<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____ )*
Equity Office Properties Trust
----------------------------------------------
(NAME OF ISSUER)
Common Shares, par value $.01
----------------------------------------------
(TITLE OF CLASS OF SECURITIES)
294741103
----------------------------------------------
(CUSIP NUMBER)
Alisa M. Singer, Equity Group Investments, L.L.C.,
Two N. Riverside Plaza, Suite 600, Chicago, IL 60606 (312) 466-3196
----------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
October 1, 1999 and January 19, 2000
----------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 2 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock/SZRT, L.L.C.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,803,116 (1)
NUMBER OF
SHARES ----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH ----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,803,116 (1)
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,803,116 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.71%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
(1) Includes 1,775,768 common shares of beneficial interest ("Common Shares") of
Equity Office Properties Trust (the "Issuer") that are issuable upon redemption
of Operating Partnership Units ("OP Units") of EOP Operating Limited Partnership
("EOP Partnership"), a Delaware limited partnership in which Equity Office
Properties Trust (the "Issuer") is the sole general partner and a limited
partner. Pursuant to the limited partnership agreement of EOP Partnership, OP
Units are redeemable for cash or, at Issuer's option, exchangeable for Common
Shares, on a one-for-one basis.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 3 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samuel Zell
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
818,173(1)
NUMBER OF
SHARES -----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
818,173(1)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
818,173(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.32%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
(1) Includes (i) 809,998 Common Shares issuable to Mr. Zell upon exercise of
stock options that currently are exercisable or will become exercisable within
60 days after the date hereof, and (ii) 3,582 Common Shares held in an account
maintained by the trustee of the Issuer's supplemental employee retirement plan
for the benefit of Mr. Zell.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 4 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock/Alpha, L.L.C.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
2,248,757 (1)
NUMBER OF
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,248,757 (1)
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,248,757 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.89%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
(1) Includes 1,990,579 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement
of EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 5 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ZFT Partnership
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
6
NUMBER OF
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH ----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
6
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.0000023%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 6 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EGI Holdings, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,932,540 (1)
NUMBER OF
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,932,540 (1)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,932,540 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.76%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
(1) Includes 1,919,706 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement of
EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis. Pursuant to a
Stockholders' Agreement, (i) various trusts for the benefit of Samuel Zell and
members of his family (the "Zell Trusts") have sole power to vote or cause the
vote of, and to dispose or cause the disposition of, all Common Shares and OP
Units beneficially owned by EGI Holdings, Inc., and (ii) the Common Shares and
OP Units owned by EGI Holdings, Inc. are subject to a right of first offer
exercisable by the other stockholders of Equity Group Investments, Inc. (other
then the Zell Trusts). See Items 5 and 6.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 7 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EGIL Investments, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,932,584 (1)
NUMBER OF
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH ------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,932,584 (1)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,932,584 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.76%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
C0
- --------------------------------------------------------------------------------
(1) Includes 1,919,749 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement of
EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis. Pursuant to a
Stockholders' Agreement, (i) various trusts for the benefit of Ann Lurie and
members of her family (the "Lurie Trusts") have sole power to vote or cause the
vote of, and to dispose or cause the disposition of, all Common Shares and OP
Units beneficially owned by EGIL Investments, Inc. and (ii) the Common Shares
and OP Units owned by EGIL Investments, Inc. are subject to a right of first
offer exercisable by the other stockholders of Equity Group Investments, Inc.
(other then the Lurie Trusts). See Items 5 and 6.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 8 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock/ZFT, L.L.C.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
7,249,865 (1)
NUMBER OF
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
7,249,865 (1)
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,249,865 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
(1) Includes 6,010,399 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement of
EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 9 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock/ZGPI, L.L.C.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,321 (1)
NUMBER OF
SHARES ------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH ------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,321 (1)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,321 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.002%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
(1) Consists of 5,321 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement of
EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 10 of 18
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RSB Properties Trust
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
12,314 (1)
NUMBER OF
SHARES --------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 0
PERSON WITH --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
12,314 (1)
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,314 (1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.005%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
(1) Consists of 12,314 Common Shares of Issuer that are issuable upon redemption
of OP Units of EOP Partnership. Pursuant to the limited partnership agreement of
EOP Partnership, OP Units are redeemable for cash or, at Issuer's option,
exchangeable for Common Shares, on a one-for-one basis.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 11 of 18
Item 1: Security and Issuer
-------------------
This Schedule 13D relates to the common shares of beneficial interest,
par value $.01 per share (the "Common Shares"), of Equity Office
Properties Trust, a real estate investment trust formed under the laws
of Maryland (the "Issuer"). Issuer's principal executive offices are
located at Two North Riverside Plaza, Suite 2200, Chicago, Illinois
60606.
Item 2: Identity and Background
-----------------------
(a - c) and (f). This Schedule 13D is being filed by each of the
following entities or persons (each, a "Reporting Person"):
(i) Samstock/SZRT, L.L.C., a Delaware limited liability company. The
sole member of Samstock/SZRT, L.L.C. is Samuel Zell, not individually
but solely as trustee of the Samuel Zell Revocable Trust dated January
17, 1990.
(ii) Samstock/Alpha, L.L.C., a Delaware limited liability company.
The sole member of Samstock/Alpha, L.L.C. is Alphabet Partners, an
Illinois general partnership whose partners are various trusts formed
for the benefit of Samuel Zell and members of his family. The sole
trustee of each of such trusts is the Chai Trust Company, L.L.C., an
Illinois limited liability company and a regulated trust company
("Chai"). The members of the Board of Directors of Chai are Matthew
Zell, Kellie Zell, JoAnn Zell, Sheli Z. Rosenberg, Donald J.
Liebentritt, Leah Zell Wanger and Bert Cohen. The executive officers
of Chai are as follows:
Sheli Z. Rosenberg - President and Chief Executive Officer
Donald J. Liebentritt - Vice President
Robert M. Levin - Senior Trust Officer
John Zoeller - Vice President, Chief Financial Officer, Assistant
Trust Officer and Treasurer
(iii) Samstock/ZFT, L.L.C., a Delaware limited liability company whose
sole member is ZFT Partnership. ZFT Partnership is an Illinois general
partnership whose partners are various trusts formed for the benefit
of Samuel Zell and members of his family. The sole trustee of such
trusts is Chai.
(iv) Samstock/ZGPI, L.L.C., a Delaware limited liability company whose
sole member is Zell General Partnership, Inc., an Illinois
corporation. The sole stockholder of Zell General Partnership, Inc. is
the Sam Investment Trust, an Illinois trust of which Chai is the sole
trustee. Samuel Zell is the sole director of Zell General Partnership,
Inc. and the executive officers of Zell General Partnership, Inc. are
as follows:
Samuel Zell - President
Rod F. Dammeyer - Vice President
Donald J. Liebentritt - Vice President
Sheli Z. Rosenberg - Vice President
None of Samstock/SZRT, L.L.C., Samstock/Alpha, L.L.C., Samstock/ZFT,
L.L.C. or Samstock/ZGPI, L.L.C. has a Board of Directors (or the
equivalent), and the executive officers of each of such entities are
as follows:
Samuel Zell - President
Rod F. Dammeyer - Vice President
Donald J. Liebentritt - Vice President
Sheli Z. Rosenberg - Vice President
Greg Stegeman - Treasurer
(v) ZFT Partnership, an Illinois general partnership whose partners
are various trusts formed for the benefit of Samuel Zell and members
of his family. The sole trustee of such trusts is Chai.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 12 of 18
(vi) EGI Holdings, Inc., an Illinois corporation ("Holdings"). The
directors of Holdings are Samuel Zell and Sheli Z. Rosenberg. The
executive officers of Holdings are as follows:
Samuel Zell - President
Rod F. Dammeyer - Vice President
Donald J. Liebentritt - Vice President
Sheli Z. Rosenberg - Vice President
Greg Stegeman - Treasurer
The sole stockholder of Holdings is Equity Group Investments, Inc., an
Illinois corporation and a private investment company ("EGI").
Approximately 50% of the capital stock of EGI is owned by various
trusts formed for the benefit of Samuel Zell and members of his family
(the "Zell Trusts") and approximately 50% of the capital stock of EGI
is owned by various trusts formed for the benefit of Ann Lurie and
members of her family (the "Lurie Trusts"). Chai is the sole trustee
of each of the Zell Trusts. The trustees of each of the Lurie Trusts
are either Ann Lurie, as sole trustee, or Ann Lurie and Mark Slezak,
as co-trustees.
The directors of EGI are Sheli Z. Rosenberg and Mark Slezak. The
executive officers of EGI are as follows:
Sheli Z. Rosenberg - President
Mark Slezak - Vice President, Treasurer
Donald J. Liebentritt - Vice President
John Zoeller - Vice President
Susan Obuchowski - Vice President, Secretary
(vii) EGIL Investments, Inc., an Illinois corporation and a wholly-
owned subsidiary of EGI ("EGIL"). The directors of EGIL are Ann Lurie
and Mark Slezak, and its executive officers are Ann Lurie, President,
and Mark Slezak, Vice President. The directors and executive officers
of EGI are set forth above.
(viii) RSB Properties Trust, an Illinois irrevocable trust of which
Samuel Zell is the sole trustee. Mr. Zell is not a beneficiary of the
trust.
(ix) Samuel Zell, who is a resident of the State of Illinois.
The principal business of each Reporting Person (other than Mr. Zell)
is investments. The principal occupations of the following individuals
are as follows: Samuel Zell is Chairman of the Board of Equity Group
Investments, L.L.C., a Delaware limited liability company and a
private investment company ("Equity Group"). Rod F. Dammeyer is
Managing Director - Corporate Investments of Equity Group. Donald J.
Liebentritt is Chief Operating Officer of Equity Group. Sheli Z.
