SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 14, 1998 (July 9, 1998)
TOWER REALTY TRUST, INC.
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(Exact name of registrant as specified in its charter)
Maryland I-13375 13-3938558
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
292 Madison Avenue
3rd Floor
New York, New York 10017
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(Address of principal executive offices) (Zip Code)
(212) 448-1864
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On July 9, 1998, Tower Realty Trust, Inc., a Maryland corporation
(the "Company"), Metropolitan Partners LLC, a Delaware limited liability
company ("Buyer"), Reckson Associates Realty Corp., a Maryland corporation
("Reckson"), and Crescent Real Estate Equities Company, a Texas real estate
investment trust ("Crescent"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"), a copy of which is filed herewith as Exhibit 10.1
and incorporated herein by reference, providing for the merger of the
Company with and into Buyer (the "Merger"). Pursuant to the Merger
Agreement and upon the terms and subject to the conditions and limitations
therein, each issued and outstanding share of common stock, par value $.01
per share, of the Company (the "Company Common Stock") will be converted
into the right to receive $24.00 in cash. Company stockholders will have
the right to elect to receive .4615 of a share of Reckson common stock and
.3523 of a share of beneficial interest in Crescent in lieu of the $24 in
cash, for up to an aggregate of 40% of the total consideration payable in
the transaction.
The Merger Agreement provides such that if the average closing
stock price for Crescent common stock or Reckson common stock during the
fifteen trading days ending on the tenth trading day prior to the Company
stockholders' meeting to approve the Merger is equal to or greater than
$36.4469 (in the case of Crescent) or $27.82 (in the case of Reckson), then
the above ratios will be adjusted to equal the quotient of 12.84 divided by
such average stock prices.
The closing of the Merger is subject to certain customary
conditions, including the approval of the Merger by the stockholders of the
Company, and is expected to close during the second half of 1998.
On July 9, 1998, the Company issued a press release (the "Press
Release") relating to the Merger, a copy of which is filed herewith as
Exhibit 99.1 and incorporated herein by reference.
This Current Report on Form 8-K and the Press Release contain
"forward looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and are
qualified by cautionary statements contained herein, including the fact
that the Merger is subject to certain conditions and therefore may not
close when anticipated or at all, and in the Company's filings with the
Securities and Exchange Commission.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 10.1 - Agreement and Plan of Merger, dated as of
July 9, 1998, by and among Tower Realty
Trust, Inc., Reckson Associates Realty Corp.,
Crescent Real Estate Equities Company and
Metropolitan Partners LLC.
Exhibit 99.1 - Press Release of Tower Realty Trust, Inc.,
dated July 9, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
Tower Realty Trust, Inc.
By: /s/ Lester S. Garfinkel
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Chief Financial Officer and
Executive Vice President for
Finance & Administration
Dated: July 14, 1998
EXHIBIT INDEX
Exhibit No. Description
10.1 - Agreement and Plan of Merger, dated as of July 9, 1998, by
and among Tower Realty Trust, Inc., Reckson Associates
Realty Corp., Crescent Real Estate Equities Company and
Metropolitan Partners LLC.
99.1 - Press Release of Tower Realty Trust, Inc., dated July 9,
1998.
EXHIBIT 10.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
TOWER REALTY TRUST, INC.,
RECKSON ASSOCIATES REALTY CORP.,
CRESCENT REAL ESTATE EQUITIES COMPANY
and
METROPOLITAN PARTNERS LLC
Dated as of July 9, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.2 Effect on Shares of Company Common Stock and Company OP
Units . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.3 Share Election . . . . . . . . . . . . . . . . . . . . .
SECTION 1.4 Proration . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.5 Exchange of Certificates . . . . . . . . . . . . . . . .
SECTION 1.6 Transfer Taxes; Withholding . . . . . . . . . . . . . .
SECTION 1.7 No Further Ownership Rights in Shares of Company Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.8 Closing of Company Transfer Books . . . . . . . . . . .
SECTION 1.9 Stock Options . . . . . . . . . . . . . . . . . . . . .
SECTION 1.10 Restricted Stock . . . . . . . . . . . . . . . . . . . .
Section 1.11 Dissenting Shares . . . . . . . . . . . . . . . . . . .
SECTION 1.12 Closing . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
THE SURVIVING ENTITY
SECTION 2.1 Certificate of Formation . . . . . . . . . . . . . . . .
SECTION 2.2 Operating Agreement . . . . . . . . . . . . . . . . . .
SECTION 2.3 Members and Managers . . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power. . . . . . . . . . . . . .
SECTION 3.2 Corporate Authorization . . . . . . . . . . . . . . . .
SECTION 3.3 Consents and Approvals; No Violations . . . . . . . . .
SECTION 3.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
SECTION 3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 SEC Documents . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Financial Statements . . . . . . . . . . . . . . . . . .
SECTION 3.8 Absence of Undisclosed Liabilities . . . . . . . . . . .
SECTION 3.9 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Absence of Material Adverse Changes, etc. . . . . . . .
SECTION 3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.12 Employee Benefit Plans and Employee Matters . . . . . .
SECTION 3.13 Litigation. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.14 Compliance with Laws . . . . . . . . . . . . . . . . . .
SECTION 3.15 Certain Contracts and Arrangements . . . . . . . . . . .
SECTION 3.16 Environmental Matters . . . . . . . . . . . . . . . . .
SECTION 3.17 Real Property . . . . . . . . . . . . . . . . . . . . .
SECTION 3.18 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
SECTION 3.19 Opinion of Financial Advisors . . . . . . . . . . . . .
SECTION 3.20 Board Recommendation . . . . . . . . . . . . . . . . . .
SECTION 3.21 Vote Required . . . . . . . . . . . . . . . . . . . . .
SECTION 3.22 Related Party Transactions . . . . . . . . . . . . . . .
SECTION 3.23 Investment Company Act of 1940 . . . . . . . . . . . . .
SECTION 3.24 Hart-Scott-Rodino Antitrust Improvements Act of 1976 . .
SECTION 3.25 State Takeover Statutes . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER,
RECKSON AND CRESCENT
SECTION 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.1 Corporate Existence and Power . . . . . . . . . . . . .
4.1.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.1.3 Consents and Approvals; No Violations . . . . . . . . .
4.1.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
4.1.5 SEC Documents . . . . . . . . . . . . . . . . . . . . .
4.1.6 Financial Statements . . . . . . . . . . . . . . . . . .
4.1.7 Absence of Undisclosed Liabilities . . . . . . . . . . .
4.1.8 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
4.1.9 Absence of Material Adverse Changes, etc. . . . . . . .
4.1.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.11 Compliance with Laws . . . . . . . . . . . . . . . . . .
4.1.12 Real Property . . . . . . . . . . . . . . . . . . . . .
4.1.13 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.1.14 Share Ownership; Other Ownership . . . . . . . . . . . .
4.1.15 Investment Company Act of 1940 . . . . . . . . . . . . .
4.1.16 Hart-Scott-Rodino Antitrust Improvements Act of 1976 . .
4.1.17 Financing . . . . . . . . . . . . . . . . . . . . . . .
4.1.18 Authorization for Reckson Common Stock . . . . . . . . .
SECTION 4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2.1 Organization, Standing and Power . . . . . . . . . . . .
4.2.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.2.3 Consents and Approvals; No Violations . . . . . . . . .
4.2.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
4.2.5 SEC Documents . . . . . . . . . . . . . . . . . . . . .
4.2.6 Financial Statements . . . . . . . . . . . . . . . . . .
4.2.7 Absence of Undisclosed Liabilities . . . . . . . . . . .
4.2.8 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
4.2.9 Absence of Material Adverse Changes, etc. . . . . . . .
4.2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
4.2.11 Compliance with Laws . . . . . . . . . . . . . . . . . .
4.2.12 Real Property . . . . . . . . . . . . . . . . . . . . .
4.2.13 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.2.14 Share Ownership; Other Ownership . . . . . . . . . . . .
4.2.15 Investment Company Act of 1940 . . . . . . . . . . . . .
4.2.16 Hart-Scott-Rodino Antitrust Improvements Act of 1976 . .
4.2.17 Financing . . . . . . . . . . . . . . . . . . . . . . .
4.2.18 Authorization for Crescent Common Stock . . . . . . . .
SECTION 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.1 Corporate Existence and Power . . . . . . . . . . . . .
4.3.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.3.3 Consents and Approvals; No Violations . . . . . . . . .
4.3.4 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.3.5 Share Ownership; Other Ownership . . . . . . . . . . . .
4.3.6 Investment Company Act of 1940 . . . . . . . . . . . . .
4.3.7 Buyer's Operations . . . . . . . . . . . . . . . . . . .
4.3.8 Surviving Entity After the Merger . . . . . . . . . . .
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Company . . . . . . . . . . . . . . . . .
SECTION 5.2 Stockholders' Meetings; Proxy Material . . . . . . . . .
SECTION 5.3 Access to Information; Confidentiality
Agreement . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.4 No Solicitation of Transactions by the
Company . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.5 Voting of Shares of Company Common Stock . . . . . . . .
SECTION 5.6 Director and Officer Liability . . . . . . . . . . . . .
SECTION 5.7 Reasonable Best Efforts . . . . . . . . . . . . . . . .
SECTION 5.8 Certain Filings . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Public Announcements . . . . . . . . . . . . . . . . . .
SECTION 5.10 Further Assurances . . . . . . . . . . . . . . . . . . .
SECTION 5.11 Employee Matters. . . . . . . . . . . . . . . . . . . .
SECTION 5.12 Transfer Taxes . . . . . . . . . . . . . . . . . . . . .
SECTION 5.13 Advice of Changes . . . . . . . . . . . . . . . . . . .
SECTION 5.14 Guaranty . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.15 Form S-4 Registration Statement . . . . . . . . . . . .
SECTION 5.16 Blue Sky Permits . . . . . . . . . . . . . . . . . . . .
SECTION 5.17 NYSE Listing . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.18 Affiliates . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligations . . . . . . . . .
SECTION 6.2 Conditions to the Company's Obligations . . . . . . . .
SECTION 6.3 Conditions to Obligations of the Buying
Entities . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.2 Effect of Termination . . . . . . . . . . . . . . . . .
SECTION 7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Survival of Representations and Warranties . . . . . . .
SECTION 8.3 Interpretation . . . . . . . . . . . . . . . . . . . . .
SECTION 8.4 Amendments, Modification and Waiver . . . . . . . . . .
SECTION 8.5 Successors and Assigns . . . . . . . . . . . . . . . . .
SECTION 8.6 Specific Performance . . . . . . . . . . . . . . . . . .
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . . . . .
SECTION 8.8 Severability . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.9 Third Party Beneficiaries . . . . . . . . . . . . . . .
SECTION 8.10 Entire Agreement . . . . . . . . . . . . . . . . . . . .
SECTION 8.11 Counterparts; Effectiveness . . . . . . . . . . . . . .
TABLE OF DEFINED TERMS
TERM SECTION NO.
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . 5.4(a)
Active Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . 3.1
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Applicable Break-Up Fee . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Break-Up Fee Ruling . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Buyer's Representatives . . . . . . . . . . . . . . . . . . . . . . . 5.3
Buying Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Buying Entities' Common Stock . . . . . . . . . . . . . . . . . . Recitals
Cash Proration Factor . . . . . . . . . . . . . . . . . . . . . 1.4(c)(i)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(b)
Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(a)(i)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10(h)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Acquisition Agreements . . . . . . . . . . . . . . . . . . 5.4(a)
Company Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Development Properties . . . . . . . . . . . . . . . . . 3.17(e)
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . 1.9
Company Future Development Properties . . . . . . . . . . . . . . 3.17(e)
Company Joint Ventures . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Company Leased Real Property . . . . . . . . . . . . . . . . . . 3.17(a)
Company Leases . . . . . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company OP Election . . . . . . . . . . . . . . . . . . . . . 1.2(a)(iii)
Company OP Election Units . . . . . . . . . . . . . . . . . . 1.2(a)(iii)
Company OP Units . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Operating Partnership . . . . . . . . . . . . . . . . . . Recitals
Company Operating Partnership Agreement . . . . . . . . . . . . . . 3.4(b)
Company Owned Real Property . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Permitted Liens . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Company Real Property . . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Rent Roll . . . . . . . . . . . . . . . . . . . . . . . . 3.17(i)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Company Securities . . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Company Space Lease . . . . . . . . . . . . . . . . . . . . . . . 3.17(i)
Company Special Meeting . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
Common Stock Election . . . . . . . . . . . . . . . . . . . . . 1.2(a)(i)
Common Stock Election Shares . . . . . . . . . . . . . . . . . 1.2(a)(i)
Company Stock Option . . . . . . . . . . . . . . . . . . . . . . . 1.9(a)
Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . 5.3
Continuing Employees . . . . . . . . . . . . . . . . . . . . . . 5.11(b)
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Counter Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(a)
Crescent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Crescent Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1
Crescent Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Confidentiality Agreement . . . . . . . . . . . . . . . . . 5.3
Crescent Excess Preferred Shares . . . . . . . . . . . . . . . . . 4.2.4
Crescent Exchange Ratio . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Leased Real Property . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Measured Price . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Operating Partnership . . . . . . . . . . . . . . . . . . 4.2.4
Crescent Owned Real Property . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Permitted Liens . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Preferred Shares . . . . . . . . . . . . . . . . . . . . . 4.2.4
Crescent Real Property . . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent SEC Documents . . . . . . . . . . . . . . . . . . . . . . 4.2.5
Crescent Series A Preferred Shares . . . . . . . . . . . . . . . . 4.2.4
Crescent Series B Preferred Shares . . . . . . . . . . . . . . . . 4.2.4
Crescent Units . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.4
Deal Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13
Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . 4.2.1
Delaware Secretary of State . . . . . . . . . . . . . . . . . . . . 1.1(b)
Director Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
DLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Election Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Environmental Claim . . . . . . . . . . . . . . . . . . . . . 3.16(a)(ii)
Environmental Laws . . . . . . . . . . . . . . . . . . . . 3.16(a)(iii)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Excess Shares of Crescent Common Stock . . . . . . . . . . . . . . 4.2.4
Excess Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.16
Form of Election . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Form S-4 Registration Statement . . . . . . . . . . . . . . . . . . . 5.15
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . 3.16(a)(iv)
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Indemnifiable Claim . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Key Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Maryland Department . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 3.1
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(c)
Maximum Common Stock Election Number . . . . . . . . . . . . . . . 1.4(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Merrill Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18
MGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
New York Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
Non-Electing Units . . . . . . . . . . . . . . . . . . . . . . 1.2(a)(iv)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
1940 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23
1997 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Non-Electing Shares . . . . . . . . . . . . . . . . . . . . . . 1.2(a)(ii)
Outside Termination Date . . . . . . . . . . . . . . . . . . . . . 7.1(b)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(b)
Qualifying Income . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Reckson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Reckson Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Confidentiality Agreement . . . . . . . . . . . . . . . . . . 5.3
Reckson Disclosure Schedule . . . . . . . . . . . . . . . . . . . 4.1.3(a)
Reckson Exchange Ratio . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Leased Real Property . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Measured Price . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Owned Real Property . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Permitted Liens . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 4.1.4
Reckson Real Property . . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 4.1.5
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(b)
REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(a)(v)
Special Dividend . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(c)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
Surviving Entity . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(d)(i)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(d)(ii)
Termination Year . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11(c)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1998 (this
"Agreement"), by and among Tower Realty Trust, Inc., a Maryland corporation
(the "Company"), Metropolitan Partners LLC, a Delaware limited liability
company ("Buyer"), Reckson Associates Realty Corp., a Maryland corporation
("Reckson"), and Crescent Real Estate Equities Company, a Texas real estate
investment trust ("Crescent").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of the Company,
Buyer, Reckson and Crescent have each approved this Agreement and the
merger of the Company with and into Buyer (with Buyer being the surviving
entity) (the "Merger"), upon the terms and subject to the conditions set
forth herein, and in accordance with the Maryland General Corporation Law
(the "MGCL") and the Delaware Limited Liability Company Act (the "DLLCA"),
whereby each issued and outstanding share of common stock, par value $.01
per share, of the Company (the "Company Common Stock") (other than shares
owned directly or indirectly by Buyer, any Subsidiary (as defined in
Section 3.5(a) hereof) of Buyer or by the Company or any wholly-owned
Subsidiary of the Company immediately prior to the Effective Time (as
defined in Section 1.1(b) hereof) and other than Dissenting Shares (as
defined in Section 1.10 hereof)), will, upon the terms and subject to the
conditions and limitations set forth herein, at the election of the holders
thereof either (A) be converted into (i) .3523 (the "Crescent Exchange
Ratio") of a share of beneficial interest, par value $.01 per share, of
Crescent (for purposes of this Agreement, "Crescent Common Stock");
provided that if the average closing price for the shares of Crescent
Common Stock on the New York Stock Exchange (the "NYSE") during the fifteen
consecutive trading days ending on the tenth trading day prior to the
Company Special Meeting (as defined in Section 5.2(b) hereof) (the
"Crescent Measured Price") is equal to or greater than 1.07 multiplied by
$34.0625, then the Crescent Exchange Ratio shall be equal to the quotient
of 12.84 divided by the Crescent Measured Price and (ii) .4615 (the
"Reckson Exchange Ratio") of a share of common stock, par value $.01 per
share, of Reckson ("Reckson Common Stock" and, together with Crescent
Common Stock, "Buying Entities' Common Stock"); provided further that if
the average closing price for the shares of Reckson Common Stock on the
NYSE during the fifteen trading days ending on the tenth trading day prior
to the Company Special Meeting (the "Reckson Measured Price") is equal to
or greater than 1.07 multiplied by 26, then the Reckson Exchange Ratio
shall be equal to the quotient of 12.84 divided by the Reckson Measured
Price or (B) be converted into the right to receive $24 per share of
Company Common Stock in cash payable to the holder thereof, without
interest;
WHEREAS, in connection with the Merger, the following additional
transaction will be effected (the Merger, together with the other
documents, agreements and transactions contemplated by this Agreement,
being referred to collectively as the "Transactions"): the parties hereto
shall cause the merger of Tower Realty Operating Partnership, L.P., a
Delaware limited partnership (the "Company Operating Partnership"), with
and into a newly formed entity created by Buyer, pursuant to which each
holder of a limited partnership interest (a "Company OP Unit") in the
Company Operating Partnership will receive the same consideration as such
holders would be entitled to pursuant to Section 1.2 hereof; and
WHEREAS, as a condition precedent to the execution of this
Agreement, Reckson, Crescent, Buyer and certain stockholders of the Company
have entered into certain voting agreements whereby each of such
stockholders have agreed to, subject to the terms and conditions of this
Agreement, vote at the Company Special Meeting (as defined in Section
5.2(a) hereof) one hundred percent (100%) of the shares of Company Common
Stock owned by each in favor of this Agreement and the Transactions.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements and conditions hereafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this
Agreement, and in accordance with the DLLCA and the MGCL, at the Effective
Time, the Company shall be merged with and into Buyer, whereupon the
separate existence of the Company shall cease, and Buyer shall continue as
the surviving entity (sometimes referred to herein as the "Surviving
Entity") and shall continue to be governed by the laws of the State of
Delaware and shall continue under the name "Metropolitan Partners LLC."
