflected in all material respects, as required by GAAP, in
the financial statements included in the Company Reports. Except as set forth in
the notes thereto, all such financial statements were prepared in accordance
with GAAP and fairly present the consolidated financial results of operation of
the Company and its consolidated Subsidiaries as of the respective dates thereof
and for respective periods covered thereby. Except as described in the Company
Reports, the financial conditions of each Subsidiary are consolidated with those
of the Company.
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(b) The Company has previously delivered or made
available to Buyer true and complete copies of the Company Charter and the
Bylaws of the Company, as amended to date, the Partnership Agreement, and the
charter, Bylaws, organization documents, partnership agreements and joint
venture agreements of the Subsidiaries, and all amendments thereto.
(c) The minute books and other records of corporate
or partnership proceedings of the Company and each of its Subsidiaries will be
made available to Buyer and contain in all material respects accurate records of
all meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of the Company and its Subsidiaries which are corporations and all
actions of the partners of the Operating Partnership and Subsidiaries which are
partnerships, except for documentation of discussions relating to or in
connection with the transactions contemplated hereby or matters related hereto.
Section 3.13 "Properties."
(a) The Company has the requisite power, right
and authority to conduct its business as now conducted, or as proposed to be
conducted by it, and to own and operate the Company Properties consistent with
past practice and in compliance with applicable law and to enjoy uninterrupted
ownership, operation and maintenance of the Company Properties, except where any
such failure could not, individually, or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(b) Except as described in the Company Reports
and except as to earthquake insurance, each of the Company and the Subsidiaries
is insured by insurers of recognized financial responsibility against such
losses and risks in such amounts as are prudent and customary in the Company's
business, and none of Company and the Subsidiaries have any reason to believe
that it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue it's business, at a cost that could not reasonably be
expected to result in a Material Adverse Effect.
(c) Each of the Company and the Subsidiaries
possesses such certificates, authorizations or permits issued by the appropriate
regulatory agencies or bodies necessary to conduct the business now conducted by
it, or proposed to be conducted by it, and none of the Company or any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to result in a Material Adverse Effect.
3.14 "Environmental Matters."
(a) Except as disclosed in the environmental
reports set forth on Schedule 3.14 or in the Company Reports, (A) to the
knowledge of the Company, the Environment at each Company Property is free of
any Hazardous Substance except for any Hazardous Substance that could not
reasonably be expected to have a Material Adverse Effect;
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(B) none of the Company, or any Subsidiary and, to the knowledge of the Company,
no prior owner of any Company Property has caused or suffered to occur any
Release of any Hazardous Substance into the Environment on, in, under or from
any Company Property in violation of any Environmental Law applicable to such
Company Property in an amount that would reasonably be expected to have a
Material Adverse Effect and no condition exists on, in or under any Company
Property or, to the knowledge of the Company, any property adjacent to any
Company Property that could reasonably be expected to result in the occurrence
of material liabilities under, or any material violations of, any Environmental
Law applicable to such Company Property, give rise to the imposition of any
material Lien under any Environmental Law, or cause or constitute a material
environmental hazard to any property, person or entity, except where such
condition or violation could not result in a Material Adverse Effect; (C)
neither of the Company, nor any Subsidiary is engaged in or intends to engage in
any manufacturing or any other similar operations at any Company Property and,
to the knowledge of the Company, no prior owner of any Company Property engaged
in any manufacturing or any similar operations at any Company Property that (1)
require the use, handling, transportation, storage, treatment or disposal of any
Hazardous Substance (other than paints, stains, cleaning solvents, insecticides,
herbicides, or other substances that are used in the ordinary course of
operating any Property and in compliance with all applicable Environmental Laws)
or (2) require permits or are otherwise regulated pursuant to any Environmental
Law; (D) neither of the Company, nor any Subsidiary and, to the knowledge of the
Company, no prior owner of any Company Property has received any notice of a
claim under or pursuant to any Environmental Law applicable to a Company
Property or under common law pertaining to Hazardous Substances on any Company
Property or pertaining to other property at which Hazardous Substances generated
at any Company Property have come to be located; (E) none of the Company or any
Subsidiary and, to the best knowledge of the Company, no prior owner of any
Company Property has received any notice from any Governmental Authority
claiming any violation of any Environmental Law that is uncured or unremediated
as of the date hereof; and (F) no Company Property (1) is included or proposed
for inclusion on the National Priorities List issued pursuant to CERCLA (as
defined below) by the United States Environmental Protection Agency (the "EPA")
or on the Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA as a potential CERCLA removal,
remedial or response site or (2) is included or proposed for inclusion on, any
similar list of potentially contaminated sites pursuant to any other applicable
Environmental Law nor has the Company, or any Subsidiary received any written
notice from the EPA or any other Governmental Authority proposing the inclusion
of any Property on such list.
(b) As used herein, "Hazardous Substance" shall
include any hazardous substance, hazardous waste, toxic or dangerous substance,
pollutant, asbestos-containing materials, PCBs, pesticides, explosives,
radioactive materials, dioxins, urea formaldehyde insulation, pollutant or
waste, including any such substance, pollutant or waste identified, listed or
regulated under any Environmental Law (including, without limitation, materials
listed in the United States Department of Transportation Optional Hazardous
Material Table, 49 C.F.R. Section 172.101, as the same may now or hereafter be
amended, or in the EPA's List of Hazardous Substances and Reportable Quantities,
40 C.F.R. Part 3202, as the same may now or hereafter be amended); "Environment"
shall mean any surface water, drinking water, ground
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water, land surface, subsurface strata, river sediment, buildings and
structures; "Environmental Law" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. Section 9601, et
seq.,) ("CERCLA"), the Resource Conservation Recovery Act, as amended (42 U.S.C.
Section 6901, et seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401,
et seq.), the Clean Water Act, as amended (33 U.S.C. Section 1251, et seq.), the
Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.), the
Toxic Substances Control Act, as amended (29 U.S.C. Section 651, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), together with all rules, regulations and orders promulgated thereunder
and all other federal, state and local laws, ordinances, rules, regulations and
orders relating to the protection of the environment from environmental effects;
and "Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, emanating or
disposing of any Hazardous Substance into the Environment, including, without
limitation, the abandonment or discard of barrels, containers, tanks (including,
without limitation, underground storage tanks) or other receptacles containing
or previously containing any Hazardous Substance or any release, emission,
discharge or similar term, as those terms are defined or used in any
Environmental Law.
3.15 "Employees and Employee Benefit Plans"
(a) The Company Reports or Schedule 3.15(a) sets
forth a complete and accurate list of all Employee Benefit Plans which affect
Employees of the Company or any of its Subsidiaries. With respect to each
Employee Benefit Plan and each material Benefit Arrangement (collectively,
"Company Plan") (i) the Company and each of its Subsidiaries is in compliance in
all material respects with the terms of each Company Plan and with the
requirements prescribed by all applicable statutes, orders or government rules
or regulations, (ii) the Company and each of its Subsidiaries has contributed
all amounts due under each Company Plan, and (iii) none of the Company or any of
its Subsidiaries has any funding commitment or other liabilities except as
reserved for in the financial statements in or incorporated by reference into
the Company Reports, and, in the case of clauses (i) through (iii), except for
such matters as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. None of the Company or any of
its Subsidiaries has made any commitment to establish any new Employee Benefit
Plan, to modify any Employee Benefit Plan, or to increase benefits or
compensation of Employees of the Company or any of its Subsidiaries (except for
normal increases in compensation consistent with past practices), and to the
Company's knowledge, no intention to do so has been communicated to Employees of
the Company or any of its Subsidiaries. There are no pending or, to the
Company's knowledge, anticipated claims against or otherwise involving any of
the Company Plans or any fiduciaries thereof with respect to their duties to the
Company Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Company Plan activities) has been
brought against or with respect to any such Company Plans that can reasonably be
expected to result in a Material Adverse Effect.