Rosenberg is President and Chief Executive Officer of Equity Group.
Greg Stegeman is Vice President and Treasurer of Equity Group. Mark
Slezak is Vice President and Chief Financial Officer of Lurie
Investments, Inc., a private investment company. John Zoeller is Vice
President - Taxes of Equity Group. Susan Obuchowski is Vice
President - Corporate Services of Equity Group. Ann Lurie is President
of Lurie Investments, Inc. Robert M. Levin is an attorney. Matthew
Zell is President of Pro-Net Solutions, Inc., a retailer of computer-
related equipment. Kellie Zell currently is not employed. JoAnn Zell
is a physician. Leah Zell is an investment portfolio manager with
Wanger Asset Management. Bert Cohen is a self-employed investment
executive. Each of the foregoing persons is a citizen of the United
States of America.
The principal business address for each Reporting Person and each of
the foregoing persons (except Messrs. Cohen and Levin and Ms. Leah
Zell Wanger) is Two North Riverside Plaza, Chicago, IL 60606. Bert
Cohen's residence is 181 North Carmelina Avenue, Los Angeles,
California 90049. Robert M. Levin's business address is 120 North
LaSalle Street, Suite 3800, Chicago, Illinois 60602. Leah Zell
Wanger's business address is 227 West Monroe Street, Suite 300,
Chicago, Illinois 60603.
(d) and (e). None of the Reporting Persons or, to the best knowledge
of each Reporting Person, none of their respective trustees, directors
or executive officers, as applicable, has, during
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 13 of 18
the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was, or
is, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect
to such laws.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
On January 19, 2000, Samstock/SZRT, L.L.C. received a distribution of
1,671,760 OP Units from certain of the Lurie Trusts. Each of the ten
Lurie Trusts that made the distribution had received 167,176 OP Units
on January 17, 2000 as a partnership distribution from a partnership
in which such trust is a partner and made a distribution of such
167,176 OP Units to Samstock/SZRT, L.L.C. on January 19, 2000.
On December 13, 1999, Samuel Zell received 588 Common Shares from the
Issuer as trustee fees for his services as a trustee and as the
Chairman of the Board of the Issuer.
On October 1, 1999, EOP Operating Limited Partnership ("EOP
Partnership") acquired certain property located in Palo Alto,
California from the Palo Alto Square Limited Partnership (the "Palo
Alto Partnership"). The Issuer is the sole general partner and is a
limited partner of EOP Partnership. As consideration for such
acquisition, EOP Partnership paid approximately $1.2 million in cash
and issued approximately 1.0 million Operating Partnership Units of
EOP Partnership ("OP Units") to the Palo Alto Partnership and assumed
certain indebtedness of the Palo Alto Partnership. OP Units currently
are redeemable for cash or, at the Issuer's option, exchangeable for
Common Shares, on a one-for-one basis. On October 1, 1999, the Palo
Alto Partnership effected a liquidating distribution to its partners,
on a pro rata basis, of the consideration it had received for the Palo
Alto property. In connection with such liquidating distribution the
following Reporting Persons received the number of OP Units set forth
opposite its name below:
<TABLE>
<CAPTION>
Reporting Person OP Units
---------------- --------
<S> <C>
Samstock/Alpha, L.L.C. 161,586
Samstock/ZFT, L.L.C. 161,179
Samstock/SZRT, L.L.C. 14,162
Samstock/ZGPI, L.L.C. 5,321
RSB Properties Trust 12,314
</TABLE>
The other Common Shares and OP Units covered by this Schedule 13D were
received by the Reporting Persons as partnership distributions from
various partnerships in which such Reporting Persons held direct or
indirect partnership interests or, in the case of Samstock/SZRT,
L.L.C., as a distribution of 1,671,760 OP Units from certain of the
Lurie Trusts, as described above. In addition, Mr. Zell received
Common Shares as trustee fees for his service as a trustee and as the
Chairman of the Board of the Issuer and as a result of his
participation in the Issuer's employee stock purchase plan.
Item 4. Purpose of the Transaction
--------------------------
Each of the Reporting Persons acquired the Common Shares and the OP
Units covered by this Schedule 13D from time to time for investment
purposes. Consistent with such investment purpose, certain of the
Reporting Persons or their respective directors and executive officers
are involved in the management, operations and financial aspects of
the Issuer's business. Samuel Zell is a trustee and the Chairman of
the Board of the Issuer and Sheli Rosenberg is a trustee of the
Issuer. Depending upon market conditions and other factors that any
Reporting Person may deem material in making his or its investment
decisions, each Reporting Person may purchase additional Common Shares
or OP Units in open market or private transactions, may redeem his or
its OP Units for cash or Common Shares, or may sell all or any portion
of the Common Shares
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 14 of 18
or OP Units currently owned or hereafter acquired by such Reporting
Person, either in open market or private transactions.
Except as described above, none of the Reporting Persons currently has
any plans or proposals of the type referred to in clauses (a) through
(j) of Item 4 of Schedule 13D; however, any Reporting Person may, at
any time and from time to time, review or reconsider his or its
position with respect to such plans or proposals.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) and (b). Each Reporting Person beneficially owns the number of
Common Shares and the number of OP Units set forth opposite his or its
name below:
<TABLE>
<CAPTION>
Reporting Person Common Shares (1) OP Units (1) % Owned (1)
---------------- ----------------- ------------ -----------
<S> <C> <C> <C>
Samstock/SZRT, L.L.C. 27,348 1,775,768 .71%
Samuel Zell 818,173(2) -- .32%
Samstock/Alpha, L.L.C. 258,178 1,990,579 .89%
ZFT Partnership 6 -- *
EGI Holdings, Inc. (3) 12,834 1,919,706 .76%
Samstock/ZFT, L.L.C. 1,239,466 6,010,399 2.8%
Samstock/ZGPI, L.L.C. -- 5,321 *
RSB Properties Trust -- 12,314 *
EGIL Investments, Inc. (3) 12,835 1,919,749 .76%
--------- ---------- ----
Total 2,368,840 13,633,836 6.0%
</TABLE>
__________________
* Less than .05%
(1) Subject to the Stockholders' Agreement described in note (3)
below, each Reporting Person exercises sole power to vote or to
direct the vote of, and to dispose or direct the disposition of,
the Common Shares and/or OP Units set forth above opposite his or
its name. To the best knowledge of the Reporting Persons, there
are 251,654,039 Common Shares issued and outstanding as of the
date hereof. Based upon such number, the 16,002,676 Common Shares
and OP Units beneficially owned by the Reporting Persons,
collectively, represent approximately 6.0% of the Common Shares
issued and outstanding. The percentage ownership for each
Reporting Person is based upon the total number of Common Shares
currently issued and outstanding plus the number of Common Shares
issuable (at the option of the Issuer) to such Reporting Person,
but not to any other Reporting Person. Pursuant to the limited
partnership agreement of EOP Partnership, able OP Units are
redeemable for cash or, at Issuer's option, exchangeable for
Common Shares, on a one-for-one basis.
(2) Includes (i) 809,998 Common Shares issuable to Mr. Zell upon
exercise of stock options that are currently exercisable or
exercisable within 60 days hereafter, and (ii) 3,582 Common Shares
held in an account maintained by the trustee of the Issuer's
supplemental employee retirement plan for the benefit of Mr. Zell.
(3) Pursuant to the Stockholders' Agreement dated as of December 31,
1999 among the Zell Trusts and the Lurie Trusts, (i) the Zell
Trusts have sole power to vote or cause the vote of, and to
dispose or cause the disposition of, all Common Shares and OP
Units beneficially owned by Holdings and have a right of first
offer to purchase any Common Shares and OP Units owned by EGIL,
and (ii) the Lurie Trusts have sole power to vote or cause the
vote of, and to dispose or cause the disposition of, all Common
Shares and OP Units beneficially owned by EGIL and have a right of
first offer to purchase any Common Shares and OP Units owned by
Holdings.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 15 of 18
In addition to the shares of Common Shares and OP Units owned by
the Reporting Persons, the following individuals also own
securities of the Issuer, in their personal capacities:
<TABLE>
<CAPTION>
No. of No. of OP
Name Common Shares Units
---- ------------- ---------
<S> <C> <C>
Sheli Z. Rosenberg(1) 218,642 191,134
Rod F. Dammeyer(2) 352 ---
Donald J. Liebentritt(3) 32,615 39,718
Mark Slezak 1,000 ---
John Zoeller(4) 7,735 ---
Matthew Zell(5) 8,403 ---
Kellie Zell(6) 15,000 ---
JoAnn Zell 5,376 ---
Bert Cohen 8,885 25,262
Susan Obuchowski(7) 4,166 ---
</TABLE>
---------------
(1) Includes 137,832 Common Shares issuable upon exercise of
options currently vested; 3,573 Common Shares held in an
account maintained by the trustee of the Issuer's
supplemental employee retirement plan for the benefit of Mrs.
Rosenberg; and 21,303 Common Shares and 17,318 OP Units held
by Mrs. Rosenberg's spouse.
(2) Includes 176 Common Shares held by Mr. Dammeyer's spouse.
(3) Includes 13,333 Common Shares issuable upon exercise of
currently exercisable options and 5,000 Common Shares held by
Mr. Liebentritt's spouse.
(4) Includes 6,666 Common Shares issuable upon exercise of
currently exercisable options.
(5) Includes 5,049 Common Shares held by Mr. Zell as custodian
for his minor children and 3,000 shares held by Mr. Zell's
spouse.
(6) Includes 10,000 Common Shares held by Ms. Zell as custodian
for her minor children.
(7) Includes 2,666 Common Shares issuable upon exercise of
currently exercisable options.
