EXCHANGE AND AMENDMENT AGREEMENT (the "Agreement") dated as of
September 30, 1997, by and among Berkshire Realty Company, Inc., a Delaware
corporation (the "Company"), Xxxxxxxxx Berkshire Holdings, L.L.C., a Delaware
limited liability company ("Holdings"), and Xxxxxx Xxxxxxx Asset Management,
Inc., as attorney-in-fact for certain clients ("MSAM").
WHEREAS, the Company, Holdings and the Advancing Party have entered
into a Stock Purchase Agreement dated as of September 19, 1997 (the "Stock
Purchase Agreement"), pursuant to which Holdings agreed to purchase 2,737,000
shares, and has purchased 2,337,000 shares, of Series A Convertible Preferred
Stock, par value $.01 per share (the "Series A Convertible Preferred Stock"), of
the Company on September 25, 1997 (the "Closing Date"), and the Company and
Holdings have entered into a Registration Rights Agreement dated as of September
25, 1997 (the "Registration Rights Agreement"), which provides for the
registration rights set forth therein:
WHEREAS, Holdings caused to be issued an aggregate of 400,000 shares of
Series A Convertible Preferred Stock to certain clients (the "Transferees") of
MSAM who were identified in a letter agreement dated September 25, 1997, among
the Company, Holdings and MSAM;
WHEREAS, on the Closing Date, the Company filed a Certificate of
Designation (the "Series A Certificate of Designation") designating 2,737,000
shares of preferred stock of the Company as 2,737,000 shares of Series A
Convertible Preferred Stock;
WHEREAS, on October , 1997, the Company filed a Certificate of
Designation (the "Series 1997-A Certificate of Designation") designating
2,737,000 shares of preferred stock of the Company as 2,737,000 shares of Series
1997-A Convertible Preferred Stock, par value $.01 per share (the "Series 1997-A
Convertible Preferred Stock");
WHEREAS, the Series 1997-A Convertible Preferred Stock is identical in
all material respects to the Series A Convertible Preferred Stock, except that
Dividend Payment Dates with respect to the Series 1997-A Convertible Preferred
Stock are February 15, May 15, August 15 and November 15, and the dividend
payable to a holder of a share of Series 1997-A Convertible Preferred Stock on
the first Dividend Payment Date after such share is issued will be the accrued
dividend calculated from September 25, 1997 to such Dividend Payment Date;
WHEREAS, the holders of the Series A Convertible Preferred Stock have
agreed to exchange (the "Exchange") their shares of Series A Convertible
Preferred Stock for a like number of Series 1997-a Convertible Preferred Stock,
and the Company has agreed to cancel the Series A Convertible Preferred Stock
immediately after the Exchange and promptly cause the elimination of the Series
A Certificate of Designation from the Company's Restated Certificate of
Incorporation; and
WHEREAS, on the Closing Date BRI OP Limited Partnership, a Delaware
limited partnership ("BRI OP"), issued a promissory note (the "Note") payable to
the Company
in the principal amount of $68,425,000 (or such lesser amount as shall
be equal to the aggregate unpaid principal amount of the loan(s) to be made by
the Company to BRI OP from the proceeds from the sale of the Series A
Convertible Preferred Stock);
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
SECTION 1. Capitalized terms not defined in this Agreement shall have
the respective meanings set forth in the Stock Purchase Agreement or the
Registration Rights Agreement, as the case may be.
SECTION 2. On the date hereof, and subject to the terms of this
Agreement, (i) Holdings and MSAM, on behalf of certain of its clients, shall
deliver to the Company certificates evidencing all outstanding shares of Series
A Convertible Preferred STock held by them, such certificates to be duly
endorsed, or accompanied by stock powers duly executed, in such manner as is
necessary to transfer such certificates to the Company in accordance with
Article 8 of the Uniform Commercial Code of the State of Delaware (6 Del. Code
xx.xx. 8-101 et. seq.): (ii) the Company shall deliver to Holdings and MSAM
certificates representing Series 1997-A Convertible Preferred Stock in the same
denominations and registered in the same names as set forth on the certificates
being delivered to the Company under the preceding clause (i), and such shares
of Series 1997-A Convertible Preferred Stock shall be delivered to Holdings and
MSAM free and clear of all liens (unless created by Holdings or MSAM or any of
their affiliates, as the case may be); and (iii) upon the delivery to the
Company of the shares of Series A Convertible Preferred Stock referred to in
clause (i) above, such shares of Series A Convertible Preferred Stock shall be
cancelled, and (iv) the Company shall promptly take all such steps as are
necessary to eliminate from the Company's Restated Certificate of Incorporation
all matters set forth in the Series A Certificate of Designation.
