EXHIBIT 99.11
PRUDENTIAL REALTY SECURITIES, INC.
8 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
As of November 12, 1998
ONE EMBARCADERO CENTER VENTURE
C/O BOSTON PROPERTIES, INC.
8 ARLINGTON STREET
BOSTON, MASSACHUSETTS 02116-3495
ATTN: GENERAL COUNCIL
Ladies and Gentlemen:
The undersigned, PRUDENTIAL REALTY SECURITIES, INC. (herein called the
"COMPANY"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the issue
of up to eight (8) of its senior promissory notes in the aggregate principal
amount of $88,200,000, to be dated the date of issue thereof, to mature in the
case of each Note so issued, subject to the terms and provisions of the next
sentence below, not more than 15 years after the date of original issuance
thereof as set forth in each such Note (the "MATURITY DATE") and listed on
Schedule 1 attached hereto, to bear interest on the unpaid balance thereof from
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the date thereof until the Rate Reset Date or, if such Note does not have a Rate
Reset Date, the Maturity Date for each such Note at the rate per annum equal to
the Initial Treasury plus the Margin, and from the Rate Reset Date (if any) of
any such Note until the principal thereof shall have become due and payable at
the rate per annum equal to the Reset Treasury plus the Margin, and to have such
other particular terms, as shall be specified herein and therein, and to be
substantially in the form of Exhibit A attached hereto. Notwithstanding the
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foregoing, each Note shall either mature or have a Rate Reset Date within ten
(10) years after the date of original issuance of such Note. The term "Notes"
as used herein shall include each such senior promissory note delivered pursuant
to any provision of this Agreement and each such senior promissory note
delivered in substitution or exchange for any other Note pursuant to any such
provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to you
and, subject to the terms and conditions herein set forth, you agree to purchase
from the Company, Notes in the aggregate principal amount of $88,200,000 at 100%
of such aggregate principal amount. The Company will deliver to you, at the
offices of O'Melveny
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& Myers LLP at 275 Battery Street, Suite 2600, San Francisco, California, (or
such other location to be determined by mutual agreement between the Company and
you) one or more Notes registered in your name, evidencing the aggregate
principal amount of Notes to be purchased by you and in the denomination or
denominations specified in the Purchaser Schedule attached hereto, against
payment of the purchase price thereof by transfer of immediately available funds
for credit to the Company's account #890-0305-525 at The Bank of New York, New
York, New York, ABA No. 021-000-018 on the date of closing, which shall be
November 12, 1998 or any other date on or before November 13, 1998 upon which
the Company and you may mutually agree (herein called the "CLOSING" or the "DATE
OF CLOSING").
3. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Notes to be purchased by you hereunder is subject to the satisfaction, on or
before the date of closing, of the following conditions:
3A. EXECUTION AND DELIVERY OF DOCUMENTS. The Company shall have
delivered, or cause to be delivered, to you duly executed, original or certified
copies of the following documents, each to be dated the date of closing unless
otherwise indicated:
(i) the Note(s), originally executed and in substantially the form of
Exhibit A attached hereto.
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(ii) a favorable opinion of Deborah Shulevitz, Esq., counsel to the
Company (or such other counsel designated by the Company and acceptable to
you) satisfactory to you and substantially in the form of Exhibit B
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attached hereto and as to such other matters as you may reasonably request.
(iii) the Certificate of Incorporation of the Company certified as of a
date within 10 Business Days of closing by the Secretary of State of
Delaware.
(iv) the Bylaws of the Company certified by the Secretary of the Company.
(v) an incumbency certificate signed by the Secretary or an Assistant
Secretary of the Company certifying as to the names, titles and true
signatures of the officers of the Company authorized to sign this Agreement
and the Notes and the other documents to be delivered hereunder.
(vi) a certificate of the Secretary or an Assistant Secretary of the
Company (A) attaching resolutions of the Board of Directors of the Company
evidencing approval of the transactions contemplated by this Agreement and
the issuance of the Notes and the execution, delivery and performance
thereof, and authorizing certain officers to execute and deliver the same,
and certifying that such resolutions were duly and validly adopted at a
meeting duly noticed and held and such resolutions have not since been
amended, revoked or rescinded, (B) certifying that no dissolution or
liquidation proceedings as to the Company have been commenced or are
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contemplated, and (C) identifying and attaching any proposed or effected
amendments to or changes in the Certificate of Incorporation of the Company
since the date of the certified copies thereof provided pursuant to clause
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(iii) above or, if none, so certifying.
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(vii) (A) the representations and warranties contained in paragraph 8
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shall be true on and as of the date of closing, except to the extent of
changes caused by the transactions herein contemplated; (B) there shall
exist on the date of closing no Event of Default or Default and no Event of
Default or Default will occur by reason of or immediately following the
sale of the Notes hereunder; (C) no condition, event or act that has had or
would have a Material Adverse Effect has occurred since December 31, 1997,
and (D) you shall have received an Officer's Certificate certifying as to
all of the foregoing.
(viii) a corporate good standing certificate as to the Company from the
State of New Jersey.
(xi) additional documents or certificates with respect to such legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by you.
3B. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by you on the date of closing on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and shall not
subject you to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and you shall have
received such certificates or other evidence as you may request to establish
compliance with this condition.
3C. PROCEEDINGS. All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified or other copies
of such documents as you may reasonably request.
3D. RATING. The Company shall have obtained a rating of the Notes, as of
a date not more than 30 days prior to the closing hereof, of A or better from
S&P and the equivalent rating from Fitch and shall provide written evidence of
the same.
3E. PHASE ONE TRANSACTIONS. Phase One of the transactions shall have been
completed or shall be consummated concurrently with the consummation of the
transactions described herein.
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3F. EQUITY REDEMPTION AND PRUDENTIAL GUARANTIED LOANS. You shall have
obtained the Prudential Guarantied Loan and Equity Redemption Loan or the
closing of such loans shall occur concurrently with the closing of the
transactions contemplated herein; and the lenders of the Prudential Guarantied
Loan and Equity Redemption Loan shall have made available to you in full the
proceeds of the Prudential Guarantied Loan and Equity Redemption Loan.
4. PREPAYMENTS. The Notes are not prepayable during the first year of
the term thereof. The Notes shall be subject to prepayment, in whole or in part
at any time after the first anniversary date of this Agreement, at the option of
the Company, at 100% of the principal amount so prepaid plus accrued interest
thereon to the prepayment date and the Yield-Maintenance Amount, if any, under
the applicable Note with respect to the principal amount so prepaid; provided,
however, that any prepayment, whether in whole or in part, made on a Rate Reset
Date shall be payable without any Yield-Maintenance Amount. If the Company
elects to prepay any of the Notes at any time while any BP Party holds any
Notes, the Company shall first offer to prepay all Notes then held by such BP
Party(ies) before offering to prepay any Notes held by any other Person. Within
three (3) business days after delivery to it of any such offer of prepayment,
each such BP Party shall provide the Company written notice of its election to
either have such BP Party's Notes prepaid first or to have the Notes held by
other Persons prepaid prior to the Notes held by such BP Party; provided that,
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notwithstanding the election of any such BP Party to have Notes held by other
Persons paid first, the Company may prepay any portion of such BP Party's Notes
once the Company has prepaid in full all Notes held by such other Persons. The
failure of any BP Party to provide such notice to the Company within such three
(3) business day period shall be deemed an election to prepay such BP Party's
Notes first.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 60 days after the
end of each quarterly period (other than the last quarterly period) in each
fiscal year, statements of income, cash flows and shareholders' equity of
the Company for the period from the beginning of the current year to the
end of such quarterly period, and a balance sheet of the Company as at the
end of such quarterly period, setting forth in comparative form statements
of income and cash flows for the corresponding period in the preceding
year, all in reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from year-end
adjustments;
(ii) as soon as practicable and in any event within 120 days after
the end of each fiscal year, statements of income, cash flows and
shareholders' equity of the Company for such year, and a balance sheet of
the Company as at the end of such year, all prepared in accordance with
GAAP, setting forth in each case in comparative form corresponding
consolidated figures from the preceding annual
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audit, all in reasonable detail and satisfactory in form to the Required
Holder(s)' and reported on by a Big Five Accounting Firm selected by the
Company whose report shall be without limitation as to the scope of the
audit and reasonably satisfactory in substance to the Required Holder(s)
and shall be certified by such Big Five Accounting Firm to its knowledge
with its unqualified opinion;
(iii) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its
stockholders;
(iv) promptly upon receipt thereof, a copy of each other report or
management letter submitted to the Company by its independent public
accountants in connection with any annual, interim or special audit made by
them of the books of the Company;
(v) such other financial data and other information as the Company
regularly provides to its other lenders, other holders of Debt or other
creditors; and
(vi) with reasonable promptness, such other information and documents
as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
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(ii) above, the Company will deliver to each Significant Holder an Officer's
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Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraph 6A and stating
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that there exists no Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence thereof and what
action the Company proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, the Company will
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deliver to each Significant Holder a certificate of such accountants stating
that, in making the audit necessary for their report on such financial
statements, they have obtained no knowledge of any Event of Default or Default,
or, if they have obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted auditing
standards.