(c) The following transactions in Common Shares and/or OP Units were
effected by the specified Reporting Persons within the past 60
days:
On December 13, 1999, Mr. Zell received 588 Common Shares from the
Issuer as trustee fees for his service as a trustee and as the
Chairman of the Board of the Issuer.
In July 1999, Samstock/SZRT, L.L.C. received certain OP Units as a
distribution from a partnership in which Samstock/SZRT, L.L.C. was an
indirect partner. The distribution consisted of merger consideration
that had been received by the partnership. On December 14, 1999,
Samstock/SZRT, L.L.C. transferred 703 of the OP Units to another
former partner of the partnership as a result of a reallocation of the
partnership distribution.
On January 17, 2000, certain of the Lurie Trusts (which are indirect
stockholders of Holdings and EGIL by virtue of their ownership of
capital stock of EGI) received an aggregate of 1,671,760 OP Units as a
partnership distribution. On January 19, 2000, each of these Lurie
Trusts made a distribution of such OP Units to Samstock/SZRT, L.L.C.
As a result, Samstock/SZRT, L.L.C. acquired beneficial ownership of
such 1,671,760 OP Units on January 19, 2000.
(d) EGI Holdings, Inc. ("Holdings") and EGIL Investments, Inc.
("EGIL"), both of which are Reporting Persons, are wholly-owned
subsidiaries of EGI. The Zell Trusts, whose beneficiaries are Samuel
Zell and members of his family, own approximately 50% of the capital
stock of EGI and the Lurie Trusts, whose beneficiaries are Ann Lurie
and members of her family, own approximately 50% of the capital stock
of EGI. The Zell Trusts and the Lurie Trusts are parties to a
Stockholders' Agreement dated as of December 31, 1999 (the
"Stockholders' Agreement") that sets forth their agreement regarding,
among other things, various corporate governance matters relating to,
and the transferability of securities of or held by, EGI, Holdings and
EGIL. A copy of the Stockholders' Agreement is attached to this filing
as Exhibit 2. Pursuant to the Stockholders' Agreement and subject to
the terms thereof, (a) the Zell Trusts have sole power to vote or
cause the vote of, and to dispose or cause the disposition of, all
Common Shares and OP Units beneficially owned by Holdings, and (b) the
Lurie Trusts have sole power to vote or cause the vote of, and to
dispose or cause the disposition of, all Common Shares and OP Units
beneficially owned by EGIL. Notwithstanding the foregoing, if the Zell
Trusts desire to cause Holdings to sell, assign, transfer or otherwise
dispose of (each, a "Transfer") any Common Shares or OP Units held by
Holdings from time to time in a bona fide transaction, the Zell Trusts
first must offer to sell such Common Shares or OP Units to the Lurie
Trusts. If the Lurie Trusts (on behalf of themselves or their
designee) do not accept such offer to purchase all but not less than
all of the Common Shares or OP Units offered by Holdings within 30
business days (in the case of a private sale) or 10 business days (in
the case of a public sale) after receipt of the offer notice, then the
Zell Trusts may Transfer such Common Shares or OP Units to a third
party at a purchase price equal to or greater than the price at which
such equity securities were offered to the Lurie Trusts. Any Common
Shares or OP Units that are not Transferred by Holdings within 90 days
after expiration of such 10 or 30 day period, as applicable, will
again be subject to such right of first offer provisions. The Lurie
Trusts have granted to the Zell Trusts an identical right of first
offer with respect to any Common Shares or OP Units held by EGIL from
time to time. The Zell Trusts and the Lurie Trusts also have agreed to
not cause Holdings or EGIL, respectively, to (i) consummate more than
one Transfer of Common Shares or OP Units in any 90-day period, (ii)
effect any sale of equity securities of Holdings or EGIL (including
Common Shares or OP Units), respectively, unless the value of such
sale is at least $5.0 million, or (iii) convert any OP Units into
Common Shares unless such Common Shares are sold for cash prior to the
due date of any tax liability arising in connection with such
conversion and the proceeds from such sale are sufficient to satisfy
any tax obligation arising from the sale. The Stockholders' Agreement
obligates Holdings and EGIL to distribute to EGI all cash dividends or
cash distributions received by Holdings or EGIL in respect of Common
Shares or OP Units and provides that, after establishing sufficient
reserves for working capital and taxes and in the discretion of the
EGI Board of
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 16 of 18
Directors, EGI may loan or distribute any remaining amounts of such
cash distributions or dividends to the Zell Trusts and/or the Lurie
Trusts, respectively. Each of Holdings and EGIL is entitled to retain
the proceeds of any financing or refinancing of Common Shares or OP
Units effected by it, and shall not be obligated to distribute such
proceeds to EGI; however Holdings or EGIL will be obligated to loan
such proceeds to affiliates of the Zell Trusts or the Lurie Trusts,
respectively, upon demand, with interest payments and any other debt
service or payment requirements being identical to the terms of the
third party financing.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
---------------------------------------------------------------------
to Securities of the Issuer.
----------------------------
EGI Holdings, Inc. ("Holdings") and EGIL Investments, Inc. ("EGIL"),
both of which are Reporting Persons, are wholly-owned subsidiaries of
EGI. The Zell Trusts, whose beneficiaries are Samuel Zell and members
of his family, own approximately 50% of the capital stock of EGI and
the Lurie Trusts, whose beneficiaries are Ann Lurie and members of her
family, own approximately 50% of the capital stock of EGI. The Zell
Trusts and the Lurie Trusts are parties to a Stockholders' Agreement
dated as of December 31, 1999 (the "Stockholders' Agreement") that
sets forth their agreement regarding, among other things, various
corporate governance matters relating to, and the transferability of
securities of or held by, EGI, Holdings and EGIL. A copy of the
Stockholders' Agreement is attached to this filing as Exhibit 2.
Pursuant to the Stockholders' Agreement and subject to the terms
thereof, (a) the Zell Trusts have sole power to vote or cause the vote
of, and to dispose or cause the disposition of, all Common Shares and
OP Units beneficially owned by Holdings, and (b) the Lurie Trusts have
sole power to vote or cause the vote of, and to dispose or cause the
disposition of, all Common Shares and OP Units beneficially owned by
EGIL. Notwithstanding the foregoing, if the Zell Trusts desire to
cause Holdings to sell, assign, transfer or otherwise dispose of
(each, a "Transfer") any Common Shares or OP Units held by Holdings
from time to time in a bona fide transaction, the Zell Trusts first
must offer to sell such Common Shares or OP Units to the Lurie Trusts.
If the Lurie Trusts (on behalf of themselves or their designee) do not
accept such offer to purchase all but not less than all of the Common
Shares or OP Units offered by Holdings within 30 business days (in the
case of a private sale) or 10 business days (in the case of a public
sale) after receipt of the offer notice, then the Zell Trusts may
Transfer such equity securities to a third party at a purchase price
equal to or greater than the price at which such equity securities
were offered to the Lurie Trusts. Any Common Shares or OP Units that
are not Transferred by Holdings within 90 days after expiration of
such 10 or 30 day period, as applicable, will again be subject to such
right of first offer provisions. The Lurie Trusts have granted to the
Zell Trusts an identical right of first offer with respect to any
Common Shares or OP Units, and other equity securities, held by EGIL
from time to time. The Zell Trusts and the Lurie Trusts also have
agreed to not cause Holdings or EGIL, respectively, to (i) consummate
more than one Transfer of Common Shares or OP Units in any 90-day
period, (ii) effect any sale of equity securities of Holdings or EGIL
(including Common Shares or OP Units), respectively, unless the value
of such sale is at least $5.0 million, or (iii) convert any OP Units
into Common Shares unless such Common Shares are sold for cash prior
to the due date of any tax liability arising in connection with such
conversion and the proceeds from such sale are sufficient to satisfy
any tax obligation arising from the sale. The Stockholders' Agreement
obligates Holdings and EGIL to distribute to EGI all cash dividends or
cash distributions received by Holdings or EGIL in respect of Common
Shares or OP Units and provides that, after establishing sufficient
reserves for working capital and taxes and in the discretion of the
EGI Board of Directors, EGI may loan or distribute any remaining
amounts of such cash distributions or dividends to the Zell Trusts
and/or the Lurie Trusts, respectively. Each of Holdings and EGIL is
entitled to retain the proceeds of any financing or refinancing of
Common Shares or OP Units effected by it, and shall not be obligated
to distribute such proceeds to EGI; however Holdings or EGIL will be
obligated to loan such proceeds to affiliates of the Zell Trusts or
the Lurie Trusts, respectively, upon demand, with interest payments
and any other debt service or payment requirements being identical to
the terms of the third party financing.
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 17 of 18
Samuel Zell is a trustee and the Chairman of the Board of the Issuer
and Sheli Z. Rosenberg is a trustee of the Issuer; however, there are
no oral or written contracts, arrangements, understandings or
agreements between either Mr. Zell or Mrs. Rosenberg and the Issuer
with respect to Mr. Zell's or Mrs. Rosenberg's services in such
capacities.
From time to time and in connection with obtaining loans or effecting
other financing transactions, certain of the Reporting Persons have
granted and may grant to lenders a security interest in all or a
portion of such Reporting Person's assets, including the Common Shares
and OP Units described herein. To perfect such security interests,
the lenders may require the Reporting Person to pledge Common Shares
or OP Units as collateral. The underlying loan agreements and
financing documents generally contain standard default provisions
authorizing the lender, upon the occurrence of any default or breach
by the Reporting Person that is party to the agreement, to foreclose
upon the collateral that secures the Reporting Person's loan. The
proceeds of such loans and financing transactions were not used to
purchase the Common Shares or OP Units described herein. Each
Reporting Person believes that its loans and financing arrangements,
and the granting of the security interests in connection therewith,
have been and will be within the ordinary course of the business of
such Reporting Person.