(b) For purposes hereof, "Employee Benefit Plans"
means each and all "employee benefit plans" as defined in Section 3(3) of ERISA
maintained or contributed to by a party hereto or in which a party hereto
participates or participated and which provides benefits to
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Employees, including (i) any such plans that are "employee welfare benefit
plans" as defined in Section 3(1) of ERISA, including retiree medical and life
insurance plans ("Welfare Plans"), and (ii) any such plans that constitute
"employee pension benefit plans" (including "multiemployer plans") as defined in
Section 3(2) of ERISA ("Pension Plans"). "Benefit Arrangements" means life and
health insurance, hospitalization, savings, bonus, deferred compensation,
incentive compensation, holiday, vacation, severance pay, sick pay, sick leave,
disability, tuition refund, service award, company car, scholarship, relocation,
patent award, fringe benefit, individual employment, consultancy or severance
contracts and agreements and other policies or practices of a party hereto
providing employee or executive compensation or benefits to Employees, other
than Employee Benefit Plans. "Employees" mean all current employees, former
employees and retired employees of a party hereto or any of its Subsidiaries,
including employees on disability, layoff or leave status.
(c) Neither the Company nor any other employer
that is (or at any relevant time was) part of a controlled group (as defined in
Section 412(l)(8)(C) of the Code) of which the Company is (or at any relevant
time was) a member maintains or has ever maintained a plan covered by Title IV
of ERISA. Neither the Company nor any such employer has engaged in any
transaction described in Section 4069 or Section 4212(c) of ERISA.
(d) The Company represents and warrants
that through its investment in the Operating Partnership of which it is the sole
general partner and owner of 77.2% of the ownership interests therein, it has
been actively engaged in the management or development of real estate in the
ordinary course of its business at all times from the date of its first
long-term investment that was not a short-term investment of funds pending
long-term commitment, ("REOC Qualification Date") to and including the Initial
Closing Date, and that it will continue to be so engaged in the management or
development of real estate so long as Buyer has any interest in any equity or
debt issued by the Company.
(e) The Company represents and warrants that the
"real estate" referenced above which was purchased on the REOC Qualification
Date and thereafter includes the Company Properties. To the extent any of the
Company Properties are subject to tenant leases (the "Leases"), the Company has
substantial responsibilities under each of the Leases, and none of the Leases
provide that substantially all management and maintenance activities with
respect to the Property in question or any portion thereof are the
responsibility of the tenant leases.
(f) The Company represents that it has not
merely passively assumed the risks of its real estate ownership, but that the
return to its stockholders from its investment in the Properties has been and is
based in part on the cash flow and capital appreciation of the Properties, and
that such return depends in substantial part on the success of the Company's
management and development efforts with respect to the Company Properties.
(g) The Company represents and warrants that the
employees of the Company perform most of the development and management
functions of the real estate business described herein, except that the Company
has employed independent contractors, each of which
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is terminable without cause and without substantial penalty upon reasonable
short notice, to perform certain of the day-to-day management activities
associated with the Company Properties. In any event, the Company represents and
warrants that it devotes substantial resources to such management and
development activities and to the oversight of its independent contractors who
perform such activities.
(h) The Company covenants and warrants that it
will comply with requirements, and take all procedural action and cause the
Operating Partnership to take all procedural actions necessary, to maintain its
status as a "real estate operating company" as such term is defined in 29 C.F.R.
Section 2510.3-101 (a "REOC"). Specifically, but without limitation, the Company
covenants that it has or it will establish an "annual valuation period" (as such
term is defined in 29 C.F.R., Section 2510.3-101). The Company agrees to certify
to Buyer its compliance with the requirements recited in this paragraph within
10 days after the close of each annual valuation period.
Section 3.16 "Affiliate Transactions." The Company Reports set forth
an accurate description of all transactions with Affiliates, which are
required to be included therein. A true and complete copy of all agreements or
contracts relating to any such transaction has been made available to Buyer.
Except as set forth in the Company Reports, all such Affiliate transactions were
conducted on an arm's-length basis.
Section 3.17 "Maryland Takeover Law." The terms of Section 3-602 and
Subtitle 7 of Title 3 of the Corporations & Associations Code of Maryland will
not apply to Buyer or any transaction contemplated hereby.
Section 3.18 "Brokers or Finders." No agent, broker, investment banker
or other firm or person, including any of the foregoing that is an Affiliate of
the Company, is or will be entitled to any broker's or finder's fee or any other
commissions or similar fee from the Company in connection with this Agreement or
any of the transactions contemplated hereby for which Buyer will be responsible
except as a result of actions by Buyer.
Section 3.19 "Knowledge Defined." As used herein, the phrase "to the
Company's knowledge" (or words of similar import) shall include the actual
knowledge after due inquiry of Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxx,
and Xxxxxx Xxxxxx and includes any facts, matters or circumstances set forth in
any written notice from any Government Authority, and also including any matter
of which Buyer informs the Company in writing. The term "due inquiry" is hereby
defined to mean such inquiry by the applicable person as such person would
normally be reasonably expected to make in the ordinary course of his regular
and usual duties as either an employee or as a board member, as the case may be,
of the Company.
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ARTICLE 4
Representations and Warranties of Buyer
Each Buyer hereby represents and warrants to the Company, as follows:
Section 4.1 "Organization." (a) Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite partnership power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted, and to enter into this Agreement, the Stockholders Agreement and to
perform its obligations hereunder and thereunder.
Section 4.2 "Due Authorization." The execution, delivery and
performance of this Agreement, the Registration Rights Agreement, and the
Stockholders Agreement have been duly and validly authorized by all necessary
partnership action on the part of Buyer. The execution, delivery and performance
of the Loan Agreement has been duly and validly authorized by all necessary
limited liability company action on the part of Lender. This Agreement has been
duly executed and delivered by Buyer for itself and constitutes the valid and
legally binding obligations of Buyer enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights or general principles of
equity. The Loan Agreement has been duly executed and delivered by the Lender
for itself and constitutes the valid and legally binding obligations of the
Lender enforceable against the Lender in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity.
Section 4.3 "Conflicting Agreements and Other Matters." Neither the
execution and delivery of this Agreement nor the performance by Buyer of its
obligations hereunder nor the execution and delivery of the Loan Agreement nor
the performance by the Lender of its obligations thereunder will conflict with,
result in a breach of the terms, conditions or provisions of, constitute a
default under, result in the creation of any mortgage, security interest,
encumbrance, Lien or charge of any kind upon any of the properties or assets of
Buyer or Lender pursuant to, or require any consent, approval or other action by
or any notice to or filing with any Government Authority pursuant to, the
organizational documents or agreements of Buyer or Lender, or any agreement,
instrument, order, judgment, decree, statute, law, rule or regulation by which
Buyer or Lender is bound, except for filings after the Initial Closing, the
Initial Exchange Closing or any Subsequent Closing under Section 13(d) of the
Exchange Act.
Section 4.4 "Acquisition for Investment; Sophistication; Source of
Funds." Buyer is acquiring the Preferred Stock being purchased by it for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof, and Buyer has no present intention or
plan to effect any distribution of shares of Preferred Stock, provided that the
disposition of Preferred Stock owned by Buyer shall at all times be and remain
within its control and, in the ordinary course of its affairs, the Buyer may
effect transfer of any of its assets, including the Preferred Stock, subject to
the provisions of this Agreement and the Registration Rights Agreement. Buyer is
able to bear the economic risk of the acquisition of Preferred Stock pursuant
hereto and can afford to sustain a total loss on such investment, and has such
knowledge
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and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment, and therefore has
the capacity to protect its own interests in connection with the acquisition of
Preferred Stock pursuant hereto.
Section 4.5 "Brokers or Finders." No agent, broker, investment banker
or other firm or person, including any of the foregoing that is an Affiliate of
Buyer is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from Buyer in connection with this Agreement or any of
the transactions contemplated hereby for which the Company will be responsible
except as a result of actions by the Company.
Section 4.6 "Investment Company Matters." Buyer is not and after
giving effect to the purchase of Preferred Stock contemplated hereby 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 4.7 "Accredited Investor." Buyer is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, as presently in effect.
ARTICLE 5
Covenants Relating to Closings
Section 5.1 "Taking of Necessary Action."
(a) Each party hereto agrees to use commercially
reasonable efforts promptly to take or cause to be taken all action and promptly
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, the Loan Agreement, the
Registration Rights Agreement and the Stockholders Agreement, subject to the
terms and conditions hereof and thereof, including, without limitation, to cause
necessary or appropriate amendments to the Operating Partnership's Partnership
Agreement; provided, however, this proviso shall not apply to a party's ability
to exercise its discretionary rights hereunder to the extent such party's
obligations hereunder are conditioned upon the performance of certain conditions
precedent which shall be satisfactory to such party in such party's sole
discretion. The Company shall use its best efforts promptly to take or cause to
be taken all action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws or regulations to consummate and make
effective the Charter Amendment and the IRS Approval.