The Company also covenants that promptly after any Responsible Officer
obtains knowledge of an Event of Default or Default, it will deliver to each
Significant Holder an Officer's Certificate specifying the nature and period of
existence thereof and what action the Company has taken, is taking or proposes
to take with respect thereto.
5B. INSPECTION OF BOOKS AND RECORDS. The Company covenants that it will
permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit the Company's place of business to
examine the corporate books and financial records of the Company and make copies
thereof or extracts therefrom and to
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discuss the affairs, finances and accounts of the Company with the principal
officers thereof and its independent public accountants, all at such reasonable
times and as often as such Significant Holder may reasonably request; provided,
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however that disclosure of any confidential or material non-public information
of the Company requested by such Person may be reasonably conditioned on such
Person's execution and delivery of a confidentiality agreement in form and
substance acceptable to Company.
5C. COVENANT TO SECURE NOTE EQUALLY. The Company covenants that if it
shall create or assume any Lien upon any of its property or assets, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
paragraph 6C(1) (unless prior written consent to the creation or assumption
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thereof shall have been obtained pursuant to paragraph 11C), it will make or
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cause to be made effective provision whereby the Notes will be secured by such
Lien equally and ratably with any and all other Debt thereby secured so long as
any such other Debt shall be so secured; provided that the creation and
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maintenance of such equal and ratable Lien shall not in any way limit or modify
the right of the holders of the Notes to enforce the provisions of paragraph
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6C(1).
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5D. COMPLIANCE WITH LAWS. The Company covenants that it and all of its
properties and facilities will comply at all times in all material respects with
all federal, state, local and regional statutes, laws, ordinances and judicial
or administrative orders, judgments, rulings and regulations, including those
relating to protection of the environment except, in any such case, where
failure to comply would not result in a Material Adverse Effect on the business,
condition (financial or otherwise) or operations of the Company.
5E. PAYMENT OF TAXES. The Company covenants that it will file or cause to
be filed all federal, state and other income tax returns which, to the knowledge
of the officers of the Company, are required to be filed, and will pay all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes become due, except such taxes as are subject to a Good Faith
Contest.
5F. ENFORCEMENT OF MORTGAGE PROVISIONS. The Company covenants that it
shall require any Commercial Mortgage Loans originated or acquired by it to
contain covenants to the effect that (1) the mortgagor shall obtain and maintain
at all times appropriate insurance coverage with respect to the mortgaged
property and (2) the mortgagor shall promptly pay and discharge any indebtedness
or lawful claims against the mortgaged property which if unpaid would constitute
a Lien on such property. The Company further covenants and agrees that it will
use commercially reasonable efforts to enforce such covenants.
6. NEGATIVE COVENANTS. So long as any Note or amount owing under this
Agreement shall remain unpaid, the Company covenants that:
6A(1). DEBT SERVICE COVERAGE RATIO. The Company will not, at any
time, permit the Debt Service Coverage Ratio to be less than 1.4 to 1.
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6A(2). DEBT TO TOTAL ASSETS RATIO. The Company will not permit the
ratio of (i) Debt to (ii) the sum of Total Assets plus the cumulative
depreciation of any real property assets of the Company to exceed .70 to 1.
6B. RESTRICTED PAYMENTS. The Company covenants that it will not make, pay
or declare, or commit to make, pay or declare, any Restricted Payment unless,
after giving effect thereto, (i) the aggregate amount of all Restricted Payments
made during the twelve month period commencing on the date hereof and expiring
on the one (1) year anniversary of the date hereof, and including all previously
made Restricted Payments, does not exceed 100% of the lesser of (A) Net Income
and (B) Net Income (determined without giving effect to any current income taxes
or any change in deferred taxes), in each case, for all such fiscal quarters
during such time period on a cumulative basis, and (ii) the aggregate amount of
all Restricted Payments made during any fiscal quarter after the expiration of
such twelve (12) month period, and including all previously made Restricted
Payments, does not exceed 105% of the lesser of (C) Net Income and (D) Net
Income (determined without giving effect to any current income taxes or any
change in deferred taxes), in each case, for all such fiscal quarters on a
cumulative basis, and (iii) no Default or Event of Default exists or would exist
after giving effect to such Restricted Payment.
6C. LIENS, DEBT, AND OTHER RESTRICTIONS. The Company will not:
6C(1). LIENS. Create, assume or suffer to exist any Lien upon any of
its properties or assets, whether now owned or hereafter acquired, or any
income, participation, royalty or profits therefrom (whether or not
provision is made for the equal and ratable securing of the Notes in
accordance with the provisions of paragraph 5C), except for the Liens
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specified in clauses (i) through (xi) below (collectively, "PERMITTED
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LIENS");
(i) Liens for taxes, assessments or other governmental levies or
charges not yet due or which are subject to a Good Faith Contest;
(ii) statutory Liens of landlords and Liens of carriers, contractors,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due or which are subject to a Good Faith Contest;
(iii) Liens (other than any Lien imposed by the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) incurred, or deposits
made, in the ordinary course of business (A) in connection with workers'
compensation, unemployment insurance, old age benefit and other types of
social security, (B) to secure (or to obtain letters of credit that secure)
the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, performance bonds, purchase, construction, government or
sales contracts and other similar obligations or (C) otherwise to satisfy
statutory or legal obligations; provided, that in each such case such Liens
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(1) were not incurred or made in connection with the incurrence or
maintenance of Indebtedness, the borrowing of money, the obtaining of
advances or
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credit, and (2) do not in the aggregate materially detract from the value
of the property or assets so encumbered or materially impair the use
thereof in the operation of its business;
(iv) Liens existing (A) prior to the time of acquisition upon any
property acquired by the Company through purchase, merger or consolidation
or otherwise, whether or not expressly assumed by the Company, or (B)
placed on property at the time of acquisition by the Company or to secure
all or a portion of (or to secure Debt incurred to pay all or a portion of)
the purchase price thereof; provided that such Lien shall not have been
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created, incurred or assumed in contemplation of such purchase, merger,
consolidation or other event;
(v) Liens now or hereafter required by this Agreement;
(vi) Liens in existence on the date hereof as set forth on Schedule
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6C(1) hereto;
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(vii) leases, subleases, licenses and sublicenses granted to third
parties not interfering in any material respect with the business of the
Company;
(viii) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to use of real
property, that are necessary for the conduct of the operations of the
Company or that customarily exist on properties of corporations engaged in
similar businesses and are similarly situated and that do not in any event
materially impair their use in the operations of the Company;
(ix) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay; provided the
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aggregate amount of such attachment or judgment Liens shall not secure
obligations in excess of $10,000,000 at any time;
(x) Liens other than those described in clauses (i) through (ix)
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above that secure Debt permitted by clauses (i) and (ii) of paragraph
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6C(2); provided that no Default or Event of Default shall exist and be
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continuing or shall result therefrom; or
(xi) any Lien renewing, extending or refunding any Lien permitted by
clause (x) above.