SECTION 3. (a) The representations and warranties of the Company set
forth in Article 3 of the Stock Purchase Agreement are hereby incorporated by
reference in this Agreement and made a part hereof to the same extent as if set
forth in full in their entirety in this Agreement.
(b) As incorporated by reference herein and made a part hereof, the
representations and warranties referred to in clause (A) are hereby amended, as
of the date of the Exchange, as follows: (i) all references to "Company
Preferred Stock" shall be deemed to be references to Series 1997-A Convertible
Preferred Stock; (ii) all references to "Certificate of Designation" shall be
deemed to be references to the Series 1997-A Certificate of Designation attached
as Exhibit A hereto; (iii) all references to the "Amended Company By-laws" shall
be deemed to be references to the By-laws attached hereto as Exhibit B; and (iv)
all references to "this Agreement" or "This Agreement" shall be deemed to be
references to this Agreement, and all references to "the Registration Rights
Agreement" shall be deemed to be references to the Registration Rights
Agreement, as amended by this Agreement.
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(c) Holdings represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the Exchange have been
duly and validly authorized by all necessary action on the part of Holdings.
(d) Section 5.6 of the Stock Purchase Agreement is hereby incorporated
by reference in this Agreement and made a part hereof to the same extent as if
set forth in full in its entirety in this Agreement. All references in such
Section 5.6, as incorporated herein are made a part hereof, to "Company
Preferred Stock" shall be deemed to be references to the Series 1997-A
Convertible Preferred Stock.
(e) The Stock Purchase Agreement is hereby amended as follows: (i) The
definition of "Company Stock" is hereby amended to include the Series 1997-A
Convertible Preferred Stock; (ii) all references to "Company Preferred Stock"
and "Certificate of Designation" in Section 6.5 of the Stock Purchase Agreement
shall be deemed to be references to the Series 1997-A Convertible Preferred
Stock and the Series 1997-A Certificate of Designation, respectively; and (iii)
all references to "Certificate of Designation" in Section 6.6 of the Stock
Purchase Agreement shall be deemed to be references to the Series 1997-a
Certificate of Designation.
(f) Article 8 of the Stock Purchase Agreement is hereby incorporated by
reference in this Agreement and made a part hereof as if set forth in full in
its entirety in this Agreement. All references in such Article 8, as
incorporated herein and made a part hereof, to "this Agreement" shall be deemed
to be references to this Agreement. The parties agree that the provisions of
such Article 8, as incorporated herein and made a part hereof, shall apply with
the same effect as if the Series 1997-A Convertible Preferred Stock had been
purchased at the Initial Closing. Notwithstanding the foregoing, each of the
Transferees shall be entitled to the benefits of Article 8 without regard to the
definition of "Buyer Portion."
(g) Section 10.4 of the Stock Purchase Agreement is hereby incorporated
by reference in this Agreement and made a part hereof as if set forth in full in
its entirety in this Agreement. Such Section 10.4, as incorporated herein and
made a part hereof, is hereby amended by adding thereto the following sentence:
"Notices to any Transferee or to MSAM shall be addressed to: Xxxxxx Xxxxxxx
Asset Management, Inc., 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: , Telecopy Number: ."
(h) The Registration Rights Agreement is hereby amended as follows: All
references to "Company Common Stock" in the definition of "Registrable
Securities" in the Registration Rights Agreement shall be deemed to be
references to the Company's common stock, par value $.01 per share, issuable
upon conversion of the Series 1997-A Convertible Preferred Stock.
(i) Not by limitation of the foregoing, all references to the Series A
Convertible Preferred Stock in other instruments and agreements delivered in
connection with the purchase and issuance of the Series A Convertible Preferred
Stock shall, when is necessary or convenient for a proper reading, be deemed to
be references to Series 1997-A Convertible Preferred Stock.