(b) As promptly as practicable after the date hereof,
the Company shall prepare and file with the SEC a preliminary proxy statement
(the "Proxy Statement") by which the Company's stockholders will be asked to
approve the Charter Amendment and other matters in connection with the
transactions contemplated hereby as the Company may reasonably suggest and the
Buyer may reasonably request, which proposed Charter Amendment shall be in form
and substance satisfactory to Buyer. The Proxy Statement as initially filed with
the SEC, as it may be amended and refiled with the SEC and as it may be mailed
to the Company's stockholders, shall be in form and substance reasonably
satisfactory to Buyer. The Company shall use its reasonable
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efforts to respond to any comments of the SEC, and to cause the Proxy Statement
to be mailed to the Company's stockholders at the earliest practicable time. As
promptly as practicable after the date hereof, the Company shall prepare and
file any other filings required under the Exchange Act, the Securities Act or
any other federal, state or local laws relating to this Agreement and the
transactions contemplated hereby, including under the HSR Act (and shall
promptly on request therefore provide Buyer with information requested by Buyer
in connection with Buyer's HSR matters and filings) and state takeover laws (the
"Other Filings"), and Buyer shall prepare and file any filings required by Buyer
under the HSR Act and shall cooperate with the Company in the preparation of any
such filings. The Company will notify Buyer promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff or
any other government officials for amendments or supplements to the Proxy
Statement or any Other Filing or for additional information and will supply
Buyer with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement or
any Other Filing. The Proxy Statement and any Other Filing shall comply in all
material respects with all applicable requirements of law. Buyer shall provide
the Company all information about Buyer required to be included or incorporated
by reference in the Proxy Statement or any Other Filing and shall otherwise
cooperate with the Company in taking the actions described in this paragraph.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement or any Other Filing, the Company or Buyer, as
the case may be, shall promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of the Company, such amendment or supplement. The
Proxy Statement shall include the recommendation of the Board of Directors of
the Company that the stockholders of the Company vote in favor of and approve
the Charter Amendment and the issuance of Preferred Stock pursuant to this
Agreement.
(c) Buyer agrees to assist the Company in its
preparation of a submission to the IRS seeking IRS Approval, including
information as to the nature of Buyer's investors, provided that Buyer may
refuse information if it reasonably believes that not doing so would be adverse
to its interests. Such submission shall be in form and substance reasonably
satisfactory to Buyer. The Company will notify Buyer promptly of the receipt of
any comments, notices or requests for additional information from IRS or its
staff and will supply Buyer with copies of all correspondence between the
Company or any of its representatives on one hand and the IRS or its staff on
the other hand.
(d) The Company shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon the Charter Amendment and shall use its best efforts to cause the
stockholder approval of the Charter Amendment by August 31, 1996.
(e) The parties agree to negotiate in good faith
whether to issue Operating Partnership Units to Buyer as contemplated hereby as
promptly as practicable after the date hereof. In the event the parties mutually
agree for the exchange of Operating Partnership Units, the Company shall propose
and submit an amendment to the Partnership Agreement to the limited partners of
the Operating Partnership to provide for the exchange of the Loan and Preferred
Stock for Operating Partnership Units and shall seek a written consent or call a
meeting to vote
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thereon. The Company shall vote all of the Operating Partnership
Units held by it at the time of such written consent or meeting in favor of such
Amended Partnership Agreement.
(f) The Company shall use its best efforts to obtain
the requisite lender consents required hereby.
Section 5.2 "Registration Rights Agreement." At the Initial Closing,
the Company and Buyer shall enter into the Registration Rights Agreement.
Section 5.3 "Stockholders Agreement." At the Initial Closing, the
Company, Buyer and the Messrs. Marcus and Guericke shall enter into the
Stockholders Agreement.
Section 5.4 "Modification to Structure." The parties agree to
negotiate in good faith modification to the structure of the Operating
Partnership and/or the Operating Partnership's investments in, and ownership of,
the Property of the Company, (a) to avoid the imposition of a corporate tax on
any income of the Operating Partnership, (b) to minimize the effects of UBTI on
a direct or indirect investor of the Buyer or (c) to assist Buyer in respect of
requirements pertinent to Buyer under ERISA. Unless and until such date Buyer
has distributed to its investors aggregate funds exceeding 50% of the net
acquisition cost of all assets which it has purchased to such date, the Company
and the Operating Partnership, considered as a single entity, or any entity in
which the partners and/or the Company and the Operating Partnership, considered
as a single entity, owns an interest and which owns any portion of the Property,
shall qualify as and/or remain an "operating company" under the plan asset rules
of ERISA at 29 C.F.R. 2510.3-101 provided that such actions shall not have a
material adverse ffect on Operating Partnership limited partners, considered as
a whole.
Section 5.5 "Designation of Directors."
(a) The Company shall use its best efforts to cause
the stockholders of the Company to approve and adopt an amendment to the Company
Charter, which permits the termination of Directors such that, upon a failure by
the Company to pay dividends on the Preferred Stock in accordance with the
Articles Supplementary or in the event of certain breaches thereof: (i) the
holders of Preferred Stock shall have the power to cause the removal or
resignation of such requisite number of Directors and to appoint the designees
to fill such vacancies or, alternatively, (ii) that the Company shall increase
the number of authorized directors of its Board of Directors and appoint such
persons designated by the holders of Preferred Stock to fill such newly-created
vacancies.
(b) The Company shall cause the committees of the
Board of Directors to include Preferred Stockholder director designees, as set
forth in the Articles Supplementary.
Section 5.6 "Listing of Preferred Stock." Upon the request of the
Buyer, the Company shall use commercially reasonable efforts to list the
Preferred Stock on such securities exchanges as may be mutually agreeable
between the parties, including, without limitation, the Singapore, Amsterdam and
Luxembourg Securities Exchanges, provided that the cost thereof including any
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periodic reporting or listing costs shall be borne by the Buyer and provided
further that in the Company's reasonable discretion such listing shall not have
an adverse effect on the Company.
Section 5.7 "Public Announcements, Confidentiality."
(a) Subject to each party's disclosure obligations
imposed by law and any stock exchange or similar rules and the confidentiality
provisions contained in Section 5.7(b), the Company and Buyer will cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement, the
Registration Rights Agreement, the Stockholders Agreement and any of the
transactions contemplated hereby or thereby.
(b) Buyer agrees that all information provided to
Buyer or any of its representatives pursuant to this Agreement shall be kept
confidential, and Buyer shall not disclose such information to any persons other
than the directors, officers, employees, financial advisors, legal advisors,
accountants, consultants and affiliates of Buyer who reasonably need to have
access to the confidential information and who are advised of the confidential
nature of such information; provided, however, the foregoing obligation of Buyer
shall not (i) relate to any information that (1) is or becomes generally
available other than as a result of unauthorized disclosure by Buyer or by
persons to whom Buyer has made such information available, (2) is or becomes
available to Buyer on a non-confidential basis from a third party that is not,
to Buyer's knowledge, bound by any other confidentiality agreement with the
Company, or (ii) prohibit disclosure of any information if required by law,
rule, regulation, court order or other legal or governmental process.
(c) The Company agrees that all information provided
to the Company or any of its representatives pursuant to this Agreement shall be
kept confidential, and the Company shall not disclose such information to any
persons other than the directors, officers, employees, financial advisors, legal
advisors, accountants, consultants and affiliates of the Company who reasonably
need to have access to the confidential information and who are advised of the
confidential nature of such information; provided, however, the foregoing
obligation of the Company shall not (i) relate to any information that (1) is or
becomes generally available other than as a result of unauthorized disclosure by
the Company or by persons to whom the Company has made such information
available, (2) is or becomes available to the Company on a non-confidential
basis from a third party that is not, to the Company's bound by any other
confidentiality agreement with Buyer, or (ii) prohibit disclosure of any
information if requested by law, rule, regulation, court order or other legal or
governmental process.
Section 5.8 "Information and Access." For so long as Buyer owns
100,000 shares or more of Preferred Stock, the Company and its Subsidiaries
shall afford to Buyer and Buyer's accountants, counsel and other representatives
full and reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to its properties, books, contracts,
commitments, records and personnel and, during such period, shall furnish
promptly to Buyer (x) a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of the Securities Laws, and (y)
all other information concerning its business, personnel and the Company
Properties as Buyer may reasonably request. Buyer and its
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accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section, not unduly interfere with the operation of the
business of the Company or its Subsidiaries.
Section 5.9 "Notification of Certain Matters." Each of Buyer and the
Company shall use its good faith efforts to notify the other party in writing of
its discovery of any matter that would render any of such party's or the other
party's representations and warranties contained herein untrue or incorrect in
any material respect, but the failure of either party to so notify the other
party shall not be deemed a breach of this Agreement.
ARTICLE 6
Certain Additional Covenants
Section 6.1 "Resale." Buyer acknowledges and agrees that the
securities that Buyer acquires hereunder will not, as of the relevant Closing
thereof, be registered under the Securities Act or the securities laws of any
state and that it may be sold or otherwise disposed of only in one or more
transactions registered under the Securities Act and, where applicable, state
securities laws or as to which an exemption from the registration requirements
of the Securities Act and, where applicable, state securities laws is available.
Section 6.2 "Use of Funds." The Company shall use the funds received
pursuant to the terms hereof, first to repay outstanding indebtedness (of either
the Company or the Operating Partnership) and second for the acquisition or
development by the Operating Partnership of assets.
Section 6.3 "REIT Status." From and after the date hereof and so long
as Buyer owns 10% or more of the Company's outstanding Common Stock (for
purposes of this provision, the Company's convertible securities, including
Preferred Stock, shall be treated as Common Stock on an as-converted basis), the
Company will elect to be taxed as a REIT in its federal income tax returns for
each of its tax years, will comply with all applicable laws, rules and
regulations of the Code relating to a REIT, and will not take any action or fail
to take any action which would result in the loss of its status as a REIT for
federal income tax purposes.
Section 6.4 "Affiliated Transactions." All transactions by and between
the Company and any Affiliate of the Company shall be conducted on an
arm's-length basis, and if any such transaction involves a cost to the Company
to such Affiliate in excess of $500,000 in a single transaction, or in excess of
an aggregate $1,000,000 for a series of transactions with all Affiliates in any
twelve-month period, shall be on terms and conditions no less favorable (when
all aspects of the transactions are considered) to the Company than could be
obtained from non-related persons except as disclosed in the Company Reports.
Section 6.5 "Loan Agreement Covenants." The Company agrees to take
such actions necessary or as may be requested by Buyer to afford Buyer the
rights set forth in the Loan Agreement, which is incorporated herein by
reference, and hereby authorizes Buyer to take such actions as are reasonably
necessary to accomplish such rights. The Buyer agrees to cause Lender to take
such actions necessary or as may be requested by the Company to afford the
Company the rights set forth in the Loan Agreement, which is incorporated herein
by reference, and hereby authorizes the Company to take such actions as are
reasonably necessary to accomplish such rights.
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ARTICLE 7
Conditions to Closings
Section 7.1 "Conditions of Purchase at Initial Closing." The
obligations of Buyer to purchase and pay for the Preferred Stock at the Initial
Closing are subject to satisfaction or waiver of each of the following
conditions precedent:
(a) "Representations and Warranties; Covenants." The
representations and warranties of the Company contained herein shall have been
true and correct in all respects on and as of the date hereof, and shall be true
and correct in all respects on and as of the date of the Initial Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Initial Closing (except for representations and
warranties that speak as of a specific date or time other than the date of the
Initial Closing), other than, in all such cases, such failures to be true and/or
correct as would not in the aggregate reasonably be expected to have a Material
Adverse Effect; provided, however, that if any of the representations and
warranties is already qualified in any respect by materiality or as to Material
Adverse Effect for purposes of this Section 7.1(a) such materiality or Material
Adverse Effect qualification will be in all respects ignored (but subject to the
overall standard as to Material Adverse Effect set forth immediately prior to
this proviso). The covenants and agreements of the Company to be performed on or
before the date of the Initial Closing in accordance with this Agreement shall
have been duly performed in all respects, other than (except for the Company's
obligation to deliver the relevant shares of Preferred Stock at the Initial
Closing, and for the covenants set forth in Sections 5.2, 5.3 and 6.3 as to
which the proviso set forth in this other-than clause shall not apply) for such
failures to have been performed as would not in the aggregate reasonably be
expected to have a Material Adverse Effect (provided, however, that if any such
covenant or agreement is already qualified in any respect by materiality or as
to Material Adverse Effect for purposes of determining whether this condition
has been satisfied, such materiality or Material Adverse Effect qualification
will be in all respects ignored and such covenant or agreement shall have been
performed in all respects without regard to such qualification (but subject to
the overall exception as to Material Adverse Effect set forth immediately prior
to this proviso)). The Company shall have delivered to Buyer at the Initial
Closing a certificate of an appropriate officer in form and substance reasonably
satisfactory to Buyer dated the date of the Initial Closing to such effect.
In making any determination as to Material Adverse Effect under this
Section 7.1(a) or under Section 7.2(a), the matters set forth in each such
Section shall be aggregated and considered together.
(b) "Preferred Stock; Articles Supplementary." The
Articles Supplementary shall have been duly filed with the State Department of
Assessments and Taxation of the State of Maryland and shall be in full force and
effect in form and substance satisfactory to Buyer.
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(c) "Consents." The Company shall have obtained the
consents set forth in Schedule 3.4.
(d) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which could reasonably be expected to have a
Material Adverse Effect on the ability of the Company to consummate the
transactions contemplated hereby or to issue the Preferred Stock.
(e) "Proceedings." All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyer and Buyer shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
(f) "Opinion of Counsel." Buyer shall have received
an opinion from Xxxxxxxx & Xxxxxxxx LLP substantially in form and substance
reasonably satisfactory to Buyer.
(g) "Bylaws." The Company shall have adopted the
amendments to the Company's Bylaws relating to alterations to the size and
composition of the Board of Directors in form and substance reasonably
satisfactory to Buyer.
(h) "Resolutions." Buyer shall have received a
certified copy or resolutions of the Board of Directors in form and substance
satisfactory to Buyer, relating to the Buyer's and its Affiliates' exemption
from the provisions of Section 3 - 602 of the Maryland Corporations and
Associations Code.
(i) "Registration Rights Agreement." Buyer shall have
received the Registration Rights Agreement executed by the Company, in form and
substance reasonably satisfactory to Buyer.
(j) "Stockholders Agreement." Buyer shall have
received the Stockholders Agreement executed by the Company, in form and
substance reasonably satisfactory to Buyer.
(k) "Disclosure Statement." Buyer shall have received
from the Company a Disclosure Statement attaching all Schedules to the
Agreement.
(l) "NYSE Advice." Buyer shall have received the NYSE
Advice.
(m) "Maryland Counsel Opinion." If requested by
Buyer, Buyer shall have received an opinion of the Company's Maryland counsel in
form and substance reasonably satisfactory to Buyer.
(n) "Amendment to Investor Rights Agreement." Buyer
shall have received from the Company a copy of an amendment to that certain
Investor Rights Agreement
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dated as of June 13, 1994 between the Company and the investors party thereto,
whereby such investors shall have agreed that their rights thereunder shall be
subordinated to the rights of holders of Preferred Stock;
(o) "Appointment of Buyer's Designees to Board of
Directors and Committees." The Buyer's designee shall have been appointed to the
Board of Directors and to all committees pursuant to the terms of the Bylaws and
Articles Supplementary.
(p) "Preemptive Rights Agreements." Buyer and Company
shall have executed an agreement providing for preemptive rights of Buyer, in
form and substance reasonably satisfactory to Buyer.
Section 7.2 "Conditions of Purchase at Subsequent Closings." The
obligations of Buyer to purchase and pay for the shares of Preferred Stock at
each Subsequent Closing are subject to satisfaction or waiver of each of the
following conditions precedent:
(a) "Representations and Warranties; Covenants." The
representations and warranties of the Company contained herein shall have been
true and correct in all respects on and as of the date hereof, and as of the
Initial Closing Date. The covenants and agreements of the Company to be
performed on or before the relevant Subsequent Closing Date in accordance with
this Agreement shall have been duly performed in all respects, other than
(except for the Company's obligation to deliver the relevant shares of Preferred
Stock at the relevant Subsequent Closing, as to which the proviso set forth in
this other-than clause shall not apply) for such failures to have been performed
as would not in the aggregate reasonably be expected to have a Material Adverse
Effect, provided, however, that if any such covenant or agreement is already
qualified in any respect by materiality or as to Material Adverse Effect for
purposes of determining whether this condition has been satisfied, such
materiality or Material Adverse Effect or qualification will be in all respects
ignored and such covenant or agreement shall have been performed in all respects
without regard to such qualification (but subject to the overall exception as to
Material Adverse Effect set forth immediately prior to this proviso). The
Company shall have delivered to Buyer at the relevant Subsequent Closing a
certificate of an appropriate officer in form and substance reasonably
satisfactory to Buyer dated the relevant Subsequent Closing Date to such effect.