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6C(2). DEBT. Create, incur, assume or in any other way become liable
in respect of any Debt, except
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(i) the Notes;
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(ii) Funded Debt of the Company described in Schedule 6C(2) and
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outstanding as of the date hereof; and
(iii) additional Funded Debt of the Company in an amount, which
when added to all other Funded Debt of the Company then outstanding
(but excluding the Funded Debt evidenced by the Notes and the Other EC
Notes), does not exceed $1,000,000,000 at any one time outstanding.
6C(3). LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES. Make
or permit to remain outstanding any loan or advance to, or extend credit
other than credit extended in the normal course of business to any Person
who is not an Affiliate of the Company to, or Guarantee, directly or
indirectly, in connection with the obligations, stock or dividends of, or
own, purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person, or
commit to do any of the foregoing, (all of the foregoing collectively being
"INVESTMENTS"), except for the Investments set forth in clauses (i) through
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(ix) below (collectively, "PERMITTED INVESTMENTS"):
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(i) obligations backed by the full faith and credit of the United
States Government (whether issued by the United States Government or an
agency thereof), and obligations guaranteed by the United States
Government, in each case which mature within one year from the date
acquired;
(ii) demand and time deposits with, Eurodollar deposits with or
certificates of deposit issued by any commercial bank or trust company (1)
organized under the laws of the United States or any of its states or
having branch offices therein, (2) having equity capital in excess of
$100,000,000 and (3) which issues either (x) senior debt securities rated A
or better by S&P, A or better by Moody's or (y) commercial paper rated A-2
or better by S&P or Prime-2 or better by Moody's (or, in either case, an
equivalent rating from another nationally recognized credit rating agency)
("RATED BANKS"), in each case payable in the United States in United States
dollars and in each case which mature within one year from the date
acquired;
(iii) marketable commercial paper and loan participations rated A-1 or
better by S&P or P-1 or better by Moody's (or, in either case, an
equivalent rating from another nationally recognized credit rating agency)
and maturing not more than 270 days from the date acquired;
(iv) bonds, debentures, notes or similar debt instruments issued by a
state or municipality given a "AA" rating or better by S&P or an equivalent
rating by another nationally recognized credit rating agency and maturing
not more than one year from the date acquired;
(v) the loans, investments and advances existing as of the date hereof
and listed on Schedule 6C(3) hereto;
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(vi) repurchase agreements and similar commercial undertakings for
terms of less than one year with any Rated Bank, provided that such
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repurchase agreements or undertakings are secured and collateralized by
obligations backed by the full faith and credit of the United States
Government in aggregate face amount equal to or greater than the
obligations so secured;
(vii) money market mutual funds that (A) are denominated in U.S.
Dollars, (B) have average asset maturities not in excess of 365 days, (C)
have total invested assets in excess of $1,000,000,000 and (D) invest
exclusively in Permitted Investments other than those described in Clause
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(ix) below, or are rated at least BBB- by S&P;
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(viii) bonds, debentures, notes or similar debt instruments issued by
a corporation organized and existing under the laws of any state of the
United States of America or the District of Columbia and having a long term
credit rating of BBB-or better from S&P or Baa3 or better from Moody's; and
(ix) Commercial Mortgage Loans and ABS originated, purchased or
acquired by the Company in the ordinary course of its business, provided
that any such Commercial Mortgage Loan or ABS shall comply with the
investment guidelines set forth on Exhibit C hereto at the time of
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origination, purchase, or acquisition by the Company; and further provided,
that at all times the Company's portfolio of Investments, taken as a whole,
shall be in compliance with such investment guidelines.
6C(4). MERGER AND CONSOLIDATION. Merge or consolidate with any other
Person, except that the Company may consolidate or merge with any other
corporation if (A) the Company shall be the continuing or surviving
corporation and (B) no Default or Event of Default exists or would exist
after giving effect to such merger or consolidation.
6C(5). TRANSFER OF ASSETS. Transfer, or agree or otherwise commit to
Transfer, a substantial portion of its assets.
6C(6) ISSUANCE OF ADDITIONAL UNSECURED NOTES. Issue any unsecured
notes of the Company which are rated lower than the rating of the Notes on
the date hereof.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law
or otherwise):
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(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest on any
Note for more than 10 days after the date due; or
(iii) the Company defaults (whether as primary obligor or as
guarantor or other surety) in any payment of principal of or interest
on any other Debt (other than secured Debt which is non-recourse to
the Company) beyond any period of grace provided with respect thereto,
or the Company fails to perform or observe any other agreement, term
or condition contained in any agreement under which any such Debt is
created (or if any other event thereunder or under any such agreement
shall occur and be continuing) and the effect of such failure or other
event is to cause, or to permit the holder or holders of such (or a
trustee on behalf of such holder or holders) to cause, such Debt to
become due (or to be repurchased by the Company) prior to any stated
maturity, provided that the aggregate amount of all Debt as to which
such a payment default shall occur and be continuing or such a failure
or other event causing or permitting acceleration (or resale to the
Company) shall occur and be continuing exceeds an amount equal to the
lesser of (x) $10,000,000 and (y) 5% of the net assets of the Company
as reflected on its most recent balance sheet at the time of
determination; or
(iv) any representation or warranty made by or on behalf of the
Company or any of its officers herein or in any other writing
furnished in connection with or pursuant to this Agreement or the
transactions contemplated hereby shall be false in any material
respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement con
tained in paragraph 6; or
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(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after the Company receives written
notice of such default from any holder of a Note; or
(vii) the Company makes an assignment for the benefit of
creditors or is generally not paying its debts as such debts become
due; or
(viii) any decree or order for relief in respect of the Company
is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law,
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whether now or hereafter in effect (herein called the "BANKRUPTCY
LAW"), of any jurisdiction; or
(ix) the Company petitions or applies to any tribunal for, or
consents to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of the Company, or
of any substantial part of the assets of the Company, or commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings relating to the Company under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company and the Company by any
act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 60
days; or
(xi) any order, judgment or decree is entered in any proceedings
decreeing the dissolution of the Company and such order, judgment or
decree remains unstayed and in effect for more than 60 days; or
(xii) one or more final judgments in an aggregate amount in
excess of $10,000,000 is rendered against the Company and, within 60
days after entry thereof, a solvent insurance carrier or carriers have
not confirmed in writing that each such judgment is fully insured or
any such judgment is not discharged or execution thereof stayed
pending appeal, or within 60 days after the expiration of any such
stay, any such judgment is not discharged;
then (a) if such event is an Event of Default specified in clauses (i) or
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(ii) of this paragraph 7A, the holder of any Note (other than the Company
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or any of its Affiliates) may at its option during the continuance of such
Event of Default, by notice in writing to the Company, declare such Note to
be, and such Note shall thereupon be and become, immediately due and
payable at par, together with interest accrued thereon, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company, (b) if such event is an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A, all of the
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Notes at the time outstanding shall automatically become immediately due
and payable, together with interest accrued thereon and the Yield-
Maintenance Amount, if any and to the extent permitted by law, with respect
to each Note, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company, and (c) with respect to any
other event constituting an Event of Default, the Required Holder(s) may,
at its or their option, by notice in writing to the Company, declare all of
the Notes to be, and all of the Notes shall thereupon be and become,
immediately due and payable together with interest accrued thereon and
12
together with the Yield-Maintenance Amount, if any, with respect to each
Note, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company (provided that, so long as any BP
-------- ----
Party holds any Note(s), such BP Party may declare its Note(s) to be
immediately due and payable with respect to any such other event
constituting an Event of Default without the consent or approval of the
other Holders).