(b) Concurrently with the Closing (as defined in Section 1.12
hereof) the Company and Buyer will cause (i) a certificate of merger or
consolidation (the "Certificate of Merger") with respect to the Merger to
be executed and filed with the Office of the Secretary of State of the
State of Delaware (the "Delaware Secretary of State") pursuant to the DLLCA
and (ii) articles of merger (the "Articles of Merger") with respect to the
Merger to be executed and filed with the State Department of Assessment and
Taxation of Maryland (the "Maryland Department") pursuant to the MGCL. The
Merger shall become effective on the date and time at which the Certificate
of Merger and the Articles of Merger have been duly filed with the Delaware
Secretary of State and the Maryland Department, respectively, or at such
other date and time as is agreed between the parties and specified in the
Certificate of Merger and the Articles of Merger, and such date and time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Entity
shall possess all the rights, privileges, immunities, powers and franchises
and be subject to all of the obligations, restrictions, disabilities,
liabilities, debts and duties of the Company and Buyer.
SECTION 1.2 Effect on Shares of Company Common Stock and
Company OP Units. At the Effective Time:
(a) Conversion of Company Common Stock and Company OP Units.
Except as otherwise provided herein and subject to Section 1.4 hereof, each
share of Company Common Stock and each Company OP Unit issued and
outstanding immediately prior to the Effective Time (other than shares
cancelled pursuant to 1.2(b) hereof and Dissenting Shares) shall be
converted into the following (the "Merger Consideration"):
(i) for each share of Company Common Stock with respect to
which an election to receive Buying Entities' Common Stock has
been effectively made pursuant to Section 1.3 hereof and not
revoked or lost (a "Common Stock Election"), a number of shares
of Crescent Common Stock equal to the Crescent Exchange Ratio and
a number of shares of Reckson Common Stock equal to the Reckson
Exchange Ratio (collectively, "Common Stock Election Shares");
(ii) for each share of Company Common Stock other than
Common Stock Election Shares, the right to receive in cash an
amount equal to $24 (collectively, "Non-Electing Shares");
(iii) for each Company OP Unit with respect to which an
election to receive Buying Entities' Common Stock has been
effectively made in accordance with Section 1.3 hereof and not
revoked or lost (a "Company OP Election"), a number of shares of
Crescent Common Stock equal to the Crescent Exchange Ratio and a
number of shares of Reckson Common Stock equal to the Reckson
Exchange Ratio (collectively, "Company OP Election Units"); and
(iv) for each Company OP Unit other than Company OP Election
Units, the right to receive in cash an amount equal to $24
(collectively, "Non-Electing Units").
(b) Cancellation of Shares of Company Common Stock and Company
OP Units. Each share of Company Common Stock held by the Company as
treasury stock or owned by Buyer or any Subsidiary of Buyer immediately
prior to the Effective Time shall automatically be cancelled and retired
and cease to exist, and no consideration or payment shall be delivered
therefor or in respect thereto. All shares of Company Common Stock to be
converted into the Merger Consideration pursuant to this Section 1.2 shall,
by virtue of the Merger and without any action on the part of the holders
thereof, cease to be outstanding, be cancelled and retired and cease to
exist; and each holder of a certificate representing prior to the Effective
Time any such shares of Company Common Stock shall thereafter cease to have
any rights with respect to such shares of Company Common Stock, except the
right to receive (i) the Merger Consideration, (ii) any dividends and other
distributions in accordance with Section 1.2(c) hereof and (iii) any cash
to be paid in lieu of any fractional share of Buying Entities' Common Stock
in accordance with Section 1.5(d) hereof. All Company OP Units shall,
without any action on the part of the holders thereof, cease to be
outstanding, be cancelled and retired and cease to exist; and each holder
of a Company OP Unit prior to the Effective Time shall thereafter cease to
have any rights with respect to such Company OP Units, except the right to
receive (i) the Merger Consideration, (ii) any dividends and other
distributions in accordance with Section 1.2(c) and 1.5(c) hereof and (iii)
any cash to be paid in lieu of any fractional share of Buying Entities'
Common Stock in accordance with Section 1.5(d) hereof.
(c) Company Special Dividend. The Company shall declare a
dividend (the "Special Dividend") to its stockholders, the record date for
which shall be the close of business on the last business day prior to the
Closing. The Special Dividend shall be equal to the Company's most recent
quarterly dividend rate, multiplied by the number of days elapsed since the
last dividend record date through and including the Closing and divided by
ninety-one (91); provided, however, that the Special Dividend shall be
increased to the extent the Company reasonably determines that the amount
provided in the preceding clause may not be sufficient for the Company to
qualify as a REIT for its taxable year ended December 31, 1997, December
31, 1998 or its taxable year ended on the Closing Date. The Special
Dividend shall be paid in the ordinary course of business consistent with
past practices of the Company as to the manner and timing of payment.
Concurrently with the Special Dividend, an equivalent distribution shall be
made by the Company Operating Partnership.
SECTION 1.3 Share Election.
(a) Each Person (as defined in Section 1.6 hereof) who, on or
prior to the Election Date referred to in subsection (c) below, is a record
holder of shares of Company Common Stock or a record holder of Company OP
Units, as the case may be, shall have the right to submit a Form of
Election (as defined in Section 1.3(c) hereof) specifying the number of
shares of Company Common Stock or Company OP Units, as the case may be,
that such Person desires to be converted into Buying Entities' Common Stock
pursuant to the Common Stock Election or a Company OP Election.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 5.2(b) hereof), Buyer shall designate the Company's registrar or
transfer agent, or such other bank, trust company, Person or Persons as
shall be acceptable to the Company to act as exchange agent (the "Exchange
Agent") for the payment of the Merger Consideration.
(c) Buyer shall prepare and mail a form of election, which form
shall be subject to the reasonable approval of the Company (the "Form of
Election") with the Proxy Statement to the record holders of shares of
Company Common Stock and the record holders of Company OP Units as of the
record date for the Company Special Meeting, which Form of Election shall
be used by each record holder of shares of Company Common Stock and each
record holder of Company OP Units who wishes to elect to receive shares of
Buying Entities' Common Stock for any or all shares of Company Common Stock
or Company OP Units, as the case may be, held, subject to the provisions of
Section 1.4 hereof, by such holder. The Company shall use its reasonable
best efforts to make the Form of Election and the Proxy Statement available
to all Persons who become holders of shares of Company Common Stock during
the period between such record date and the Election Date. Any such
holder's election to receive shares of Buying Entities' Common Stock shall
have been properly made only if the Exchange Agent shall have received at
its designated office, by 5:00 p.m., New York City time on the business day
(the "Election Date") next preceding the date of the Company Special
Meeting, a Form of Election properly completed and signed and accompanied
by certificates for the shares of Company Common Stock or Company OP Units
to which such Form of Election relates, duly endorsed in blank or otherwise
in form acceptable for transfer on the books of the Company (or by an
appropriate guarantee of delivery of such certificates as set forth in such
Form of Election from a firm which is a member of a registered national
securities exchange or of the NYSE or a commercial bank or trust company
having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within five NYSE
trading days after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the stockholder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent prior to 5:00 p.m., New York City time on the Election Date.
In addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by Buyer and the Company that the
Merger has been abandoned. If a Form of Election is revoked, the
certificate or certificates (or guarantees of delivery, as appropriate) for
the share of Company Common Stock or Company OP Unit, if any, to which such
Form of Election relates shall promptly be returned to the stockholder
submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be binding as
to whether or not elections have been properly made or revoked pursuant to
this Section 1.3 with respect to shares of Company Common Stock and Company
OP Units and when elections and revocations were received by it. If the
Exchange Agent determines that any Common Stock Election was not properly
made with respect to shares of Company Common Stock or Company OP Units,
then such shares of Company Common Stock or Company OP Units shall be
treated by the Exchange Agent at the Effective Time as Non-Electing Shares,
and such shares shall be exchanged in the Merger for cash pursuant to
Section 1.2(a)(ii) hereof. If the Exchange Agent determines that any
Company OP Election was not properly made with respect to Company OP Units,
then such Company OP Units shall be treated by the Exchange Agent at the
Effective Time as Non-Electing Units, and such units shall be exchanged for
cash pursuant to 1.2(a)(iv) hereof. The Exchange Agent shall also make all
computations as to the allocation and the proration contemplated by Section
1.4 hereof, and any such computation shall be conclusive and binding on the
holders of shares of Company Common Stock and the holders of Company OP
Units. The Exchange Agent may, with the mutual agreement of Buyer and the
Company, make such rules as are consistent with this Section 1.3 for the
implementation of the elections provided for herein as shall be necessary
or desirable to effect such elections fully.
SECTION 1.4 Proration.
(a) Notwithstanding anything in this Agreement to the contrary,
the maximum number of shares of Company Common Stock and Company OP Units
which can be converted into shares of Buying Entities' Common Stock
pursuant to the Common Stock Election and Company OP Election shall be the
number determined by the formula in the following sentence (the "Maximum
Common Stock Election Number"). The Maximum Common Stock Election Number
shall be the number such that the product of (i) the Maximum Common Stock
Election Number multiplied by (ii) the sum of (x) the product of (A) the
Crescent Exchange Ratio multiplied by (B) the Crescent Stated Price and (y)
the product of (C) the Reckson Exchange Ratio multiplied by (D) the Reckson
Stated Price shall be equal to the product of (1) 16 multiplied by (2) the
excess of the total number of shares of Company Common Stock outstanding or
issuable upon exchange of Company OP Units immediately prior to the
Effective Time over the Maximum Common Stock Election Number.
(b) If the sum of (i) the number of Common Stock Election Shares
and (ii) the number of Company OP Election Units does not exceed the
Maximum Common Stock Election Number, then each Common Stock Election Share
and each Company OP Election Unit shall be converted into shares of Buying
Entities' Common Stock.
(c) If the sum of (i) the number of Common Stock Election Shares
and (ii) the number of Company OP Election Units exceeds the Maximum Common
Stock Election Number, then each Common Stock Election Share and each
Company OP Election Unit shall either (x) be converted into Buying
Entities' Common Stock or (y) be converted into the right to receive cash
in accordance with the terms of Section 1.2(a) hereof in the following
manner:
(i) A proration factor (the "Cash Proration Factor") shall
be determined by dividing the Maximum Common Stock Election Number by
the sum of (i) the total number of Common Stock Election Shares and
(ii) the total number of Company OP Election Units;
(ii) The number of Common Stock Election Shares covered by
each Common Stock Election and Company OP Election Units which are
covered by Company OP Elections which are converted into Buying
Entities' Common Stock shall be determined by multiplying the Cash
Proration Factor by the sum of (i) the number of Common Stock Election
Shares and (ii) the number of Company OP Election Units; and
(iii) All Common Stock Election Shares and Company OP
Election Units, other than those shares and units which are converted
into Buying Entities' Common Stock in accordance with clause (ii) of
this subsection (c), shall be converted into the right to receive cash
on a consistent basis among stockholders and unitholders who made the
elections referred to in Section 1.2(a)(i) and (iii) hereof, pro rata
to the number of shares of Company Common Stock and number of Company
OP Units as to which they made such election. Holders of Company
Common Stock who make a Common Stock Election pursuant to Section
1.2(a)(i) hereof and holders of Company OP Units who make a Company OP
Election in accordance with Section 1.2(a)(iii) hereof, but who
receive cash in accordance with this Section 1.4(c), shall have the
portion of their Merger Consideration received in Crescent Common
Stock and the portion of their Merger Consideration received in
Reckson Common Stock reduced proportionately to account for the
receipt of cash pursuant to this Section 1.4(c).
SECTION 1.5 Exchange of Certificates.
(a) At or promptly following the Effective Time, Buyer shall
deposit, or cause to be deposited with the Exchange Agent for the benefit
of holders of shares of Company Common Stock, cash and certificates
representing shares of Buying Entities' Common Stock, constituting the
Merger Consideration. For purposes of this Section 1.5, holders of Company
OP Units shall be treated in the same manner as holders of shares of
Company Common Stock.
(b) As of or promptly after, and in any event not later than one
business day following, the Effective Time, the Surviving Entity shall
cause the Exchange Agent to mail (and to make available for collection by
hand) to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates"), (i) a letter of transmittal and
a Form of Election (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and which shall be in
the form and have such other provisions as Buyer and the Company may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for (A) a certificate or
certificates representing the number of full shares of Buying Entities'
Common Stock, if any, into which all or a portion of the number of shares
of Company Common Stock previously represented by such Certificate have
been converted pursuant to this Agreement and (B) the amount of cash, if
any, into which all or a portion of the number of shares of Company Common
Stock previously represented by such Certificate shall have been converted
pursuant to this Agreement (which instructions shall provide that at the
election of the surrendering holder, Certificates may be surrendered, and
the Merger Consideration in exchange therefor collected, by hand delivery).
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a Form of Election and a letter of transmittal duly completed
and validly executed in accordance with the instructions thereto, and such
other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each share of Company Common Stock
formerly represented by such Certificate, to be mailed (or made available
for collection by hand if so elected by the surrendering holder) within
three business days of receipt thereof, and the Certificate so surrendered
shall be forthwith cancelled. The Exchange Agent shall accept such
Certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates.
(c) No dividends or other distributions with respect to shares
of Buying Entities' Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Buying Entities' Common Stock represented thereby
by reason of the conversion of shares of Company Common Stock pursuant to
Sections 1.2(a), 1.3 and 1.4 hereof and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
1.5(d) hereof until the surrender of such Certificate in accordance with
this Article I. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the person in
whose name the shares of Buying Entities' Common Stock are registered
(i) at the time of such surrender or as promptly after the sale of the
Excess Shares (as defined in Section 1.5(d) hereof) as practicable, the
amount of any cash payable in lieu of fractional shares of Buying Entities'
Common Stock to which such holder is entitled pursuant to Section 1.5(d)
hereof and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such Buying
Entities' Common Stock issued upon conversion of Company Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with
respect to such Buying Entities' Common Stock.
(d) Notwithstanding any other provision of this Agreement, no
fraction of a share of Buying Entities' Common Stock shall be issued in
connection with the Merger, and such fractional interest shall not entitle
the owner thereof to vote or to any rights as a security holder of the
Buying Entities. In lieu of any such fractional security, each holder of
shares of Company Common Stock otherwise entitled to a fraction of a share
of Buying Entities' Common Stock will be entitled to receive in accordance
with the provisions of this Section 1.5 from the Exchange Agent, a cash
payment representing such holder's proportionate interest in the net
proceeds from the sale by the Exchange Agent on behalf of all such holders
of the aggregate of the fractions of Buying Entities' Common Stock which
would otherwise be issued (the "Excess Shares"). The sale of the Excess
Shares by the Exchange Agent shall be executed on the NYSE through one or
more member firms of the NYSE and shall be executed in round lots to the
extent practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of shares of Company Common Stock, the Exchange
Agent will, subject to Section 1.5(e) hereof, hold such proceeds in trust
for the holders of shares of Company Common Stock (the "Excess Shares
Trust"). Buyer shall pay all commissions, transfer taxes and other out-of-
pocket transaction costs, including the expenses and compensation, of the
Exchange Agent incurred in connection with such sale of the Excess Shares.
As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of shares of Company Common Stock in lieu of any
fractional Buying Entities' Common Stock, the Exchange Agent shall make
available such amounts to such holders of shares of Company Common Stock.