Item 7. Materials to be Filed as Exhibits
---------------------------------
Exhibit 1 -- Joint Filing Agreement among the Reporting Persons
Exhibit 2 -- Stockholders Agreement dated as of December 31, 1999
among the Zell Trusts and the Lurie Trusts
<PAGE>
CUSIP No. 294741103 SCHEDULE 13D Page 18 of 18
SIGNATURES
----------
After reasonable inquiry, and the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: January 21, 2000.
Samstock/SZRT, L.L.C., Samstock/Alpha, L.L.C.,
Samstock/ZFT, L.L.C., Samstock ZGPI, L.L.C.,
and EGI Holdings, Inc.
By: /s/ Donald J. Liebentritt
---------------------------------------------
Donald J. Liebentritt, as Vice President of
each of the above entities
/s/ Samuel Zell
- -------------------------------------------------
Samuel Zell
ZFT Partnership
By: ZFT Kellie Trust, as partner
By: Chai Trust Company, as trustee
By: /s/ Donald J. Liebentritt
---------------------------------------------
Donald J. Liebentritt, Vice President
RSB Properties Trust
By: /s/ Samuel Zell
---------------------------------------------
Samuel Zell, not individually but solely
as Trustee
EGIL Investments, Inc.
By: /s/ Mark Slezak
---------------------------------------------
Mark Slezak, Vice President
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ---------- -----------
1 Joint Filing Agreement among the Reporting Persons
2 Stockholders Agreement dated as of December 31, 1999 among
the Zell Trusts and the Lurie Trusts
<PAGE>
Exhibit 1
JOINT FILING AGREEMENT
Each of the undersigned hereby agrees that the Schedule 13D filed herewith
is filed jointly, on behalf of each of the undersigned, pursuant to Rule
13d-1(k)(1) of the Securities and Exchange Act of 1934, as amended.
Dated: January 21, 2000
Samstock/SZRT, L.L.C., Samstock/Alpha, L.L.C.,
Samstock/ZFT, L.L.C., Samstock ZGPI, L.L.C.,
and EGI Holdings, Inc.
By: /s/ Donald J. Liebentritt
---------------------------------------------
Donald J. Liebentritt, as Vice President of
each of the above entities
/s/ Samuel Zell
- -------------------------------------------------
Samuel Zell
ZFT Partnership
By: ZFT Kellie Trust, as partner
By: Chai Trust Company, as trustee
By: /s/ Donald J. Liebentritt
---------------------------------------------
Donald J. Liebentritt, Vice President
RSB Properties Trust
By: /s/ Samuel Zell
---------------------------------------------
Samuel Zell, not individually but solely
as Trustee
EGIL Investments, Inc.
By: /s/ Mark Slezak
---------------------------------------------
Mark Slezak, Vice President
<PAGE>
EXHIBIT 2
---------
STOCKHOLDERS' AGREEMENT
-----------------------
This Stockholders' Agreement (this "Agreement") is entered into as of the
31st day of December, 1999, by and between those certain trusts set forth on
Schedule A (the "Zell Trusts") and those certain trusts set forth on Schedule B
(the "Lurie Trusts"), constituting all of the stockholders of Equity Group
Investments, Inc., an Illinois corporation ("EGI" or the "Company"). The "Zell
Trusts" are sometimes herein collectively referred to as the "Zell Stockholder"
and the "Lurie Trusts" are sometimes herein collectively referred to as the
"Lurie Stockholder". The Zell Stockholder and the Lurie Stockholder are
sometimes collectively referred to herein as the "Stockholders". Capitalized
terms used and not otherwise defined in this Agreement shall have the meaning
ascribed to them in Section 1 hereof.
RECITALS
Immediately prior to the execution and delivery of this Agreement, the
Company and Equity Group Investments, L.L.C., a Delaware limited liability
company ("L.L.C.") entered into, and consummated the terms of, an agreement (the
"Operations Transfer Agreement") relating to, among other things, the transfer
of certain assets of the Company to, and the assumption of certain liabilities
of the Company by, L.L.C. The Stockholders desire to set forth herein
provisions regarding, among other things, corporate governance, restrictions on
transferability of Shares and various other related matters with respect to the
Company.
THEREFORE, in consideration of the foregoing, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
Section 1. Certain Definitions. In addition to certain terms defined
-------------------
elsewhere in this Agreement, the following terms shall have the following
meanings:
"Affiliate" shall mean (a) with respect to an individual, any member of his
---------
"immediate family", or any partnership, corporation or limited liability company
in which he or his immediate family own a "majority interest"; or (b) with
respect to a trust, corporation, partnership or limited liability company, (i)
any individual who, together with members of his immediate family, owns a
majority interest in such entity and (ii) any other trust, corporation,
partnership or limited liability company in which such individual and/or members
of his immediate family own a majority interest. "Immediate family" of an
individual means his spouse, descendants (including descendants by adoption or
the descendants of a spouse) and parents and any trusts for the benefit of any
one or more of such individual and some or all such persons. A "majority
interest" is owned (a) in a corporation, partnership or limited liability
company when the designated people, or trusts for the benefit of said people,
own, directly or indirectly, fifty percent (50%) or more of the beneficial or
equity interests in such entity and (b) in a trust when an individual and
members of said individual's family are a majority of the current beneficiaries
of such trust.
<PAGE>
"Asset" shall mean any asset held by a Subsidiary.
-----
"Asset Disposition" shall mean the sale of any Asset (including but not
-----------------
limited to a deemed sale under Section 1259 of the Code) to a buyer other than
EGI or one of EGI's 100% owned subsidiaries (whether owned directly or
indirectly). It is understood and agreed that an Asset Disposition may occur
over time, but in any event must be completed within the Permitted Sale Period
provided for in Section 3(b) or 3(c) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time, and the regulations and rulings thereunder, as from time to time in
effect.
"Company Accountants" shall mean Arthur Andersen, or such other public
-------------------
accounting firm as is selected by the Company's Board of Directors.
"Disposition Date" shall mean the date upon which an Asset Disposition
----------------
occurs or is completed, as the case may be.
"Distributable Tax Amount" shall be equal to the product arrived at by
------------------------
multiplying:
(i) the difference between the taxable income as reported on Schedule
K of Form 1120 S for EGI for a calendar year (taking into account
the character of such taxable income) less the amount of taxable
income that would have been reported on Schedule K of Form 1120 S
for EGI for such calendar year if the taxable gain or loss
resulting from an Asset Disposition for such calendar year is
disregarded, and
(ii) the sum of the highest federal income tax rate applicable under
the Code to such taxable income (taking into account the
character of such taxable income, including capital gains rates)
and the highest marginal income tax rate applicable thereto for
trusts resident in the State of Illinois for such calendar year.
"EGI Fair Market Value" shall mean the total fair market value as of the
---------------------
Valuation Date of the assets recorded on the books of account of EGI and all of
EGI's 100% owned subsidiaries (whether owned directly or indirectly) less the
sum of the following, calculated on a non-duplicative basis: (i) all recorded
liabilities on the books of account of EGI and all of EGI's 100% owned
subsidiaries (whether owned directly or indirectly), plus (ii) the EGI Tax
Amount calculated for the applicable Asset Disposition, plus (iii) any federal,
state and local income tax liability that would be payable by EGI and all of
EGI's 100% owned subsidiaries (whether owned directly or indirectly) if all of
the assets owned by EGI and EGI's 100% owned subsidiaries, other than the Assets
subject to the Asset Disposition, were disposed of on the Valuation Date at the
fair market values thereof at such date, plus (iv) the Distributable Tax Amount
calculated for the applicable Asset Disposition. For purposes of determining
EGI Fair Market Value: (i) all Marketable Securities shall be valued at the
Market Price for same as of the Valuation Date, except that the value of a
Marketable Security whose sale gave rise to the need to determine EGI Fair
Market Value shall be the average gross sales price received by the Subsidiary
from the applicable Asset Disposition; (ii) all other assets shall be valued
based upon
2
<PAGE>
a good faith determination of the Company's Board of Directors as of the
immediately preceding December 31 (unless there has since been a transaction or
other event applicable to a particular asset that objectively establishes a
different, updated value, in which case the updated value shall be used); and
(iii) all liabilities and any contingent assets shall be valued at the amount
thereof on the books of EGI as of the Valuation Date. Any disagreement(s) with
respect to a determination of EGI Fair Market Value shall be promptly submitted
to the Company's Accountants for resolution within ten (10) days of submission,
and the decision(s) of the Company Accountants with respect thereto shall be
final and binding, unless within ten (10) days of the rendering of such decision
either or both of the Zell Stockholder or the Lurie Stockholder notifies the
other in writing (such notice being the "Dispute Notice") that it intends to
dispute such determination. Such disputing Stockholder shall appoint one of the
five largest nationally recognized public accounting firms to confer with the
Company Accountants in an effort to resolve such dispute. The decision of said
firm, rendered within twenty (20) days of its appointment shall, absent fraud or
manifest error, be final and binding. The Company shall bear the expenses of
both such accounting firms.
"EGI Tax Amount" shall mean the total amount of federal, state, and local
--------------
income taxes payable by EGI and the applicable Subsidiary by reason of an Asset
Disposition (including but not limited to income taxes resulting from the
application of Section 1374 of the Code), which shall be equal to the difference
between:
(i) the amount of federal, state, and local income taxes payable by
EGI and the applicable Subsidiary for the calendar year in which
the Asset Disposition occurs, less
(ii) the amount of federal, state, and local income taxes that would
have been payable for such calendar year if the taxable gain or
loss resulting from the Asset Disposition is disregarded.
"EGIL" shall mean EGIL Investments, Inc. an Illinois corporation.
----
"Fair Market Value Per Share" shall mean the EGI Fair Market Value divided
---------------------------
by the total number of Shares outstanding as of the applicable Disposition Date.