The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for)
and that the provision for payment of the Yield-Maintenance Amount by the
Company in the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to
paragraph 7A, the Required Holder(s) may, by notice in writing to the
------------
Company, rescind and annul such declaration and its consequences if (i) the
Company shall have paid all overdue interest on the Notes, the principal of
and Yield-Maintenance Amount, if any, payable with respect to any Notes
which have become due otherwise than by reason of such declaration, and
interest on such overdue interest and overdue principal and Yield-
Maintenance Amount at the applicable rate specified in the Notes, (ii) the
Company shall not have paid any amounts which have become due solely by
reason of such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C, and
-------------
(iv) no judgment or decree shall have been entered for the payment of any
amounts due pursuant to the Notes or this Agreement. Notwithstanding the
foregoing, so long as any BP Holder holds any Note(s), only such BP Holder
shall be permitted to rescind and annul any such declaration with respect
to the Note(s) that it holds. No such rescission or annulment shall extend
to or affect any subsequent Event of Default or Default or impair any right
arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
------------
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
------------
Company shall forthwith give written notice thereof to the holder of each
Note at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as
are available to such holder in respect thereof under applicable law,
either by suit in equity or by action at law, or both, whether for specific
performance of any covenant or other agreement contained in this Agreement
or in aid of the exercise of any power granted
13
in this Agreement. No remedy conferred in this Agreement upon the holder of
any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law or in
equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
The Company represents, covenants and warrants as follows:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate
power and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof. The Company has no
Subsidiaries.
8B. FINANCIAL STATEMENTS. The Company has furnished you with the
unaudited financial statements, certified by a principal financial officer
of the Company: a balance sheet of the Company as of June 30, 1998 and
statements of income, stockholders' equity and cash flows for the six-month
period ended on such date, prepared by the Company. To the Company's
knowledge, such financial statements are true and correct in all material
respects (subject, as to interim statements, to changes resulting from
audits and year-end adjustments), have been prepared in accordance with
GAAP consistently followed throughout the periods involved and show all
liabilities, direct and contingent, of the Company required to be shown in
accordance with such principles. To the Company's knowledge, the balance
sheets fairly present the condition of the Company as at the dates thereof,
and the statements of income, stockholders' equity and cash flows fairly
present the results of the operations of the Company and its cash flows for
the periods indicated. To the knowledge of the Company, there has been no
material adverse change in the business, condition (financial or otherwise)
or operations of the Company since June 30, 1998.
8C. ACTIONS PENDING. There is no action, suit, investigation or pro
ceeding pending or, to the knowledge of the Company, threatened against the
Company, or any properties or rights of the Company, by or before any
court, arbitrator or administrative or governmental body which (i) might
result in a Material Adverse Effect or (ii) purports to affect the validity
or enforceability of this Agreement, any Note issued hereunder or the
transactions contemplated hereby.
8D. TAXES. The Company has filed all federal, state and other income
tax returns which, to the knowledge of the officers of the Company, are
required to be
14
filed, and has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due,
except such taxes as are subject to a Good Faith Contest.
8E. CONFLICTING AGREEMENTS AND OTHER MATTERS. The Company is not a
party to any contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects its business,
property or assets, or financial condition. Neither the execution nor
delivery of this Agreement or the Notes, nor the offering, issuance and
sale of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will materially conflict with, or result
in a material breach of the terms, conditions or provisions of, or
constitute a default under, or result in any material violation of, or
result in the creation of any Lien upon any of the properties or assets of
the Company pursuant to, the charter or by-laws of the Company, any award
of any arbitrator or any agree ment (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company is subject. Except as set forth in
Schedule 8E attached hereto, the Company is not a party to, or otherwise
-----------
subject to any provision contained in, any instrument evidencing
Indebtedness of the Company, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of,
or otherwise imposes restrictions on the incurring of, Debt of the Company
of the type to be evidenced by the Notes.
8F. OFFERING OF NOTES. Neither the Company nor any agent acting on
its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached
or negotiated with respect thereto with, any Person other than
Institutional Investors, and neither the Company nor any agent acting on
its behalf has taken or will take any action which would subject the
issuance or sale of the Notes to the provisions of section 5 of the
Securities Act or to the provisions of any securities or Blue Sky law of
any applicable jurisdiction.
8G. USE OF PROCEEDS. The Company does not own or have any present
intention of acquiring any "margin stock" as defined in Regulation U (12
CFR Part 207) of the Board of Governors of the Federal Reserve System
(herein called "MARGIN STOCK"). The proceeds of sale of the Notes will be
used to purchase Commercial Mortgage Loans and/or marketable debt
securities, including, but not limited to, ABS. None of such proceeds will
be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or for
the purpose of maintaining, reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any stock that is currently a
margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U.
Neither the Company nor any agent acting on its behalf has taken or will
take any action which might cause this Agreement or the Notes to violate
Regulation U, Regulation T or any other
15
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
8H. ERISA. The Company has no retirement or employee benefit plans
subject to ERISA.
8I. GOVERNMENTAL CONSENT. No circumstance in connection with the
offering, issuance, sale or delivery of the Notes is such as to require any
authorization, consent, approval, exemption or other action by or notice to
or filing with any court or administrative or governmental body in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or compliance
with the terms and provisions hereof or of the Notes, if the failure to
obtain any such consent would have a Material Adverse Effect.
8J. COMPLIANCE WITH LAWS. The Company and all of its properties and
facilities have complied at all times in all material respects with all
federal, state, local and regional statutes, laws, ordinances and judicial
or administrative orders, judgments, rulings and regulations, except, in
any such case, where failure to comply would not result in a Material
Adverse Effect on the business, condition (financial or otherwise) or
operations of the Company.
8K. INVESTMENT COMPANY STATUS. Neither the Company nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or an "investment adviser" within the meaning of the
Investment Advisers Act of 1940, as amended.
8L. DUE AUTHORIZATION, ETC. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
8M. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to you by or on behalf of the Company in
connection herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to
the Company which materially adversely affects or in the future may (so far
as the Company can now foresee) materially adversely affect the business,
property or assets, or financial condition of the
16
Company and which has not been set forth in this Agreement or in the other
docu ments, certificates and written statements furnished to you and Boston
Properties Limited Partnership, a Delaware limited partnership by or on
behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby.
8N. INVESTMENTS. All mortgage loans owned by the Company as of the
date of this Agreement are Commercial Mortgage Loans which are not in
default beyond any applicable cure periods pursuant to the terms thereof,
and the Company has not extended any of the cure periods provided in the
loan documents governing, evidencing and securing such Commercial Mortgage
Loans and originally executed in connection therewith beyond the applicable
cure periods provided in such loan documents.
8O. ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 8O
-----------
hereto, the Company (i) has complied in all material respects with all
applicable Environmental Laws, and the Company has not received (A) notice
of any material failure so to comply, (B) any letter or request for
information under Section 104 of CERCLA or comparable state laws or (C) any
information that would lead it to believe that it is the subject of any
federal, state or local investigation concerning Environmental Laws; (ii)
does not manage, generate, transport, discharge or store any Hazardous
Material in material violation of any material Environmental Laws; (iii)
does not own, operate or maintain any underground storage tanks; and (iv)
is not aware of any conditions or circumstances associated with its
currently or previously owned or leased properties or operations (or those
of any tenants of such properties) which may give rise to any liabilities
under Environmental Laws which could have a Material Adverse Effect.