(b) "No Material Adverse Change." Since the Initial
Closing Date, there shall not have been any change, circumstance or event which
has had or could reasonably be expected to have a Material Adverse Effect.
(c) "Operating Partnership Agreement." If Operating
Partnership Units are to be purchased by Buyer, the Partnership Agreement shall
have been duly and validly amended and restated so that it is in a form which is
satisfactory to both the Company and Buyer (the "Amended Partnership Agreement")
by the requisite vote or consent of the partners of the Operating Partnership,
all as required by and in accordance with the Partnership Agreement.
(d) "Amended Company Charter; Modification of
Ownership Limit." As to Subsequent Closings under Option A or Option B, the
Charter Amendment shall have been approved by the requisite vote of holders of
Common Stock, all as required by and in accordance
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with the Company Charter, and duly filed with the State Department of
Assessments and Taxation of the State of Maryland and shall be in full force and
effect.
(e) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which could reasonably be expected to have a
Material Adverse Effect on the ability of the Company to consummate the
transactions contemplated hereby or to issue the Preferred Stock.
(f) "Proceedings." All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyer and Buyer shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
(g) "REIT Status." The Company shall have elected to
be taxed as a REIT in its most recent federal income tax return, and shall be in
compliance with all applicable laws, rules and regulations, including the Code,
necessary to permit it to be taxed as a REIT. The Company shall not have taken
any action or have failed to take any action which would reasonably be expected
to, alone or in conjunction with any other factors, result in the loss of its
status as a REIT for federal income tax purposes.
(h) "Opinion of Counsel." Buyer shall have received
an opinion from Xxxxxxxx & Xxxxxxxx LLP in such form and substance reasonably
satisfactory to Buyer.
(i) "IRS Approval." As to the Initial Exchange
Closing under Option D, the IRS Approval shall have been obtained and shall be
in full force and effect.
(j) "Certain Conditions Still True." The conditions
precedent set forth in Sections 7.1(c), (e), (h) and (i) shall continue to be
satisfied or waived in all respects on and as of each relevant Closing Date.
With respect to the Initial Exchange Closing and each
Subsequent Closing:
(k) "HSR Act." Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or beenterminated, and no action shall have been instituted by the
United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or terminated,
or the Company and Buyer shall have mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby.
Section 7.3 "Conditions of Sale." The obligation of the Company to
issue and sell any Preferred Stock at any closing (including the Initial
Closing) is subject to satisfaction or waiver of each of the following
conditions precedent:
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(a) "Representations and Warranties; Covenants." The
representations and warranties of Buyer contained herein shall have been true
and correct in all respects on and as of the date hereof and as of the date of
the Initial Closing, other than, in all such cases, such failures to be true
and/or correct as would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company or Buyer's ability to consummate the
transactions contemplated hereby; provided, however, that if any of the
representations and warranties is already qualified in any respect by
materiality or as to Material Adverse Effect for purposes of this Section 7.3(a)
such materiality or Material Adverse Effect qualification will be in all
respects ignored (but subject to the overall standard as to Material Adverse
Effect set forth immediately prior to this proviso). The covenants and
agreements of Buyer to be performed on or before the relevant Closing Date in
accordance with this Agreement shall have been duly performed in all respects,
other than (except for Lender's obligations under the Loan Agreement, Buyer's
obligation to pay the relevant Purchase Price at the relevant Closing, including
any Closing under Section 2.5(b), and except for Buyer's covenants set forth in
Sections 5.2 and 5.3, as to which the proviso set forth in this other-than
clause shall not apply) for such failures to have been performed as would not in
the aggregate reasonably be expected to have a Material Adverse Effect on the
Company or Buyer's ability to consummate the transactions contemplated hereby
(provided, however, that if any such covenant or agreement is already qualified
in any respect by materiality or as to Material Adverse Effect for purposes of
determining whether this condition has been satisfied, such materiality or
Material Adverse Effect qualification will be in all respects ignored and such
covenant or agreement shall have been performed in all respects without regard
to such qualification (but subject to the overall exception as to Material
Adverse Effect set forth immediately prior to this proviso)). Buyer shall have
delivered to the Company at the relevant Closing a certificate of an appropriate
officer in form and substance reasonably satisfactory to the Company dated the
relevant Closing Date to such effect.
(b) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which would reasonably be expected to have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby or to acquire the Preferred Stock.
(c) "Consents." The Company shall have obtained the
consents set forth in Schedule 3.4.
(d) "Proceedings." All corporate and other
proceedings to be taken by Buyer in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company and the Company shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(e) "Opinion of Counsel." The Company shall have
received an opinion from counsel to Buyer in form and substance reasonably
satisfactory to the Company.
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(f) "Bylaws." The Company shall have adopted the
amendments to the Company's Bylaws relating to alterations to the size and
composition of the Board of Directors.
(g) "Registration Rights Agreement." The Company
shall have received the Registration Rights Agreement executed by the Buyer in
form and substance satisfactory to the Company.
(h) "Stockholders Agreement." The Company shall have
received the Stockholders Agreement executed by the Buyer in form and substance
satisfactory to the Company.
With respect to any Subsequent Closing only:
(x) "Amended Company Charter; Modification of Ownership Limit." As to
Subsequent Closings under Option A or Option B, the Charter Amendment shall have
been approved by the requisite vote of holders of Common Stock, all as required
by and in accordance with the Company Charter, and duly filed with the State
Department of Assessments and Taxation of the State of Maryland and shall be in
full force and effect.
(y) "Operating Partnership Agreement." If Operating Partnership Units
are to be purchased by Buyer, the Partnership Agreement shall have been duly and
validly amended and restated as the Amended Partnership Agreement by the
requisite vote or consent of the partners of the Operating Partnership, all as
required by and in accordance with the Partnership Agreement.
(z) "HSR Act." Any waiting period applicable to the consummation of
the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated, or the Company and
Buyer shall have mutually concluded that no filing under the HSR Act is required
with respect to the transactions contemplated hereby.
ARTICLE 8
Survival; Indemnification
Section 8.1 "Survival." All representations, warranties and (except as
provided by the last sentence of this Section 8.1) covenants and agreements of
the parties contained herein, including indemnity or indemnification agreements
contained herein, or in any Schedule or Exhibit hereto, or any certificate,
document or other instrument delivered in connection herewith shall survive the
Initial Closing until 18 months after the Initial Closing. No Action or
proceeding may be brought with respect to any of the representations and
warranties, or any of the covenants or agreements which survive until 18 months
after the Initial Closing, unless written notice thereof, setting forth in
reasonable detail the claimed misrepresentation or breach of warranty or breach
of covenant or agreement, shall have been delivered to the party alleged to have
breached such representation or warranty or such covenant or agreement prior to
18 months after the Initial Closing; provided, however, that, if Buyer shall
have complied with this Section 8.1, the damages
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for breach by the Company of any of the representations and warranties, or any
of the covenants or agreements which survive until 18 months after the Initial
Closing, shall be measured with respect to all of Buyer's purchases of Preferred
Stock hereunder and not with respect only to Buyer's purchases hereunder made
during the period ending 18 months after the Initial Closing, but such
measurement shall not in any event include any shares of Preferred Stock that
Buyer may have purchased other than from the Company. Notwithstanding the
foregoing, those covenants or agreements that contemplate or may involve actions
to be taken or obligations in effect after the Initial Closing shall survive in
accordance with their terms, and representations and warranties of the Company
contained in Section 3.10 herein shall survive until the running of the
applicable statutes of limitations.
Section 8.2 "Indemnification by Buyer or the Company."