"Holdings" shall mean EGI Holdings, Inc. an Illinois corporation.
--------
"Marketable Securities" shall mean securities that are (or are convertible
---------------------
into securities that are) traded on an established U.S. or foreign securities
exchange, reported through the National Association of Securities Dealers, Inc.
Automated Quotation System or comparable foreign established over-the-counter
trading system, otherwise traded over-the-counter or traded on PORTAL (in the
case of securities eligible for trading pursuant to Rule 144A under the
Securities Act or any successor rule thereto ("Rule 144A")); provided that any
such securities shall be deemed Marketable Securities only if they are (or are
convertible into securities that are) freely tradable by the holder or are the
subject of immediately exercisable demand registration rights under applicable
securities laws. Freely tradable for this purpose shall mean securities that
either are (A) transferable by a holder pursuant to a then effective
registration statement under
3
<PAGE>
the Securities Act (or similar applicable statutory provision in the case of
foreign securities), (B) transferable by a holder subject only to (i) a
contractual "lock-up" or other similar restriction on transferability with a
term not exceeding 12 months, (ii) a holding period arising under applicable
securities laws not exceeding 12 months, or (C) transferable by a holder
pursuant to Rule 144A which shall include (x) a covenant by the issuer of such
security to comply with the reporting and informational requirements under Rule
144A and (y) eligibility for trading such Securities on PORTAL.
"Market Price" shall mean the average closing price of the relevant
------------
security (or the security into which it is convertible) during the 10-trading
day period preceding the date of determination if traded on an exchange, or if
traded over the counter, the average between the "bid" and the "ask" price for
such security (or the security into which it is convertible) during such 10-
trading day period.
"Net Proceeds" shall mean the amount of Proceeds available to a Subsidiary
------------
from an Asset Disposition after taking into account the payment of any sales
commissions, underwriting fees, legal fees or other transaction expenses (other
than tax liability) associated with an Asset Disposition.
"OP Units" shall mean limited partnership interests in an operating
--------
partnership of a real estate investment trust.
"Permitted Transferee" shall mean an Affiliate of a transferor of Shares
--------------------
provided the Transfer to such Affiliate does not result in the termination of
the S Corporation Election.
"Person" shall mean an individual, a corporation, a partnership, a limited
------
liability company, a joint venture, an association, a joint-stock company, a
trust, a business trust, a government or any agency or any political
subdivision, any unincorporated organization or any other entity.
"Proceeds" shall mean the total amount of consideration, received by a
--------
Subsidiary, in the form of cash, notes, or securities, from an Asset
Disposition.
"Public Sale" shall mean a bona fide sale of shares either in "broker's
-----------
transactions" within the meaning of Section 4(4) of the Securities Act of 1933,
as amended, or in transactions directly with a "market maker" as that term is
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended.
"Redeemable Proceeds" shall mean Net Proceeds less the sum of the EGI Tax
-------------------
Amount and the Distributable Tax Amount, but not less than zero.
"Redeemable Shares" shall mean the number of Shares calculated by dividing
-----------------
the Redeemable Proceeds by the Fair Market Value Per Share, with the number of
Redeemable Shares not to exceed the total number of shares held by the Lurie
Stockholder (if the Asset Disposition giving rise to the Redeemable Proceeds was
made by EGIL) or by the Zell Stockholder (if the Asset Disposition giving rise
to the Redeemable Proceeds was made by Holdings) as of the applicable
Disposition Date.
4
<PAGE>
"S Corporation Election" shall mean the election made by the Company and
----------------------
the Stockholders to be an S Corporation pursuant to Section 1362 of the Code.
"Shares" means all shares of capital stock of the Company, whether now
------
owned or hereafter acquired.
"Subsidiary" means either or both of Holdings or EGIL, as the context may
----------
require.
"Subsidiary Shares" means the equity securities held from time to time by
-----------------
Holdings or EGIL, as the case may be, including OP Units and securities issued
upon a conversion of OP Units.
"Transfer" means any voluntary or involuntary, direct or indirect,
--------
transfer, sale, assignment, donation, pledge, hypothecation, issuance, grant of
a security interest in or other disposition or attempted disposition of shares
of capital stock or other equity securities or any right or interest whatsoever
therein, including, without limitation, by operation of law or otherwise,
whether with or without consideration or value, and whether for cash, other
securities or other property and specifically including any share for share or
similar exchange, but shall not include the conversion into shares of OP Units.
"Valuation Date" shall mean the date immediately preceding a Disposition
--------------
Date.
Section 2. Restrictions on Transfer of Shares and Related Matters;
-------------------------------------------------------
Permitted Transferees.
----------------------
(a) The Stockholders shall not, and shall not permit any of their
Affiliates, to Transfer any Shares except for a Transfer to a Permitted
Transferee pursuant to Section 2(b) or in compliance with the provisions of
Section 3 hereof. If any Transfer is made or attempted contrary to the
provisions of this Agreement, such purported Transfer shall be void ab initio,
and, without limitation, the Company shall refuse to recognize any such
purported transferee of Shares as a holder of such Shares for any purpose.
(b) Notwithstanding anything to the contrary in Section 2(a) hereof,
but subject to the provisions of Section 5 hereof, for purposes of this
Agreement, any Stockholder may Transfer Shares to a Permitted Transferee of such
Stockholder; provided that in no event may any Stockholder Transfer Shares in a
transaction if the effect of such Transfer is to cause a termination of the S
Election or a violation of any applicable federal or state securities laws. As
a condition to the effectiveness of any Transfer of Shares to a Permitted
Transferee, the Permitted Transferee shall execute a counterpart to this
Agreement, whereupon the Permitted Transferee shall hold Shares subject to all
of the provisions of this Agreement, as if the Permitted Transferee were the
Person who transferred the Shares actually held by the Permitted Transferee.
Section 3. Right of First Offer.
--------------------
(a) General. It is acknowledged that pursuant and subject to the
-------
provisions of Section 4(c) hereof, the Zell Stockholder will maintain sole
control of the Transfer of the
5
<PAGE>
Subsidiary Shares of Holdings and the Lurie Stockholder will maintain sole
control of the Transfer of the Subsidiary Shares of EGIL. The Stockholders
desire to provide each other with certain rights of first offer in connection
with any such proposed Transfer (it being understood and agreed that no such
Transfer shall be to EGI or any subsidiary thereof). For purposes of this
Section 3: (i) the term "Transferring Subsidiary" shall mean, as applicable,
Holdings with regard to a proposed Transfer of all of a portion of the
Subsidiary Shares held by Holdings, or EGIL with regard to a proposed Transfer
of all of a portion of the Subsidiary Shares held by EGIL; (ii) the term
"Non-Transferring Stockholder" shall mean the Zell Stockholder if EGIL is the
Transferring Subsidiary, and the Lurie Stockholder if Holdings is the
Transferring Subsidiary; and (iii) the term "Transfer" shall not include a bona
fide pledge or hypothecation of the Subsidiary Shares or a transfer of
Subsidiary Shares in realization upon any such a pledge or hypothecation.
(b) Right of First Offer on Private Transfer. In the event that a
----------------------------------------
Subsidiary desires to Transfer to any Person (whether or not such Person has
made an offer to purchase or otherwise acquire) all or any portion of the
Subsidiary Shares for cash or other consideration in a bona fide transaction,
other than in a Public Sale, the Subsidiary shall first notify the Non-
Transferring Stockholder in writing (the "Notice of Intended Sale") of the
number of Subsidiary Shares for Transfer by the Transferring Subsidiary (the
"Offered Shares") and the proposed price and other terms of Transfer. The Non-
Transferring Stockholder thereupon shall have the right to purchase (or
designate a purchaser, other than the Company or any subsidiary thereof, of) all
(but not less than all) of the Offered Shares at the proposed price in cash or
other consideration and on the other proposed terms of Transfer all as specified
in the Notice of Intended Sale. In order to exercise its purchase right, within
thirty (30) business days after receiving the Notice of Intended Sale from the
Subsidiary, Non-Transferring Stockholder shall deliver to the Subsidiary a
binding written election (the "Election Notice") agreeing to purchase (or
designating a purchaser of) all of the Offered Shares. If Non-Transferring
Stockholder does not exercise its purchase right with respect to all (and not
less than all) of the Offered Shares within the time period as provided herein,
or fails to deliver the Election Notice within the time period provided, the
Subsidiary shall be free for a period of ninety (90) days thereafter (a
"Permitted Sale Period") to complete a Transfer of the Offered Shares to any
Person or Persons at or above the price and pursuant to the other terms
specified in the Notice of Intended Sale in one or more bona fide transactions
(other than Public Sales) consummated within the Permitted Sale Period. If such
a Transfer is not consummated within the Permitted Sale Period, the Offered
Shares shall again be subject to a right of first offer under the provisions of
this Section 3. In the event Non-Transferring Stockholder (or its designee as
aforesaid) exercises its rights of first offer hereunder, the parties shall, as
promptly as practicable and as a condition to their respective obligations with
respect thereto, enter into such agreements and deliver such documents to one
another as shall be reasonably necessary for the sale of the Offered Shares to
Non-Transferring Stockholder (or its designee as aforesaid) as contemplated
hereby, free and clear of all liens, claims, or encumbrances, other than those
arising under applicable securities laws, it being the intention of the
Stockholders that such sale would be consummated within 90 days following
delivery of the Election Notice.