9. REPRESENTATIONS OF THE PURCHASER. You represent that you are not
acquiring the Notes to be purchased by you hereunder with a view to or for
sale in connection with any distribution thereof within the meaning of the
Securities Act, provided that the disposition of your property shall at all
times be and remain within your control. You understand that the Notes have
not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and
that the Company is not required to register the Notes.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this
Agreement, the terms defined in paragraphs 10A and 10B (or within the text
-------------- ---
of any other paragraph) shall have the respective meanings specified
therein and all accounting matters shall be subject to determination as
provided in paragraph 10C.
-------------
10A. YIELD-MAINTENANCE TERMS.
17
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or
authorized to be closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
princi pal of such Note that is to be prepaid pursuant to paragraph 4 or is
-----------
declared to be immediately due and payable pursuant to paragraph 7A, as the
------------
context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial practice and at a
discount factor (as converted to reflect the periodic basis on which
interest on the Notes is payable, if interest is payable other than on a
semi-annual basis) equal to the Reinvestment Yield with respect to such
Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Princi pal of any Note, the offered-side yield to maturity, as of 10:00
a.m. (New York City time) on the Business Day next preceding the Settlement
Date with respect to such Called Principal, of the U.S. Treasury security
that was used to determine the then Treasury of such Investment Note.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will
elapse between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date through
and including the Rate Reset Date (assuming that the entire principal
balance and all accrued interest as of such Rate Reset Date will be repaid
on such Rate Reset Date), if the Settlement Date precedes such Rate Reset
Date, or alternatively, the Maturity Date if the Settlement Date occurs
after the Rate Reset Date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be
prepaid pursuant to paragraph 4 or is declared to be immediately due and
-----------
payable pursuant to paragraph 7A, as the context requires.
------------
18
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal
plus (ii) to the extent paid on the Settlement Date with the Called
Principal, interest accrued thereon as of (including interest due on) the
Settlement Date with respect to such Called Principal. The Yield-
Maintenance Amount shall in no event be less than zero.
10B. OTHER TERMS.
"ABS" shall mean mortgage, or other asset backed securities.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control
with, the Company. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such corporation, whether
through the ownership of voting securities, by contract or otherwise.
"BANKRUPTCY LAW" shall have the meaning specified in clause
------
(viii) of paragraph 7A.
------ ------------
"BIG FIVE ACCOUNTING FIRM" shall mean any of Arthur Andersen,
Deloitte & Touche, KPMG Peat Marwick, PricewaterhouseCoopers and Ernst &
Young.
"BP PARTY" shall mean Boston Properties Limited Partnership, a
Delaware limited partnership, and any Affiliate thereof, and shall also
include, in all events, One Embarcadero Center Venture, a California
general partnership.
"CASH FLOW" shall mean, in respect of any period, the sum of (a)
Net Income for such period and (b) the amount of all depreciation and
amortization allowances and other non-cash expenses of the Company but only
to the extent deducted in the determination of Net Income for such period.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMERCIAL MORTGAGE LOANS" shall mean commercial mortgage loans
made in substantial conformance with (x) standards prevailing in the
commercial loan mortgage marketplace and (y) the guidelines contained in
Exhibit C hereto.
---------
19
"CURRENT DEBT" shall mean, with respect to the Company, all
Indebtedness for borrowed money which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or within one
year from the date of the creation thereof and is not directly or
indirectly renewable or extendible at the option of the debtor to a date
more than one year from the date of the creation thereof, provided that
Indebtedness for borrowed money outstanding under a revolving credit or
similar agreement which obligates the lender or lenders to extend credit
over a period of more than one year shall constitute Funded Debt and not
Current Debt, even though such Indebtedness by its terms matures on demand
or within one year from the date of the creation thereof.
"DEBT" shall mean Current Debt and Funded Debt.
"DEBT SERVICE" shall mean, with respect to any period, the sum of
the following: (a) Interest Charges for such period, and (b) all payments
of principal in respect of Debt of the Company paid or payable during such
period.
"DEBT SERVICE COVERAGE RATIO" shall mean, at any time of
determination, the ratio of (a) Cash Flow for the most recent fiscal
quarter to (b) Debt Service for such fiscal quarter.
"DEFAULT" shall mean any of the events specified in paragraph 7A,
------------
whether or not any requirement for such event to become an Event of Default
has been satisfied.
"DUFF & PHELPS" shall mean Duff & Phelps Corporation.
"ENVIRONMENTAL LAWS" shall mean all laws relating to pollution,
the release or other discharge, handling, disposition or treatment of
Hazardous Materials and other substances or the protection of the
environment or of employee health and safety, including, without
limitation, CERCLA, the Hazardous Material Transportation Act (49 U.S.C.
Section 1801 et. seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 7401 et. seq.), the Clean Air Act (42 U.S.C. Section 401 et.
seq.), the Toxic Substances Control Act (15 U.S.C. Section 651 et. seq.)
and the Emergency Planning and Community Right-To-Know Act (42 U.S.C.
Section 11001 et. seq.), each as the same may be amended and supplemented.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
------------
connection with such event for the giving of notice, or the lapse of time,
or the happening of any further condition, event or act.
"EQUITY REDEMPTION LOAN" shall mean that certain loan in the
aggregate principal amount of $328,143,000 by Bankboston. N.A., The Chase
Manhattan Bank, Fleet National Bank, PNC Bank, National Association,
Dresdner
20
Bank AG New York Branch and Grand Cayman Branch, The Bank of New York, Key
Bank National Association and Citizens Bank (and the other banks which may
become parties to the Term Loan Agreement described immediately below) to
you, Embarcadero Center Associates, Three Embarcadero Center Venture and
Four Embarcadero Center Venture pursuant to that certain Term Loan
Agreement dated as of November 12, 1998.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FITCH" shall mean Fitch IVCA, Inc.
"FUNDED DEBT" shall mean, with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures, or which is otherwise
payable or unpaid, more than one year from, or is directly or indirectly
renewable or extendible at the option of the debtor to a date more than one
year (including an option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period
of more than one year) from, the date of the creation thereof, including
current maturities of long-term debt that appear as current liabilities in
accordance with GAAP.
"GAAP" shall have the meaning set forth in paragraph 10C.
-------------
"GOOD FAITH CONTEST" shall mean, with respect to any tax,
assessment, Lien, obligation, claim, liability, judgment, injunction,
award, decree, order, law, regulation, statute or similar item, any
challenge or contest thereof by appropriate proceedings timely initiated in
good faith by the Company for which adequate reserves therefor have been
taken in accordance with GAAP.
"GUARANTEE" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness, lease, dividend or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business) or discounted or sold with recourse by such
Person, or in respect of which such Person is otherwise directly or
indirectly liable, including, without limitation, any such obligation in
effect guaranteed by such Person through any agreement (contingent or
otherwise) to
(i) purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise);
21
(ii) maintain the solvency or any balance sheet or other financial
condition of the obligor of such obligation; or
(iii) pay the purchase price for goods or services regardless of the
non-delivery or non-furnishing thereof, in any such case if the
purpose, intent or effect of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders
of such obligation will be protected against loss in respect thereof.
The amount of any Guarantee shall be equal to the outstanding principal
amount of the obligation guaranteed or such lesser amount to which the
maximum exposure of the guarantor shall have been specifically limited.