(e) Any portion of the Merger Consideration deposited with the
Exchange Agent pursuant to this Section 1.5 (the "Exchange Fund") which
remains undistributed to the holders of the Certificates for one year after
the Effective Time shall be delivered to Buyer, upon demand, and any
holders of shares of Company Common Stock prior to the Merger who have not
theretofore complied with this Article I shall thereafter look only to
Buyer and only as general creditors thereof for payment of their claim for
(i) cash, if any, (ii) shares of Buying Entities' Common Stock, if any,
(iii) any cash in lieu of fractional shares of Buying Entities' Common
Stock and (iv) any dividends or distributions with respect to shares of
Buying Entities' Common Stock to which such holders may be entitled.
(f) None of Buyer, the Buying Entities, the Company or the
Exchange Agent shall be liable to any Person in respect of shares of Buying
Entities' Common Stock or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law. If any Certificates shall not have been surrendered prior to one year
after the Effective Time (or immediately prior to such earlier date on
which (i) any cash, (ii) any cash in lieu of fractional shares of retained
shares of Buying Entities' Common Stock, (iii) any shares of Buying
Entities' Common Stock or (iv) any dividends or distributions with respect
to shares of Buying Entities' Common Stock in respect of which such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.3(b) hereof)), any such shares
of Buying Entities' Common Stock, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable
law, become the property of Buyer, free and clear of all claims or interest
of any Person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Buyer on a daily basis. Any interest and
other income resulting from such investments shall be paid to the Company.
Nothing contained in this Section 1.5(g) shall relieve Buyer, the Buying
Entities or the Exchange Agent from making the payments required by this
Article I to be made to the holders of shares of Company Common Stock and
to holders of Company Stock Options (as defined in Section 1.9 hereof).
SECTION 1.6 Transfer Taxes; Withholding. If the Merger
Consideration is to be paid to a Person other than a Person in whose name
the Company Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Company Certificate so
surrendered in exchange therefor shall be properly endorsed and otherwise
in proper form for transfer and that the Person requesting such exchange
shall pay to the Exchange Agent any transfer or other Taxes required by
reason of the payment of the Merger Consideration to a Person other than
the registered holder of the Company Certificate so surrendered, or shall
establish to the satisfaction of the Exchange Agent that such Tax has been
paid or is not applicable. "Person" means any natural person, firm,
individual, corporation, limited liability company, partnership,
association, joint venture, company, business trust, trust or any other
entity or organization, whether incorporated or unincorporated, including a
government or political subdivision or any agency or instrumentality
thereof.
SECTION 1.7 No Further Ownership Rights in Shares of Company
Common Stock. The Merger Consideration delivered upon the surrender for
exchange of any Company Certificate in accordance with the terms hereof
shall be deemed to have been delivered (and paid) in full satisfaction of
all rights pertaining to the shares of Company Common Stock previously
represented by such Company Certificate.
SECTION 1.8 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed,
and no transfer of shares of Company Common Stock shall thereafter be made.
Subject to the last sentence of Section 1.5 hereof, if after the Effective
Time Company Certificates are presented to the Surviving Entity, they shall
be cancelled and exchanged as provided in this Article I.
SECTION 1.9 Stock Options.
(a) Each option to acquire shares of Company Common Stock
("Company Stock Option") set forth in Schedule 3.12 of the disclosure
schedule of the Company attached hereto (the "Company Disclosure Schedule")
that is outstanding immediately prior to the Effective Time, whether or not
then vested or exercisable, shall, effective as of the Effective Time,
become fully exercisable and vested and each such Company Stock Option
shall, subject to obtaining the required consent, if any, of each holder of
Company Stock Options, be cancelled. In consideration of such
cancellation, the Company shall pay to each such holder of Company Stock
Options an amount in cash in respect thereof equal to the product of (1)
the excess, if any, of $24 over the exercise price of such Common Stock
Option and (2) the number of shares of Company Common Stock subject
thereto. The Company's obligations to make such payment to any holder of
Company Stock Options shall be subject to having received the required
consent, if any, of such holder to the cancellation of such Options and the
Company shall use its reasonable best effort to obtain such consents prior
to the Effective Time.
SECTION 1.10 Restricted Stock. All unvested shares of
restricted stock of the Company, set forth in Schedule 1.10 of the Company
Disclosure Schedule, shall, by virtue of this Agreement and without further
action of the Company, Buyer or the holder of such restricted shares, to
the extent required in the plan, agreement or instrument pursuant to which
such restricted stock was granted, vest and become free of all restrictions
immediately prior to the Effective Time and shall be converted into the
Merger Consideration pursuant to Section 1.2 hereof.
Section 1.11 Dissenting Shares. Notwithstanding Section 1.2(b)
hereof, shares of Common Stock issued and outstanding immediately prior to
the Effective Time and held by a holder who has properly exercised and
perfected appraisal rights under Title 3. Subtitle 2. of the MGCL (the
"Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, but the holders of Dissenting Shares shall be
entitled to receive such consideration as shall be determined pursuant to
Title 3. Subtitle 2. of the MGCL; provided, however, that if any such
holder shall have failed to perfect or shall effectively withdraw or lose
his or her right to appraisal and payment under the MGCL, such holder's
shares of Company Common Stock shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive Merger
Consideration as set forth in Section 1.2(a) hereof, and such shares of
Common Stock shall no longer be Dissenting Shares.
SECTION 1.12 Closing. Subject to the satisfaction or waiver of
the conditions set forth in Article VIII hereof, the closing of the Merger
(the "Closing") will take place at 10:00 a.m., New York City time, on a
date to be specified by the parties hereto, which shall be no later than
the second business day after the satisfaction of the conditions set forth
in Section 8.1 hereof, at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York, unless another time, date
or place is agreed to in writing by the parties hereto (such date, the
"Closing Date").
ARTICLE II
THE SURVIVING ENTITY
SECTION 2.1 Certificate of Formation. The Certificate of
Formation of Buyer shall be the certificate of formation of the Surviving
Entity until thereafter amended in accordance with applicable law.
SECTION 2.2 Operating Agreement. The operating agreement of
Buyer in effect at the Effective Time shall be the operating agreement of
the Surviving Entity until thereafter amended in accordance with applicable
law, the certificate of formation of the Surviving Entity and the operating
agreement of the Surviving Entity.
SECTION 2.3 Members and Managers. From and after the
Effective Time, the members and managers of Buyer at the Effective Time
shall be the initial members and managers of the Surviving Entity, in each
case until their respective successors are duly elected or appointed and
qualified in accordance with applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
SECTION 3.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland, and except as set forth in Schedule 3.1
of the Company Disclosure Schedule, has all corporate powers and all
governmental licenses, authorizations, consents and approvals
(collectively, "Licenses") required to carry on its business as now
conducted except for failures to have any such License which would not,
individually or in the aggregate, have a Material Adverse Effect (as
defined hereafter). The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned, leased or operated by it or the nature of
its activities makes such qualification necessary, except for those
jurisdictions where failures to be so qualified would not, in the
aggregate, have a Material Adverse Effect. As used herein, the term
"Material Adverse Effect" means a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations of the
Company and its Subsidiaries, or Reckson and Crescent and their respective
Subsidiaries, as the case may be, in each case taken as a whole, that is
not a result of a decline or deterioration in the economy in general or the
real estate markets in which such entities operate. Notwithstanding the
foregoing, for purposes of Sections 3.14 and 3.17 hereof, a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole, shall
include, without limitation, the Company being deprived of all or
substantially all of its beneficial ownership of or rights to use any Key
Property (as defined hereafter), and the Company continuing to be deprived
of such interests as of the date of termination of this Agreement pursuant
to Section 7.1(b) or (d) hereof, as the case may be. For purposes of this
Agreement, the term "Key Properties" shall mean: Tower 45, New York, New
York; 100 Wall Street, New York, New York; 810 Seventh Avenue, New York,
New York; One Orlando Center, Orlando, Florida. The Company has heretofore
made available to Reckson, Crescent and Buyer (collectively, the "Buying
Entities") complete and correct copies of its articles of incorporation and
the by-laws of the Company (the "Articles of Incorporation" and "Company
By-laws," respectively) as currently in effect.
SECTION 3.2 Corporate Authorization. The Company has the
requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval of the Company's stockholders as
contemplated by Section 5.2 hereof, to perform its obligations hereunder.
The execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by the Board of
Directors of the Company and, other than the approval and adoption of this
Agreement by the requisite vote of the Company's stockholders, no other
corporate proceedings on the part of the Company are necessary to authorize
the execution, delivery and performance of this Agreement. This Agreement
has been duly executed and delivered by the Company and constitutes,
assuming due authorization, execution and delivery of this Agreement by
each of the Buying Entities, a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
SECTION 3.3 Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 3.3(a) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement
nor the performance by the Company of its obligations hereunder will
(i) conflict with or result in any breach of any provision of the Articles
of Incorporation or the Company By-laws; (ii) result in a breach or
violation of, a default under, or the triggering of any payment or other
material obligations pursuant to, or except as otherwise contemplated by
Sections 1.9 and 1.10 hereof, accelerate vesting under, any of the Company
stock option or other benefit plans, or any grant or award made under any
of the foregoing; (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration or
obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) or result in the creation of any Lien (as defined in Section
3.5(b) hereof) upon any properties of the Company or any of its
Subsidiaries (other than Company Permitted Liens) under any of the terms,
conditions or provisions of, any note, mortgage, indenture, letter of
credit, other evidence of indebtedness, franchise, permit, guarantee,
license, lease or agreement or similar instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them
or any of their assets may be bound or (iv) assuming that the filings,
registrations, notifications, authorizations, consents and approvals
referred to in subsection (b) below have been obtained or made, as the case
may be, violate any order, injunction, decree, statute, rule or regulation
of any Governmental Entity (as defined in Section 3.3(b) hereof) to which
the Company or any of its Subsidiaries is subject, excluding from the
foregoing clauses (ii), (iii) and (iv) such requirements, defaults,
breaches, rights, violations or creations of such liens, security
interests, charges or encumbrances (A) that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect and would not
reasonably be expected to have a material adverse effect on the ability of
the Company to perform its obligations hereunder or (B) that become
applicable as a result of the business or activities in which any of the
Buying Entities or any of their respective affiliates is or proposes to be
engaged or any acts or omissions by, or facts pertaining to, any of the
Buying Entities.
(b) Except as set forth in Schedule 3.3(b) of the Company
Disclosure Schedule, no filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board bureau, department, political subdivision or
other instrumentality of any government (including any regulatory or
administrative agency), whether federal, state, multinational (including,
but not limited to, the European Community), provincial, municipal,
domestic or foreign (each, a "Governmental Entity"), is required in
connection with the execution and delivery of this Agreement by the Company
or the performance by the Company of its obligations hereunder, except
(i) the filing of the Certificate of Merger in accordance with the DLLCA
and the Articles of Merger in accordance with the MGCL and filings to
maintain the good standing of the Surviving Entity; (ii) compliance with
any applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Exchange Act"); (iii) compliance with any applicable requirements of
state takeover laws; (iv) any Tax Returns (as defined in Section 3.11(d)
hereof) that may be required in connection with the Merger and (v) such
other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and would not have a material adverse effect
on the ability of the Company to perform its obligations hereunder or (B)
that become applicable as a result of the business or activities in which
any of the Buying Entities or any of their respective affiliates is or
proposes to be engaged or any acts or omissions by, or facts pertaining to,
any of the Buying Entities.
SECTION 3.4 Capitalization.
(a) The authorized capital stock of the Company consists of
150,000,000 shares of Company Common Stock and 50,000,000 shares of
preferred stock, par value $.01 per share, of the Company (the "Company
Preferred Stock"). As of May 31, 1998, there were (i) 16,959,355 shares of
Company Common Stock and (ii) no shares of Company Preferred Stock issued
and outstanding. All shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and are
free of pre-emptive rights. As of May 31, 1998, there were (i) outstanding
Company Stock Options in respect of 1,268,597 shares of Company Common
Stock at an option price, in each case, equal to $26 per share, which
Options were granted pursuant to the Company's 1997 Incentive Plan (the
"1997 Plan") and an additional 338,846 shares of Company Common Stock
available for future grants pursuant to the 1997 Plan through December 31,
1998, (ii) up to 200,000 shares of Company Common Stock authorized for
possible issuance pursuant to the Company's 1997 Directors' Plan (the
"Director Plan"), (iii) no agreements with respect to stock bonuses for
shares of Company Common Stock and (iv) 2,000,000 shares of Company Common
Stock reserved for issuance upon exchange of limited partnership interests
in the Company Operating Partnership ("Company OP Units").
(b) Except (i) as set forth in this Section 3.4, (ii) for
Company OP Units (which, subject to certain restrictions, may be exchanged
by holders thereof for shares of Company Common Stock), (iii) as required
under the Second Amendment and Restatement of Agreement of Limited
Partnership of the Company Operating Partnership, as amended (the "Company
Operating Partnership Agreement"), (iv) for changes since April 30, 1998
resulting from the exercise of Options outstanding on such date and (v) as
set forth in Schedule 3.4 of the Company Disclosure Schedule, there are
outstanding (A) no shares of capital stock or other voting securities or
partnership interests of the Company, (B) no securities of the Company or
any Subsidiary of the Company convertible into or exchangeable for shares
of capital stock or voting securities or partnership interests of the
Company and (C) no options or other rights to acquire from the Company, and
no obligation of the Company to issue, any capital stock, voting securities
or partnership interests or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses
(A), (B) and (C) being referred to collectively as the "Company
Securities"). Except (x) as required pursuant to rights of first refusal
or rights of first offer, "buy-sell" provisions, anti-dilution provisions
or pro-rata funding obligations set forth in the terms of any partnership
or joint venture agreement governing any of the partnerships, joint
ventures or business trusts in which the Company Operating Partnership owns
an interest (collectively, the "Company Joint Ventures") existing on the
date of this Agreement, a list of which is set forth in Schedule 3.4 of the
Company Disclosure Schedule , (y) as set forth in Schedule 3.4 of the
Company Disclosure Schedule and (z) as required under the Company Operating
Partnership Agreement, there are no outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities or any capital stock, voting securities or other
ownership interests in any Subsidiary of the Company or make any material
investment (in the form of a loan, capital contribution or otherwise) in
any Person (other than a Subsidiary of the Company or a wholly owned
Company Joint Venture).
SECTION 3.5 Subsidiaries.
(a) Each Subsidiary of the Company that is actively engaged in
any business or owns any material assets (each, an "Active Subsidiary")
(i) that is a corporation is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation,
(ii) that is a partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization, (iii) except as set forth in Schedule 3.5(a) of the Company
Disclosure Schedule, has all corporate power and authority to, and all
governmental licenses, authorizations, consents and approvals required to,
carry on its business as now conducted and (iv) is duly qualified or
licensed to do business and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification or licensing necessary, except for
failures of this representation and warranty to be true which would not, in
the aggregate, have a Material Adverse Effect. For purposes of this
Agreement, "Subsidiary" means with respect to any Person, any corporation
or other entity of which such Person owns, directly or indirectly, more
than 50% of the outstanding voting stock or other equity interests. All
Subsidiaries and their respective jurisdictions of incorporation are
identified in Schedule 3.5(a) of the Company Disclosure Schedule.
(b) Except as set forth in Schedule 3.5(b) of the Company
Disclosure Schedule, (i) all of the outstanding shares of capital stock of
each Subsidiary of the Company that is a corporation are duly authorized,
validly issued, fully paid and nonassessable, and such shares are owned by
the Company or by a Subsidiary of the Company (other than directors'
qualifying shares and nominal shares held by other Persons as may be
required by local law) free and clear of any Liens (as defined hereafter)
or limitations on voting rights and (ii) all equity interests in each
Subsidiary of the Company that is a partnership, joint venture, limited
liability company or trust are owned by the Company or by a Subsidiary of
the Company, free and clear of any Liens or limitations on voting rights;
provided that no representation is made as to any shares of capital stock
or other equity interests owned by any Persons other than the Company.
Except as set forth in Schedule 3.5(b) of the Company Disclosure Schedule,
there are no subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character relating to
the issuance, transfer, sale, delivery, voting or redemption (including any
rights of conversion or exchange under any outstanding security or other
instrument) for, any of the capital stock or other equity interests of any
of such Subsidiaries. Except as set forth in Schedule 3.5(b) of the
Company Disclosure Schedule, there are no agreements requiring the Company
or any of its Subsidiaries to make contributions to the capital of, or lend
or advance funds to, any Subsidiaries of the Company. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
(c) Except for interests in the Subsidiaries and except as set
forth in Schedule 3.5(c) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than
investments in short-term investment securities).