(c) Right of First Offer on Public Sale. In the event that a
-----------------------------------
Subsidiary desires to Transfer for cash in a Public Sale all or any portion of
the Subsidiary Shares, the Subsidiary
6
<PAGE>
shall first notify the Non-Transferring Stockholder in writing (the "Notice of
Intended Sale") of the number of Subsidiary Shares for Transfer by the
Transferring Subsidiary (the "Section 3(c) Offered Shares") and the proposed
price and other terms of Transfer. The Non- Transferring Stockholder thereupon
shall have the right to purchase (or designate a purchaser, which shall not be
the Company or any subsidiary thereof, of) all or a portion of the Section 3(c)
Offered Shares at their Market Price, as determined as of the day prior to the
date of receipt of the Notice of Intended Sale. In order to exercise its
purchase rights, within ten (10) business days after receiving the Notice of
Intended Sale from the Subsidiary, the Non-Transferring Stockholder shall
deliver to the Subsidiary a binding written election (the "Section 3(c) Election
Notice") agreeing to purchase (or designating a purchaser of) all of or a
portion the Section 3(c) Offered Shares. If Non-Transferring Stockholder does
not exercise its purchase rights with respect to all (and not less than all) of
the Section 3(c) Offered Shares within the time period as provided herein, or
fails to deliver the Section 3(c) Election Notice within the time period
provided, the Subsidiary shall be free for a period of ninety (90) days
thereafter (a "Section 3(c) Permitted Sale Period") to complete a Transfer of
the Section 3(c) Offered Shares not agreed to be acquired to any Person or
Persons in one or more Public Sales consummated within the Permitted Sale
Period. If such a Transfer is not consummated within the Section 3(c) Permitted
Sale Period by the Transferring Subsidiary, the Section 3(c) Offered Shares
shall again be subject to a right of first offer under the provisions of this
Section 3. In the event Non-Transferring Stockholder (or its designee as
aforesaid) exercises its rights of first offer hereunder, the parties shall, as
promptly as practicable and as a condition to their respective obligations with
respect thereto, enter into such agreements and deliver such documents to one
another as shall be reasonably necessary for the Transfer of the Section 3(c)
Offered Shares to Non-Transferring Stockholder (or its designee as aforesaid) as
contemplated hereby, free and clear of all liens, claims, or encumbrances, other
than those arising under applicable securities laws, it being the intention of
the Stockholders that such sale would be consummated within 90 days following
delivery of the Section 3(c) Election Notice.
(d) Joint Sale. The provisions of this Section 3 shall not apply to
----------
sales of Subsidiary Shares effected jointly and equally by, and with the mutual
agreement of, all Stockholders.
Section 4. Governance; Voting
------------------
(a) General. It is expressly understood and agreed that although the
-------
Lurie Stockholder holds, in the aggregate, 50.027088% of the Shares and the Zell
Stockholder holds, in the aggregate, 49.972912% of the Shares, control over the
Company has always been and shall continue to be deemed shared 50/50 as between
the Lurie Stockholder and the Zell Stockholder. Subject to the provisions of
Section 4(c) below, unless and until there shall occur an event, including a
redemption pursuant to Section 6 hereof, (the date of such an event, should it
occur, is herein referred to as the "Adjustment Date") the result of which is
that the number of Shares held by the Zell Stockholder or its Permitted
Transferees, on the one hand, and the Lurie Stockholder or its Permitted
Transferees, on the other hand, shall no longer be equal to the number of Shares
held by each as of the date of this Agreement (i) all material decisions
relating to the management of the business, assets and operations of the Company
shall be made by the board of directors of the Company consisting of not less
than two (2) members, with the same
7
<PAGE>
number of directors being appointed by the Lurie Stockholder and by the Zell
Stockholder; and (ii) all committees of the board of directors of the Company
and all boards of directors of subsidiaries of the Company (other than Holdings
and EGIL) shall have equal numbers of representatives designated by each of the
Zell Stockholder and the Lurie Stockholder. Following an Adjustment Date, the
representation on the aforesaid boards of directors (other than for Holdings and
EGIL) shall be adjusted based on the Stockholders voting their Shares in
accordance with their respective ownership interests therein or as may be
otherwise agreed by the parties.
(b) Administrative Matters. Prior to the first Adjustment Date, the
----------------------
day-to-day corporate and administrative matters of the Company (for example,
maintaining books and records, and preparation of financial statements and tax
returns) shall be handled by an Affiliate of the Zell Stockholder, which shall
be entitled to reimbursement for all out-of-pocket third-party expenses
reasonably incurred in the performance of such duties, provided that, for a
period of two (2) years (that is, for 2000 and 2001), the amount of such
expenses on a per item or category basis shall not exceed the amount thereof for
1999. The out-of-pocket expenses for 1999 are identified on attached Schedule
C. During such two-year period, the Zell Stockholder Affiliate responsible for
the day-to-day corporate and administrative matters as aforesaid shall not be
entitled to collect or receive a fee for services thus rendered (but shall be
entitled to do so thereafter), but may contract to have such services performed
by third parties and, subject to the foregoing provisions of this Section 4(b),
be entitled to reimbursement for the cost reasonably incurred in doing so.
After the first Adjustment Date, such day-to-day corporate and administrative
matters shall be handled at the direction of the Board of Directors of the
Company.
(c) Management of Holdings and EGIL. Notwithstanding the other
-------------------------------
provisions of this Section 4, the Stockholders agree as follows with respect to
the management of the Subsidiaries:
(i) Directors of Holdings shall be appointed solely by the Zell
Stockholder and the directors of EGIL shall be appointed solely by the
Lurie Stockholder.
(ii) The Zell Stockholder shall have the sole right to make all
decisions respecting the Subsidiary Shares held by Holdings, including the
voting or Transfer thereof, and the Lurie Stockholder shall have the sole
right to make all decisions respecting the Subsidiary Shares held by EGIL,
including the voting, or Transfer thereof; provided, however that (A) any
Transfer of Subsidiary Shares shall be subject to, and must be in
accordance with the terms of, Section 3 above, (B) a Subsidiary may
consummate only one Asset Disposition in any 90-day period, (C) each Asset
Disposition must be for Subsidiary Shares having a value of not less than
$5,000,000, and (D) the Net Proceeds of each Asset Disposition must be at
least equal to the sum of the EGI Tax Amount and the Distributable Tax
Amount arising by reason of the Asset Disposition.
(iii) Any and all decisions relative to any Transfer of any
shares representing the ownership interests in EGIL or Holdings, any
Transfer of any Asset other than Subsidiary Shares, and any non-cash
dividend or non-cash distribution to the
8
<PAGE>
Company of the assets of EGIL or Holdings, whether by reason of merger,
liquidation or otherwise and including any distribution of Subsidiary
Shares, shall each require the approval of all of the members of the Board
of Directors of the Company.
(iv) All cash dividends or cash distributions received in
respect of Subsidiary Shares shall be distributed by the Subsidiary to the
Company and, after establishing by action of the board of directors of the
Company reasonable reserves for taxes and operating expenses and other
working capital requirements of the Company and its Subsidiaries, shall be
loaned or distributed to the Stockholders as determined by the Board of
Directors of the Company.
(v) OP Units shall not be converted to shares of capital stock
unless such shares are sold for cash prior to the due date of any tax
liability arising in connection with such conversion and the Proceeds are
applied in accordance with Section 6 hereof.
(vi) All proceeds of any financing or refinancing of, Subsidiary
Shares shall be retained by the applicable Subsidiary and not distributed
to the Company, but shall be simultaneously loaned on a demand basis to any
Affiliate of the Zell Stockholder or the Lurie Stockholder, as the case may
be, with interest payments and any other debt service or payment
requirements being identical to the terms of the third party financing;
provided that prior to any other Transfer of Subsidiary Shares, any loans
secured by such Subsidiary Shares, or loans which would by contract be
required to be repaid as a condition to the distribution of the proceeds of
a sale of such Subsidiary Shares, shall be fully repaid and any loans by
Holdings or EGIL to their respective Affiliates shall be called as
necessary to permit such repayment to occur. Each Subsidiary shall submit
to the Company, which in turn will promptly distribute to the Stockholders,
within ten (10) business days of each such financing or refinancing, a
statement certifying to the compliance by such Subsidiary with the
provisions of this Section 4(c)(vi), containing sufficient detail to enable
the recipient to verify such compliance.
(d) Implementation Procedures. The Stockholders agree to vote their
-------------------------
Shares, and to take all action, (and to cause their respective designated board
representatives, to take all action) as may be necessary to effectuate the
purpose and intent of this Section 4, including executing and delivering written
consents consistent with the provisions hereof. Any director of the Company,
EGIL or Holdings, may be removed at anytime, with or without cause, but only by
the Stockholder or Stockholders entitled to designate such director. In the
event any designated director ceases for any reason to serve as a board
representative of the Company, Holdings or EGIL, the resulting vacancy shall be
filled promptly by the Stockholder or Stockholders which designated such
director and the board of directors of the applicable corporation shall cease to
take corporate action until such vacancy is filled.
(e) Current Designations. The members of the Board of Directors of
--------------------
the Company shall be:
9
<PAGE>
Zell Stockholder designee: Sheli Rosenberg
Lurie Stockholder designee: Mark Slezak
Unless and until otherwise determined by the Board of Directors of the
Company, the officers of the Company shall be:
Sheli Rosenberg: President
Mark Slezak: Vice President and Treasurer
Don Liebentritt: Vice President
John Zoeller: Vice President
Susan Obuchowski: Vice President and Secretary
Jean Ruegsegger: Assistant Secretary
The directors of Holdings (designated by the Zell Stockholder) shall
be unless and until otherwise designated:
Sam Zell and Sheli Rosenberg
10
<PAGE>
The directors of EGIL (designated by the Lurie Stockholder) shall be
unless and until otherwise designated:
Ann Lurie and Mark Slezak
Section 5. S Corporation Status
--------------------
5.1 Termination of S Corporation Election.
-------------------------------------
(a) By Consent or Revocation. Neither the Company nor any
------------------------
Stockholder, by any act or failure to act, shall terminate, or have the effect
of terminating, the S Corporation Election, unless the Company, by written
resolution of its Board of Directors, first directs or consents to such act or
failure to act, and Stockholders holding at least fifty-two percent (52%) of the
Shares shall consent to such action or failure to act. Thereafter, each
Stockholder shall promptly act or fail to act as may be necessary or advisable
to terminate the S Corporation Election as and when the Company so directs or
consents. In addition, in the event that both a majority of the Board of
Directors and the Stockholders, by the affirmative vote of holders of at least
fifty-two percent (52%) of the Shares, determine to terminate the Company's
status as an S Corporation, each Stockholder, if requested, will execute a
consent to such revocation in the form prescribed by the Internal Revenue
Service ("IRS") and shall deliver such consent to the Company.