"HAZARDOUS MATERIALS" shall mean (i) any material or substance
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous material", "toxic substances" or any other
formulations intended to define, list or classify substances by reason of
their deleterious properties, (ii) any oil, petroleum or petroleum derived
substance, (iii) any flammable substances or explosives, (iv) any
radioactive materials, (v) asbestos in any form, (vi) electrical equipment
that contains any oil or dielectric fluid containing levels or
polychlorinated biphenyls in excess of 50 parts per million, (vii)
pesticides or (viii) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental agency or
authority or which may or could pose a hazard to the health and safety of
persons in the vicinity thereof.
"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
"INDEBTEDNESS" shall mean, with respect to any Person and without
duplication (i) all items (excluding items of contingency reserves or of
reserves for deferred income taxes) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of
a balance sheet of such Person as of the date on which Indebtedness is to
be determined, other than Preferred Stock of such Person except as set
forth in clause (iv) below; (ii) all indebtedness secured by any Lien on,
-----------
or payable out of the proceeds or production from, any property or asset
owned or held by such Person, whether or not the indebtedness secured
thereby shall have been assumed, (iii) all indebtedness of third parties,
including joint ventures and partnerships of which such Person is a
venturer or general partner, recourse to which may be had against such
Person, (iv) redemption obligations in respect of mandatorily redeemable
Preferred Stock; and (v) all indebtedness and other obligations of others
with respect to which such Person has become liable by way of a Guarantee.
22
"INITIAL TREASURY" shall mean, for any Note, the yield to
maturity implied by (i) the bid-side yields reported, as of 10:00am (New
York City time) (or, at your election, at such other time as we may
mutually agree) on the Business Day next preceding the date upon which such
Note is funded, on the display designated as "Page 8" on the Telerate
Access Service, for actively traded U.S. Treasury securities having a
maturity equal to the Rate Reset Date of such Note, or if such bid-side
yields shall not be reported as of such time or the yields reported as of
such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series bid-side yields reported, for the latest day for which such yields
shall have been so reported as of the Business Day next preceding the date
upon which such Note is funded in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Rate Reset Date
of such Note. Such implied yields shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between yields reported for various maturities. Notwithstanding the
foregoing, subject to the Company's written approval (which approval shall
not be unreasonably withheld or delayed), you shall be entitled to select a
different actively traded U.S. Treasury security (which shall have a
maturity date approximately equal and reasonably comparable to the first
Rate Reset Date of such Note) the bid-side yield to maturity of which shall
be the Initial Treasury for purposes of such Note; provided, however, that
-------- -------
if you select a different U.S. Treasury security which is approved by the
Company pursuant to the foregoing or if a time other than 10:00 a.m. is
used to determine the Initial Treasury, then the Margin for such Note shall
be adjusted so that the interest rate on such Investment Note is no
different than if you had not exercised your rights pursuant to this
sentence to select a different U.S. Treasury or to agree to a different
time for determining the Initial Treasury. Schedule 1 sets forth the
----------
definitive Initial Treasury for each Note.
"INSTITUTIONAL INVESTOR" shall mean any insurance company,
commercial, investment or merchant bank, finance company, mutual fund,
registered money or asset manager, savings and loan association, credit
union, registered investment advisor, pension fund, investment company,
licensed broker-dealer, "qualified institutional buyer" (as such term is
defined under Rule 144A promulgated under the Securities Act, or any
successor law, rule or regulation) or "accredited investor" (as such term
is defined under Regulation D promulgated under the Securities Act, or any
successor law, rule or regulation).
"INTANGIBLES" shall mean, without duplication, all Intellectual
Property and operating agreements, treasury stock, deferred or capitalized
research and development costs, goodwill (including any amounts, however
designated, representing the cost of acquisition of business and
investments in excess of the book value thereof), unamortized debt discount
and expense, any write-up of asset value after June 30, 1997 and any other
amounts reflected in contra-equity accounts, and any other assets treated
as intangible assets under GAAP.
23
"INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
service marks, trade names, copyrights, brand names, mechanical or
technical processes and paradigms, know-how, and similar intellectual
property and applications, licenses and similar rights in respect of the
same.
"INTEREST CHARGES" shall mean, with respect to any period, the
sum (without duplication) of the following: (a) all interest in respect of
Debt of the Company deducted in determining Net Income for such period, and
(b) all debt discount and expense amortized or required to be amortized in
the determination of Net Income for such period.
"INVESTMENTS" shall have the meaning provided in paragraph 6C(3).
---------------
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, minimum or compensating deposit arrangement, lien (statutory
or otherwise) or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction)
or any other type of preferential arrangement for the purpose, or having
the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
"MARGIN" shall mean, for any Note, 165 basis points; provided
--------
that, if you select, for purposes of determining the Initial Treasury, a
----
different U.S. Treasury security from the U.S Treasury selected by the
Company or if a time other than 10:00 a.m. is used to determine the Initial
Treasury, in either case pursuant to your rights as described in the
definition of Initial Treasury, then the Margin during the period of time
commencing on the funding of the Investment Note until the first Rate Reset
Date thereunder shall be adjusted as described in the last sentence of the
definition of Initial Treasury and, from and after the first Rate Reset
Date, the Margin shall again adjust to equal 165 basis points. Schedule 1
----------
sets forth the definitive initial Margin for each Note through the first
Rate Reset Date of each Note.
"MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse
effect on the business, assets, liabilities, operations, prospects or
condition, financial or otherwise, of the Company, (ii) material impairment
of the Company to perform any of its obligations under the Agreement and
the Notes or (iii) material impairment of the validity or enforceability or
the rights of, or the benefits available to, the holders of the Notes under
this Agreement or the Notes.
"MATURITY DATE" shall have the meaning set forth in paragraph 1
-----------
hereof.
"MOODY'S" shall mean Moody's Investors Services, Inc., including
the NCO/Moody's Commercial Division, or any successor Person.
24
"NET INCOME" shall mean, as to any period, consolidated gross
revenues of the Company less all operating and non-operating expenses of
the Company for such period, including all charges of a proper character
(including current and deferred taxes on income, provision for taxes on
unremitted foreign earnings which are included in gross revenues, and
current additions to reserves), but not including in gross revenues the
following:
(i) any gains (net of expenses and taxes applicable thereto)
in excess of losses resulting from the Transfer of capital assets
(i.e., assets other than current assets);
(ii) any gains resulting from the write-up of assets;
(iii) any equity of the Company in the undistributed earnings
(but not losses) of any corporation which is not a Subsidiary;
(iv) any earnings or losses of any Person acquired by the
Company through purchase, merger, consolidation or otherwise for
any fiscal period prior to the fiscal period in which the
acquisition occurs:
(v) gains or losses from the acquisition of securities or the
retirement or extinguishment of Debt;
(vi) gains on collections from insurance policies or
settlements;
(vii) any income or gain during such period from any change in
accounting principles, from any discontinued operations or the
disposition thereof, from any extraordinary items or from any
prior period adjustment;
(viii) in the case of a successor to the Company by consolidation
or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or
transfer of assets.
If the preceding calculation results in a number less than zero, such
amount shall be considered a net loss.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"OTHER EC NOTES" shall mean those certain senior promissory notes
of the Company issued by the Company on the date hereof to (a) Embarcadero
Center Associates in the aggregate principal amount of $111,927,000 (b)
Three Embarcadero Center Venture in the aggregate principal amount of
$76,897,000 and
25
(c) Four Embarcadero Center Venture in the aggregate principal amount of
$143,119,000.
"PERMITTED INVESTMENTS" shall have the meaning set forth in
paragraph 6C(3).
---------------
"PERMITTED LIENS" shall have the meaning set forth in paragraph
---------
6C(1).
-----
"PERSON" shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organ ization and a government or any department or agency
thereof.