SECTION 3.6 SEC Documents. The Company has timely filed all
required reports, proxy statements, forms and other documents with the SEC
since October 16, 1997 (the "Company SEC Documents"). As of their
respective dates, and giving effect to any amendments thereto, (a) the
Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the applicable rules and regulations of the SEC promulgated thereunder
and (b) none of the Company SEC Documents (except as to the financial
statements contained therein, which are dealt with in Section 3.7 hereof)
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.7 Financial Statements. The financial statements of
the Company (including, in each case, any notes and schedules thereto)
included in the Company SEC Documents (a) comply as to form in all material
respects with all applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (b) are in
conformity with generally accepted accounting principles ("GAAP"), applied
on a consistent basis (except in the case of unaudited statements, as
permitted by Form 10-Q as filed with the SEC under the Exchange Act) during
the periods involved (except as may be indicated in the related notes and
schedules thereto) and (c) fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
SECTION 3.8 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 3.8 of the Company Disclosure Schedule or in the Company
SEC Documents filed prior to the date hereof, neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be
set forth on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes thereto except for those that
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
SECTION 3.9 Proxy Statement; Form S-4 Registration Statement;
Other Information. None of the information with respect to the Company or
its Subsidiaries to be included in the Proxy Statement (as defined in
Section 5.2(b) hereof) or any amendments thereof or supplements thereto or
the Form S-4 Registration Statement (as defined in Section 5.15 hereof)
will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement or
such amendments or supplements thereto, and at the time of the Company
Special Meeting, or, in the case of the Form S-4 Registration Statement, at
the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information related
to any of the Buying Entities or any of their respective affiliates
included in the Proxy Statement or the Form S-4 Registration Statement, as
the case may be. The Proxy Statement and the Form S-4 Registration
Statement will each comply as to form in all material respects with the
provisions of the Exchange Act and the Securities Act, respectively, and
the rules and regulations promulgated under each of such statutes.
SECTION 3.10 Absence of Material Adverse Changes, etc. Except
as disclosed in the Company SEC Documents filed by the Company and as set
forth in Schedule 3.10 of the Company Disclosure Schedule, (i) since March
31, 1998, the Company and its Subsidiaries have conducted their business in
the ordinary course of business consistent with past practice and there has
not been a Material Adverse Effect and (ii) since December 31, 1997, there
has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution (other than regular quarterly dividends or regular
distributions pursuant to the Company Operating Partnership Agreement (or
as necessary to maintain REIT status)) with respect to the shares of
Company Common Stock or the Company OP Units, or any repurchase, redemption
or other acquisition by the Company or any Subsidiary of the Company of (x)
any outstanding shares of capital stock or other equity securities of, or
other ownership interests in, the Company or (y) the Company OP Units;
(b) any amendment of any material term of any outstanding
security issued by the Company or any Subsidiary of the Company;
(c) any incurrence, assumption or guarantee by the Company or
any Subsidiary of the Company of any indebtedness for borrowed money other
than in the ordinary course of business which, in any event, does not
exceed $287,000,000 in the aggregate through the date of this Agreement;
(d) any creation or assumption by the Company or any Subsidiary
of the Company of any Lien on any asset other than in the ordinary course
of business and other than Liens which, in the aggregate, do not have and
could not reasonably be expected to have a Material Adverse Effect;
(e) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company
or any Subsidiary of the Company which has had a Material Adverse Effect;
(f) any change in any method of accounting or accounting
practice by the Company or any Subsidiary of the Company, except for any
such change required by reason of a change in GAAP;
(g) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary of the
Company, (ii) employment, deferred compensation or other similar agreement
(or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary of the Company entered
into, (iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any Subsidiary of the Company, in each case,
other than in the ordinary course of business;
(h) any commitment or contractual obligation relating to any
capital expenditure (each, a "Commitment") entered into by the Company or
any of its Subsidiaries, other than immaterial Commitments in the ordinary
course of business; or
(i) any authorization of, or commitment or agreement to take any
of, the foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.11 Taxes.
(a) Except as set forth in Schedule 3.11 of the Company
Disclosure Schedule, (i) all Tax Returns (as defined in Section 3.11(d)
hereof) required to be filed by or with respect to Taxes of the Company and
each of its Subsidiaries as of the date hereof have been filed in a timely
manner (taking into account all lawful extensions of due dates) other than
those Tax Returns as to which the failure to file would not reasonably be
expected to have a Material Adverse Effect, and all such Tax Returns are
true, complete and correct in all material respects, (ii) all Taxes due and
payable have been timely paid or adequate provision in accordance with GAAP
with respect to the matters covered by such Tax Returns has been made for
the payment therefor, (iii) the Company and each of its Subsidiaries has
properly accrued all Taxes for periods subsequent to the periods covered by
such Tax Returns, (iv) the Company and each of its Subsidiaries have not
received any written notice of deficiency or assessment from any taxing
authority with respect to liabilities for Taxes of the Company or its
Subsidiaries that have not been fully paid, finally settled or contested in
good faith, (v) neither the Company nor any of its Subsidiaries has
executed or filed with any taxing authority any agreement now in effect
extending the period for assessment or collection of any Taxes (except for
extensions to file Tax Returns which may have such effect), (vi) there are
no Liens with respect to Taxes upon any of the properties or assets of the
Company or its Subsidiaries and (vii) since the date of the most recently
audited financial statements of the Company and each of its Subsidiaries,
the Company has incurred no liability for Taxes under Sections 857(b),
860(c) or 4981 of the Code, including without limitation, any Tax arising
from a prohibited transaction described in Section 857(b)(6) of the Code,
and neither the Company nor any of its Subsidiaries has incurred any
liability for Taxes other than in the ordinary course of business.
(b) The Company (i) will elect to be taxed as a real estate
investment trust (a "REIT") within the meaning of the Code commencing with
its taxable year ending December 31, 1997, (ii) for all taxable years
commencing with its taxable year ending December 31, 1997, has been
organized and operated in conformity with the requirements for taxation as
a REIT within the meaning of Section 856 of the Code, (iii) has operated to
the date hereof, and intends to continue to operate, in such a manner as to
qualify as a REIT for all of its taxable years ending on or prior to the
Closing, and (iv) has not taken or omitted to take any action which would
result in a successful challenge to its status as a REIT and, to the
knowledge of the Company, no such challenge is pending or threatened.
(c) Each of the Company's corporate Subsidiaries is a Qualified
REIT Subsidiary as defined in Section 856(i) of the Code, and each
partnership, limited liability company or joint venture in which the
Company (either directly or indirectly) owns an equity interest thereof has
been treated since its formation and continues to be treated for federal
income tax purposes as a partnership and not as an association taxable as a
corporation.
(d) For purposes of this Agreement, (i) "Taxes" means all taxes,
levies or other like assessments, charges or fees (including estimated
taxes, charges and fees), including, without limitation, income,
corporation, advance corporation, gross receipts, transfer, excise,
property, sales, use, value-added, license, payroll, withholding, social
security and franchise or other governmental taxes or charges, imposed by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, and such term shall include any interest,
penalties or additions to tax attributable to such taxes and (ii) "Tax
Return" means any report, return, statement or other written information
required to be supplied to a taxing authority in connection with Taxes.
SECTION 3.12 Employee Benefit Plans and Employee Matters.
(a) Schedule 3.12 of the Company Disclosure Schedule contains a
true and complete list of each deferred compensation, incentive
compensation and equity compensation plan; "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (each, an
"ERISA Affiliate"), that together with the Company would be deemed a
"single employer" within the meaning of section 4001(b) of ERISA, or to
which the Company or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee or former employee of the Company or any
United States Subsidiary of the Company (collectively, the "Plans").
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Buyer true and complete copies of the Plan
and any amendments thereto (or if the Plan is not a written Plan, a
description thereof), any related trust or other funding vehicle, any
reports or summaries required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with
respect to each Plan intended to qualify under section 401 of the Code.
(c) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 of the Code. No material liability under Title IV or section
302 of ERISA has been incurred by the Company or any ERISA Affiliate that
has not been satisfied in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation (which premiums have been paid when due).
(d) No Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, a plan described in section 4063(a) of ERISA or a
"welfare benefit fund" as defined in Section 419(e) of the Code.
(e) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but
not limited to, ERISA and the Code.
(f) Except as set forth in Schedule 3.12(f) of the Company
Disclosure Schedule, each Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and the Company is
not aware of any circumstances that could reasonably be expected to result
in revocation of any such favorable determination letter.
(g) Except as set forth in Schedule 3.12(g) of the Company
Disclosure Schedule, no Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees of the Company or any Subsidiary for periods extending beyond
their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan,"
or (iii) benefits the full cost of which is borne by the current or former
employee (or his or her beneficiary).
(h) There are no pending, or, to the knowledge of the Company,
threatened or anticipated, claims that would reasonably be expected to have
a Material Adverse Effect by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(i) Except with respect to Company Stock Options and 10,000
shares of restricted stock which vest upon the Merger, and except as set
forth in Schedule 3.12(i) of the Company Disclosure Schedule, the
consummation of the Transactions will not, either alone or in combination
with another event, (A) entitle any current or former employee, officer,
director or independent contractor of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement; (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
officer, director or independent contractor; (C) constitute a "prohibited
transaction" (as defined in section 406 of ERISA or section 4975 of the
Code); or (D) entitle any such employee, director or independent contractor
to an "excess parachute payment" within the meaning of Section 280G of the
Code.
(j) No "reportable event" (other than those for which the 30-day
notice to the Pension Benefit Guaranty Corporation has been waived) or
"prohibited transaction" (other than those for which there is an available
exemption), as such terms are defined in ERISA and the Code, as applicable,
has occurred with respect to any Plan during the five years preceding the
Closing Date.
(k) Except as set forth on Schedule 3.12(k) of the Company
Disclosure Schedule, all contributions required to be made by the Company
or any ERISA Affiliate under applicable law or the terms of any Plan or
collective bargaining agreement to each Plan have been made within the time
prescribed by such law, Plan or collective bargaining agreement.
(l) Except as set forth on Schedule 3.12(l) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries and
affiliates (i) is in material compliance with all applicable law respecting
employment, employment practices, terms and conditions of employment and
wages and hours, in each case, with respect to current and former
employees, directors and independent contractors of the Company and such
Subsidiaries and affiliates, (ii) has withheld all amounts required by
applicable law or by agreement to be withheld from the wages, salaries and
other payments to such current and former employees, directors and
independent contractors, (iii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing,
and (iv) is not liable for any payment to any trust or other fund or to any
governmental entity, with respect to unemployment compensation benefits,
social security or other benefits, for such current or former employees,
directors and independent contractors.
(m) Except as set forth on Schedule 3.12(m) of the Company
Disclosure Schedule, (i) no employees of the Company or any of its
Subsidiaries or affiliates are represented by any labor organization and
there is no union organizational activity currently underway, or to the
Company's knowledge, threatened, with respect to any such employees, (ii)
neither the Company nor any of its Subsidiaries or affiliates is engaged
in, or has received any written notice during the current or preceding year
of, any unfair labor practice, and no such complaint is pending before the
National Labor Relations Board or any other agency having jurisdiction
thereof, (iii) neither the Company nor any of its Subsidiaries or
affiliates is engaged in, or has received any notice of, any grievances
arising under any collective bargaining agreements, or any pending
arbitration proceedings under any collective bargaining agreements,
(iii) during the immediately preceding twenty-four (24) calendar months
there has not been any and, to the knowledge of the Company, there is no
threatened labor strike, work stoppage or slowdown pending against any
portion of the Company or any of its Subsidiaries or affiliates, and there
is no pending lockout by the Company or any of its Subsidiaries or
affiliates. The Company and each of its Subsidiaries and affiliates has
satisfied and performed fully its obligations under each collective
bargaining agreement, and under any order, conciliation contract or
settlement contract by which any of them is bound or to which any of them
is subject concerning employment related matters.
(n) Except as set forth on Schedule 3.12(n) of the Company
Disclosure Schedule, each Plan that is a "group health plan" (as defined in
section 4980B of the Code) has been operated substantially in material
compliance with section 4980B of the Code and the secondary payor
requirements of section 1862(b)(1) of the Social Security Act.
(o) Except as set forth on Schedule 3.12(o) of the Company
Disclosure Schedule, the Company has reserved all rights necessary to amend
unilaterally each Plan and to terminate its participation in any Plan.
SECTION 3.13 Litigation. Except as set forth in either the
Company SEC Documents or in Schedule 3.13 of the Company Disclosure
Schedule or otherwise fully covered by insurance, there is no action, suit
or proceeding pending against, or to the knowledge of the Company
threatened against, the Company or any Subsidiary of the Company or any of
their respective properties before any court or arbitrator or any
Governmental Entity which (i) is pending on the date of this Agreement and
seeks to prevent or delay the Transactions or challenges any of the terms
or provisions of this Agreement or seeks material damages in connection
therewith ("Deal Litigation") or (ii) except for Deal Litigation, would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Compliance with Laws. Except as set forth in
Schedule 3.14 of the Company Disclosure Schedule, the Company and its
Subsidiaries are in compliance with all applicable laws, ordinances, rules
and regulations of any Governmental Entity applicable to their respective
businesses and operations, including any Company Real Property, except for
such violations, if any, which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. All governmental
approvals, permits and licenses (collectively, "Permits") required to
conduct the business of the Company and its Subsidiaries, including any
Company Real Property, have been obtained, are in full force and effect and
are being complied with except for such violations and failures to have
Permits in full force and effect, if any, which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.15 Certain Contracts and Arrangements. Schedule 3.15
of the Company Disclosure Schedule sets forth a list of the following
contracts and commitments to which the Company or any of its Active
Subsidiaries is a party: (i) all management agreements relating to the
Company Real Property, (ii) all leasing brokerage agreements, (iii) all
service contracts that relate to services in excess of $75,000 per annum
and that are not terminable by Company or its Subsidiary on notice of 90
days or less without penalty and (iv) all collective bargaining agreements,
if any, and includes a description of arrangements with independent
contractors for the provision of services to certain of the Company Real
Property (as defined in Section 3.17(a) hereof). Except as set forth in
Schedule 3.15 of the Company Disclosure Schedule, each material contract or
agreement, commitment and instrument to which the Company or any of its
Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to
the knowledge of the Company, any other party thereto, is in breach of, or
default under, any such contract, agreement, commitment or instrument, and
no event has occurred that with notice or passage of time or both would
constitute such a breach or default thereunder by the Company or any of its
Subsidiaries, or, to the knowledge of the Company, any other party thereto,
except for such failures to be in full force and effect and such breaches
and defaults which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
SECTION 3.16 Environmental Matters.
(a) (i) "Cleanup" means all actions required to: (A)
cleanup, remove, treat or remediate Hazardous Materials (as defined
hereafter) in the indoor or outdoor environment; (B) prevent the
Release (as defined hereafter) of Hazardous Materials so that they do
not migrate, endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment; (C) perform pre-remedial studies
and investigations and post-remedial monitoring and care; or
(D) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or
potential cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
(ii) "Environmental Claim" means any claim, action, cause
of action, investigation or written notice by any Person alleging
potential liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (A)
the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its
Subsidiaries or (B) circumstances forming the basis of any violation
of any Environmental Law (as defined hereafter).
(iii) "Environmental Laws" means all federal, state, local
and foreign laws and regulations relating to pollution or protection
of the environment, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, transport or handling of Hazardous Materials.
(iv) "Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National
Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
section 300.5, or defined as such by, or regulated as such under, any
Environmental Law.
(v) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the environment (including, without
limitation, ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any property, including the
movement of Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
(b) (i) Except as set forth in Schedule 3.16(b)(i) of the
Company Disclosure Schedule, to the knowledge of the Company, the
Company and its Subsidiaries are in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and its Subsidiaries of all permits and
other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof), except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.16(b)(i) of the Company Disclosure
Schedule, since January 1, 1996 and prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries has
received any communication (written or oral), whether from a
Governmental Entity, citizens' group, employee or otherwise, alleging
that the Company or any of its Subsidiaries is not in such compliance,
except where failures to be in compliance would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(ii) Except as set forth in Schedule 3.16(b)(ii) of the
Company Disclosure Schedule, there is no Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against
any Person whose liability for any Environmental Claim the Company or
any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law that would reasonably be expected
to have a Material Adverse Effect.
(iii) Except as set forth in Schedule 3.16(b)(iii) of the
Company Disclosure Schedule, there are no present or, to the knowledge
of the Company, past, actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the Release or
presence of any Hazardous Material that could form the basis of any
Environmental Claim against the Company or any of its Subsidiaries or,
to the knowledge of the Company, against any Person whose liability
for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation
of law that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(iv) The Company agrees to cooperate with Buyer to effect
the transfers of any permits or other governmental authorizations
under Environmental Laws that will be required to permit Buyer to
conduct the business as conducted by the Company and its Subsidiaries
immediately prior to the Closing Date.
SECTION 3.17 Real Property.
(a) For purposes of this Agreement, "Company Permitted Liens"
means (i) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business for sums not yet due and payable and such Liens as are
being contested by the Company in good faith, (ii) Liens arising or
resulting from any action taken by any of the Buying Entities,
(iii) matters that would be disclosed by an accurate survey or inspection
of the Company Real Property, (iv) Liens for current Taxes not yet due or
payable, (v) any covenants, conditions, restrictions, reservations, rights,
Liens, easements, encumbrances, encroachments and other matters affecting
title which are shown as exceptions on the Company's title insurance
policies and/or title commitments or reports which have been made available
to the Buying Entities, (vi) any other covenants, conditions, restrictions,
reservations, rights, non-monetary Liens, easements, encumbrances,
encroachments and other matters affecting title which do not individually
or in the aggregate materially adversely affect the value or use of any of
the Company Real Property as it is presently used, (vii) Company Space
Leases (as defined in Section 3.7(i) hereof) and (viii) matters set forth
in Schedule 3.17(a) of the Company Disclosure Schedule and/or permitted
pursuant to Sections 5.1(n), 5.1(r), 5.1(s) or 5.4 hereof. "Company
Leases" means the real property leases, subleases, licenses and use or
occupancy agreements pursuant to which the Company or any of its Active
Subsidiaries is the lessee, sublessee, licensee, user or occupant of
Company Real Property, or interests therein. "Company Leased Real
Property" means all interests in real property pursuant to the Company
Leases. "Company Owned Real Property" means the real property owned in fee
by the Company and its Subsidiaries necessary for the conduct of, or
otherwise material to, the business of the Company and its Subsidiaries as
it is currently conducted. "Company Real Property" means the Company Owned
Real Property and the Company Leased Real Property.