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SECTION 4. The obligations of Holdings and MSAM to consummate the
Exchange are subject to satisfaction or waiver of each of the following
conditions precedent:
(a) The representations and warranties of the Company contained in this
Agreement 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 Exchange with the same effect as though such representations and warranties
had been made on and as of the date of the Exchange (except for representations
and warranties that speak as of a specific date or time other than the date of
the Exchange (which need only be true and correct in all respects as of such
date or time)). The covenants and agreements of the Company to be performed on
or before the date of the Exchange in accordance with this Agreement shall have
been duly performed in all respects. The Company shall have delivered to
Holdings and MSAM at the Exchange a certificate of an appropriate officer in
form and substances reasonably satisfactory to Holdings dated the date of the
Exchange to such effect.
(b) The Series 1997-A Certificate of Designation shall have been duly
filed with the office of the Secretary of State of Delaware, any other necessary
Government Authority or the NYSE and shall be in full force and effect.
(c) The amendment to the Company By-laws in the form attached as
Exhibit C hereto shall have been approved by the Board of Directors, all as
required or permitted by and in accordance with the Company Charter, duly filed
if any filing thereof shall be required by any Government Authority or NYSE, and
shall be in full force and effect. The Board of Directors resolutions pertaining
to this Agreement, and the procedures, findings and transactions contemplated
hereby, shall have been duly approved and adopted by the Board of Directors, the
Secretary shall have been instructed to place the record of such action of the
Board of Directors in the records of the meetings of the Board of Directors and
the Secretary shall have placed the record of such action in such records and
shall be in form and substance satisfactory to Holdings.
(d) There shall not be in effect any order, decree or injunction of a
court or agency of competent jurisdiction which cojoins 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 the Company to consummate the transactions contemplated
hereby or to issue the Series 1997-A Convertible Preferred Stock.
(e) 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 Holdings and
Holdings and MSAM shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(f) 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
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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.
(g) Holdings and MSAM shall have received opinions, dated the date of
the Exchange, of Peabody & Xxxxx, counsel to the Company, and of Xxxxxx Xxxxxxx
Arsht & Xxxxxxx, special Delaware counsel to the Company, in form and substance
reasonably satisfactory to Holdings.
SECTION 5. Holdings hereby consents to the amendment and restatement of
the Note in the form attached as Exhibit D hereto.
SECTION 6. Each of the Transferees hereby agrees to be subject to the
terms of the Registration Rights Agreement, as amended hereby, to the same
extent as if each such Transferee were the Buyer (as defined in the Registration
Rights Agreement, as amended hereby) thereunder, provided, however nothing in
this Section 6 shall alter or affect any of Holdings' rights under clause (A) of
the proviso contained in Section 11(c) of the Registration Rights Agreement, as
amended hereby.
SECTION 7. Except as otherwise set forth in this Agreement, all terms,
provisions and conditions of the Stock Purchase Agreement and the Registration
Rights Agreement shall remain in full force and effect. As amended hereby, each
of the Stock Purchase Agreement and the Registration Rights Agreement is hereby
ratified and confirmed in all respects.
SECTION 8. 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. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF.
SECTION 10. This Agreement contains the entire agreement among 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.
SECTION 11. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
SECTION 12. The Section headings contained in this Agreement are
inserted for convenience of reference only and will not affect the meaning or
interpretations of this Agreement.
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SECTION 13. 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 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.
SECTION 14. 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, (h) 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 and not to any
particular provision of this Agreement, and Section references are to the
Sections of 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.
This Agreement shall be constructed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
any instrument to be drafted.
SECTION 15. 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 16. The Company agrees that, from time to time, whether before,
at or after the date hereof, the Company will execute and deliver such further
instruments and take such other action as may be necessary to carry out the
purposes and terms hereof.
SECTION 17. The parties 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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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.
BERKSHIRE REALTY COMPANY, INC.
By: ________________________________________
Name:
Title:
XXXXXXXXX BERKSHIRE HOLDINGS, L.L.C.
By: ________________________________________
Name:
Title:
XXXXXX XXXXXXX ASSET MANAGEMENT, INC.,
as Attorney-in-Fact for Certain Clients
Who Own Shares of Series A Convertible
Preferred Stock of Berkshire Realty
Company, Inc.
By: ________________________________________
Name:
Title:
