EXHIBIT 99.23
STOCK PURCHASE AGREEMENT
by and between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
as Investor
and
BOSTON PROPERTIES, INC.
as Company
Dated: September 28, 1998
STOCK PURCHASE AGREEMENT
INDEX
SECTION 1. SALE OF SHARES AND AGGREGATE PURCHASE PRICE............................. 1
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1.1 Purchase Price and Payment.............................................. 1
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1.2 Transfer of Shares...................................................... 1
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1.3 Time and Place of Closing............................................... 2
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1.4 Further Assurances...................................................... 2
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 2
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2.1 Making of Representations and Warranties................................ 2
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2.2 Organization, Good Standing and Authority............................... 2
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2.3 Company's Authorization and Binding Effect.............................. 3
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2.4 Capitalization; Status of Shares........................................ 3
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2.5 Conflicting Agreements and Other Matters................................ 4
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2.6 Litigation, Proceedings, etc............................................ 5
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2.7 No Default or Violation................................................. 5
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2.8 Governmental Consents, etc.............................................. 5
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2.9 No Registration Under the Securities Act; No
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General Solicitation. Registration of Shares............................ 6
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2.10 Insurance............................................................... 6
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2.11 Information Provided.................................................... 6
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2.12 No Other Liabilities.................................................... 7
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2.13 The Partnership; Taxes; REIT Status..................................... 7
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2.14 Compliance With Laws.................................................... 7
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2.15 SEC Documents........................................................... 7
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2.16 Material Contracts...................................................... 8
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2.17 No Merger Agreement..................................................... 8
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2.18 Certain Actions by the Company.......................................... 8
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2.19 No Investment Company Status............................................ 8
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SECTION 3. COVENANTS OF THE COMPANY................................................ 9
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3.1 Making of Covenants and Agreements...................................... 9
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3.2 Conduct of Business..................................................... 9
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3.3 Information Rights...................................................... 9
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3.4 Consultation Rights..................................................... 10
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3.5 Notice of Default....................................................... 10
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3.6 Consummation of Agreement............................................... 10
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3.7 Cooperation of the Company.............................................. 10
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3.8 Negative Covenants of the Company....................................... 10
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3.9 Survival................................................................ 11
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(i)
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR.............................. 11
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4.1 Making of Representations and Warranties of Investor.................... 11
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4.2 Investor's Organization................................................. 11
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4.3 Investment Intent....................................................... 11
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4.4 Investor Status......................................................... 11
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4.5 Access to Information................................................... 12
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4.6 Reliance................................................................ 12
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4.7 No Advertisement or Solicitation........................................ 12
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4.8 Other Investor Representations.......................................... 12
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SECTION 5. COVENANTS OF INVESTOR................................................... 13
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5.1 Making of Covenants and Agreement....................................... 13
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5.2 Legends................................................................. 13
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5.3 Confidentiality of Information.......................................... 13
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5.4 Consummation of Agreement............................................... 14
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5.5 Cooperation of Investor................................................. 14
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SECTION 6. CONDITIONS.............................................................. 14
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6.1 Conditions to the Obligations of Investor............................... 14
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6.2 Conditions to Obligations of the Company................................ 17
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SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED............................. 17
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7.1 Termination............................................................. 17
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7.2 Effect of Termination................................................... 18
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7.3 Right to Proceed........................................................ 18
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SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING............................ 18
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8.1 Survival................................................................ 18
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SECTION 9. INDEMNIFICATION......................................................... 18
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9.1 Indemnification by the Company.......................................... 18
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9.2 Indemnification by Investor............................................. 19
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9.3 Notice; Defense of Claims............................................... 19
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SECTION 10. MISCELLANEOUS........................................................... 20
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10.1 Fees and Expenses....................................................... 20
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10.2 Governing Law........................................................... 20
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10.3 Notices................................................................. 20
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10.4 Entire Agreement........................................................ 21
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10.5 Assignability; Binding Effect........................................... 21
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10.6 Captions and Gender..................................................... 22
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10.7 Execution in Counterparts............................................... 22
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10.8 Amendments.............................................................. 22
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10.9 Publicity and Disclosures............................................... 22
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(ii)
10.10 Consent to Jurisdiction................................................. 22
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10.11 Specific Performance.................................................... 22
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Schedule 2.4 - Capitalization, Status of Shares
Schedule 2.5 - Conflicting Agreements
Schedule 2.8 - Required Governmental Consents
Schedule 2.11 - Information Provided
Schedule 2.12 - Other Liabilities
Schedule 2.16 - Material Contracts
Schedule 2.17 - Merger Agreements
Schedule 4.8(a) - Litigation
Exhibit A - Form of Registration Rights Agreement
Exhibit B - Form of Opinions of Company's Counsel
Exhibit C - Confidentiality Agreement
Exhibit D - Form of Agreement Regarding Certain Information
Exhibit E - Form of Certificate of Designations
Exhibit F - Form of Ownership Resolutions
(iii)
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
September ___, 1998, by and between BOSTON PROPERTIES INC., a Delaware
corporation (the "COMPANY"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation (the "INVESTOR").
W I T N E S S E T H
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WHEREAS, the Company has agreed to issue and sell to Investor, and Investor
has agreed to purchase from the Company, shares of a newly created class of the
Company's Series A Convertible Redeemable Preferred Stock (the "SERIES A
PREFERRED STOCK"), for aggregate cash consideration of $100,000,000.00; and
WHEREAS, Investor desires to purchase such Series A Preferred Stock on the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. SALE OF SHARES AND AGGREGATE PURCHASE PRICE.
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1.1 Purchase Price and Payment. (a) In consideration of the sale by the
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Company to Investor of the 2,000,000 shares of Series A Preferred Stock to be
acquired by Investor pursuant to this Agreement (the "SHARES") and in reliance
upon the representations and warranties of the Company herein contained and to
be reconfirmed at the Closing and subject to the satisfaction of all of the
conditions contained herein, Investor agrees that at the Closing, Investor will
deliver to the Company the aggregate amount of $100,000,000.00 (the " PURCHASE
PRICE").
(b) The purchase price per Share (the "PER SHARE PRICE") shall be
equal to $50.00 per share.
(c) The Purchase Price shall be delivered on the Closing Date to the
Company by wire transfer of immediately available funds, to a bank account of
the Company specified by the Company at least three (3) business days prior to
the Closing.
1.2 Transfer of Shares. At the Closing the Company shall deliver or cause
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to be delivered to Investor one or more certificates (in Investor's name or in
the name of Investor's nominees or designees as the Investor shall have informed
the Company at least three (3) business days prior to the Closing), representing
the 2,000,000 Shares that Investor is entitled to receive.
1.3 Time and Place of Closing. The closing of the purchase and sale
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provided for in this Agreement (herein called the "CLOSING") shall be held at
the offices of Goodwin, Procter & Hoar LLP, 599 Lexington Avenue, 40th Floor,
New York, New York 10022, on the Closing Date. For purposes of this Agreement,
"CLOSING DATE" means the earlier to occur of: (i) ninety (90) days after the
"CLOSING DATE" (as defined in that certain Master Transaction Agreement of even
date herewith, by and among the Company, Investor, Boston Properties Limited
Partnership, PIC Realty Corporation, Fedmark Corporation, Embarcadero Center
Investors Partnership, Pacific Property Services, L.P. and certain other persons
listed on Exhibit A attached thereto (the "MASTER TRANSACTION AGREEMENT")) , or
if such ninetieth (90th) day is not a business day, the next ensuing business
day (the "OUTSIDE DATE"); and (ii) the date (the "REDEMPTION DATE") that the
redemption transactions described in those certain Redemption Agreements (as
defined in the Master Transaction Agreement) are consummated in accordance with
the terms of such Redemption Agreements; provided, however, that in the event
the Redemption Date is the earlier date, then the Company (in its sole
discretion) may elect, by written notice provided to the Investor within three
(3) business days of receipt of a Redemption Notice (as defined in the
Redemption Agreements), to delay the Closing until any future date prior to and
including the Outside Date (provided that the Company provides Investor with at
least five (5) business days written notice of the date of such delayed Closing
hereunder).
1.4 Further Assurances. The Company from time to time after the Closing
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at the request of Investor and without further consideration shall execute and
deliver further instruments of transfer and assignment and take such other
action as Investor may reasonably require to more effectively transfer and
assign to, and vest in, Investor the Shares and all rights thereto, and to fully
implement the provisions of this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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2.1 Making of Representations and Warranties. As a material inducement to
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Investor to enter into this Agreement and consummate the transactions
contemplated hereby, the Company hereby makes to Investor the representations
and warranties contained in this Section 2.
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2.2 Organization, Good Standing and Authority. The Company is a
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corporation, and the Boston Properties Limited Partnership (the "PARTNERSHIP")
and each other entity in which the Company directly or indirectly owns, holds or
controls twenty percent (20%) or more of any class of voting equity securities
of such entity and an equity investment with a current fair market value of
$10,000,000.00 or more (collectively, the "SUBSIDIARIES," or individually, a
"SUBSIDIARY") is a general or limited partnership, limited liability company or
corporation, each of which is (a) duly organized, validly existing and in good
standing under the laws of its respective state of incorporation or formation
and (b) duly qualified to do business in all jurisdictions where such
qualification is necessary to carry on its business as now conducted, except
where failure to do so would not have a material adverse effect upon the assets,
liabilities, financial condition, earnings
2
or operations of the Company and the Subsidiaries, taken as a whole (such change
a "MATERIAL ADVERSE EFFECT") and the Company and each Subsidiary of the Company
is authorized to consummate the transactions contemplated hereby and fulfill all
of their respective obligations hereunder and under all documents contemplated
hereunder to be executed by the Company and/or any such Subsidiary of the
Company, and has all necessary power to execute and deliver this Agreement and
all documents contemplated hereunder to be executed by the Company and/or any
such Subsidiary of the Company, and to perform all of their respective
obligations hereunder and thereunder. The Company has (i) delivered to Investor
true, correct and complete copies of (a) its certificate of incorporation and
bylaws and (b) the Amended and Restated Agreement of Limited Partnership (the
"PARTNERSHIP AGREEMENT") of the Partnership and the Partnership's certificate of
limited partnership and (ii) made available to Investor the certificate of
incorporation and bylaws, or the partnership agreement and certificate of
partnership or certificate of limited partnership or other formation and
organizational documents, as the case may be, of each of the Subsidiaries.
2.3 Company's Authorization and Binding Effect. This Agreement has, and
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all documents contemplated hereunder to be executed by the Company when executed
and delivered will have been duly authorized by all requisite corporate action
on the part of the Company and are, or will be upon execution and delivery, as
applicable, the valid and legally binding obligation of the Company enforceable
in accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity. Neither the execution and delivery of this
Agreement and all documents contemplated hereunder to be executed by the
Company, nor the performance of the obligations of the Company hereunder or
thereunder will result in the violation of any provision of the certificate of
organization or bylaws of the Company, or will conflict with any order or decree
of any court or governmental instrumentality of any nature by which the Company
is bound.
2.4 Capitalization; Status of Shares.
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(a) Schedule 2.4 sets forth as of the date of this Agreement (i) the
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total number of shares of the outstanding capital stock of the Company and the
Subsidiaries, (ii) all options, warrants and registration rights with respect to
such stock, (iii) contractual obligations, commitments, understandings or
arrangements of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire, require or make any payment in respect of any shares of
equity securities of the Company or any such Subsidiary, (iv) contractual
restrictions on the payment of dividends or other distributions or amount on or
in respect of any of the Company's capital stock, and (v) agreements or
arrangements restricting the voting or transfer of any equity securities of the
Company. All of the outstanding shares of capital stock of the Company
(including the Shares when issued and delivered as contemplated by the terms of
this Agreement) or any Subsidiary are duly and validly issued, fully paid and
non-assessable and not subject to any preemptive rights of other shareholders.
At the Closing the Company will have transferred the Shares to be issued
3
hereunder free and clear of all liens, pledges, encumbrances, mortgages, charges
or security interests of any kind (each individually a "LIEN" and collectively
referred to as "LIENS"). The issuance of the Shares to Investor at the Closing
will not require any material approval or consent of any individual,
partnership, corporation, trust, unincorporated organization, or any government
or agency or political subdivision thereof (each a "PERSON") except any such
approval that shall have been obtained on or prior to the Closing.
(b) The shares of common stock of the Company, $0.01 par value (the
"COMMON STOCK") issuable upon the conversion of Series A Preferred Stock in
accordance with the terms of the Certificate of Designations (defined below)
will be duly and validly reserved for issuance and when issued upon such
conversion will be duly and validly authorized and issued, fully paid and non-
assessable. Upon conversion of any shares of Series A Preferred Stock in
accordance with the terms of the Certificate of Designations, the Common Stock
issuable upon such conversion will be issued free and clear of all Liens and the
issuance of such Common Stock will not require any approval or consent of any
Person except any such approval that shall have been obtained on or prior to the
Closing.
2.5 Conflicting Agreements and Other Matters. Neither the Company nor any
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Subsidiary is a party to any contract or agreement or subject to any certificate
of incorporation or other corporate restriction compliance with which could
reasonably be expected to have Material Adverse Effect. Neither the execution
and delivery of the documents relating to the transaction contemplated herein
nor fulfillment of nor compliance with the terms and provisions thereof, nor the
issuance of the Shares to Investor (or the issuance of Common Stock upon a
conversion of the Shares) pursuant to this Agreement will (i) to the Company's
knowledge violate any provision of any law, statute, ordinance, order, rule,
regulation or interpretation of any thereof presently in effect or in effect at
the Closing Date having applicability to the Company or any Subsidiary or any of
their properties, except such violations as could not reasonably be expected to
have a Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the certificate of incorporation or bylaws or any
other organizational document of either the Company or any Subsidiary, (iii)
except as set forth in Schedule 2.5, require any consent, approval or notice
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under, or conflict with or result in a breach of, constitute a default or
accelerate any right under, any note, bond, mortgage, license, indenture or loan
or credit agreement, or any other agreement or instrument, to which the Company
or any Subsidiary is a party or by which any of their respective properties is
bound, except where the failure to obtain such consents, approvals, notices,
conflicts, breaches or defaults could not reasonably be expected to have a
Material Adverse Effect or (iv) result in, or require the creation or imposition
of, any Lien upon or with respect to any of the properties now owned or
hereafter acquired by the Company or any Subsidiary. Neither the Company nor
any Subsidiary is bound by any agreement which would impose upon Investor any
personal obligation or personal liability which is greater than the personal
obligations and personal liabilities imposed upon Investor under this Agreement
and the Registration Rights Agreement (as defined in Section 6.1(d) below). In
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addition, the Company
4
is not aware of any facts or circumstances that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
2.6 Litigation, Proceedings, etc. There is (a) no action, suit, notice of
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violation or proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any of their
respective properties before or by any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign (each a
"GOVERNMENTAL ENTITY") which could (individually or in the aggregate) reasonably
be expected to have a Material Adverse Effect, and (b) to the best knowledge of
the Company, there is no investigation or pending against or affecting the
Company or any Subsidiary or any of their respective properties by any
Governmental Entity which in either case (i) challenges the legality, validity
or enforceability of any of the documents relating to the transactions
contemplated under this Agreement, or (ii) could (individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect, or (iii)
would (individually or in the aggregate) impair the ability of the Company to
perform fully on a timely basis any obligations which it has under this
Agreement or the Registration Rights Agreement.
2.7 No Default or Violation. Neither the Company nor any Subsidiary is
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(i) in default under or in violation of any indenture, loan or credit agreement
or any other agreement or instrument to which it is a party or by which it or
any of its properties is bound, except for violations or defaults that would not
result in a Material Adverse Effect, (ii) in violation of any order, decree,
injunction, judgment, ruling, assessment, writ, or executive mandate of any
Governmental Entity, except for violations or defaults that would not result in
a Material Adverse Effect, or (iii) in violation of any law which could
reasonably be expected to (A) adversely affect the legality, validity or
enforceability of this Agreement, (B) have a Material Adverse Effect or (C)
adversely impair the Company or any Subsidiary's ability or obligation to
perform fully on a timely basis any obligation which it has under this Agreement
or the Registration Rights Agreement.
2.8 Governmental Consents, etc. Except as may be required under any
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applicable securities law in connection with the performance by the Company of
its obligations under the Registration Rights Agreement, and assuming the
accuracy of the representations and warranties of, and the performance of the
agreements of, Investor set forth herein, no authorization, consent, approval,
waiver, license, qualification or formal exemption from, nor any filing,
declaration, qualification or registration with, any Governmental Entity or any
securities exchange is required in connection with the execution, delivery or
performance by the Company of this Agreement and the issuance of the Shares to
Investor pursuant to this Agreement except for the filing of the Certificate of
Designations (defined below) with the Delaware Secretary of State and except for
those that (i) have been made or obtained by the Company as of the date hereof
or (ii) are set forth in Schedule 2.8. At the Closing Date, the Company will
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have made all filings and given all notices to Governmental Entities and
obtained all necessary ordinances, registrations, declarations,
5
approvals, orders, consents, qualifications, franchises, certificates, permits
and authorizations from any Governmental Entity, to own or lease its properties
and to conduct its property and businesses as currently conducted, except where
failure to do so could not reasonably be expected to have a Material Adverse
Effect. At the Closing Date, all such registrations, declarations, approvals,
orders, consents, qualifications, franchises, certificates, permits and
authorizations, the failure of which to file, give notice of or obtain could
reasonably be expected to have a Material Adverse Effect, will be in full force
and effect. The assets of the Company qualify as exempt assets for purposes of
the Hart-Scott-Rodino Act and no filing under the Hart-Scott-Rodino Act is
required in connection with the issuance of the Shares to Investor pursuant to
this Agreement.
2.9 No Registration Under the Securities Act; No General Solicitation.
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Registration of Shares.
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(a) Assuming the continuing accuracy of Investor's representations set
forth in Section 4 and compliance by Investor with the transfer restrictions set
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forth in the legends on the certificates evidencing the Shares, it is not
necessary in connection with the offer, sale and delivery of the Shares in the
manner contemplated by this Agreement (or the conversion of the Shares into
Common Stock in accordance with their terms) to register the Shares (or such
Common Stock) under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
(b) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "AFFILIATE") of the Company has
directly, or through an agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Shares in a
manner that would require registration under the Securities Act of the Shares or
(ii) engaged in any form of general solicitation or general advertising in
connection with the offering of the Shares (as those terms are used in
Regulation D under the Securities Act).
2.10 Insurance. At Closing, the Company and/or any Subsidiary will have
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(i) with respect to each property owned by the Company or any Subsidiary, "all
risk" property insurance, including fire, flood, earthquake, extended coverage
and rental loss insurance and (ii) with respect to the Company and each of the
Subsidiaries, and each property owned by the Company or any Subsidiary, general
commercial liability insurance, in each case under such terms and in such
amounts and covering such risks that are customary for properties and businesses
similar to those of the Company and any Subsidiary. There are currently no
outstanding material losses for which the Company or any Subsidiary has failed
to give or present notice or claim under any policy. Policies for all the
insurance are in full force and effect and none of the Company or any or the
Subsidiaries is in default in any material respect under any of the policies.
2.11 Information Provided. Neither (a) this Agreement, the schedules and
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exhibits hereto, nor (b) any other written document delivered to Investor in
connection with the transactions contemplated hereby and identified on Schedule
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2.11 attached hereto, contain any
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6
untrue statement of a material fact or omit any material fact necessary to make
the statements herein or therein, as the case may be, in light of the
circumstances under which it was made, not misleading, and all material
information regarding the Company and all Subsidiaries is provided therein or in
the SEC Documents referred to in Section 2.15 below.
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2.12 No Other Liabilities. Except as set forth in Schedule 2.12, neither
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the Company nor any of the Subsidiaries has any material liability whether
absolute, accrued, contingent or otherwise, of a nature required to be disclosed
in financial statements (or the notes thereto) prepared in accordance with
generally accepted accounting principles, consistently applied, except
liabilities (i) reflected on the consolidated balance sheet of the Company and
the Subsidiaries as of December 31, 1997 (or the notes thereto), or (ii)
liabilities that (1) were incurred by the Company or any of the Subsidiaries
after December 31, 1997 in the ordinary course of business or (2) could not
reasonably be expected to have a Material Adverse Effect.
2.13 The Partnership; Taxes; REIT Status. The Partnership Agreement of
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the Partnership is in full force and effect, a true, complete and correct copy
thereof has been delivered to Investor and there are no dissolution, termination
or liquidation proceedings pending or contemplated with respect to the
Partnership. The Partnership is, and has been since the date of formation,
taxable as a "partnership" as defined in Section 7701(a) of the Internal Revenue
Code of 1986, as amended (together with the rules and regulations promulgated
thereunder as in effect on the date hereof, the "CODE"), and is, and has been
since the date of formation, not taxable as a corporation by reason of not being
a publicly traded partnership within the meaning of Section 7704 of the Code.
Each of the Company and Subsidiaries has filed all tax returns that are required
to be filed with any Governmental Entity (except in any case in which the
failure so to file would not have a Material Adverse Effect), and has paid all
taxes due pursuant to the tax returns or any assessment received by it or
otherwise required to be paid, except taxes being contested in good faith by
appropriate proceedings and for which adequate reserves or other provisions are
maintained. The Company has (i) elected to be taxed as a REIT effective for
the taxable year ending December 31, 1997, (ii) has not revoked such election,
(iii) qualifies for taxation as a REIT for such taxable year and for its current
taxable year, (iv) operates, and intends to continue to operate, in a manner so
as to qualify as a REIT, and (v) has not sold or otherwise disposed of any
assets which could give rise to a material amount of tax pursuant to any
election made by the Company under Notice 88-19, 1988-1 CB 486 and does not
expect to effect any such sale or other disposition.
2.14 Compliance With Laws. Neither the Company nor any Subsidiary has been
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in or is in, and none of them has received written notice of, violation of or
default with respect to, any law or any decision, ruling, order or award of any
arbitrator applicable to it or its business, properties or operations except for
violations or defaults that, individually or in the aggregate, would not result
in a Material Adverse Effect.
2.15 SEC Documents. The Company has filed with the Securities and Exchange
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Commission (the "Commission") all financial statements, reports, schedules,
forms, statements
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and other documents required by the Securities Act, and Securities Exchange Act
of 1934, as amended, (the "EXCHANGE ACT") to be filed by the Company
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC DOCUMENTS"). The Company
has delivered or made available to Investor all SEC Documents. As of their
respective filing dates, (or if amended, revised or superseded by a subsequent
filing with the Commission, then as of the date of such subsequent filing), the
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included or incorporated
by reference therein) as of such dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The consolidated
financial statements of the Company and its Subsidiaries included in all SEC
Documents, including any amendments thereto, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto.
2.16 Material Contracts. The SEC Documents and Schedule 2.16 include a
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correct and complete list of the following with respect to the Company and the
Subsidiaries: (i) agreements with any shareholder having beneficial ownership of
5% or more of the shares of the stock of the Company then issued and
outstanding, director or officer of the Company and all shareholders' agreements
and voting trusts; and (ii) agreements not made in the ordinary course of
business and which would reasonably be expected to result in a Material Adverse
Effect.
2.17 No Merger Agreement. As of the date hereof, except as set forth in
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Schedule 2.17, neither the Company nor any Subsidiary has entered into any
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agreement with any person or entity which has not been terminated as of the date
of this Agreement and under which there remains any material liability or
obligation thereof with respect to a merger or consolidation with either the
Company or any Subsidiary, or any other acquisition of a substantial amount of
the assets of the Company or any Subsidiary which would reasonably be expected
to result in a Material Adverse Effect.
2.18 Certain Actions by the Company. Neither the Company nor any of the
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Subsidiaries has: (i) made a general assignment for the benefit of creditors;
(ii) filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by such entities' creditors; (iii) suffered the appointment
of a receiver to take possession of all or substantially all of such entities'
assets; (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of such entities' assets; (v) admitted in writing such
entities' inability to pay its debts as they come due; or (vi) made an offer of
settlement, extension, or composition to its creditors generally.
2.19 No Investment Company Status. The Company is not subject to
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registration as an investment company under the Investment Company Act of 1940,
as amended, and the transactions
8
contemplated by this Agreement will not cause the Company to become an
investment company subject to registration under such Act.
SECTION 3. COVENANTS OF THE COMPANY
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3.1 Making of Covenants and Agreements. The Company hereby makes the
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covenants and agreements set forth in this Section 3.
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3.2 Conduct of Business. Between the date of this Agreement and the
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Closing Date, the Company and each of its Subsidiaries will:
(a) Conduct its business only in the ordinary course and refrain from
changing or introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices, provided that
the Company shall not have breached its obligation with respect to this
subsection 3.2(a) as long as the aggregate effect of all changes in the conduct
- -----------------
of the Company's business and its methods of management and operations could not
reasonably be expected to result in a Material Adverse Effect; and
(b) Use its reasonable best efforts to keep intact its business
organization and use reasonable efforts to keep available its present officers
and employees and to preserve the goodwill of all individuals and entities
having business relations with it.
3.3 Information Rights. For the period that the Prudential Investors (as
------------------
such term is defined in Section 10.5) own, in the aggregate at least $40,000,000
of the Company's Common Stock, including all Common Stock issuable to any such
Prudential Investor or any affiliate of Investor upon a conversion of Shares or
upon a redemption or in exchange for limited partnership units in the
Partnership, on a fully diluted basis (the "QUALIFICATION PERIOD"), Investor
shall be entitled to receive from the Company: (i) upon reasonable notice to the
Company, reasonable access to the books and records of the Company and the
Subsidiaries during normal business hours to review any information that is
reasonably related to or necessary for Investor to formulate informed opinions
regarding the operating and financial matters of the Company and to effectively
exercise Investor's consultation rights pursuant to Section 3.4 hereof;
-----------
provided, however, that with respect to this clause (i), Investor acknowledges
- -------- -------
that (a) the Company will not be required to furnish or provide access to any
information that the Company reasonably believes would constitute material
nonpublic information, unless, at the Company's request, Investor agrees with
the Company in writing, substantially in the form attached hereto as Exhibit D,
---------
not to trade in the securities of the Company until such time as such material
information becomes public and (b) Investor shall, in any event, be required to
keep all material nonpublic information received by Investor pursuant to this
clause (i) confidential (which precludes the disclosure of such information to
any other party, including Prudential Securities Incorporated or investors or
potential investors in Investor) and shall not use such information for any
purpose other than evaluating its investment in the Company and evaluating the
operating and financial matters of the Company in connection
9
with Investor's consultation rights pursuant to Section 3.4 hereof; (ii)
-----------
information filed with the Commission including amendments thereto, and non-
confidential filings with any other regulatory bodies; and (iii) non-
confidential operating information of the same general nature as the Company
provides to financial analysts, concurrently with its provision of such
information to financial analysts.
3.4 Consultation Rights. During the Qualification Period, Investor shall
-------------------
have the right to consult from time to time (but in any event not more
frequently than five (5) times in any calendar year) with the management of the
Company and the Subsidiaries, upon reasonable notice and during normal business
hours, at their respective places of business regarding operating and financial
matters of the Company and the Subsidiaries.