(b) Schedule 3.17(b) of the Company Disclosure Schedule contains
a complete and correct list of all Company Owned Real Property setting
forth information sufficient to identify specifically such Company Owned
Real Property and the legal owner thereof. The Company and its
Subsidiaries have good, valid and insurable (at commercially reasonable
rates) title to the Company Owned Real Property, free and clear of any
Liens other than Company Permitted Liens. Except as set forth in Schedule
3.17(b) of the Company Disclosure Schedule, there are no outstanding
options or rights of first refusal to purchase the Company Owned Real
Property, or any material portion thereof or interest therein.
(c) Schedule 3.17(c) of the Company Disclosure Schedule contains
a complete and correct list of all Company Leased Real Property and the
Company Leases. Except for such exceptions as would not, in the aggregate,
have a Material Adverse Effect (i) each Company Lease is valid and binding
upon the Company and its Subsidiaries and in full force and effect and
grants the lessee under the Lease the exclusive right to use and occupy the
premises and (ii) each of the Company and its Subsidiaries has good and
valid title to the leasehold estate or other interest created under its
respective Company Leases. To the knowledge of the Company, no non-
monetary defaults exist under the Company Leases which, individually or in
the aggregate, would have a Material Adverse Effect.
(d) The Company Real Property constitutes all of the fee,
leasehold and other interests in real property, necessary for the conduct
of, or otherwise material to, the business of the Company and its
Subsidiaries as it is currently conducted in all material respects, except
for any fee, leasehold or other interest acquired or disposed of after the
date hereof in accordance with Sections 5.1(r), 5.1(s) or 5.1(u) hereof or
Section 5.4 hereof. The use and operation of the Company Real Property in
the conduct of the business of the Company and its Subsidiaries does not
violate any instrument of record or agreement affecting the Company Real
Property, except for such violations that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(e) All Company Real Property currently under development or
construction by the Company or a Subsidiary of the Company (the "Company
Development Properties") and all properties currently proposed for
acquisition, development or commencement of construction by the Company or
a Subsidiary of the Company (the "Company Future Development Properties")
are listed as such in Schedule 3.17(e) of the Company Disclosure Schedule.
All executory agreements entered into by the Company or any Subsidiary of
the Company relating to the development or construction of commercial
office or other real estate properties (other than agreements the value of
which individually do not exceed $50,000.00 or are terminable on 30 days
notice or less and which are for architectural, engineering, planning,
accounting, legal or other professional services, or construction
agreements for material or labor) are listed in Schedule 3.17(e) of the
Company Disclosure Schedule. Copies of such agreements, all of which have
previously been delivered or made available to Buyer, are true and correct.
To the knowledge of the Company, there are no material defaults existing
under any of such agreements.
(f) Valid policies of title insurance have been issued insuring
the applicable Company's or its Subsidiary's fee simple title to the
Company Owned Real Property owned by it, subject only to the Company
Permitted Liens. To the knowledge of the Company, such policies are, at
the date hereof, in full force and effect. To the knowledge of the
Company, no claim has been made against any such policy.
(g) Except as provided in Schedule 3.17(g) of the Company
Disclosure Schedule, the Company and its Subsidiaries have no knowledge (i)
that any certificate, permit or license from any Governmental Entity having
jurisdiction over any of the Company Owned Real Property or any agreement,
easement or other right which is necessary to permit the lawful use and
operation of the buildings and improvements on any of the Company Owned
Real Property or which is necessary to permit the lawful use and operation
of all driveways, roads and other means of egress and ingress to and from
any of the Company Owned Real Property has not been obtained and is not in
full force and effect, or of any pending threat of modification or
cancellation of any of same which would have a Material Adverse Effect,
(ii) of any written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement having a
Material Adverse Effect issued by any Governmental Entity, (iii) of any
structural defects relating to any Company Real Property which would have a
Material Adverse Effect, (iv) of any Company Owned Real Property whose
building systems are not in working order so as to have a Material Adverse
Effect, or (v) of any physical damage to any Company Owned Real Property
which would have a Material Adverse Effect for which there is no insurance
in effect covering the cost of the restoration.
(h) Neither the Company nor any of its Subsidiaries has received
any written or published notice to the effect that (i) any condemnation or
rezoning proceedings are pending or threatened with respect to any Company
Owned Real Property or (ii) any zoning, building or similar law, code,
ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any
Company Owned Real Property or by the continued maintenance, operation or
use of the parking areas. Except as set forth in Section 3.17(h) of the
Company Disclosure Schedule, all work required to be performed, payments
required to be made and actions required to be taken on any Company Owned
Real Property prior to the date hereof pursuant to any agreement entered
into with a governmental body or authority in connection with a site
approval, zoning reclassification or other similar action relating to any
Company Owned Real Property or under any Company Space Lease have been
performed, paid or taken, as the case may be, and the Company and its
Subsidiaries have no knowledge of any planned or proposed work, payments or
actions that may be required after the date hereof.
(i) The rent roll set forth in Schedule 3.17(i) of the Company
Disclosure Schedule (the "Company Rent Roll") lists each Company Space
Lease (including the square footage of the leased premises (if set forth in
the subject Company Space Lease)) in effect as of the date hereof.
"Company Space Lease" means each lease or other right of occupancy
affecting or relating to a property in which the Company or its
Subsidiaries (or an entity in which it directly or indirectly has an
interest) is the landlord, either pursuant to the terms of a lease
agreement or as successor to any prior landlord. The Company and its
Subsidiaries have made available to the Buying Entities true, correct and
complete copies of all Company Space Leases, including all amendments,
modifications, supplements, renewals, extensions and guarantees related
thereto, as of the date hereof. Except for discrepancies that, either
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect, all information set forth in the Company Rent
Roll is true, correct and complete as of the date of this Agreement. To
the knowledge of the Company, no material default exists by the Company or
its Subsidiaries under any Company Space Lease. Except as set forth in
Schedule 3.17(i) of the Company Disclosure Schedule, to the Company's
knowledge, (x) all rental payments due under each Company Space Lease have
been paid through the date hereof, (y) the Company has not received any
prepayment of rent for a period in excess of thirty (30) days and (z) no
tenant is in material default, and no condition or event exists which with
the giving of notice or the passage of time, or both would constitute a
material default by any tenant under any Company Space Lease.
(j) The disposition of any of the Company Owned Real Property by
the Company Operating Partnership does not require the approval of any of
the limited partners of the Company Operating Partnership.
(k) Except as set forth in Schedule 3.17(k) of the Company
Disclosure Schedule, there are no ongoing tax certiorari proceedings with
respect to the Company Owned Real Property.
SECTION 3.18 Finders' Fees. Except for Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), there is no investment
banker, broker, finder or other intermediary which has been retained by, or
is authorized to act on behalf of, the Company or any Subsidiary of the
Company that would be entitled to any fee or commission from the Company,
any Subsidiary of the Company, any Buying Entity or any affiliate of any of
the Buying Entities upon consummation of the Transactions.
SECTION 3.19 Opinion of Financial Advisors. The Company has
received the opinion or advice of Merrill Lynch to the effect that, as of
such date, the consideration to be received by holders of shares of Company
Common Stock (other than any Buying Entity or any affiliate of any of the
Buying Entities) pursuant to the Merger is fair from a financial point of
view to such holders.
SECTION 3.20 Board Recommendation. The Board of Directors of
the Company, at a meeting duly called and held, has (a) determined that
this Agreement and the Transactions, taken together, are fair to and in the
best interests of the stockholders of the Company; (b) taken all actions
necessary on the part of the Company to render the restrictions on business
combinations contained in Section 3-602 of the MGCL inapplicable to this
Agreement and the Merger; and (c) resolved to recommend that the
stockholders of the Company approve this Agreement and the Transactions.
SECTION 3.21 Vote Required. The affirmative vote of a majority
of all of the votes of Company Common Stock entitled to be cast is the only
vote of the holders of any class or series of the Company's capital stock
necessary or required under this Agreement or under applicable law to
approve the Merger, this Agreement and the Transactions.
SECTION 3.22 Related Party Transactions. Set forth in Schedule
3.22 of the Company Disclosure Schedule is a list of all arrangements,
agreements and contracts entered into by the Company or any of its
Subsidiaries with (a) any consultant or (b) any Person who is an officer,
director or affiliate (as defined in Section 8.3 hereof) of the Company or
any of its Subsidiaries, any relative of any of the foregoing or any entity
of which any of the foregoing is an affiliate. Copies of such documents
have previously been delivered or made available to Buyer.
SECTION 3.23 Investment Company Act of 1940. Neither the
Company nor any of its Subsidiaries is, or at the Effective Time will be,
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
SECTION 3.24 Hart-Scott-Rodino Antitrust Improvements Act of
1976. For purposes of determining compliance with the HSR Act, the Company
confirms that the conduct of its business consists solely of investing in,
owning and operating real estate for the benefit of its stockholders.
SECTION 3.25 State Takeover Statutes. The Company has taken
all action necessary to exempt the transactions contemplated by this
Agreement from the operation of any applicable "fair price," "moratorium,"
"control share acquisition" or any other applicable anti-takeover statute
enacted under the state or federal laws of the United States or similar
statute or regulation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER,
RECKSON AND CRESCENT
SECTION 4.1 Reckson represents and warrants to the Company as
follows:
4.1.1 Corporate Existence and Power. Reckson is a corporation
duly organized, validly existing and in good standing under the laws
of the requisite state of its incorporation and has all corporate
power and authority to carry on its business as now conducted.
Reckson has heretofore delivered to the Company complete and correct
copies of its governing documents or other organizational documents of
like import, as currently in effect.
4.1.2 Authorization. Reckson has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action by Reckson and no other
corporate proceedings on the part of Reckson are necessary to
authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly executed and delivered by Reckson, and
constitutes, assuming due authorization, execution and delivery of
this Agreement by the Company, a valid and binding obligation of
Reckson enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
4.1.3 Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 4.1.3(a) of the
disclosure schedule of the Reckson attached to this Agreement (the
"Reckson Disclosure Schedule"), neither the execution and delivery of
this Agreement nor the performance by Reckson of its obligations
hereunder will (i) conflict with or result in any breach of any
provision of the articles of incorporation or by-laws of Reckson or
(ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration or
obligation to repurchase, repay, redeem or acquire or any similar
right or obligation) under any of the terms, conditions or provisions
of, any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar
instrument or obligation to which Reckson or any of its Subsidiaries
is a party or by which any of them or any of their assets may be bound
or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b)
below have been obtained or made, as the case may be, violate any
order, injunction, decree, statute, rule or regulation of any
Governmental Entity to which Reckson or any of its Subsidiaries is
subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Reckson to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.1.3(b) of the Reckson
Disclosure Schedule, no filing or registration with, notification to,
or authorization, consent or approval of, any Governmental Entity is
required in connection with the execution and delivery of this
Agreement by Reckson or the performance by Reckson of its obligations
hereunder, except (i) the filing of the Certificate of Merger in
accordance with the DLLCA and the Articles of Merger in accordance
with the MGCL and filings to maintain the good standing of the
Surviving Entity; (ii) compliance with any applicable requirements of
the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect and would not have a material
adverse effect on the ability of Reckson to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
4.1.4 Capitalization. The authorized capital stock of
Reckson consists of 100,000,000 shares of Reckson Common Stock and
25,000,000 shares of preferred stock, par value $.01 per share, of
Reckson (the "Reckson Preferred Stock"). As of May 31, 1998, there
were (i) 39,972,102 shares of Reckson Common Stock and (ii) 9,200,000
shares of Reckson Preferred Stock issued and outstanding. All shares
of capital stock of Reckson have been duly authorized and validly
issued and are fully paid and nonassessable. As of May 31, 1998,
there were outstanding Options in respect of 3,817,078 shares of
Reckson Common Stock at option prices ranging from $12.125 to $25.75
per share. Upon conversion of all existing units of limited
partnership interest in the Reckson Operating Partnership, there would
be 47,685,053 (49,051,991 shares including the conversion of
convertible preferred units) shares of Reckson Common Stock
outstanding. Except as set forth in Schedule 4.1.4 of the Buyer
Disclosure Schedule, there are outstanding (A) no shares of capital
stock or other voting securities or partnership interests of Reckson,
(B) no securities of Reckson or any Subsidiary of Reckson convertible
into or exchangeable for shares of capital stock or voting securities
or partnership interests of Reckson and (C) no options or other rights
to acquire from Reckson, and no obligation of Reckson to issue, any
capital stock, voting securities or partnership interests or
securities convertible into or exchangeable for capital stock or
voting securities or partnership interests of Reckson.
4.1.5 SEC Documents. Reckson has timely filed all required
reports, proxy statements, forms and other documents required to be
filed by it with the SEC since January 1, 1997 (collectively, the
"Reckson SEC Documents"). As of their respective dates, and giving
effect to any amendments thereto, (a) the Reckson SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder and
(b) none of the Reckson SEC Documents (except as to the financial
statements contained therein, which are dealt with in Section 4.1.6
hereof) contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.1.6 Financial Statements. The financial statements of
Reckson (including, in each case, any notes and schedules thereto)
included in the Reckson SEC Documents (a) comply as to form in all
material respects with all applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, (b)
are in conformity with GAAP, applied on a consistent basis (except in
the case of unaudited statements, as permitted by Form 10-Q as filed
with the SEC under the Exchange Act) during the periods involved
(except as may be indicated in the related notes and schedules
thereto) and (c) fairly present, in all material respects, the
consolidated financial position of Reckson and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments).
4.1.7 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 4.1.7 of the Reckson Disclosure Schedule or in the
Reckson SEC Documents filed prior to the date hereof, and included in
the Reckson SEC Documents filed prior to the date hereof, neither
Reckson nor any of its Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of
Reckson and its consolidated Subsidiaries or in the notes thereto
except for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.1.8 Proxy Statement; Form S-4 Registration Statement;
Other Information. None of the information with respect to Reckson or
its Subsidiaries supplied by Reckson in writing specifically for
inclusion in the Proxy Statement or any amendments thereof or
supplements thereto and at the time of the Company Special Meeting or
in the Form S-4 Registration Statement (as defined in Section 5.16
hereof) will, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the
Proxy Statement or any amendments or supplements thereto, or, in the
case of the Form S-4 Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no
representation is made by Reckson with respect to information related
to the Company or any affiliate of the Company included in the Proxy
Statement or the Form S-4 Registration Statement, as the case may be.
The Proxy Statement and the Form S-4 Registration Statement will each
comply as to form in all material respects with the provisions of the
Exchange Act and the Securities Act, respectively, and the rules and
regulations promulgated under each of such statutes.
4.1.9 Absence of Material Adverse Changes, etc. Except as
disclosed in the Reckson SEC Documents filed by Reckson and as set
forth in Schedule 4.1.9 of the Reckson Disclosure Schedule, since
March 31, 1998, Reckson and its Subsidiaries have conducted their
business in the ordinary course of business and there has not been a
Material Adverse Effect.
4.1.10 Taxes. (a) Except as set forth in Schedule 4.1.10
of the Reckson Disclosure Schedule, (i) all Tax Returns required to be
filed by or with respect to Taxes of Reckson and its Subsidiaries have
been filed in a timely manner (taking into account all lawful
extensions of due dates), other than those Tax Returns as to which the
failure to file would not reasonably be expected to have a Material
Adverse Effect and all such Tax Returns are true, complete and correct
in all material respects, (ii) all Taxes due and payable have been
paid or adequate provision in accordance with GAAP with respect to the
matters covered by such Tax Returns has been made for the payment
therefor, (iii) Reckson and its Subsidiaries have not received any
written notice of deficiency or assessment from any taxing authority
with respect to liabilities for material Taxes of Reckson or its
Subsidiaries that have not been fully paid, finally settled or
contested in good faith and (iv) there are no Liens with respect to
Taxes upon any of the properties or assets of Reckson or its
Subsidiaries other than Liens for Taxes not yet due or payable or that
are being contested in good faith.
(b) Reckson (i) for all taxable years commencing with its
taxable year ending December 31, 1996 has been subject to taxation as
a REIT within the meaning of the Code and its proposed method of
operation, taking into account the Merger, will enable it to continue
to qualify as a REIT for each taxable year ending after the Closing
and (ii) has not taken or omitted to take any action which would
result in a successful challenge to its status as a REIT.