(b) Prohibited Corporate Actions. So long as an S Corporation
----------------------------
Election is in effect, the Company shall not take any action or engage in any
transaction which would result in the termination of the S Corporation Election,
including, but not limited to:
(i) any action or transaction resulting in the Company becoming an
"ineligible Company" under Section 1361(b)(2) of the Code;
(ii) the creation of a class of Shares (other than non-voting common
capital Shares) in addition to the Company's authorized shares
of common Shares as of the date hereof; and
(iii) the borrowing of funds from any person or entity, other than a
lender which is actively and regularly engaged in the business
of lending, unless the following conditions are met: (A) the
loan is in writing and contains an unconditional promise to pay
on demand or on a specific date; (B) the interest rate and
payment dates are not contingent on profits, the discretion of
the Company, the payment of dividends with respect to the Shares
or other similar factors; (C) the loan is not convertible into
capital Shares of the Company; and (D) the lender is a qualified
S Corporation Stockholder.
(c) Inadvertent Termination. In the event of a termination of the
-----------------------
Company's status as an S Corporation other than pursuant to Section 5.01(a)
above, if the Company and the Stockholders remaining after such termination
desire that the Company's status as an S Corporation be continued, the Company
and such Stockholders agree to use their best efforts to
11
<PAGE>
obtain from the IRS a ruling that the termination was inadvertent and that the
Company shall continue to be treated as an S Corporation during the period from
and after the terminating event or any other period designated by the IRS. The
Company and such Stockholders further agree to take such steps, and make such
adjustments, as may be required by the IRS pursuant to Sections 1362(f)(3) and
(4) of the Code. In addition to the indemnification provided pursuant to Section
5.4 hereof, the Stockholder or Stockholders, jointly and severally, who caused
the terminating event to occur shall cooperate in taking all such steps and
making all such adjustments required by the IRS and shall pay all costs and
expenses of procuring the ruling, including but not limited to the legal,
accounting and tax costs of taking such steps and making such adjustments.
5.2 Prohibitions on Transfer.
------------------------
Notwithstanding anything in this Agreement to the contrary, and in addition
to the restrictions on transferability set forth in Section 2 hereof, except to
the extent authorized pursuant to Section 5.1 hereof, no Stockholder shall
Transfer any Shares, now owned or hereafter acquired, unless prior thereto (i)
the Company's attorney shall have given a written opinion that the Transfer will
not have the effect of terminating the S Corporation Election and (ii) the
proposed transferee shall have agreed to execute any documents necessary at any
time the Company's attorney deems necessary to the continuation of such
election. Any transfer of Shares in violation of this Section 5.2 shall be void.
5.3 Reporting S Corporation Items in the Event of Termination. On the
---------------------------------------------------------
termination of the S Corporation Election or on the complete termination of a
Stockholder's interest in the Company, to the extent permitted by law, the
Stockholder's hereby elect and agree to execute all documents necessary to cause
the Company's items of income, loss, deduction and credit to be allocated as if
the taxable year of such termination consisted of two taxable years, in
accordance with the method of allocation described in Section 1377(a)(2) and
Section 1362(e)(3) of the Code. The Company Accountants shall determine the
items so allocable and reportable to the Stockholders, and their determinations
shall bind all concerned parties.
5.4 Indemnification Relating to Maintenance of the S Corporation Election.
---------------------------------------------------------------------
(a) Indemnification. If any Stockholder breaches any term of this Agreement
---------------
and such breach has the effect of terminating the S Corporation Election, the
breaching Stockholder (the "Indemnitor") shall indemnify the other Stockholders
(each individually the "Indemnitee" and collectively the "Indemnitees") for the
"loss of federal and state income tax benefits," as defined below, reasonably
expected to result from such termination. In addition, the Indemnitor shall
indemnify each Indemnitee for all federal and state income taxes payable by the
Indemnitee as a result of the receipt of any indemnification payment required by
this subsection. The Indemnitor shall make the indemnification payments required
by this subsection to each Indemnitee no more than ninety (90) days after the
later of (i) the date notice of such breach is given to the Indemnitor by the
Company or by an Indemnitee or (ii) the last day of the Indemnitee's first
taxable year within which ends the first taxable year of the Company for which
such termination is effective.
12
<PAGE>
(b) "Loss of Federal and State Income Tax Benefits" Defined. For purposes
-------------------------------------------------------
of the preceding subsection, "loss of federal and state income tax benefits"
means the excess of: (i) the sum of (A) the Indemnitee's pro rata share of the
Company's federal and state income and replacement tax liabilities for the
Indemnification Period and (B) the Indemnitee's individual federal and state
income tax liabilities for his taxable years within which the taxable years of
the Indemnification Period end, with both (A) and (B) computed as if the S
Corporation Election had not been in effect and as if the Company had
distributed its taxable income as a dividend on the last day of each taxable
year of the Indemnification Period, over (ii) the sum of such liabilities, with
both (A) and (B) computed as if the S Corporation Election had been in effect
and as if the Company had distributed its entire taxable income as a dividend on
the last day of each taxable year of such period. In addition, using similar
principles, the following shall be taken into account in determining the loss of
federal and state income tax benefits: (i) any built-in gain tax to which the
Company would be subject as a result of termination of the S Corporation
Election in violation of this Agreement, followed by a subsequent S Corporation
Election taking effect for any of the taxable years in the Indemnification
Period, and (ii) any tax under Section 1375 of the Code to which the Company
would be subject as a result of termination of the S Corporation Election in
violation of this Agreement. For each taxable year which has already ended by
the time an indemnification payment is required under the preceding subsection,
such loss of benefits shall be computed by using the actual tax liabilities of
the Company and the Indemnitee. For each taxable year which has not ended, such
loss shall be computed by using hypothetical tax liabilities derived by applying
the federal and state tax laws in effect for the year of the indemnification
payment to the average of the items of taxable income, loss, deduction and
credit of the Company and of the Indemnitee for the taxable years of the
Indemnification Period which have ended. The Company Accountants shall determine
the indemnification payments required by this Section 5.4 and their
determinations shall be binding on all concerned parties. Each Indemnitee shall
provide the Company Accountants with the individual tax return and other
information necessary to make such determinations.
(c) Other Definitions. The term "Indemnification Period" means the period
-----------------
beginning on the first day of the first taxable year for which termination of
the S Corporation Election is effective and ending with the first to occur of
(i) the first day for which the S Corporation Election becomes effective after
such termination and (ii) the last day of the fourth taxable year ending after
such first taxable year. The term "Indemnitee's pro rata share of the Company's
federal and state income and replacement tax liabilities" means that proportion
of such liabilities from time to time during the Indemnification Period which
the number of the Indemnitee's Shares bears to the total number of the Company's
outstanding Shares.
(d) Duty to Mitigate. The Company and the Stockholders shall make
----------------
reasonable efforts to mitigate the loss of federal income tax benefits under
this Section 5.4 as and to the extent permitted by Sections 1362(f) and 1362(g)
of the Code.
5.5 Distributions From Earnings and Profits. Upon the determination by a
---------------------------------------
majority of the Board of Directors that it is in the best interests of the
Stockholders that the Company make the election described by Section 1368(e)(3)
of the Code, the Company shall make such election, and each Stockholder hereby
agrees that he or she shall take all steps
13
<PAGE>
necessary to indicate his or her consent to such election in the manner provided
by the Code or federal income tax regulations.
Section 6. Use of Proceeds Upon Asset Disposition.
--------------------------------------
(a) Distribution of Net Proceeds. Upon the consummation of an Asset
----------------------------
Disposition, the Subsidiary which effected the Asset Disposition shall, within
ten (10) days after the Disposition Date, so notify the Company and the Non-
Transferring Stockholder (providing each with reasonable details as to the
transaction(s) involved), and shall also distribute the Net Proceeds to EGI
within such 10-day period.
(b) Redemption of Shares. Within ten (10) days after receiving notice
--------------------
of the consummation of an Asset Disposition, the Company will estimate the EGI
Tax Amount and the Distributable Tax Amount with respect thereto and (i) retain
such estimated EGI Tax Amount for payment of the underlying taxes, and (ii)
distribute such estimated Distributable Tax Amount pro rata to the then
Stockholders of record. Also within ten (10) days after receiving notice of the
consummation of an Asset Disposition, the Company will estimate the EGI Fair
Market Value, the Fair Market Value Per Share, the Redeemable Proceeds and the
Redeemable Shares, in each case using the estimated EGI Tax Amount and the
estimated Distributable Tax Amount. Within five (5) business days after the
aforesaid calculation, EGI will pay the estimated Redeemable Proceeds to the
Lurie Stockholder (if EGIL effected the Asset Disposition) or the Zell
Stockholder (if Holdings effected the Asset Disposition), in redemption of the
estimated Redeemable Shares, and such Stockholder shall deliver to EGI
certificates representing the estimated Redeemable Shares, endorsed in blank or
accompanied by executed stock powers, free and clear of any liens, claims or
encumbrances, which Shares shall be cancelled.
(c) Final Tax Amounts. Upon the filing of the federal, state and local
-----------------
income tax returns for EGI and for the Subsidiary which has effected the Asset
Disposition for the tax year in which the Asset Disposition occurred, EGI will
finally calculate the EGI Tax Amount and the Distributable Tax Amount applicable
thereto. EGI shall make payment of federal, state, and local income taxes of EGI
and the Subsidiary which has effected the Asset Disposition for the tax year for
which the EGI Tax Amount is calculated, based on the final EGI Tax Amount.
(d) Adjustment of Estimated Distributable Tax Amount. In the event the
------------------------------------------------
final Distributable Tax Amount is more than $250,000 greater or less than the
amount of the estimated Distributable Tax Amount previously distributed, such
Stockholders and the Company shall reimburse each other, as appropriate, to
equalize such excess or deficient payments within fifteen (15) days after the
final calculation.
(e) Adjustment of Proceeds and Share Redemptions. Within fifteen (15)
--------------------------------------------
days after the final calculation of the EGI Tax Amount and the Distributable Tax
Amount, the Company will recalculate EGI Fair Market Value, Fair Market Value
Per Share, the Redeemable Proceeds and the Redeemable Shares and provide notice
to the Stockholders of such recalculated amounts. Within fifteen (15) days of
receipt of such final calculations, the Company and each Stockholder shall take
all such action, pay or receive all such amounts, and issue or redeem such
number of additional Shares as may be necessary to place the Company and each
Stockholder in
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the position such party would have been in with respect to the Redeemable
Proceeds and Redeemable Shares, had such final calculations been available at
the time of the redemption and payments made pursuant to Section 6(b) hereof.
Notwithstanding the foregoing, the adjustments contemplated by this Section 6(e)
shall not be made if the aggregate value of the adjustments required to be made
(whether in cash or in Shares based on Fair Market Value Per Share) is less than
$250,000.00.
Section 7. Cooperation. The Stockholders shall cooperate in good faith to
-----------
prepare all necessary tax and securities filings relating to the Company and its
various holdings.
Section 8. Notices. All notices, and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
facsimile, to the appropriate address or facsimile number set forth below (or at
such other address or facsimile number for a party as shall be specified by like
notice):
if to the Zell Stockholder:
c/o Equity Group Investments, L.L.C.
Two North Riverside Plaza - Suite 600
Chicago, IL 60606
Attention: Donald J. Liebentritt
Fax: (312) 575-7024
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if to the Lurie Stockholder:
c/o Lurie Investments
Two North Riverside Plaza, Suite 1500
Chicago, Illinois 60606
Attention: Mark Slezak
Fax: (312) 466-3700
Section 9. Termination. This Agreement shall terminate and its provisions
-----------
shall be of no further force and effect if either the Zell Stockholder or the
Lurie Stockholder shall cease to own Shares of the Company, or upon completion
of the final liquidation and dissolution of the Company; provided, the
provisions of Section 5 shall survive such termination.
Section 10. Remedies. Any party having rights under this Agreement may
--------
enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and,
accordingly, in addition to all other remedies available to any party, such
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce, or prevent any violation of, the provisions of this Agreement.
Section 11. Legend. During the term hereof each stock certificate
------
representing the Shares shall bear a legend as follows:
"The sale, assignment, transfer, gift, pledge, other disposition and
voting of any of the securities represented by this certificate is restricted by
the terms of a certain Stockholders' Agreement, dated as of December 31, 1999.
The securities represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), as amended, or applicable state
securities laws and may not be sold, assigned, transferred, pledged or otherwise
disposed of except in compliance with the requirements of the Act and until the
Company shall have received the written opinion of counsel satisfactory to the
Company to that effect."
Section 12. Entire Agreement; Binding Effect; Amendment. This Agreement and
-------------------------------------------
the Articles and Bylaws of the Company and its subsidiaries, together with the
Operations Transfer Agreement, as the same may be amended by their terms from
time to time, constitutes the entire agreement between the parties with respect
to EGI and its subsidiaries and shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives, successors and
permitted assigns. Any amendments, or alternative or supplementary provisions to
this Agreement must be made in writing and duly executed by an authorized
representative or agent of each of the parties hereto. Except as contemplated by
this Agreement, no Person who is not an original party to this Agreement may
become a party hereto without the written consent of each of the parties hereto.
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Section 13. Non-Waiver. The failure in any one or more instances of a party
----------
to insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. A breach of any
representation, warranty or covenant shall not be affected by the fact that a
more general or more specific representation, warranty or covenant was not also
breached.
Section 14. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
Section 15. Severability. The invalidity of any provision of this Agreement
------------
or portion of a provision shall not affect the validity of any other provision
of this Agreement or the remaining portion of the applicable provision.
Section 16. Applicable Law. This Agreement shall be governed and controlled
--------------
as to validity, enforcement, interpretation, construction, effect and in all
other respects by the internal laws of the State of Illinois applicable to
contracts made in that State.
Section 17. Allocation Among Stockholders. The rights and obligations
-----------------------------
hereunder of the Zell Stockholder shall be allocated among the Stockholders
comprising the Zell Stockholder, and the rights and obligations hereunder of the
Lurie Stockholder shall be allocated among the Stockholders comprising the Lurie
Stockholder, in each case in accordance with the relative number of Shares held
by such Stockholder as a percentage of all Shares held by all Stockholder's
comprising the Zell Stockholder or the Lurie Stockholder, as applicable.
Section 18. Headings. The headings contained in this Agreement are for
--------
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Stockholders'
Agreement as of the day and year first above written.
SZ KELLIE TRUST SZ JOANN TRUST
By: Chai Trust Company, as Trustee By: Chai Trust Company, as Trustee
By: /s/ Donald J. Liebentritt By: /s/ Donald J. Liebentritt
----------------------------- --------------------------------
Donald J. Liebentritt, as Vice Donald J. Liebentritt, as Vice
President President
SZ MATTHEW TRUST ZELL EGI TRUST
By: Chai Trust Company, as Trustee
By: /s/ Sheli E. Rosenberg
-----------------------------------
Sheli Z. Rosenberg, as Trustee
By: /s/ Donald J. Liebentritt
-----------------------------
Donald J. Liebentritt, as Vice
President
ZFT KELLIE TRUST ZFT MATTHEW TRUST
By: Chai Trust Company, as Trustee By: Chai Trust Company, as Trustee
By: /s/ Donald J. Liebentritt By: /s/ Donald J. Liebentritt
----------------------------- -------------------------------
Donald J. Liebentritt, as Vice Donald J. Liebentritt, as Vice
President President
ZFT JO ANN TRUST ZFT GRANDCHILDREN TRUST
By: Chai Trust Company, as Trustee By: Chai Trust Company, as Trustee
By: /s/ Donald J. Liebentritt By: /s/ Donald J. Liebentritt
----------------------------- -------------------------------
Donald J. Liebentritt, as Vice Donald J. Liebentritt, as Vice
President President
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JESSE TRUST SARA TRUST
By: /s/ Ann Lurie By: /s/ Ann Lurie
--------------------------- -------------------------
Ann Lurie, as Trustee Ann Lurie, as Trustee
ANDREW TRUST ABIGAIL TRUST
By: /s/ Ann Lurie By: /s/ Ann Lurie
--------------------------- -------------------------
Ann Lurie, as Trustee Ann Lurie, as Trustee
BENJAMIN TRUST ELIZABETH TRUST
By: /s/ Ann Lurie By: /s/ Ann Lurie
--------------------------- -------------------------
Ann Lurie, as Trustee Ann Lurie, as Trustee
AOQ TRUST AGQ TRUST
By: /s/ Mark Slezak By: /s/ Mark Slezak
--------------------------- --------------------------
Mark Slezak, as Co-Trustee Mark Slezak, as Co-Trustee
AJQ TRUST ADQ TRUST
By: /s/ Mark Slezak By: /s/ Mark Slezak
--------------------------- --------------------------
Mark Slezak, as Co-Trustee Mark Slezak, as Co-Trustee
ACQ TRUST AAQ TRUST
By: /s/ Mark Slezak By: /s/ Mark Slezak
--------------------------- --------------------------
Mark Slezak, as Co-Trustee Mark Slezak, as Co-Trustee
ABQ TRUST ASQ TRUST
By: /s/ Mark Slezak By: /s/ Mark Slezak
--------------------------- --------------------------
Mark Slezak, as Co-Trustee Mark Slezak, as Co-Trustee
ANQ TRUST AEQ TRUST
By: /s/ Mark Slezak By: /s/ Mark Slezak
--------------------------- --------------------------
Mark Slezak, as Co-Trustee Mark Slezak, as Co-Trustee
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Schedule A
----------
Stockholders comprising the Zell Stockholder
SZ Kellie Trust
SZ JoAnn Trust
SZ Matthew Trust
Zell EGI Trust
ZFT Kellie Trust
ZFT Matthew Trust
ZFT Jo Ann Trust
ZFT Grandchildren Trust
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Schedule B
----------
Stockholders comprising the Lurie Stockholder
Jesse Trust
Sara Trust
Andrew Trust
Abigail Trust
Benjamin Trust
Elizabeth Trust
AOQ Trust
AGQ Trust
AJQ Trust
ADQ Trust
ACQ Trust
AAQ Trust
ABQ Trust
ASQ Trust
ANQ Trust
AEQ Trust
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Schedule C
----------
Company Administrative Expenses for 1999
Arthur Andersen & Co. Accounting and Tax Expenses:
Equity Group Investments, Inc. 268,308
EOP of Illinois, Inc. 6,939
Equity Hotel Properties, Inc. 6,939
Equity Realty Inc. 11,565
S/Biz, Inc. 2,313
ZM Inc. 6,939
Zell/Merrill II Inc. 6,939
Zell/Merrill III Inc. 6,939
Zell/Merrill IV Inc. 6,939
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323,820
=======
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