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/Westbrook Real Estate Fund,
L.P., a Delaware limited partnership, and Tiger/Westbrook 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:
2
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 Mr. Guericke, the Company and Buyer and among Mr.
Marcus, 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
3
4
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;
5
6
(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
6
7
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.
7
8
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.
8
9
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.
* * *
10
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/WESTBROOK REAL ESTATE FUND,
L.P., a Delaware limited partnership
By: Tiger/Westbrook Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Westbrook Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ W.H. Walton III
-------------------------------------------
William H. Walton III,
Managing Member
By: /s/ Paul D. Kazilionis
-------------------------------------------
Paul D. Kazilionis
Managing Member
TIGER/WESTBROOK REAL ESTATE CO-INVESTMENT PARTNERSHIP,
L.P., a Delaware limited partnership
By: Tiger/Westbrook Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Westbrook Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ W.H. Walton III
-------------------------------------------
William H. Walton III,
Managing Member
By: /s/ Paul D. Kazilionis
-------------------------------------------
Paul D. Kazilionis
Managing Member
9
11
ESSEX PROPERTY TRUST, INC.
By: /s/ Michael Schall
------------------------------------------------------
Name: Michael Schall
---------------------------------------------
Title: CFO
--------------------------------------------
10