4.1.11 Compliance with Laws. Except as set forth in
Schedule 4.1.11 of the Reckson Disclosure Schedule, Reckson and its
Subsidiaries are in compliance with all applicable laws, ordinances,
rules and regulations of any Governmental Entity applicable to their
respective businesses and operations, except for such violations, if
any, which, in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. All Permits required to conduct the
business of Reckson and its Subsidiaries have been obtained, are in
full force and effect and are being complied with except for such
violations and failures to have Permits in full force and effect, if
any, which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.1.12 Real Property.
(a) For purposes of this Agreement, "Reckson Permitted
Liens" means (i) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or
incurred in the ordinary course of business for sums not yet due and
payable and such Liens as are being contested by Reckson in good
faith, (ii) Liens arising or resulting from any action taken by the
Company, (iii) matters that would be disclosed by an accurate survey
or inspection of the Reckson Real Property (as defined hereafter) (iv)
Liens for current Taxes not yet due or payable, (v) any covenants,
conditions, restrictions, reservations, rights, Liens, easements,
encumbrances, encroachments and other matters affecting title which
are shown as exceptions on Reckson's title insurance policies and/or
title commitments or reports which have been made available to the
Company, (vi) any other covenants, conditions, restrictions,
reservations, rights, non-monetary Liens, easements, encumbrances,
encroachments and other matters affecting title which do not
individually or in the aggregate materially adversely affect the value
or use of any of the Reckson Real Property as it is presently used and
(vii) matters set forth in Schedule 4.1.12(a) of the Buyer Disclosure
Schedule. "Reckson Leases" means the real property leases, subleases,
licenses and use or occupancy agreements pursuant to which Reckson or
any of its Subsidiaries is the lessee, sublessee, licensee, user or
occupant of Reckson Real Property, or interests therein. "Reckson
Leased Real Property" means all interests in real property pursuant to
Reckson Leases. "Reckson Owned Real Property" means the real property
owned in fee by Reckson and its Subsidiaries necessary for the conduct
of, or otherwise material to, the business of Reckson and its
Subsidiaries as it is currently conducted. "Reckson Real Property"
means Reckson Owned Real Property and Reckson Leased Real Property.
(b) The Reckson SEC Documents refer to all Reckson Owned
Real Property (in all material respects) as of their respective dates.
Reckson and its Subsidiaries have good, valid and insurable (at
commercially reasonable rates) title to the Reckson Owned Real
Property, free and clear of any Liens other than Reckson Permitted
Liens and other than title defects which would not in the aggregate
have a Material Adverse Effect.
(c) Except for such exceptions as would not, in the
aggregate, have a Material Adverse Effect (i) each Reckson Lease is
valid and binding upon Reckson and its Subsidiaries and in full force
and effect and grants the lessee under the Lease the exclusive right
to use and occupy the premises and (ii) each of Reckson and its
Subsidiaries has good and valid title to the leasehold estate or other
interest created under its respective Reckson Leases. To the
knowledge of Reckson, no non-monetary defaults exist under the Reckson
Leases which, individually or in the aggregate, would have a Material
Adverse Effect.
(d) The Reckson Real Property constitutes all of the fee,
leasehold and other interests in real property, necessary for the
conduct of, or otherwise material to, the business of Reckson and its
Subsidiaries as it is currently conducted in all material respects.
The use and operation of the Reckson Real Property in the conduct of
the business of Reckson and its Subsidiaries does not violate any
instrument of record or agreement affecting the Reckson Real Property,
except for such violations that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
4.1.13 Finders' Fees. Except for Salomon Smith Barney,
whose fee will be paid by Reckson, there is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Reckson.
4.1.14 Share Ownership; Other Ownership. Reckson does not
beneficially own any shares of Company Common Stock. Since January 1,
1997, Reckson has not acquired any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture,
business trust or other entity which is, or will be, required to be
reported by Reckson in a report to the SEC and which has not been so
reported.
4.1.15 Investment Company Act of 1940. Neither Reckson nor
any of its Subsidiaries is, or at the Effective Time will be, required
to be registered under the 1940 Act.
4.1.16 Hart-Scott-Rodino Antitrust Improvements Act of
1976. For purposes of determining compliance with the HSR Act,
Reckson confirms that the conduct of its business consists solely of
investing in, owning and operating real estate for the benefit of its
stockholders.
4.1.17 Financing. Reckson has provided, or will provide to
Buyer at the Effective Time, one-half of the funds necessary, when
taken together with cash of the Company available on the date hereof
and on the Closing Date, to (i) pay the Merger Consideration, (ii) pay
all fees and expenses required to be paid by the Buying Entities and
the Company in connection with the Merger and the financing of the
Transactions (the "Financing"), (iii) perform Reckson's obligations
hereunder and the obligations of the Surviving Entity hereunder and
(iv) provide the Surviving Entity with adequate working capital
following the Effective Time.
4.1.18 Authorization for Reckson Common Stock. Reckson has
taken all necessary action to permit it to issue the number of shares
of Reckson Common Stock required to be issued by it pursuant to this
Agreement. Shares of Reckson Common Stock issued pursuant to this
Agreement will, when issued, be validly issued, fully paid and
nonassessable and no Person will have any preemptive right of
subscription or purchase in respect thereof. Shares of Reckson Common
Stock issued pursuant to this Agreement will, when issued, be
registered under the Securities Act and the Exchange Act and
registered or exempt from registration under any applicable state
securities laws and will, when issued, be listed on the NYSE, subject
to official notice of issuance.
SECTION 4.2 Crescent represents and warrants to the Company as
follows:
4.2.1 Organization, Standing and Power. Crescent has been
formed as a real estate investment trust under the laws of the State
of Texas in accordance with the REIT Act. The County Clerk of Tarrant
County, Texas, has certified in writing that the Restated Declaration
of Trust of the Company (the "Declaration of Trust") is recorded in
Volume 12645, beginning at Page 1811, in the records of the County
Clerk. The Declaration of Trust is in effect, and no dissolution,
revocation or forfeiture proceedings regarding the Company have been
commenced. The Company has power and authority under its Declaration
of Trust, Amended and Restated Bylaws, as amended (the "Crescent
Bylaws") and the REIT Act to own, lease and operate its properties and
to conduct the business in which it is engaged. Crescent has
heretofore delivered to the Company true and complete copies of the
Declaration of Trust and the certification referred to above.
4.2.2 Authorization. Crescent has the requisite power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action by Crescent and no other
proceedings on the part of Crescent are necessary to authorize the
execution, delivery and performance of this Agreement. This Agreement
has been duly executed and delivered by Crescent, and constitutes,
assuming due authorization, execution and delivery of this Agreement
by the Company, a valid and binding obligation of Crescent enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.2.3 Consents and Approvals; No Violations. (a) Except
as set forth in Schedule 4.2.3(a) of the Crescent Disclosure Schedule,
neither the execution and delivery of this Agreement nor the
performance by Crescent of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or by-laws of Crescent or (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination,
cancellation or acceleration or obligation to repurchase, repay,
redeem or acquire or any similar right or obligation) under any of the
terms, conditions or provisions of, any note, mortgage, letter of
credit, other evidence of indebtedness, guarantee, license, lease or
agreement or similar instrument or obligation to which Crescent or any
of its Subsidiaries is a party or by which any of them or any of their
assets may be bound or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in
subsection (b) below have been obtained or made, as the case may be,
violate any order, injunction, decree, statute, rule or regulation of
any Governmental Entity to which Crescent or any of its Subsidiaries
is subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Crescent to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.2.3(b) of the
Crescent Disclosure Schedule, no filing or registration with,
notification to, or authorization, consent or approval of, any
Governmental Entity is required in connection with the execution and
delivery of this Agreement by Crescent or the performance by Crescent
of its obligations hereunder, except (i) the filing of the Certificate
of Merger in accordance with the DLLCA and the Articles of Merger in
accordance with the MGCL and filings to maintain the good standing of
the Surviving Entity; (ii) compliance with any applicable requirements
of the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect and would not have a material
adverse effect on the ability of Crescent to perform its obligations
hereunder or (B) that become applicable as a result of any acts or
omissions by, or facts pertaining to, the Company.
4.2.4 Capitalization. At the date hereof, the authorized
capital stock of Crescent solely consists of 250,000,000 shares of
Crescent Common Stock, 250,000,000 excess shares issuable in exchange
for shares of Crescent Common Stock ("Excess Shares of Crescent Common
Stock"), 100,000,000 preferred shares of beneficial interest, par
value $.01 per share (the "Crescent Preferred Shares"), and
100,000,000 excess shares issuable in exchange for Preferred Shares
("Crescent Excess Preferred Shares"). As of July 2, 1998, 120,871,894
shares of Crescent Common Stock, 8,000,000 6.75% Series A Convertible
Cumulative Preferred Shares ("Crescent Series A Preferred Shares") and
6,948,734 Series B Convertible Preferred Shares ("Crescent Series B
Preferred Shares") were issued and outstanding. As of July 2, 1998,
Crescent had no shares reserved for issuance, except (i) 13,153,702
shares of Crescent Common Stock reserved for issuance upon the
exchange of 6,576,851 units of ownership interest (the "Crescent
Units") of Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership (the "Crescent Operating Partnership"),
(ii) 15,965,924 shares of Crescent Common Stock reserved for issuance
pursuant to the 1994 Crescent Real Estate Equities, Inc. Stock
Incentive Plan, the Second Amended and Restated 1995 Crescent Real
Estate Equities Company Stock Incentive Plan, the 1995 Crescent Real
Estate Equities Limited Partnership Unit Incentive Plan and the 1996
Crescent Real Estate Equities Limited Partnership Unit Incentive Plan,
(iii) the possible issuance of up to 664,294 shares of Crescent Common
Stock upon the exchange of a portion of a partnership interest in
Desert Mountain Properties Limited Partnership, (iv) an outstanding
option to acquire 217,530 shares of Crescent Common Stock, (v) shares
of Crescent Common Stock issuable upon the possible conversion of
Crescent Series A Preferred Shares, (vi) shares of Crescent Common
Stock issuable upon the possible conversion of Crescent Series B
Preferred Shares and (vii) shares of Crescent Common Stock and
Crescent Preferred Shares issuable pursuant to the Merger Agreement
dated as of January 16, 1998, as amended, by and among Crescent and
Station Casinos, Inc., a Nevada corporation, and shares of Crescent
Common Stock issuable upon the possible conversion of the Crescent
Preferred Shares issued pursuant to such Merger Agreement, (viii)
shares of Crescent Common Stock issuable pursuant to a forward
purchase agreement and (ix) shares of Crescent Common Stock issuable
pursuant to a swap agreement. Except as set forth in Schedule 4.2.4
of the Buyer Disclosure Schedule, there are outstanding (A) no shares
of capital stock or other voting securities or partnership interests
of Crescent, (B) no securities of Crescent or any Subsidiary of
Crescent convertible into or exchangeable for shares of capital stock
or voting securities or partnership interests of Crescent and (C) no
options or other rights to acquire from Crescent, and no obligation of
Crescent to issue, any capital stock, voting securities or partnership
interests or securities convertible into or exchangeable for capital
stock or voting securities or partnership interests of Crescent.
4.2.5 SEC Documents. Crescent has timely filed all
required reports, proxy statements, forms and other documents required
to be filed by it with the SEC since January 1, 1997 (collectively,
the "Crescent SEC Documents"). As of their respective dates, and
giving effect to any amendments thereto, (a) the Crescent SEC
Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder and
(b) none of the Crescent SEC Documents (except as to the financial
statements contained therein, which are dealt with in Section 4.2.6
hereof) contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.2.6 Financial Statements. The financial statements of
Crescent (including any notes and schedules thereto) included in the
Crescent SEC Documents (a) comply as to form in all material respects
with all applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, (b) are in conformity
with GAAP, applied on a consistent basis (except in the case of
unaudited statements, as permitted by Form 10-Q as filed with the SEC
under the Exchange Act) during the periods involved (except as may be
indicated in the related notes and schedules thereto) and (c) fairly
present, in all material respects, the consolidated financial position
of Crescent and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
4.2.7 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 4.2.7 of the Crescent Disclosure Schedule or in the
Crescent SEC Documents filed prior to the date hereof, and included in
the Crescent SEC Documents filed prior to the date hereof, neither
Crescent nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance
sheet of Crescent and its consolidated Subsidiaries or in the notes
thereto except for those that would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
4.2.8 Proxy Statement; Form S-4 Registration Statement;
Other Information. None of the information with respect to Crescent
or its Subsidiaries supplied by Crescent in writing specifically for
inclusion in the Proxy Statement or any amendments thereof or
supplements thereto and at the time of the Company Special Meeting or
in the Form S-4 Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or any amendments thereof
or supplements thereto, and at the time of the Company Special
Meeting, or, in the case of the Form S-4 Registration Statement, at
the time it becomes effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading,
except that no representation is made by Crescent with respect to
information related to the Company or any affiliate of the Company
included in the Proxy Statement or the Form S-4 Registration
Statement, as the case may be. The Proxy Statement and the Form S-4
Registration Statement will each comply as to form in all material
respects with the provisions of the Exchange Act and the Securities
Act, respectively, and the rules and regulations promulgated under
each of such statutes.
4.2.9 Absence of Material Adverse Changes, etc. Except as
disclosed in the Crescent SEC Documents filed by Crescent and as set
forth in Schedule 4.2.8 of the Crescent Disclosure Schedule, since
March 31, 1998, Crescent and its Subsidiaries have conducted their
business in the ordinary course of business consistent with past
practice and there has not been a Material Adverse Effect.
4.2.10 Taxes. (a) Except as set forth in Schedule 4.2.10
of Crescent Disclosure Schedule, (i) all Tax Returns required to be
filed by or with respect to Taxes of Crescent and its Subsidiaries
have been filed in a timely manner (taking into account all lawful
extensions of due dates), other than those Tax Returns as to which the
failure to file would not reasonably be expected to have a Material
Adverse Effect and all such Tax Returns are true, complete and correct
in all material respects, (ii) all Taxes due and payable have been
paid or adequate provision in accordance with GAAP with respect to the
matters covered by such Tax Returns has been made for the payment
therefor, (iii) Crescent and its Subsidiaries have not received any
written notice of deficiency or assessment from any taxing authority
with respect to liabilities for material Taxes of Crescent or its
Subsidiaries that have not been fully paid, finally settled or
contested in good faith and (iv) there are no Liens with respect to
Taxes upon any of the properties or assets of Crescent or its
Subsidiaries other than Liens for Taxes not yet due or payable or that
are being contested in good faith.
(b) Crescent (i) for all taxable years commencing with its
taxable year ending December 31, 1996 has been subject to taxation as
a REIT within the meaning of the Code and its proposed method of
operation, taking into account the Merger, will enable it to continue
to qualify as a REIT for each taxable year ending after the Closing
and (ii) has not taken or omitted to take any action which would
result in a successful challenge to its status as a REIT.
4.2.11 Compliance with Laws. Except as set forth in
Schedule 4.2.11 of the Crescent Disclosure Schedule, Crescent and its
Subsidiaries are in compliance with all applicable laws, ordinances,
rules and regulations of any Governmental Entity applicable to their
respective businesses and operations, except for such violations, if
any, which, in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. All Permits required to conduct the
business of Crescent and its Subsidiaries have been obtained, are in
full force and effect and are being complied with except for such
violations and failures to have Permits in full force and effect, if
any, which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.2.12 Real Property.
(a) For purposes of this Agreement, "Crescent Permitted
Liens" means (i) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or
incurred in the ordinary course of business for sums not yet due and
payable and such Liens as are being contested by Crescent in good
faith, (ii) Liens arising or resulting from any action taken by the
Company, (iii) matters that would be disclosed by an accurate survey
or inspection of the Crescent Real Property (as defined hereafter)
(iv) Liens for current Taxes not yet due or payable, (v) any
covenants, conditions, restrictions, reservations, rights, Liens,
easements, encumbrances, encroachments and other matters affecting
title which are shown as exceptions on Crescent's title insurance
policies and/or title commitments or reports which have been made
available to the Company, (vi) any other covenants, conditions,
restrictions, reservations, rights, non-monetary Liens, easements,
encumbrances, encroachments and other matters affecting title which do
not individually or in the aggregate materially adversely affect the
value or use of any of the Crescent Real Property as it is presently
used and (vii) matters set forth in Schedule 4.2.12(a) of the Buyer
Disclosure Schedule. "Crescent Leases" means the real property
leases, subleases, licenses and use or occupancy agreements pursuant
to which Crescent or any of its Subsidiaries is the lessee, sublessee,
licensee, user or occupant of Crescent Real Property, or interests
therein. "Crescent Leased Real Property" means all interests in real
property pursuant to Crescent Leases. "Crescent Owned Real Property"
means the real property owned in fee by Crescent and its Subsidiaries
necessary for the conduct of, or otherwise material to, the business
of Crescent and its Subsidiaries as it is currently conducted.
"Crescent Real Property" means Crescent Owned Real Property and
Crescent Leased Real Property.
(b) The Crescent SEC Documents refer to all Crescent Owned
Real Property (in all material respects) as of their respective dates.
Crescent and its Subsidiaries have good, valid and insurable (at
commercially reasonable rates) title to the Crescent Owned Real
Property, free and clear of any Liens other than Crescent Permitted
Liens and other than title defects which would not in the aggregate
have a Material Adverse Effect.