(a) Subject to Section 8.1, from and after any
Closing Date, Buyer shall indemnify and hold harmless the Company, its
successors and assigns, from and against any and all damages, claims, losses,
expenses, costs, obligations, and liabilities, including liabilities for all
reasonable attorneys' fees and expenses (including attorney and expert fees and
expenses incurred to enforce the terms of this Agreement) (collectively, "Loss
and Expenses") suffered, directly or indirectly, by the Company by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by Buyer in or pursuant to this
Agreement, or (ii) any failure by Buyer to perform or fulfill any of its
covenants or agreements set forth herein. Notwithstanding any other provision of
this Agreement to the contrary, in no event shall Loss and Expenses include a
party's incidental or consequential damages.
(b) Subject to Section 8.1, from and after any
Closing Date, the Company shall indemnify and hold harmless Buyer, its
successors and assigns, from and against any and all Loss and Expenses,
suffered, directly or indirectly, by Buyer by reason of, or arising out of, (i)
any breach as of the date made or deemed made or required to be true of any
representation or warranty made by the Company in or pursuant to this Agreement
and any statements made in any certificate delivered pursuant to this Agreement,
or (ii) any failure by the Company to perform or fulfill any of its covenants or
agreements set forth herein. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Loss and Expenses include a party's
incidental or consequential damages.
(c) Notwithstanding the foregoing, (i) neither Buyer
nor the Company shall be responsible for any Loss and Expenses as provided by
paragraphs (a) and (b), respectively, of this Section 8.2, until the cumulative
aggregate amount of such Loss and Expenses suffered by Buyer or the Company, as
the case may be, exceeds $1,000,000, and only to the extent such Losses and
Expenses exceed $1,000,000, in which case Buyer or the Company, as the case may
be, shall then be liable for all such Loss and Expenses, and (ii) the cumulative
aggregate indemnity obligation of each of Buyer and the Company under this
Section 8.2 shall in no event exceed $40,000,000. Except with respect to
third-party claims being defended in good faith or claims for indemnification
with respect to which there exists a good faith dispute, the indemnifying party
shall satisfy its obligations hereunder within 30 days of receipt of a notice of
claim under this Article 8.
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Section 8.3 "Third-Party Claims." If a claim by a third party is made
against an Indemnified Party and if such Indemnified Party intends to seek
indemnity with respect thereto under this Article, such Indemnified Party shall
promptly notify the indemnifying party in writing of such claims setting forth
such class in reasonable detail. The indemnifying party shall have 20 days after
receipt of such notice to undertake, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and the Indemnified Party
shall cooperate with it in connection therewith; provided, however, that the
Indemnified Party may participate in such settlement or defense through counsel
chosen by such Indemnified Party, provided that the fees and expenses of such
counsel shall be borne by such Indemnified Party. The Indemnified Party shall
not pay or settle any claim which the indemnifying party is contesting.
Notwithstanding the foregoing, the Indemnified Party shall have the right to pay
or settle any such claim, provided that in such event it shall waive any right
to indemnity therefor by the indemnifying party. If the indemnifying party does
not notify the Indemnified Party within 20 days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party, with the Indemnifying
Party's consent not to be unreasonably withheld or delayed, shall have the right
to contest, settle or compromise the claim but shall not thereby waive any right
to indemnity therefor pursuant to this Agreement.
ARTICLE 9
Miscellaneous
Section 9.1 "Counterparts." This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 9.2 "Governing Law." THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 9.3 "Consequential Damages." In no event will either party be
liable to the other in contract, tort or otherwise for any consequential,
indirect, exemplary, incidental or special damages arising out of or relating to
this Agreement.
Section 9.4 "Entire Agreement." This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a party hereto (and their successors
and assigns) any rights or remedies hereunder.
Section 9.5 "Notices." All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by
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documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Company shall be addressed
to:
with a copy to: Essex Property Trust, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
with a copy to: Xxxxxxx Xxxxxx
Essex Property Trust, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
and another copy to: Xxxxxx Xxxxxx
Essex Property Trust, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer. Notices to Buyer shall be
addressed to:
with a copy to: Xxxxxxx X. Xxx
General Counsel
Xxxxxxxxx Partners, L.L.C.
00000 Xxxxx Xxxxxx Xxxxxxx, #000
Xxxxxx, Xxxxx 00000
with a copy to: Xxxxx Xxxx
Vice President
Xxxxxxxxx Partners, L.L.C.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
and another copy to: Xxxxx Xxxxxx Xxxxx, XX
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Section 9.6 "Successors and Assigns." This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
Section 9.7 "Headings." The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or
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interpretation of this Agreement. All references to Sections or Articles
contained herein mean Sections or Articles of this Agreement unless otherwise
stated.
Section 9.8 "Amendments and Waivers." This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or compiled with. The waiver by
any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
Section 9.9 "Interpretation; Absence of Presumption."
(a) For the purposes hereof, (i) words in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires, (ii)
the terms "hereof', "herein," and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all of the Schedules and Exhibits hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph, Exhibit and
Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
provisions shall apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party, drafting or causing any instrument to be drafted.
Section 9.10 "Severability." Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 9.11 "Further Assurances." The Company and Buyer agree that,
from time to time, whether before, at or after any Closing Date, each of them
will execute and deliver such further instruments of conveyance and transfer and
take such other action as may be necessary to carry out the purposes and intents
hereof.
Section 9.12 "Specific Performance." Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
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Section 9.13 "Schedules." Any matter set forth on any Schedule shall be
deemed to be referred to on all other Schedules to which such matter logically
relates and where such reference would be appropriate and can reasonably be
inferred from the matters disclosed on the first Schedule as if set forth on
such other Schedules.
Section 9.14 "Expenses." Except as set forth in this Agreement,
whether or not any purchase of Preferred Stock contemplated hereby is
consummated, all reasonable legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Company.
* * *
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IN WITNESS WHEREOF, this Agreement has been signed by, or on behalf of
each of the parties hereto as of the day first above written.
TIGER/XXXXXXXXX REAL ESTATE FUND,
L.P., a Delaware limited partnership
By: Tiger/Xxxxxxxxx Real Estate Partners
Management,
L.L.C., a Delaware limited
liability company, General Partner
By: Xxxxxxxxx Real Estate Fund I,
L.L.C., a Delaware limited
liability company,
Managing Member
By: /s/ X. X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx III,
Managing Member
TIGER/XXXXXXXXX REAL ESTATE CO-
INVESTMENT PARTNERSHIP, L.P., a Delaware
limited partnership
By: Tiger/Xxxxxxxxx Real Estate Partners
Management, L.L.C., a Delaware
limited liability company, General
Partner
By: Xxxxxxxxx Real Estate Fund I,
L.L.C., a Delaware limited
liability company, Managing
Member
By: /s/ X. X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx III,
Managing Member
42
ESSEX PROPERTY TRUST, INC.
By: /s/ Jordan X. Xxxxxx
------------------------
Name: Jordan X. Xxxxxx
Title: Vice President
1
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT ("Amendment"), dated
as of July 1, 1996, is made by and between Essex Property Trust, Inc., a
Maryland corporation (the "Company"), and Tiger/Xxxxxxxxx Real Estate Fund,
L.P., a Delaware limited partnership, and Tiger/Xxxxxxxxx Real Estate
Co-Investment Partnership, L.P., a Delaware limited partnership (individually
and collectively, and including any nominee or nominees in whose name
securities may be held, "Buyer").
R E C I T A L S:
WHEREAS, the parties hereto entered into that certain Stock Purchase
Agreement, dated as of June 20, 1996 (the "Stock Purchase Agreement"),whereby,
subject to certain conditions, the Company agreed to sell to the Buyer and the
Buyer agreed to purchase from the Company an aggregate of 280,000 shares of a
newly authorized series of preferred stock of the Company designated as 8.75%
Convertible Preferred Stock, Series 1996A (the "Preferred Stock"), having the
terms set forth in the form of Company's Articles Supplementary attached as
Exhibit A thereto (the "Articles Supplementary") establishing the rights,
privileges and preferences of the Preferred Stock, at a price of $25.00 per
share;
WHEREAS, an affiliate of Buyer and the Company entered into that
certain Loan Facility Agreement, dated as of June 20, 1996, as amended to the
date hereof (as amended, the "Loan Agreement"), whereby T/W Essex Funding,
L.L.C. (the "Lender"), agreed to lend to the Company and the Company agreed to
borrow from the Lender up to an aggregate of $31,500,000, and portions of such
borrowed funds were, under the circumstances set forth in the Loan Agreement, to
be repaid or exchangeable for additional shares of Preferred Stock or, if the
Company and Buyer so agree, Operating Partnership Units or other interests,
subject to the terms and conditions set forth therein;
WHEREAS, the parties hereto desire, among other things, to provide that
the Buyer shall purchase an aggregate of 340,000 shares of Preferred Stock at
the Initial Closing (as defined herein) and may, subject to the terms and
conditions hereof, of the Stock Purchase Agreement and the Loan Agreement,
purchase up to an aggregate of 1,600,000 shares of Preferred Stock; and
WHEREAS, the parties hereto have agreed, among other things, to amend
and modify the Stock Purchase Agreement as set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and
covenants hereinafter set forth, and other good and valuable consideration had
and received, the parties hereto, upon the terms and subject to the conditions
contained herein, hereby agree as follows:
1
2
1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Stock Purchase
Agreement has the meaning ascribed to such term in the Stock Purchase Agreement.