3.5 Notice of Default. Between the date of this Agreement and Closing,
-----------------
promptly upon the occurrence of, or promptly upon the Company becoming aware of
the impending or threatened occurrence of, any event which would cause or
constitute a breach or default, or would have caused or constituted a breach or
default had such event occurred or been known to the Company prior to the date
hereof, of any of the representations, warranties or covenants of the Company
contained in or referred to in this Agreement or in any Schedule or Exhibit
referred to in this Agreement, the Company shall give detailed written notice
thereof to Investor and the Company shall use its best efforts to prevent or
promptly remedy the same.
3.6 Consummation of Agreement. The Company shall use its reasonable best
-------------------------
efforts to perform and fulfill all conditions and obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out. To this end, the
Company will obtain prior to the Closing all necessary authorizations or
approvals of its stockholders and Board of Directors.
3.7 Cooperation of the Company. The Company shall cooperate with all
--------------------------
reasonable requests of Investor and Investor's counsel in connection with the
consummation of the transactions contemplated hereby.
3.8 Negative Covenants of the Company. The Company covenants and agrees
---------------------------------
as follows, and shall not enter into any agreement or take any other action
inconsistent with the following, in each case until the earlier of the Closing
or the termination of this Agreement, except as specifically contemplated by
this Agreement or to the extent such action shall not reasonably be expected to
result in a Material Adverse Effect:
(a) Organizational Documents. The Company shall not amend the
------------------------
Company's articles of incorporation or by-laws and shall not permit any of the
Subsidiaries to amend its articles or certificate of incorporation, by-laws or
other relevant organizational documents.
(b) Mergers, Etc. Except as shall have been previously agreed in
-------------
writing by Investor and the Company, the Company shall not, and shall not permit
any of the Subsidiaries to,
10
merge or consolidate with any entity, sell, lease, license or otherwise dispose
of all or substantially all of its assets (whether now owned or hereafter
acquired) to any entity or acquire all or substantially all of the assets or
business of any entity in each case whether in one transaction or in a series of
transactions pursuant to which the Company or such Subsidiary shall not be the
surviving entity.
3.9 Survival. The covenants of the Company in this Section 3 shall,
-------- ---------
except to the extent they terminate by their express terms, survive the Closing
in accordance with their terms and shall not be merged therein.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
- --------------------------------------------------------
4.1 Making of Representations and Warranties of Investor. As a material
----------------------------------------------------
inducement to the Company to enter into this Agreement and consummate the
transactions contemplated hereby, Investor hereby makes the representations and
warranties to the Company contained in this Section 4.
---------
4.2 Investor's Organization. Investor represents and warrants that it (a)
-----------------------
is a corporation duly organized, validly existing and in good standing under the
laws of New Jersey, (b) is authorized to consummate the transactions
contemplated by this Agreement and under all documents contemplated hereunder to
be executed by such Investor, and (c) has all the necessary corporate power to
execute and deliver this Agreement and all documents contemplated hereunder to
be executed by such Investor and to perform its obligations hereunder and
thereunder. This Agreement and all documents contemplated hereunder to be
executed by such Investor have been duly authorized by all requisite corporate
action on the part of such Investor and are valid and legally binding
obligations of such Investor and enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor's rights generally and to the general principals of equity. Neither
the execution and delivery of this Agreement and all documents contemplated
hereunder to be executed by such Investor nor the performance of the obligations
of such Investor hereunder or thereunder will result in the violation of any
provision of the operating agreement or other organizational document of such
Investor or will conflict with any order or decree of any court or governmental
instrumentality of any nature by which Investor is bound.
4.3 Investment Intent. Investor represents and warrants to Company that
-----------------
the Shares to be acquired by it hereunder are being acquired for its own account
for investment and with no intention of distributing or reselling such Shares or
any part thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America or any state or
any foreign country or jurisdiction.
4.4 Investor Status. Investor represents and warrants to, and covenants
---------------
and agrees with, Company that (i) at the time such Investor was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing Date,
it will be an "accredited investor" as defined in Rule 501 under the
11
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Company, and is able to bear the economic risk of such
investment.
4.5 Access to Information. Investor acknowledges as of the date hereof
---------------------
that it has been afforded: (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the Company; (ii) access to information about the
Company, the Company's financial condition, pro forma results of operations,
business properties, management and prospects sufficient to enable it to
evaluate its investment in the Shares; and (iii) the opportunity to obtain such
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information contained in the SEC Documents.
4.6 Reliance. Investor also understands and acknowledges that (i) the
--------
Shares may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act, except
pursuant to an exemption from such registration available under such Act, and
without compliance with state, local and foreign securities laws, in each case,
to the extent applicable, (ii) the Shares are being offered and sold to such
Investor without registration under the Securities Act in a transaction that is
exempt from the registration provisions of the Securities Act and (iii) the
availability of such exception depends in part on, and that the Company and, for
the purposes of the opinion to be delivered to such Investor pursuant to Section
-------
6.1(f) hereof, Wachtell, Lipton, Rosen & Katz will rely upon, the accuracy and
- ------
truthfulness of the foregoing representations and Investor hereby consents to
such reliance.
4.7 No Advertisement or Solicitation. Investor acknowledges that the
--------------------------------
offer and sale of the Shares to it has not been accomplished by any form of
general solicitation or general advertising, including, but not limited to, (i)
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media, or broadcast over television or radio and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
4.8 Other Investor Representations.
------------------------------
(a) Except as listed on Schedule 4.8(a) attached hereto and
---------------
incorporated herein by this reference, Investor has not received any written
notice of any threatened litigation, claim condemnation, administrative
proceeding, or special assessment against Investor which would have a material
adverse effect on the ability of Investor to perform its obligations under this
Agreement; and
(b) There is no proceeding pending or to Investor's knowledge
threatened by or against Investor under the United States Bankruptcy Code.
12
SECTION 5. COVENANTS OF INVESTOR.
- ---------- ---------------------
5.1 Making of Covenants and Agreement. Investor hereby makes the
---------------------------------
covenants and agreements set forth in this Section 5.
---------
5.2 Legends. To the extent applicable or appropriate, any Certificates
-------
or other documents issued in respect of any Shares shall be endorsed with the
legends set forth below, and Investor covenants that, except to the extent such
restrictions are waived by the Company, such Investor shall not transfer any
Shares without complying with the restrictions on transfer described in such
legends:
(i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATES AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY WHICH OPINION IS REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY AND ITS COUNSEL, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR THE SECURITIES LAWS OF SUCH STATES OR THAT SUCH TRANSACTION
COMPLIES WITH THE RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
UNDER SAID ACT OR THE SECURITIES LAWS OF SUCH STATES. THIS LEGEND MAY ONLY BE
REMOVED AS PROVIDED FOR IN SECTION 5.2 OF THAT CERTAIN STOCK PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 28, 1998 ENTERED INTO BETWEEN THE HOLDER HEREOF AND THE
COMPANY. A COPY OF SAID AGREEMENT MAY BE INSPECTED AT THE OFFICES OF THE
COMPANY."