(c) Except for such exceptions as would not, in the
aggregate, have a Material Adverse Effect (i) each Crescent Lease is
valid and binding upon Crescent and its Subsidiaries and in full force
and effect and grants the lessee under the Lease the exclusive right
to use and occupy the premises and (ii) each of Crescent and its
Subsidiaries has good and valid title to the leasehold estate or other
interest created under its respective Crescent Leases. To the
knowledge of Crescent, no non-monetary defaults exist under the
Crescent Leases which, individually or in the aggregate, would have a
Material Adverse Effect.
(d) The Crescent Real Property constitutes all of the fee,
leasehold and other interests in real property, necessary for the
conduct of, or otherwise material to, the business of Crescent and its
Subsidiaries as it is currently conducted in all material respects.
The use and operation of the Crescent Real Property in the conduct of
the business of Crescent and its Subsidiaries does not violate any
instrument of record or agreement affecting the Crescent Real
Property, except for such violations that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
4.2.13 Finders' Fees. There is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Crescent.
4.2.14 Share Ownership; Other Ownership. Crescent does not
beneficially own any shares of Company Common Stock. Since January 1,
1997, Crescent has not acquired any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture,
business trust or other entity which is, or will be, required to be
reported by Crescent in a report to the SEC and which has not been so
reported.
4.2.15 Investment Company Act of 1940. Neither Crescent
nor any of its Subsidiaries is, or at the Effective Time will be,
required to be registered under the 1940 Act.
4.2.16 Hart-Scott-Rodino Antitrust Improvements Act of
1976. For purposes of determining compliance with the HSR Act,
Crescent confirms that the conduct of its business consists solely of
investing in, owning and operating real estate for the benefit of its
stockholders.
4.2.17 Financing. Crescent has provided, or will provide
to Buyer at the Effective Time, one-half of the funds necessary, when
taken together with cash of the Company available on the date hereof
and on the Closing Date, to (i) pay the Merger Consideration, (ii) pay
all fees and expenses required to be paid by the Buying Entities and
the Company in connection with the Merger and the Financing, (iii)
perform Crescent's obligations hereunder and the obligations of the
Surviving Entity and its Subsidiaries hereunder and (iv) provide the
Surviving Entity with adequate working capital following the Effective
Time.
4.2.18 Authorization for Crescent Common Stock. Crescent
has taken all necessary action to permit it to issue the number of
shares of Crescent Common Stock required to be issued by it pursuant
to this Agreement. Shares of Crescent Common Stock issued pursuant to
this Agreement will, when issued, be validly issued, fully paid and
nonassessable and no Person will have any preemptive right of
subscription or purchase in respect thereof. Shares of Crescent
Common Stock will, when issued, be registered under the Securities Act
and the Exchange Act and registered or exempt from registration under
any applicable state securities laws and will, when issued, be listed
on the NYSE, subject to official notice of issuance.
SECTION 4.3 Each of Reckson, Crescent and Buyer, jointly and
severally, represents and warrants to the Company as follows:
4.3.1 Corporate Existence and Power. Buyer is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all power and
authority to carry on its business as now conducted. Buyer has
heretofore delivered or made available to the Company true and
complete copies of its governing documents or other organizational
documents of like import, as currently in effect.
4.3.2 Authorization. Buyer has the requisite power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action of Buyer and no other
proceedings on the part of Buyer are necessary to authorize the
execution, delivery and performance of this Agreement. This Agreement
has been duly executed and delivered by Buyer, and constitutes,
assuming due authorization, execution and delivery of this Agreement
by the Company, a valid and binding obligation of Buyer enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.3.3 Consents and Approvals; No Violations. (a) Except
as set forth in Schedule 4.3.3(a) of the Buyer Disclosure Schedule,
neither the execution and delivery of this Agreement nor the
performance by Buyer of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
formation or operating agreement (or other governing or organizational
documents) of Buyer or (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or obligation to repurchase, repay, redeem or acquire or
any similar right or obligation) under any of the terms, conditions or
provisions of, any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar
instrument or obligation to which Buyer or any of its Subsidiaries is
a party or by which any of them or any of their assets may be bound or
(iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b)
below have been obtained or made, as the case may be, violate any
order, injunction, decree, statute, rule or regulation of any
Governmental Entity to which Buyer or any of its Subsidiaries is
subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Buyer to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.3.3(b) of the Buyer
Disclosure Schedule, no filing or registration with, notification to,
or authorization, consent or approval of, any Governmental Entity is
required in connection with the execution and delivery of this
Agreement by Buyer or the performance by Buyer of its obligations
hereunder, except (i) the filing of the Articles of Merger in
accordance with the MGCL and the Certificate of Merger in accordance
with the DLLCA and filings to maintain the good standing of the
Surviving Entity; (ii) compliance with any applicable requirements of
the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not reasonably be expected to have a Material
Adverse Effect and would not have a material adverse effect on the
ability of Buyer to perform its obligations hereunder or (B) that
become applicable as a result of the business or activities in which
the Company or any of its affiliates is or proposes to be engaged or
any acts or omissions by, or facts pertaining to, the Company.
4.3.4 Finders' Fees. There is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Buyer.
4.3.5 Share Ownership; Other Ownership. Buyer does not
beneficially own any shares of Company Common Stock.
4.3.6 Investment Company Act of 1940. Buyer is not, and at
the Effective Time will not be, required to be registered under the
1940 Act.
4.3.7 Buyer's Operations. Buyer has been formed by
Crescent and Reckson solely to enter into this Agreement and
consummate the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with
this Agreement and the Transactions.
4.3.8 Surviving Entity After the Merger. At and
immediately after the Effective Time, and after giving effect to the
Merger, the Financing and the other Transactions (and any changes in
the Surviving Entity's assets and liabilities as a result thereof),
the Surviving Entity will not (i) be insolvent (either because its
financial condition is such that the sum of its debts is greater than
the fair value of its assets or because the present fair saleable
value of its assets will be less than the amount required to pay its
probable liabilities on its debts as they mature), (ii) have
unreasonably small capital with which to engage in its business or
(iii) have incurred or plan to incur debts beyond its ability to pay
as they mature.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Company. From the date hereof
until the Effective Time, the Company and its Subsidiaries shall conduct
their business in the ordinary course and in substantially the same manner
as heretofore conducted and shall use their reasonable best efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, other than
(i) as set forth in Schedule 5.1 of the Company Disclosure Schedule, (ii)
as specifically contemplated by this Agreement or (iii) with the written
consent of Buyer, from the date of hereof until the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to:
(a) confer on a regular basis with one or more representatives
of Reckson and Crescent to report operational matters of materiality and
any proposals to engage in material transactions;
(b) promptly notify Reckson and Crescent after becoming aware of
any material change in the condition (financial or otherwise), business,
properties, assets, liabilities or the normal course of its business or in
the operation of its properties, or of any material governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated);
(c) promptly deliver to Reckson and Crescent true and correct
copies of any report, statement or schedule filed with the SEC subsequent
to the date of this Agreement;
(d) duly and timely file all reports, tax returns and other
documents required to be filed with federal, state, local and other
authorities, subject to extensions permitted by law, provided the Company
notifies Reckson and Crescent that it is availing itself of such extensions
and provided such extensions do not adversely affect the Company's status
as a qualified REIT under the Code;
(e) not make or rescind any express or deemed election relative
to Taxes (unless required by law or necessary to preserve the Company's
status as a REIT or the status of any noncorporate Subsidiary of the
Company as a partnership for federal income Tax purposes or as a Qualified
REIT Subsidiary under section 856(i) of the Code, as the case may be);
(f) not declare, set aside or pay any dividend (other than
regular quarterly dividends, the Company Special Dividend or regular
distributions pursuant to the Company Operating Partnership Agreement (or
as necessary to maintain REIT status)) or other distribution with respect
to any shares of capital stock of the Company or Company OP Units, or any
repurchase, redemption or other acquisition by the Company or any
Subsidiary of the Company of any outstanding shares of capital stock or
other equity securities of, or other ownership interests in, the Company;
(g) not issue or sell shares of Company Common Stock or any
securities convertible into or exchangeable or exercisable for, or any
rights, warrants or options to acquire any such shares of Company Common
Stock except for the issuance of (i) shares of Company Common Stock issued
pursuant to Company stock-based benefits and options plans in accordance
with their terms as of the date of this Agreement and (ii) shares of
capital stock upon the exercise, exchange or conversion of securities,
rights, warrants and options outstanding on the date of this Agreement or
referred to in clause (i) above;
(h) not amend any material term of any outstanding security
issued by the Company or any Subsidiary of the Company;
(i) make all capital expenditures, and expenditures relating to
leasing, in accordance with the budget of the Company approved by Reckson
and Crescent and attached hereto as Section 5.1(i) of the Company
Disclosure Schedule and shall not acquire, enter into any option to
acquire, or exercise an option or other right or election or enter into any
Commitment, including any lease or amendment thereto, for the acquisition
of, any real property or other transaction (other than Commitments referred
to in the budget attached as Schedule 5.1(i) of the Company Disclosure
Schedule) involving payments to or by the Company in excess of $75,000 or
which is not included in such budget, encumber assets or commence
construction of, or enter into any Commitment to develop or construct,
other real estate projects;
(j) not amend the Articles of Incorporation, or the Company By-
Laws, or the articles or certificate of incorporation, bylaws, code of
regulations, partnership agreement, operating agreement or joint venture
agreement or comparable charter or organization document of any Active
Subsidiary of the Company;
(k) grant no options or other right or commitment relating to
any Company Securities, or any other security the value of which is
measured by shares of Company Common Stock, or any security subordinated to
the claim of its general creditors;
(l) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company SEC Documents;
(m) not settle any tax certiorari proceeding with respect to the
Company without the written consent of Reckson, Crescent and Buyer (which
consent shall not be unreasonably withheld);
(n) except (1) in order to pay dividends permitted pursuant to
this Agreement and to pay transaction expenses related to the Transactions
or (2) to finance an acquisition permitted by clause (r) below (which is in
accordance with the budget attached hereto as Schedule 5.1(i) of the
Company Disclosure Schedule), not incur, assume or guarantee by the Company
or any Subsidiary of the Company any indebtedness for borrowed money;
(o) except in connection with a transaction that is permitted by
the budget attached as Schedule 5.1(i) to the Company Disclosure Schedule,
not create or assume by the Company or any Subsidiary of the Company any
Lien on any asset other than Company Permitted Liens and Liens which, in
the aggregate, do not have and could not reasonably be expected to have a
Material Adverse Effect;
(p) maintain its books and records in accordance with GAAP
consistently applied and not change any method of accounting or accounting
practice by the Company or any Subsidiary of the Company, except for any
such change required by reason of a change in GAAP;
(q) except as set forth in Schedule 5.1(q) of the Company
Disclosure Schedule, not (i) grant any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary of the
Company, (ii) enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any Subsidiary of the
Company, (iii) increase the benefits payable under any existing severance
or termination pay policies or employment agreement, (iv) increase the
compensation, bonus or other benefits payable to any director, officer or
employee of the Company or any Subsidiary of the Company or (v) adopt any
new plan, program or arrangement that would constitute a Plan under Section
3.12 hereof;
(r) except as permitted by Section 5.4 hereof, not consummate (or
enter into any agreement or agreement in principle with respect to or take
any steps to facilitate) any acquisition of stock or assets or operations
of another entity, other than any acquisition by the Company in respect of
which the cash consideration paid by the Company is less than $100,000
individually and for all such transactions taken together, the aggregate
cash consideration paid by the Company is less than $1,000,000;
(s) not sell, lease (or amend any existing lease), mortgage,
subject to Lien or otherwise dispose of any Company Real Property, except
in connection with transactions as contemplated by the budget that is
attached as Schedule 5.1(i) of the Company Disclosure Schedule or that does
not involve any sale, lease, mortgage, Lien or disposition in excess of
7,500 square feet;
(t) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans, advances and capital
contributions to Subsidiaries of the Company in existence on the date
hereof;
(u) not acquire or enter into any option or agreement to
acquire, any real property or other transaction involving in excess of
$100,000 which is not included in the budget that is attached as Schedule
5.1(i) of the Company Disclosure Schedule; or
(v) authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise permitted by this Agreement;
provided that as soon as reasonably practicable, the Buying Entities shall
appoint an individual as the representative of the Buying Entities for all
purposes of this Section 5.1; provided further that the Buying Entities
shall be entitled to change the identity of such representative upon notice
to the Company of such change.
SECTION 5.2 Stockholders' Meetings; Proxy Material.
(a) Subject to the duties of the Board of Directors of the
Company, the Company shall, in accordance with applicable law and the
Articles of Incorporation and the Company By-laws, duly call, give notice
of, convene and hold a special meeting of its stockholders (the "Company
Special Meeting") as promptly as practicable after the date hereof for the
purpose of considering and taking action upon this Agreement and the Merger
and such other matters as may in the reasonable judgment of the Company be
appropriate for consideration at the Company Special Meeting. The Proxy
Statement shall, subject to the proviso set forth below, include the
recommendation of the Board of Directors of the Company that the
stockholders of the Company vote in favor of approval and adoption of this
Agreement and the Merger; provided that the Board of Directors of the
Company may withdraw, modify or change such recommendation if it has
determined in good faith, after consultation with outside legal counsel,
that the failure to withdraw, modify or change such recommendation would
present a reasonable risk of a breach of the duties of the Board of
Directors of the Company under applicable law.
(b) The Company shall, subject to the duties of the Board of
Directors of the Company, (i) as promptly as practicable following the date
of this Agreement, prepare and file with the SEC, shall use its reasonable
best efforts to have cleared by the SEC and shall thereafter mail to its
stockholders as promptly as practicable, a proxy statement and a form of
proxy, in connection with the vote of the Company's stockholders with
respect to the Merger (such proxy statement, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to
the Company's stockholders is herein called the "Proxy Statement"),
(ii) use its reasonable best efforts to obtain the necessary approvals by
its stockholders of this Agreement and the Transactions and (iii) otherwise
comply in all material respects with all legal requirements applicable to
the Company Special Meeting. The Company will notify the Buying Entities
promptly of the receipt of any comments from the SEC or its staff and or
any government officials for amendments or supplements to the Proxy
Statement or for additional information and will supply the Buying Entities
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government official, on the other hand, with respect to the Proxy
Statement. The Proxy Statement shall comply in all material respects with
all applicable requirements of law. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly inform the Buying Entities of such
occurrence and cooperate in filing with the SEC or its staff or any other
governmental officials, and/or mailing to stockholders of the Company, such
amendment or supplement.
SECTION 5.3 Access to Information; Confidentiality Agreement.
Upon reasonable advance notice, between the date hereof and the Effective
Time, the Company shall (a) give each of the Buying Entities, and their
respective counsel, financial advisors, auditors and other authorized
representatives (collectively, "Buyer's Representatives"), reasonable
access during normal business hours to the offices, properties, books and
records of the Company and its Subsidiaries, (b) furnish to Buyer's
Representatives such financial and operating data and other information as
such Persons may reasonably request and (c) instruct the Company's
employees, counsel and financial advisors to fully cooperate with the
Buying Entities in their investigation of the business of the Company and
its Subsidiaries; provided that all requests for information, to visit
plants or facilities or to interview the Company's employees or agents
should be directed to and coordinated with the chief financial officer of
the Company or such person or persons as he shall designate; and provided
further that any information and documents received by any of the Buying
Entities or Buyer's Representatives (whether furnished before or after the
date of this Agreement) shall be held in strict confidence in accordance
with the Confidentiality Agreement dated April 20, 1998 between Reckson and
the Company (the "Reckson Confidentiality Agreement") and the
Confidentiality Agreement dated May 20, 1998 between Crescent (the
"Crescent Confidentiality Agreement" and, together with the Reckson
Confidentiality Agreement, the "Confidentiality Agreements"), which shall
remain in full force and effect pursuant to the terms thereof,
notwithstanding the execution and delivery of this Agreement or the
termination hereof. Notwithstanding anything to the contrary in this
Agreement, neither the Company nor any of its Subsidiaries shall be
required to disclose any information to any Buying Entity or the Buyer
Representatives if doing so would violate any agreement, law, rule or
regulation to which the Company or any of its Subsidiaries is a party or to
which the Company or any of its Subsidiaries is subject.
SECTION 5.4 No Solicitation of Transactions by the Company.
(a) From the date hereof until the termination of this
Agreement, the Company shall not (whether directly or indirectly through
advisors, agents or other intermediaries), and the Company shall use its
reasonable best efforts to ensure that the respective officers, directors,
advisors, representatives or other agents (other than Lawrence Feldman) of
the Company will not, directly or indirectly, (i) solicit, initiate or
encourage any Acquisition Proposal (as defined hereafter) or (ii) engage in
discussions (other than to disclose the provisions of this Agreement) or
negotiations with, or disclose any non-public information relating to the
Company or its Subsidiaries or afford access to the properties, books or
records of the Company or its Subsidiaries to, any Person that has made, or
has indicated its interest in making, an Acquisition Proposal; provided
that, if the Company's Board of Directors determines in good faith, after
consultation with outside legal counsel, that the failure to engage in such
negotiations or discussions or provide such information would present a
reasonable risk of a breach of the duties of the Board of Directors of the
Company under applicable law, the Company may furnish information with
respect to the Company and its Subsidiaries and participate in negotiations
and discussions and enter into agreements regarding such Acquisition
Proposal with a third party ("Company Acquisition Agreements"); provided
that prior to approving or recommending such an Acquisition Proposal or
entering into a Company Acquisition Agreement or withdrawing, amending or
modifying its recommendation of this Agreement and the Transactions, the
Company shall (A) notify Reckson and Crescent in writing that it intends to
approve, recommend or accept such an Acquisition Proposal or enter into
such a Company Acquisition Agreement or withdraw, amend or modify its
recommendation, and (B) attach the most current version of any such Company
Acquisition Proposal or Company Acquisition Agreement to such notice.