Each reference to "hereof," "hereunder," "herein" and "hereby" and each other
similar reference contained in the Stock Purchase Agreement shall from and after
the date hereof refer to the Stock Purchase Agreement as amended hereby.
2. Amendment to Preamble to Definitions. The Preamble to the
Definitions in Article I of the Stock Purchase Agreement shall be amended by
adding "All references in this Agreement to any other agreement or instrument
shall include such other agreement or instrument as the same may be amended,
modified, reaffirmed or supplemented on or before the date hereof in accordance
with the terms thereof." immediately following the first sentence thereof.
3. Amendment to Section 2.1. Section 2.1 of the Stock Purchase
Agreement is hereby amended (a) by deleting the term "280,000" in the third line
thereof and inserting the term "340,000" in its place and stead, and (b) by
deleting the term "$7,000,000" in the fourth line thereof and inserting the term
"$8,500,000" in its place and stead.
4. Amendment to Section 2.2(b). Section 2.2(b) of the Stock
Purchase Agreement shall be amended by deleting the words "including the
delivery of the Diligence Fee," in the first and second lines thereof.
5. Amendment to Section 2.3(I)(a). Section 2.3(I)(a) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead.
6. Amendment to Section 2.3(I)(b). Section 2.3(I)(b) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead.
7. Amendment to Section 2.3(I)(c). Section 2.3(I)(c) of the
Stock Purchase Agreement shall be deleted in its entirety.
8. Amendment to Section 2.3(I)(d). Section 2.3(I)(d) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead and (c) by deleting the term
"240,000" in the fifth line thereof and inserting the term "280,000" in its
place and stead.
9. Amendment to Section 5.1(d). Section 5.1(d) of the Stock
Purchase Agreement shall be amended by deleting the words "August 31" in the
third line thereof and inserting the words "September 30" in their place and
stead.
10. Amendment to Article 5. Article 5 of the Stock Purchase
Agreement shall be amended to add the following new Section 5.10:
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3
"Section 5.10 Stockholders Agreements. The Company
agrees that it shall not knowingly permit the transfer, or
knowingly allow the Operating Partnership to permit the
transfer, of the interests restricted from transfer pursuant
to the terms of the Stockholders Agreements each dated July 1,
1996 among Xx. Xxxxxxxx, the Company and Buyer and among Xx.
Xxxxxx, the Company and Buyer, respectively. If the Operating
Partnership is requested to transfer Partnership Units of the
Operating Partnership now held by either of Messrs. Marcus or
Guericke directly, or indirectly by the person or persons
holding of record as reflected in the Company's 1996 Proxy
Statement, the Company will make reasonable inquiries and use
its reasonable efforts to ascertain that any such transfer is
not in violation of the terms of the applicable Stockholders
Agreement. The Company will also monitor the Form 4 and Form 5
Reports that each of Messrs. Marcus or Guericke files with the
Securities and Exchange Commission to ascertain that their
transfers are in compliance with the terms of the applicable
Stockholders Agreement."
11. Addition of Article 10. The Stock Purchase Agreement shall
be amended by inserting the following Article 10 therein:
"ARTICLE 10
"Preemptive Right
"10.1 Preemptive Right. For so long as any shares of
Preferred Stock are outstanding, the Buyer shall have the
rights set forth in this Article 10 as if it was the holder of
record and beneficially of all such outstanding shares. The
rights set forth herein are in favor of the Buyer and its
successors and assigns, provided that any exercise procedures
to be accomplished hereunder shall be performed by the Buyer
or its nominee and no other person may accomplish such
procedures or seek to exercise the preemptive right set forth
in this Article 10. Absent an express assignment of the rights
of the Buyer under this Article 10, no transfer by the Buyer
of shares of Preferred Stock shall affect the rights of the
Buyer hereunder.
"The Buyer shall have, as if it were the holder of
each and every of the issued and outstanding shares of
Preferred Stock, at any time and from time to time the
preemptive right to purchase, in the case of the proposed
issuance by the Company of, or the proposed granting by the
Company of shares of, any class of the Company's stock
("Capital Stock"), or any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for
Common Stock (including, without limitation, interests in the
Operating Partnership) (such rights or options being
hereinafter referred to as "Options" and such convertible or
exchangeable stock or securities being hereinafter referred to
as "Convertible Securities"). On each occasion that the
Company proposes to issue Capital Stock, Options or
Convertible Securities, or any of the foregoing, the Company
shall give to the
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Buyer prior written notice (the "Company Notice") of its
intention, by first class mail, postage prepaid, addressed at
its last address as shown by the records of the Company,
describing the same, the price and the specific terms (or in
the context of an offering of Capital Stock, Convertible
Securities or Options to the public, a range of price and
terms) upon which the Company proposes to issue the same. The
Buyer shall have fifteen (15) days from the date of the receipt
by the Buyer of the Company Notice to deliver a notice (the
"Rights Exercise Notice") notifying the Company of the Buyer's
intention to purchase all or a part of its pro rata share of
shares or other securities represented by Capital Stock,
Options or Convertible Securities, or any of the foregoing, in
accordance herewith, for the price and upon the terms specified
by the Company Notice, such pro rata share to be that number of
such shares or securities or Capital Stock, Options or
Convertible Securities, or any of the foregoing, as shall bear
the same proportion to the aggregate number of such shares or
securities or Capital Stock, Options or Convertible Securities,
or any of the foregoing, to be issued or sold as (i) the number
of shares of Common Stock as are issuable upon conversion of
the Preferred Stock issued and outstanding on the date of the
Company Notice bears to (ii) the sum of (A) the total number of
shares of Common Stock issued and outstanding on the date of
the Company Notice and (B) the number of shares of Common Stock
issuable upon conversion or exercise of the Preferred Stock and
any Convertible Securities or Options, or both, issued and
outstanding on the date of the Company Notice, and at a price
or prices no less favorable to the Buyer than the price or
prices at which such Capital Stock, Convertible Securities or
Options are proposed to be offered for sale to others,
provided, however, that the purchase of such Capital Stock,
Convertible Securities or Options shall be consummated prior to
the later of (x) thirty (30) days after the date of the Rights
Exercise Notice and (y) the date the Company consummates the
issuance of the Capital Stock, Convertible Securities or
Options described in the Company Notice. If, in connection with
any proposed issue of Capital Stock, Convertible Securities or
Options, the Buyer fails to exercise in full its preemptive
right as set forth in this Article 10 then, subject to the next
following sentence, the Company may sell the unsold Capital
Stock, Convertible Securities or Options at any time within 180
days (60 days in the case of a public offering) thereafter at a
price and upon terms no more favorable to the purchasers
thereof than specified in the Company Notice; provided, that
the Company shall not sell or grant, or permit conversion
under, any Capital Stock, Convertible Securities or Options, or
any of the foregoing, after such 180 - day period (or 60 - day
period in the case of a public offering) without renewed
compliance with this Section 10.1; provided, further, that in
the case of an underwritten public offering of Securities, if
in the opinion of the Company and the underwriter, such renewed
compliance by the Company with the procedural requirements
hereunder (i.e., timing of notices, etc.) would otherwise
impede the consummation of such public offering, the parties
agree to take such further action as may be reasonably
necessary to effectuate such offering while preserving Buyer's
substantive preemptive right hereunder.