(ii) Any legend required by any applicable state securities law.
The legends set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or upon the Company's receipt of
an opinion of counsel, in form and substance and from counsel reasonably
satisfactory to the Company and its counsel, confirming that any sale or
transfer of such securities will not require registration of such securities
under the Securities Act or under any "Blue Sky" or similar laws.
5.3 Confidentiality of Information. Subject to the Investor's
------------------------------
conditional obligations with respect to certain information provided to Investor
in accordance with Section 3.3, Investor shall keep all information furnished to
-----------
such Investor by the Company concerning the business and properties of the
Company and other activities of the Company confidential in accordance with the
terms of that certain Confidentiality Agreement, dated as of January 15, 1998,
by and between the Company and Prudential, a copy of which is attached hereto as
Exhibit C.
- ---------
13
5.4 Consummation of Agreement. The Investor shall use its reasonable
-------------------------
best efforts to perform and fulfill all conditions and obligations on its part
to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out. To this
end, Investor will obtain prior to the Closing (i) all necessary authorizations
or approvals of the Investment Committee of its Board of Directors and (ii) all
necessary authorizations, consents and permits of others required to permit the
consummation by the Investor of the transactions contemplated by this Agreement.
5.5 Cooperation of Investor. The Investor shall cooperate with all
-----------------------
reasonable requests of the Company and the Company's counsel in connection with
the consummation of the transactions contemplated hereby.
SECTION 6. CONDITIONS.
- ---------------------
6.1 Conditions to the Obligations of Investor. The obligation of Investor
-----------------------------------------
to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Company contained in Section 2 shall be
---------
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms as to materiality, which
representations and warranties as so qualified shall be true in all respects) as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing; and the Company shall, on or before the Closing, have
performed all of its obligations hereunder which by the terms hereof are to be
performed on or before the Closing; provided, however, that for purposes of
determining compliance with this Section 6.1(a) and for purposes of Section
6.1(b), each as of the Closing Date, "Material Adverse Effect" shall mean (A)
the Company or any of its Subsidiaries has: (i) made a general assignment for
the benefit of creditors; (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by such entity's creditors;
(iii) suffered the appointment of a receiver to take possession of all or
substantially all of such entity's assets; (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of such entity's assets; (v)
admitted in writing such entity's inability to pay its debts as they come due;
or (vi) made an offer of settlement, extension or composition to its creditors
generally, or (B) the total liabilities of the Company and its consolidated
subsidiaries are greater than the total assets of the Company and its
consolidated subsidiaries, each as determined in accordance with generally
accepted accounting principles, or (C) any combination of the foregoing.
(b) No Material Change. There shall have been no change since the
------------------
date hereof, whether or not in the ordinary course of business, which has had a
Material Adverse Effect, as defined in Section 6.1(a).
14
(c) Certificate from Officers. The Company shall have delivered to
-------------------------
Investor a certificate of the Company's President and Chief Financial Officer
dated as of the Closing to the effect that the statements set forth in
paragraphs (a) and (b) above in this Section 6.1 are true and correct.
-----------
(d) Registration Rights Agreement. Simultaneous with the Closing, the
-----------------------------
Company and Investor shall have entered into a Registration Rights Agreement in
the form attached hereto as Exhibit A. (the "REGISTRATION RIGHTS AGREEMENT").
---------
(e) Certificate of Designations. At or prior to the Closing, the
---------------------------
Company shall have adopted a Certificate of Designations in the form attached
hereto as Exhibit E (the "CERTIFICATE OF DESIGNATIONS") and as of the Closing,
---------
such Certificate of Designations (i) shall be in full force and effect, (ii)
shall not have been modified, amended, supplemented, rescinded or revoked in any
way, and (iii) shall have been filed with and accepted for recording by the
Secretary of State of the State of Delaware; provided, however, that if any
event has occurred or any action has been taken by the Company between the date
hereof and the Closing which, if the Shares had been issued on the "Closing
Date" as defined in the Master Transaction Agreement, would have resulted in any
benefit to the holders of the Shares (other than a "Regular Dividend" (as
defined in the Certificate of Designations) but including, without limitation,
any extraordinary dividend or distribution, any transaction resulting in an
adjustment to the "Conversion Price" (as defined in the Certificate of
Designations) or any acceleration of the convertibility of the Shares), then the
----
Certificate of Designations as adopted and filed shall be modified to provide
such benefit to the holders of the Shares as if the Shares had been issued to
the holders on the "Closing Date", as defined in the Master Transaction
Agreement.
(f) Opinions of Counsel. On the Closing Date, Investor shall have
-------------------
received (i) from Wachtell, Lipton, Rosen & Katz, counsel for the Company, an
opinion as of said date, in form attached hereto as Exhibit B-1, and (ii) from
Goodwin, Procter & Hoar llp, an opinion as of said date, in form attached hereto
as Exhibit B-2.
(g) No Order or Judgments. No Governmental Entity shall have enacted,
---------------------
issued, promulgated, enforced or entered any law, order, decree, injunction,
judgment, ruling, assessment, writ, or executive mandate (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting the consummation of such transactions; provided, however, that from
-------- -------
the date any such law, order, decree, injunction, judgment, ruling, assessment,
writ, or executive mandate is binding or effective upon the Company, the Company
shall use all reasonable efforts to have any such law, order, decree,
injunction, judgment, ruling, assessment, writ, or executive mandate vacated.
(h) Consents. The Company shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities set forth on Schedule 2.8; and the
------------
15
Company and Investor shall have received all authorizations, waivers, consents
and permits set forth on Schedules 2.5 and 2.8, in form and substance reasonably
------------- ---
satisfactory to Investor.
(i) Waiver of Ownership Limits. The Board of Directors of the Company
--------------------------
shall have duly adopted resolutions substantially in the form attached hereto as
Exhibit F (the "OWNERSHIP RESOLUTIONS") and such resolutions shall be in full
force and effect on the Closing Date. The Company covenants and agrees with
Investor, for the benefit of Investor and its permitted transferees and
subsequent transferees of the securities and interests which are the subject of
the Ownership Resolutions, that upon adoption by the Board of Directors of the
Ownership Resolutions, the application of the provisions of the Company's
Amended and Restated Articles of Incorporation (the "CHARTER") shall be
effectively modified so as to waive the Ownership Limit, as defined in the
Charter, with respect to the acquisition, ownership, conversion, transfer and
redemption of such securities and interests in accordance with the terms of, and
subject to the limitations set forth in, the Ownership Resolutions, and that the
waiver and modification effected by the Ownership Resolutions will not be
subsequently modified or rescinded without the written consent of Investor. In
connection with the Ownership Resolutions, Investor acknowledges that any
Beneficial Ownership or Constructive Ownership by Investor or any other
"Person", as defined in the Charter, in which Investor is included of Common
Stock in the aggregate in excess of 9.8% of the Common Stock outstanding
("INVESTOR'S COMMON LIMIT") or of Series A Preferred Stock in the aggregate in
excess of the limitation set forth in the proviso in the last sentence of the
first Ownership Resolution (the "PREFERRED LIMIT") or any violation or attempted
violation of such limitations shall result, as of the time of such occurrence,
violation or attempted violation even if discovered after such occurrence,
violation or attempted violation, in the conversion of such shares of Common
Stock in excess of Investor's Common Limit Beneficially Owned or Constructively
Owned by Investor or any other "Person" in which Investor is included or such
shares of Series A Preferred Stock in excess of the Preferred Limit Beneficially
Owned or Constructively Owned by Investor or any other "Person" in which
Investor is included (but not of any other shares of Common Stock or shares of
Series A Preferred Stock) into shares of Excess Stock pursuant to Section (D)(1)
of Article IV of the Charter. The preceding sentence may be relied upon by the
Board of Directors of the Company. Notwithstanding Section 8.1 hereof, the
-----------
covenants, agreements and acknowledgments contained in this paragraph shall
survive the Closing.