"PHASE ONE" shall mean the closing and consummation of the
transactions described in that certain Master Transaction Agreement dated
as of September 28, 1998, by and among Prudential, PIC Realty Corporation,
Fedmark Corporation, Embarcadero Center Investors Partnership, Pacific
Property Services, L.P., the Persons listed on Exhibit A-1 attached
thereto, Boston Properties Limited Partnership and Boston Properties, Inc.,
which are to be consummated on the "Closing Date" (as defined in such
Master Transaction Agreement).
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America, a New Jersey mutual insurance company.
"PRUDENTIAL GUARANTIED LOAN" shall mean that certain loan in the
aggregate principal amount of $92,000,000 by The Chase Manhattan Bank
and/or any of its subsidiaries or affiliates (the "BANK") to you,
Embarcadero Center Associates, Three Embarcadero Center Venture and Four
Embarcadero Center Venture pursuant to that certain Term Loan Agreement
dated as of November 12, 1998.
"RATE RESET DATE", with respect to any Note, shall have the
meaning set forth in such Note.
"RATED BANK" shall have the meaning set forth in paragraph
---------
6C(3)(ii).
---------
"RELEASE" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, leaching or migration
into the indoor or outdoor environment, including, without limitation, the
movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, in violation of
applicable law or prudent business practice.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least
51% of the aggregate principal amount of the Notes from time to time
outstanding,
26
but shall include, in any event, the BP Parties so long as any BP Party
holds a direct or indirect interest in any Note.
"RESET TREASURY" shall mean the yield to maturity implied by (i)
the yields reported, as of 10:00am (New York City time) on the Business Day
next preceding the Rate Reset Date for any Note, on the display designated
as "Page 678" on the Telerate Access Service, for actively traded U.S.
Treasury securities having a maturity equal to the earlier to occur of the
next Rate Reset Date provided for in such Note (if any) and the Maturity
Date of such Note, or if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for
which such yields shall have been so reported as of the Business Day next
preceding the Rate Reset Date in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the earlier to
occur of the next Rate Reset Date provided for in such Note (if any) or the
Maturity Date of such Note. Such implied yields shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-
equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between yields reported for various maturities.
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting
officer of the Company or any other officer of the Company involved
principally in its financial administration or its controllership function.
"RESTRICTED INVESTMENT" shall mean any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" shall mean any of the following (provided
that, notwithstanding anything to the contrary stated below, the term
"Restricted Payments" does not include any distribution of capital gains by
the Company to its shareholders):
(i) any dividend on any class of the Company's capital stock at
any time after the date hereof;
(ii) any other distribution on account of any class of the
Company's capital stock;
(iii) any redemption, purchase or other acquisition, direct or
indirect, of any shares of the Company's capital stock;
(iv) any unscheduled payment of principal of, or retirement,
redemption, purchase or other acquisition of, any subordinated
debt,
27
including subordinated debt that is convertible into equity of
the Company;
(v) any Restricted Investment;
"S&P" shall mean Standard and Poor's Corporation, or any
successor Person.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHAREHOLDER" shall mean and include any Person who owns,
beneficially or of record, directly or indirectly, at any time during any
year with respect to which a computation is being made 5% or more of the
outstanding voting stock of the Company.
"SIGNIFICANT HOLDER" shall mean (i) any BP Party, so long as any
BP Party shall hold (or be committed under this Agreement to purchase) any
Note, or (ii) any other holder of at least 5% of the aggregate principal
amount of the Notes from time to time outstanding.
"SUBSIDIARY" shall mean any corporation or other entity at least
51% of the total combined voting power of all classes of Voting Stock or
similar securities of which shall, at the time as of which any
determination is being made, be owned by the Company either directly or
through Subsidiaries.
"TOTAL ASSETS" shall mean, as at any time of determination, the
total assets of a Person recorded on a balance sheet of such Person
prepared in accordance with GAAP.
"TRANSFER" shall mean, with respect to any item, the sale,
exchange, conveyance, lease, transfer or other disposition of such item.
"TRANSFEREE" shall mean any direct or indirect transferee of all
or any part of any Note purchased by you under this Agreement.
"TREASURY" shall mean, for any Note, the Initial Treasury or the
then Reset Treasury, as the case may be, upon which the Margin under such
Note is added to obtain the interest rate of such Note.
"VOTING STOCK" shall mean, with respect to any corporation, any
shares of stock of such corporation whose holders are entitled under
ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class
or classes shall have or might have voting power by reason of the happening
of any contingency), and, with respect to any other entity, any similar
security of such entity.
28
10C. ACCOUNTING AND LEGAL PRINCIPLES, TERMS AND DETERMINATIONS.
All references in this Agreement to "GAAP" shall mean generally accepted
accounting principles, as in effect in the United States from time to time.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all unaudited financial statements and
certificates and reports as to financial matters required to be furnished
hereunder shall be prepared, in accordance with GAAP (except as set forth
in the next succeeding sentence of this paragraph 10C), applied on a basis
-------------
consistent with the most recent audited financial statements of the Company
delivered pursuant to paragraph 5A(i) or (ii) or, if no such statements
--------------- ----
have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B. Notwithstanding the foregoing,
---------- ------------
however, quarterly financial statements shall not include notes to
financial statements and to that extent such statements will not have been
prepared in accordance with GAAP. Any reference herein to any specific
citation, section or form of law, statute, rule or regulation shall refer
to such new, replacement or analogous citation, section or form should
citation, section or form be modified, amended or replaced.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as you shall
hold any Note, it will make payments of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note, which comply
with the terms of this Agreement, by wire transfer of immediately available
funds for credit (not later than 12:00 noon, New York City time, on the
date due) to your account or accounts as specified in the Purchaser
Schedule attached hereto, or such other account or accounts in the United
States as you may designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment. You
agree that, before disposing of any Note, you will make a notation thereon
(or on a schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been paid. Upon
written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office. The Company
agrees to afford the benefits of this paragraph 11A to any Transferee which
-------------
shall have made the same agreement as you have made in this paragraph 11A.
-------------
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all reasonable
out-of-pocket costs and expenses arising in connection with such
transactions, including:
29
(i) (A) all stamp and documentary taxes and similar charges and (B)
costs of obtaining a private placement number for the Notes in each
case as a result of the execution and delivery of this Agreement or
the issuance of the Notes;
(ii) document production and duplication charges and the reasonable
fees and expenses of any special counsel engaged by you or such
Transferee in connection with this Agreement and the transactions
contemplated hereby;
(iii) the costs and expenses, including reasonable attorneys' fees,
incurred by you or such Transferee in enforcing any rights under this
Agreement or the Notes; and
(iv) any judgment, liability, claim, order, decree, cost, fee,
expense, action or obligation resulting directly from the consummation
of the transactions contemplated hereby, including the use of the
proceeds of the Notes by the Company;
provided that the Company shall not be responsible for (1) any of your
--------
expenses or those of a Transferee incurred solely in connection with any
transfer of any Note or (2) the fees and expenses of more than one counsel
for the holders of the Notes, except to the extent the Required Holders
determine that (a) either legal advice is needed in a jurisdiction other
than that specified in paragraph 11L or (b) there exists a conflict of
-------------
interest amongst the holders of the Notes. The obligations of the Company
under this paragraph 11B shall survive the transfer of any Note or portion
-------------
thereof or interest therein by you or any Transferee and the payment of any
Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act, of the
Required Holder(s); except that, (i) without the written consent of the
------ ----
holder or holders of all Notes at the time outstanding, no amendment to
this Agreement shall change the maturity of any Note, or change the
principal of, or the rate, method of computation or time of payment of
interest on or any Yield-Maintenance Amount payable with respect to any
Note, or affect the time, amount or allocation of any prepayments, or
change the proportion of the principal amount of the Notes required with
respect to any consent, amendment, waiver or declaration, and (ii) so long
as any BP Holder holds any Note(s), no amendment, action or omission to act
shall amend, modify or otherwise affect such BP Party's rights under the
Note(s) that it holds (or its rights under this Agreement to the extent
relating to such BP Party's Note(s)) without such BP Party's written
consent. Each holder of any Note at the time or thereafter outstanding
shall be bound by any consent authorized by this paragraph 11C, whether or
-------------
not such Note shall have been marked to indicate such consent, but any
Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights
30
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "this
Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $1,000,000, except as may be necessary to (i)
reflect any principal amount not evenly divisible by $1,000,000 or (ii)
enable the registration of transfer by a holder of its entire holding of
Notes. The Company shall keep at its principal office a register in which
the Company shall provide for the registration of Notes and of transfers of
Notes. Upon surrender for registration of transfer of any Note at the
principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees.