4
5
"10.2 Certain Exclusions. The provisions of this
Section 10 shall not apply to any shares of any class of the
Company's Capital Stock or Options or Convertible Securities,
or both (i) issuable upon conversion of any Preferred Stock;
(ii) issuable upon conversion of Convertible Securities or the
exercise of Options, or both, if the Buyer was offered the
opportunity to purchase such shares or securities, or
Convertible Securities or Options, or both, pursuant to this
Article 10, and declined the same, or as to which the Buyer
was not given such opportunity by reason of the application of
this Article 10; (iii) issuable in connection with stock
splits, stock dividends or recapitalizations as to the effects
of which adjustment will be made as provided elsewhere herein
or in the Articles Supplementary pertaining to the Preferred
Stock; or (iv) issuable to employees and prospective employees
pursuant to any plan or pattern of employee equity
participation or issuable in connection with the Company's
Dividend Reinvestment Plan.
"10.3 Adjustments Prior to the Defining Event.
Notwithstanding the foregoing, in the event the Company
delivers the Company Notice to the Buyer on a date prior to
the earliest to occur of (A) December 15, 1996, (B) the
Stockholder Approval Date, (C) the later of (x) the
Stockholder Rejection Date and (y) the IRS Approval Date (the
earliest to occur of (A), (B) and (C), above, shall
hereinafter be referred to as the "Defining Event"), the
following shall apply:
(i) subject to subsections (iv) and (v),
below, the Buyer shall have the preemptive right to
purchase all or part of its pro rata share of Capital
Stock, Options or Convertible Securities
(collectively, "Securities"), which pro rata share
shall equal such number of Securities which bears the
same proportion to the aggregate number of Securities
to be issued or sold as (a) the number of shares
issuable upon conversion of 800,000 shares of
Preferred Stock bears to (b) the sum of (I) the total
number of shares of Common Stock issued and
outstanding on the date of the Company Notice and
(II) the number of shares of Common Stock issuable
upon conversion of 800,000 shares of Preferred Stock
and any Convertible Securities or Options issued and
outstanding on the date of the Company Notice;
(ii) the Buyer's Rights Exercise Notice
must be delivered to the Company within fifteen (15)
days of receipt by the Buyer of the Company Notice;
(iii) the Buyer must consummate any
purchases hereunder on or prior to the later of (a)
forty-five (45) days after the Defining Event and (b)
the date the Company consummates the issuance of the
Securities specified in the Company Notice;
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(iv) if and to the extent that on the date
of or following the Defining Event, the Buyer is
prevented or prohibited from the exercise in full or
in part of its preemptive right to purchase any
Securities due to restrictions on the ownership by
the Buyer (or any group of holders with which such
the Buyer may be affiliated or may be deemed to be
affiliated) of any of such Securities, whether under
applicable Maryland law, provisions of the Company's
Charter, any Articles Supplementary thereto or
ByLaws, or by reason of restrictions applicable for
purposes of the Company's continued qualification as
a 'real estate investment trust' for purposes of the
Internal Revenue Code of 1986, as amended from time
to time (the "Exercise Restriction"), such number of
Securities required to be purchased pursuant to such
preemptive right shall automatically be reduced to
such amount as to not exceed the Exercise
Restriction.
(v) Provided further, notwithstanding
Section 10.3(i), in the event that, after the date of
the Defining Event, the Company issues Securities
(the date of such issuance, the "Issuance Date")
specified in the Company Notice applicable to such
securities and such Company Notice was dated a date
before the date of the Defining Event, the Buyer
shall have the preemptive right to purchase all or
part of its pro rata share of Securities which pro
rata share shall equal such number of Securities
which bears the same proportion to the aggregate
number of Securities sold on the Issuance Date as (a)
the number of shares issuable upon conversion of the
issued and outstanding Preferred Stock on the
Issuance Date bears to (b) the sum of (I) the total
number of shares of Common Stock issued and
outstanding on the Issuance Date and (II) the number
of shares of Common Stock issuable upon conversion of
the issued and outstanding Preferred Stock on the
Issuance Date and any other Securities issued and
outstanding on the Issuance Date."
12. Amendment to Section 9.2. Section 9.2 of the Stock
Purchase Agreement is hereby amended by deleting Section 9.2 in its entirety and
inserting in lieu thereof:
"(a) OTHER THAN WITH RESPECT TO THE
PROVISIONS OF ARTICLE 10, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF. ARTICLE 10 OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES
THEREOF. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT OR
OF ANY COURT OF THE STATE OF MARYLAND WHICH IS
LOCATED IN THE CITY BALTIMORE, MARYLAND, IN ANY
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ACTION, SUIT OR PROCEEDING BROUGHT AND RELATED TO OR
IN CONNECTION WITH THE RIGHTS AND OBLIGATIONS SET
FORTH IN ARTICLE 10 OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY ARTICLE 10 AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH
COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THE RIGHTS AND OBLIGATIONS SET FORTH IN ARTICLE 10 OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO THEREIN OR
THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR
BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AGREES NOT TO SEEK AND HEREBY WAIVES
THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH
COURT BY ANY COURT OF ANY OTHER NATION OR
JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN
ENFORCEMENT OF SUCH JUDGMENT.
"(b) The parties to this Agreement agree to
use their best efforts to cause the provisions of
Section 9.2(a) to be observed.
"(c) The parties hereto knowingly,
voluntarily and expressly waive all right to trial by
jury in any action, proceeding or counterclaim
enforcing or defending any rights arising out of or
relating to this Agreement or the transactions
contemplated hereby. Each of the parties acknowledge
that the provisions of this Section 9.2(c) have been
bargained for and that it has been represented by
counsel in connection therewith."
13. Full Force and Effect. Except as specifically amended and
modified hereby, the Stock Purchase Agreement shall remain in full force and
effect and no party hereto waives any of its rights under the Stock Purchase
Agreement.
14. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party. Copies of executed
counterparts have been signed by each party hereto and delivered to the other
party. Copies of executed counterparts transmitted by telecopy, telefax or other
electronic transmission service shall be considered original executed
counterparts for purposes of this Section, provided receipt of copies of such
counterparts is confirmed.
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15. Consequential Damages. In no event will either party be
liable to the other in contract, tort or otherwise for any consequential,
indirect, exemplary, incidental or special damages arising out of or relating to
this Amendment.
16. Entire Agreement. The Stock Purchase Agreement, as amended
hereby (including agreements incorporated herein or therein), and the Schedules
and Exhibits thereto contain the entire agreement between the parties with
respect to the subject matter hereof and thereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein or therein. This Amendment is not intended
to confer upon any person not a party hereto (and their successors and assigns)
any rights or remedies hereunder.
17. Successors and Assigns. Except as otherwise provided
herein, this Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
18. Headings. The Section headings contained in this Amendment
are inserted for convenience of reference only and will not affect the meaning
or interpretation of this Amendment.
19. Amendments and Waivers. This Amendment may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision hereof shall not be construed as a waiver of
any subsequent breach.
20. Absence of Presumption. This Amendment shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party, drafting or causing any instrument to be
drafted.
21. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
22. Further Assurances. The Company and Buyer agree that, from
time to time, each of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be necessary to carry
out the purposes and intents hereof.
23. Specific Performance. Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Amendment were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
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24. Expenses. Whether or not any purchase of Preferred Stock
contemplated hereby is consummated, all reasonable legal and other costs and
expenses incurred in connection with this Amendment and the transactions
contemplated hereby shall be paid by the Company.
* * *
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IN WITNESS WHEREOF, the parties have duly executed, or have caused
their duly authorized officer or representative to execute, this Amendment No. 1
to Stock Purchase Agreement as of the date first above written.
TIGER/XXXXXXXXX REAL ESTATE FUND,
L.P., a Delaware limited partnership
By: Tiger/Xxxxxxxxx Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Xxxxxxxxx Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ X.X. Xxxxxx III
-------------------------------------------
Xxxxxxx X. Xxxxxx III,
Managing Member
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxxx
Managing Member
TIGER/XXXXXXXXX REAL ESTATE CO-INVESTMENT PARTNERSHIP,
L.P., a Delaware limited partnership
By: Tiger/Xxxxxxxxx Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Xxxxxxxxx Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ X.X. Xxxxxx III
--------------------------------------------
Xxxxxxx X. Xxxxxx III,
Managing Member
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxxxx
Managing Member
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ESSEX PROPERTY TRUST, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------------------------
Name: Xxxxxxx Xxxxxx
---------------------------------------------
Title: CFO
--------------------------------------------
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