(j) Master Transaction Agreement. On or before the Closing, all
----------------------------
transactions described in Articles 2 and 10 of the Master Transaction Agreement
shall have closed or shall close in the manner and order provided in Section
10.2 of the Master Transaction Agreement.
(k) Amendment to Partnership Agreement. The Partnership Agreement
----------------------------------
shall have been amended to create preferred partnership interests with economic
attributes and priorities substantially identical to those of the Series A
Preferred Stock and such interests shall have been issued to the Company.
16
6.2 Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to consummate this Agreement and the transactions contemplated hereby is
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of Investor contained in Section 4 shall be true
---------
and correct in all material respects (except for such representations and
warranties that are qualified by their terms as to materiality, which
representations and warranties as so qualified shall be true in all respects) as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing; and Investor shall, on or before the Closing, have performed
all of its obligations hereunder which by the terms hereof are to be performed
on or before the Closing.
(b) No Order or Judgments. No Governmental Entity shall have enacted,
---------------------
issued, promulgated, enforced or entered any law, order, decree, injunction,
judgment, ruling, assessment, writ, or executive mandate (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated by this Agreement illegal or otherwise restraining or
prohibiting the consummation of such transactions; provided, however, that from
-------- -------
the date any such law, order, decree, injunction, judgment, ruling, assessment,
writ, or executive mandate is binding or effective upon Investor, Investor shall
use all reasonable efforts to have any such law, order, decree, injunction,
judgment, ruling, assessment, writ, or executive mandate vacated.
(c) Master Transaction Agreement. On or before the Closing, all
----------------------------
transactions described in Articles 2 and 10 of the Master Transaction Agreement
shall have closed or shall close in the manner and order provided in Section
10.2 of the Master Transaction Agreement.
SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
- -----------------------------------------------------
7.1 Termination. At any time prior to the Closing, this Agreement may be
-----------
terminated as follows:
(i) by mutual written consent of all of the parties to this
Agreement;
(ii) by Investor, pursuant to written notice by such Investor to
the Company, if any of the conditions set forth in Section 6.1 of this
-----------
Agreement have not been satisfied at or prior to the Closing Date, or if it
has become reasonably and objectively certain that any of such conditions,
other than a condition within the control of the Company or any Subsidiary
will not be satisfied at or prior to the Closing Date, such written notice
to set forth such conditions which have not been or will not be so
satisfied; or
(iii) by the Company, pursuant to written notice by the Company to
Investor, if any of the conditions set forth in Section 6.2 of this
-----------
Agreement have not been satisfied at or prior to the Closing Date, or if it
has become reasonably and objectively certain that any of such conditions,
other than a condition within the control of Investor, will not be
17
satisfied at or prior to the Closing Date, such written notice to set forth
such conditions which have not been or will not be so satisfied.
7.2 Effect of Termination. All obligations of the parties hereunder shall
---------------------
cease upon any termination pursuant to Section 7.1, provided, however, that (i)
-----------
the provisions of this Section 7.2, Section 10.1 and Section 10.9 hereof shall
----------- ------------ ------------
survive any termination of this Agreement and (ii) nothing herein shall relieve
any breaching party from any liability for any wilful breach of this Agreement
giving rise to such termination.
7.3 Right to Proceed. Anything in this Agreement to the contrary
----------------
notwithstanding, if any of the conditions specified in Section 6.1 hereof have
-----------
not been satisfied, Investor shall have the right to proceed with the
transactions contemplated hereby and if any of the conditions specified in
Section 6.2 hereof have not been satisfied, the Company shall have the right to
- -----------
proceed with the transactions contemplated hereby; provided, however, that if
-------- -------
the Company or Investor proceed with such contemplated transactions, such action
shall not be deemed a waiver of any of such party's rights hereunder except to
the extent that such party had actual knowledge prior to Closing of such failure
of one or more conditions to such party's performance; provided further, that to
----------------
the extent any such party had actual knowledge prior to Closing of any such
failure, such action shall be deemed a waiver of such party's rights hereunder
with respect to such failure.
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
- ------------------------------------------------------
8.1 Survival. Except to the extent expressly provided to the contrary
--------
herein, each of the representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or financial
statement delivered by any party to the other party incident to the transactions
contemplated hereby, shall be deemed to have been relied upon by the other party
and shall survive the Closing regardless of any investigation and shall not
merge in the performance of any obligation by either party hereto; provided,
--------
however, that the liability of either party to this Agreement (i) with respect
- -------
to the representations and warranties (excluding for purposes of this limitation
the representations and warranties of the Company in Sections 2.2, 2.3, 2.4 and
------------ --- ---
2.9) made by such party herein or in any schedule, exhibit, certificate or
- ---
financial statement delivered by such party incident to the transactions
contemplated hereby shall expire and be terminated on the second anniversary of
the Closing Date and (ii) with respect to the covenants made by such party in
this Agreement (other than the obligations of the Company and Investor with
respect to Section 9 hereof) shall expire and be terminated upon the date which
---------
is the final day of the Qualification Period.
SECTION 9. INDEMNIFICATION.
- ---------------------------
9.1 Indemnification by the Company. The Company agrees to indemnify and
------------------------------
hold Investor and its subsidiaries and affiliates and persons serving as
officers, directors, partners, members or employees thereof harmless from and
against any damages, liabilities, losses, taxes,
18
fines, penalties, costs, and expenses (including, without limitation, reasonable
fees of counsel) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in the investigation, defense
or settlement of the foregoing) which may be sustained or suffered by any of
them arising out of or based upon any of the following matters:
(a) a deliberate or wilful breach by the Company of any of its
covenants under this Agreement or in any certificate, schedule or exhibit
delivered pursuant hereto; and
(b) any fraud, intentional misrepresentation, other material breach of
any representation, warranty or covenant of the Company under this Agreement or
in any certificate, schedule or exhibit delivered pursuant hereto, or by reason
of any claim, action or proceeding asserted or instituted growing out of any
matter or thing constituting a material breach of such representations,
warranties or covenants.