At the option of the holder of any Note, such Note may be exchanged for
other Notes of like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged at
the principal office of the Company. Whenever any Notes are so surrendered
for exchange, the Company shall, at its expense, execute and deliver the
Notes which the holder making the exchange is entitled to receive. Every
Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly
executed, by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from
any such transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's indemnity agreement (which shall be unsecured if such
holder is an Institutional Investor whose senior debt securities are rated
BBB- or Baa3 or better by S&P or Moody's, respectively, and, otherwise,
which shall be unsecured unless the Company requests in writing that such
indemnity agreement be secured), or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver
a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of
Notes.
11E. TRANSFER OF NOTES; PERSONS DEEMED OWNERS. Subject to the next
succeeding sentence, you may transfer any Note or portion thereof in your
sole discretion; provided, however, that any Transferee shall be an
Institutional Investor.
31
Prior to due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered as the owner and
holder of such Note for the purpose of receiving payment of principal of,
interest on and any Yield-Maintenance Amount payable with respect to such
Note and for all other purposes whatsoever, whether or not such Note shall
be overdue, and the Company shall not be affected by notice to the
contrary.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by
or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by you
of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of you or any Transferee.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings between you and the
Company relating to the subject matter hereof, and the Company shall not be
affected by notice to the contrary. No provision of this Agreement shall
be interpreted for or against any party because that party or its legal
representative drafted the provision.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of either of the parties hereto
shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limitation, any
Transferee) whether so expressed or not.
11H. NOTICES. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service
(with charges prepaid) and (i) if to you, addressed to you at the address
specified for such communications in the Purchaser Schedule attached
hereto, or at such other address as you shall have specified to the Company
in writing, (ii) if to any other holder of any Note, addressed to such
other holder at such address as such other holder shall have specified to
the Company in writing or, if any such other holder shall not have so
specified an address to the Company, then addressed to such other holder in
care of the last holder of such Note which shall have so specified an
address to the Company, and (iii) if to the Company, addressed to it at
Prudential Realty Group, 8 Campus Drive, 4th Floor, Arbor Circle South,
Parsippany, New Jersey 07054, Attention: John Triece, or at such other
address as the Company shall have specified to the holder of each Note in
writing; provided, however, that any such communication to the Company may
also, at the option of the holder of any Note, be delivered by any other
means either to the Company at its address specified above or to any
officer of the Company.
11I. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of
or interest
32
on any Note that is due on a date other than a Business Day shall be made
on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation
of the interest payable on such Business Day.
11J. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to you or to the Required Holder(s),
the determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in the reasonable judgment of the Person or
Persons making such determination.
11K. INDEMNIFICATION. The Company hereby agrees to indemnify you
and your directors, officers, employees and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims, damages and
expenses arising out of or by reason of any investigation or litigation or
other proceeding relating to this Agreement, the Notes or the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation
or litigation or other proceedings (but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
11L. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
law of the State of New York.
11M. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
11N. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11O. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
33
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same
to the Company, whereupon this letter shall become a binding agreement
between the Company and you.
Very truly yours,
PRUDENTIAL REALTY
SECURITIES, INC.
By: /s/ Paul D. Egan
------------------------
Name: Paul D. Egan
Title: Vice President
By:________________________
Name:______________________
Title:_____________________
S-1
The forgoing Agreement is
hereby accepted as of the
date first above written:
ONE EMBARCADERO CENTER VENTURE, a
California General Partnership
By: BOSTON PROPERTIES LLC, as
Managing General Partner
By: BOSTON PROPERTIES LIMITED
PARTNERSHIP, as Manager
By: BOSTON PROPERTIES, INC.,
as General Partner
By: /s/ Thomas J. O'Connor
-------------------------------
Name: Thomas J. O'Connor
Title: Vice President
S-2
EXHIBIT A
[FORM OF NOTES]
PRUDENTIAL REALTY SECURITIES, INC.
SENIOR NOTE DUE __________, 200_
No. _____ [Date]
$________
FOR VALUE RECEIVED, the undersigned, PRUDENTIAL REALTY SECURITIES, INC.
(the "COMPANY"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to ONE EMBARCADERO CENTER VENTURE, a
California general partnership, or registered assigns, the principal sum of
___________________________ DOLLARS ($______________) on _____________, ____
(the "Maturity Date"), with interest (computed on the basis of a 360-day year
comprised of 12 30-day months) on the unpaid balance thereof at the rate of
____% per annum from the date hereof through and including _______, ___ (the
"RATE RESET DATE") and thereafter through and including the Maturity Date, at a
rate of interest per annum equal to the sum of (i) ________ basis points, and
(ii) the Reset Treasury, as defined in the Note Agreement. All such interest
shall be payable semiannually on the 15/th/ day of June and December in each
year, commencing with the first such date next succeeding the date hereof, until
the principal hereof shall have become due and payable, and shall be payable on
any overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Yield-Maintenance Amount (as
defined in the Note Agreement), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the lesser of (a) the maximum rate permitted by applicable
law and (b) 2.0% over the interest rate then in effect under this Note in
accordance with the foregoing terms and provisions.
Payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made in immediately available funds,
in lawful money of the United States of America, by wire transfer to [_______]
at [NAME OF BANK] in [New York City], ABA #________, Account # __________, or to
such other account or place as the registered holder hereof shall designate to
the Company in writing.
This Note is one of a series of Senior Notes (the "NOTES") issued pursuant
to a Note Agreement, dated as of November 12, 1998 (the "NOTE AGREEMENT"),
between the Company and One Embarcadero Center Venture and is entitled to the
benefits thereof.
This Note is a registered Note and, as provided in the Note Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written
A-1
instrument of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time
in part, on the terms specified in the Note Agreement.
If an Event of Default, as defined in the Note Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Note
Agreement.
The Company and any and all endorsers, guarantors and sureties severally
waive grace, demand, presentment for payment, notice of dishonor or default,
notice of intent to accelerate, notice of acceleration (to the extent set forth
in the Note Agreement), protest and diligence in collecting.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
PRUDENTIAL REALTY SECURITIES, INC.
By_________________________
[Vice] President
By_________________________
Treasurer
A-2
EXHIBIT C
INVESTMENT GUIDELINES
1. Invest only in investment grade fixed income assets that:
a) are current in payment and not in default (subject to cure periods):
b) minimally provide for interest payments which are (i) monthly in the case of
"non securities" investments (i.e., whole mortgage loans) or (ii) semi-annually
in the case of "securities" investments (i.e. ABS):
c) have a maturity date which is at least thirty months beyond the asset
purchase date:
d) include prepayment premiums providing for yield maintenance or the
substantial equivalent: and
e) on an individual basis, do not exceed 7% of the total portfolio:
2. Make more than 80% of all investment in assets directly secured by first
mortgages. In addition: (a) no such assets may have a "loan to value" ratio
which exceeds 80%, and at least 90% of such assets shall have a "loan to value"
ratio which is 75% or less and (b) the overall portfolio of such assets shall be
geographically diverse.