9.2 Indemnification by Investor. Investor agrees to indemnify and hold
---------------------------
the Company, the Subsidiaries, and their respective affiliates and persons
serving as officers, directors, partners or employees thereof harmless from and
against any damages, liabilities, losses, taxes, fines, penalties, costs and
expenses (including, without limitation, reasonable fees of counsel) of any kind
or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in the investigation, defense or settlement of the
foregoing) which may be sustained or suffered by any of them arising out of or
based upon any of the following matters:
(a) a deliberate or wilful breach by the Investor of any of its
covenants under this Agreement or in any certificate, schedule or exhibit
delivered pursuant hereto; and
(b) any fraud, intentional misrepresentation, other material breach of
any representation, warranty or covenant of the Investor under this Agreement or
in any certificate, schedule or exhibit delivered pursuant hereto, or by reason
of any claim, action or proceeding asserted or instituted growing out of any
matter or thing constituting a material breach of such representations,
warranties or covenants.
9.3 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the basis for the claim for
indemnification and any claim or liability being asserted by a third party.
Within 20 days after receiving such notice the indemnifying party shall give
written notice to the indemnified party stating whether it disputes the claim
for indemnification and whether it will defend against any third party claim or
liability at its own cost and expense. If the indemnifying party fails to give
notice that it disputes an indemnification claim within 20 days after receipt of
notice thereof,
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it shall be deemed to have accepted and agreed to the claim, which shall become
immediately due and payable. The indemnifying party shall be entitled to direct
the defense against a third party claim or liability with counsel selected by it
(subject to the consent of the indemnified party, which consent shall not be
unreasonably withheld) as long as the indemnifying party is conducting a good
faith and diligent defense. The indemnified party shall at all times have the
right to fully participate in the defense of a third party claim or liability at
its own expense directly or through counsel; provided, however, that if the
named parties to the action or proceeding include both the indemnifying party
and the indemnified party and the indemnified party is advised that
representation of both parties by the same counsel would be inappropriate under
applicable standards of professional conduct, the indemnified party may engage
separate counsel at the expense of the indemnifying party. If no such notice of
intent to dispute and defend a third party claim or liability is given by the
indemnifying party, or if such good faith and diligent defense is not being or
ceases to be conducted by the indemnifying party, the indemnified party shall
have the right, at the expense of the indemnifying party, to undertake the
defense of such claim or liability (with counsel selected by the indemnified
party), and to compromise or settle it, exercising reasonable business judgment.
If the third party claim or liability is one that by its nature cannot be
defended solely by the indemnifying party, then the indemnified party shall make
available such information and assistance as the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, at the expense of the indemnifying party.
SECTION 10. MISCELLANEOUS.
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10.1 Fees and Expenses.
-----------------
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Company or any Subsidiary relating in any way
to the purchase and sale of the Shares hereunder and the transactions
contemplated hereby, including without limitation legal, accounting or other
professional expenses of the Company or any Subsidiary, shall be charged to or
paid by Investor.
(b) The Company will pay all costs incurred, whether at or subsequent
to the Closing, in connection with the transfer of the Shares to Investor as
contemplated by this Agreement, including without limitation, all transfer taxes
and charges applicable to such transfer, and all costs of obtaining permits,
waivers, registrations or consents with respect to any assets, rights or
contracts of the Company or any Subsidiary.
10.2 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the state of New York without regard to its conflict of
laws provisions.
10.3 Notices. Except as set forth below, all notices and other
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communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if
20
delivered personally or sent by telex or telecopier, registered or certified
mail (return receipt requested), postage prepaid or courier or overnight
delivery service to the respective parties at the following addresses (or at
such other address for any party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof):
If to the Company: Boston Properties, Inc.
8 Arlington Street
Boston, Massachusetts 02116
Attn: Edward H. Linde, President
Telecopy: (617) 536-4233
with a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Adam O. Emmerich, Esq.
Telecopy: (212) 403-2234
If to the Investor: The Prudential Insurance Company of
America
8 Campus Drive, 4th Floor
Parsippany, New Jersey 07054-4493
Attn: Robert Falzon
Telecopy: (973) 683-1752
with a copy to: Goodwin, Procter & Hoar LLP
599 Lexington Avenue
40th Floor
New York, New York 10022
Attn: Robert S. Insolia, Esq.
Telecopy: (212) 355-3333
10.4 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such Schedules or
Exhibits or in such other writings.
10.5 Assignability; Binding Effect. The terms and conditions of this
-----------------------------
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Company without the prior
written consent of Investor. This Agreement shall only be assignable by
Investor
21
to another Prudential Investor and by a Prudential Investor to another
Prudential Investor. For purposes of this Agreement, "PRUDENTIAL INVESTOR" shall
mean (i) Investor, (ii) any Person controlled (as such term is defined in Rule
12b-2 under the Exchange Act), directly or indirectly, by Prudential, (iii)
Strategic Value Investors, LLC, Strategic Value Investors International, LLC
and/or Strategic Value Investors II, LLC, (iv) any investor in Strategic Value
Investors, LLC, Strategic Value Investors International, LLC and/or Strategic
Value Investors II, LLC, and (v) any entity directly or indirectly owned by one
or more investors in Strategic Value Investors, LLC, Strategic Value Investors
International, LLC and/or Strategic Value Investors II, LLC. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
10.6 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
10.7 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.8 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
10.9 Publicity and Disclosures. With respect to the initial public
-------------------------
disclosures of the transactions contemplated by this Agreement, Investor shall
have the right to review, before any filing or public announcement is made, any
such filing or press releases that refer to Investor or the transaction
contemplated by this Agreement. Investor shall have the right to review before
filing or public announcement any subsequent public disclosures that
specifically refer to this transaction or to Investor.
10.10 Consent to Jurisdiction. Each of the parties hereby consents to
-----------------------
personal jurisdiction, service of process and venue in the federal or state
courts of New York for any claim, suit or proceeding arising under this
Agreement, or in the case of a third party claim subject to indemnification
hereunder, in the court where such claim is brought.
10.11 Specific Performance. The parties agree that it would be difficult
--------------------
to measure damages which might result from a breach of this Agreement by the
Company and that money damages would be an inadequate remedy for such a breach.
Accordingly, if there is a breach or proposed breach of any provision of this
Agreement by the Company, and Investor does not elect to terminate under Section
-------
7, Investor shall be entitled, in addition to any other remedies which it may
- -
have, to an
22
injunction or other appropriate equitable relief to restrain such breach without
having to show or prove actual damage to Investor.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
INVESTOR:
--------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation
By: [Signature Illegible]
COMPANY:
-------
BOSTON PROPERTIES, INC.,
a Delaware corporation
By: /s/ Mortimer B. Zuckerman
---------------------------------------
Name: Mortimer B. Zuckerman
Title: Chairman
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