Reckson and Crescent shall have the opportunity, within three days of
receipt of the Company's written notification of its intention to accept
such Acquisition Proposal or to enter into such Company Acquisition
Agreement or to withdraw, amend or modify its recommendation, to make an
offer relating to the acquisition of the Company (a "Counter Offer").
Unless the Board of Directors of the Company determines, in good faith
after consultation with its outside legal counsel and financial advisors,
that such Counter Offer is not at least as favorable to the shareholders of
the Company, taking into account such factors (including, without
limitation, the consideration (both as to amount and form) offered in, and
the other terms and conditions of, the Counter Offer and such other
Acquisition Proposal or Company Acquisition Agreement) as and to the extent
it deems relevant, the Company shall not accept such other Acquisition
Proposal or Company Acquisition Agreement, but shall have the right to
accept the Counter Offer. If accepted, the Counter Offer shall become a
binding and irrevocable agreement among the Company, Buyer, Reckson and
Crescent upon such acceptance. The Company agrees that it will not enter
into a Company Acquisition Agreement referred to in clause (A) above until
at least the fourth day after it has provided the notice to Reckson and
Crescent required hereby. For purposes of this Agreement, "Acquisition
Proposal" means any offer or proposal for a merger, consolidation,
recapitalization, liquidation or other business combination involving the
Company or any of its Subsidiaries or the acquisition or purchase of 50% or
more of any class of equity securities of the Company or any of its
Subsidiaries, or any tender offer (including self-tenders) or exchange
offer that if consummated would result in any Person beneficially owning
50% or more of any class of equity securities of the Company or any of its
Subsidiaries, or all or substantially all of the assets of, the Company and
its Subsidiaries, other than the Transactions. Furthermore, nothing
contained in this Section 5.4 shall prohibit the Company or the Company's
Board of Directors from taking and disclosing to the Company's stockholders
a position with respect to a tender or exchange offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act if
failure to so disclose would be inconsistent with its obligations under
applicable law or to make any other disclosures required in its judgment by
applicable law. On the date of this Agreement, the Company shall
immediately terminate discussions, if any, with all third parties relating
to an Acquisition Proposal.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.4, the Company shall reasonably promptly
advise Buyer orally and in writing of any Acquisition Proposal, the
material terms and conditions of such Acquisition Proposal and the identity
of the Person making such Acquisition Proposal.
SECTION 5.5 Voting of Shares of Company Common Stock. Each of
the Buying Entities shall vote all shares of Company Common Stock, if any,
beneficially owned by it or its affiliates in favor of adoption and
approval of the Merger and this Agreement at the Company Special Meeting.
SECTION 5.6 Director and Officer Liability.
(a) From and after the Effective Time, Buyer shall provide
exculpation and indemnification for each Indemnitee (as defined hereafter)
which is the same as the exculpation and indemnification provided to such
parties by the Company immediately prior to the Effective Time in the
Articles of Incorporation, Company By-Laws or in its partnership, operating
or similar agreement or an agreement between an Indemnitee and the Company
or a Subsidiary of the Company, in each case as in effect on the date
hereof. To the extent permitted by the DLLCA, advancement of expenses
pursuant to this Section 5.6 shall be mandatory rather than permissive and
the Surviving Entity shall advance Costs (as defined in Section 5.6(b)
hereof) in connection with such indemnification.
(b) In addition to the other rights provided for in this Section
5.6 and not in limitation thereof, for a period of six years and ninety
days after the Effective Time, Buyer shall, and shall cause the Surviving
Entity to the fullest extent permitted by law to, (i) indemnify and hold
harmless the individuals who on or prior to the Effective Time were
officers, directors, employees or agents of the Company and any of its
Subsidiaries (the "Indemnitees") against all losses, expenses (including,
without limitation, attorneys' fees and the cost of any investigation or
preparation incurred in connection thereof), claims, damages, liabilities,
judgments, or amounts paid in settlement (collectively, "Costs") in respect
to any threatened, pending or contemplated claim, action, suit or
proceeding, whether criminal, civil, administrative or investigative
arising out of acts or omissions occurring on or prior to the Effective
Time (including, without limitation, in respect of acts or omissions in
connection with this Agreement and the Transactions) (an "Indemnifiable
Claim") and (ii) advance to such Indemnitees all Costs incurred in
connection with any Indemnifiable Claim. In the event any Indemnifiable
Claim is asserted or made within such six-year-and-ninety-day period, all
rights to indemnification and advancement of costs in respect of any such
Indemnifiable Claim shall continue until such Indemnifiable Claim is
disposed of or all judgments, orders, decrees or other rulings in
connection with such Indemnifiable Claim are fully satisfied.
(c) Buyer shall, and shall cause the Surviving Entity to,
expressly assume and honor in accordance with their terms all indemnity
agreements listed in Schedule 5.6 of the Company Disclosure Schedule. For
a period of three years and ninety days after the Effective Time, Buyer
will, and will cause the Surviving Entity to, provide officers' and
directors' liability insurance in respect of acts or omissions occurring
prior to the Effective Time covering each such Person currently covered by
the Company's officers' and directors' liability insurance policy on terms
with respect to coverage and amount no less favorable than those of such
policy in effect on the date hereof; provided, however, that in no event
shall Buyer or Surviving Entity be required to expend more than an amount
per year equal to 200% of current annual premiums paid by the Company for
such insurance (the "Maximum Amount") to maintain or procure insurance
coverage pursuant hereto (which the Company represents and warrants
aggregates currently to $133,000 per annum); provided, further, that if the
amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Buyer and Surviving Entity
shall maintain or procure, for such three-year-and-ninety-day period, the
most advantageous policies of directors' and officers' insurance obtainable
for an annual premium equal to the Maximum Amount. In the event that any
Indemnitee is entitled to coverage under an officers' and directors'
liability insurance policy pursuant to this Section 5.6(c) and such policy
has lapsed, terminated, been repudiated or is otherwise in breach or
default as a result of Buyer's failure to maintain and fulfill its
obligations pursuant to such policy to the extent required by as provided
in this Section 5.6(c); Buyer shall, and shall cause the Surviving Entity
to, pay to the Indemnitee such amounts and provide any other coverage or
benefits as the Indemnitee shall have received pursuant to such policy.
Buyer agrees that, should the Surviving Entity fail to comply with the
obligations of this Section 5.6, Buyer shall be responsible therefor.
(d) Notwithstanding any other provisions hereof, the obligations
of the Company, the Surviving Entity and Buyer contained in this Section
5.6 shall be binding upon the successors and assigns of Buyer and the
Surviving Entity. In the event the Company or the Surviving Entity or any
of their respective successors or assigns (i) consolidates with or merges
into any other Person or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each case, proper
provision shall be made so that successors and assigns of the Company or
the Surviving Entity, as the case may be, honor the indemnification
obligations set forth in this Section 5.6.
(e) The obligations of the Company, the Surviving Entity and
Buyer under this Section 5.6 shall not be terminated or modified in such a
manner as to adversely affect any Indemnitee to whom this Section 5.6
applies without the consent of such affected Indemnitee (it being expressly
agreed that the Indemnitees to whom this Section 5.6 applies shall be third
party beneficiaries of this Section 5.6).
(f) Buyer shall, and shall cause the Surviving Entity to,
advance all Costs to any Indemnitee incurred by enforcing the indemnity or
other obligations provided for in this Section 5.6.
(g) Each of Crescent and Reckson unconditionally and irrevocably
guarantee the obligations of Buyer under this Section 5.6 up to a maximum
amount, in the case of each of them separately, of fifty percent (50%) of
the aggregate of such obligations.
SECTION 5.7 Reasonable Best Efforts. Upon the terms and
subject to the conditions of this Agreement, each party hereto shall use
its reasonable best efforts (including with respect to the consents set
forth in Schedule 5.7 of the Company Disclosure Schedule) to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Transactions. The Company shall use its reasonable best
efforts to obtain the consent of The Carlyle Group to the transfer of the
Company's interest in 2800 Associates, L.P.
SECTION 5.8 Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the
Proxy Statement, (b) in determining whether any action by or in respect of,
or filing with, any Governmental Entity is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of the
Transactions and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Proxy Statement and seeking timely to
obtain any such actions, consents, approvals or waivers.
SECTION 5.9 Public Announcements. None of the Company,
Reckson, Crescent, or Buyer nor any of their respective affiliates shall
issue or cause the publication of any press release or other public
announcement with respect to the Merger, this Agreement or the other
Transactions without the prior consultation with the other party, except as
may be required by law or by any listing agreement with, or the policies
of, a national securities exchange.
SECTION 5.10 Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Entity will be authorized
to execute and deliver, in the name and on behalf of the Company or Buyer,
any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company or Buyer, any other actions to vest,
perfect or confirm of record or otherwise in the Surviving Entity any and
all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the
Surviving Entity as a result of, or in connection with, the Merger.
SECTION 5.11 Employee Matters.
(a) The Buying Entities shall, and shall cause their
Subsidiaries to, honor in accordance with their terms all agreements,
contracts, arrangements, commitments and understandings described in
Schedule 5.11 of the Company Disclosure Schedule.
(b) Except with respect to accruals under any defined benefit
pension plans, the Buying Entities will, or will cause the Surviving Entity
and its Subsidiaries to, give all active employees of the Company who
continue to be employed by the Company as of the Effective Time
("Continuing Employees") full credit for purposes of eligibility, vesting
and determination of the level of benefits under any employee benefit plans
or arrangements maintained by Buyer, the Surviving Entity or any Subsidiary
of Buyer or the Surviving Entity for such Continuing Employees' service
with the Company or any Subsidiary of the Company to the same extent
recognized by the Company immediately prior to the Effective Time. The
Buying Entities will, or will cause the Surviving Entity and its
Subsidiaries to, (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Continuing Employees under any welfare plan
that such employees may be eligible to participate in after the Effective
Time, other than limitations or waiting periods that are already in effect
with respect to such employees and that have not been satisfied as of the
Effective Time under any welfare plan maintained for the Continuing
Employees immediately prior to the Effective Time, and (ii) provide each
Continuing Employee with credit for any co-payments and deductibles paid
prior to the Effective Time in satisfying any applicable deductible or out-
of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time.
(c) The Buying Entities shall not, and shall not permit the
Surviving Entity or any of its Subsidiaries to, at any time prior to 90
days following the date of the Closing, without complying fully with the
notice and other requirements of the Worker Adjustment Retraining and
Notification Act of 1988 (the "WARN Act"), effectuate (i) a "plant closing"
as defined in the WARN Act affecting any single site of employment or one
or more facilities or operating units within any single site of employment
of the Surviving Entity or any of its Subsidiaries; or (ii) a "mass layoff"
as defined in the WARN Act affecting any single site of employment of the
Surviving Entity or any of its Subsidiaries; or any similar action under
applicable state, local or foreign law requiring notice to employees in the
event of a plant closing or layoff.
SECTION 5.12 Transfer Taxes. The Buying Entities and the
Company shall cooperate in the preparation, execution and filing of all Tax
Returns, questionnaires, applications, or other documents regarding any
real property transfer or gains, sales, use, transfer, value added, stock
transfer and stamp taxes, any transfer, recording, registration and other
fees, and any similar Taxes which become payable in connection with the
Transactions (together with any related interest, penalties or additions
thereto, "Transfer Taxes"). The Surviving Entity shall pay all Transfer
Taxes.
SECTION 5.13 Advice of Changes. Each party hereto shall
promptly advise the other parties hereto orally and in writing to the
extent it has knowledge of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect, (ii) the failure by it to comply in any material respect with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, and (iii) any change
or event having a Material Adverse Effect on the Company or on the truth of
its representations and warranties or the ability of the conditions set
forth in Article 7 to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.14 Guaranty. Each of Crescent and Reckson hereby
agrees to take all actions within their respective powers to cause Buyer to
perform its obligations under this Agreement, except as limited with
respect to the financial obligations contemplated by Sections 4.1.17,
4.2.17 and 5.6(g) hereof.
SECTION 5.15 Form S-4 Registration Statement. The Buying
Entities shall, as promptly as practicable following the date of this
Agreement, prepare and file with the SEC a registration statement on Form
S-4 (the "Form S-4 Registration Statement"), containing the Proxy Statement
and prospectus, in connection with the registration under the Securities
Act of Buying Entity Common Stock issuable upon conversion of the Company
Common Stock and the other Transactions. The Buying Entities and the
Company shall, and shall cause their accountants and attorneys to, use
their reasonable best efforts to have or cause the Form S-4 Registration
Statement declared effective as promptly as practicable, including, without
limitation, causing their accountants to deliver necessary or required
instruments such as opinions and certificates, and will take any other
action reasonably required or necessary to be taken under federal or state
securities laws or otherwise in connection with the registration process.
SECTION 5.16 Blue Sky Permits. The Buying Entities shall use
their reasonable best efforts to obtain, prior to the effective date of the
Form S-4 Registration Statement, all necessary state securities laws or
"blue sky" permits and approvals required to carry out the transactions
contemplated by this Agreement and the Merger, and will pay all expenses
incident thereto.
SECTION 5.17 NYSE Listing. Each of Reckson and Crescent shall
use its reasonable best efforts to cause the shares of Reckson Common Stock
and Crescent Common Stock, respectively, to be issued in the Merger to be
listed on the NYSE, subject to notice of official issuance thereof, prior
to the Closing Date.
SECTION 5.18 Affiliates. Prior to the Closing, the Company
shall deliver to Buyer a list identifying all Persons who are, at the time
this Agreement is submitted for approval to the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligations. The
respective obligations of the Company and the Buying Entities to consummate
the Merger are subject to the satisfaction or, to the extent permitted by
applicable law, the waiver on or prior to the Effective Time of each of the
following conditions:
(a) this Agreement shall have been adopted by the stockholders
of the Company in accordance with applicable law;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Merger;
(c) no action or proceeding by any Governmental Entity shall
have been commenced (and be pending), or, to the knowledge of the parties
hereto, threatened, against the Company, Reckson, Crescent or Buyer or any
of their respective affiliates, partners, associates, officers or
directors, or any officers or directors of such partners, seeking to
prevent or delay the Transactions or challenging any of the terms or
provisions of this Agreement or seeking material damages in connection
therewith;
(d) the Form S-4 Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order, and any material "blue sky" and
other state securities laws applicable to the registration and
qualification of the shares of Buying Entities' Common Stock following the
Merger shall have been complied with; and
(e) the shares of Buying Entities' Common Stock issuable in
accordance with the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
SECTION 6.2 Conditions to the Company's Obligations. The
obligation of the Company to consummate the Merger shall be further subject
to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following
conditions:
(a) Reckson, Crescent and Buyer shall have performed in all
material respects each of their respective agreements and covenants
contained in or contemplated by this Agreement (other than Section 5.13
hereof) that are required to be performed by it at or prior to the
Effective Time pursuant to the terms hereof;
(b) the representations and warranties of Reckson, Crescent and
Buyer contained in Article IV hereof that are qualified by materiality
shall be true and correct in all respects as of the Closing Date, and the
representations and warranties contained in Article IV hereof that are not
qualified by materiality shall be true and correct in all material
respects, except (i) to the extent such representations and warranties
speak as of an earlier date, in which case they shall be true in all
respects as of such earlier date, (ii) as otherwise contemplated by this
Agreement and (iii) as may result from any actions or transactions by or
involving the Company or any of its affiliates;
(c) the Company shall have received a certificate signed by the
chief executive officer, general partner or managing member, as the case
may be, of each of Reckson, Crescent and Buyer, dated the Closing Date, to
the effect that, to such officer's knowledge, the conditions set forth in
Sections 6.2(a), 6.2(b) and 6.2(d) hereof have been satisfied or waived;
and
(d) the Company shall have received an opinion of Brown & Wood
LLP, counsel to Reckson and Shaw, Pittman, Potts & Trowbridge, counsel to
Crescent, dated as of the Closing Date, reasonably satisfactory to the
Company, that for its taxable year ended December 31, 1997 and all
subsequent taxable years ending on or before the Closing Date, each of
Reckson and Crescent was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code (with customary
exceptions, assumptions and qualifications and based on customary
representations and covenants).
SECTION 6.3 Conditions to Obligations of the Buying Entities.
The obligations of Reckson, Crescent and Buyer to effect the Merger shall
be further subject to the satisfaction, or to the extent permitted by
applicable law, the waiver on or prior to the Effective Time of each of the
following conditions:
(a) the Company shall have performed in all material respects
each of its agreements and covenants contained in or contemplated by this
Agreement (other than Section 5.13 hereof) that are required to be
performed by it at or prior to the Effective Time pursuant to the terms
hereof;
(b) the representations and warranties of the Company contained
in Article III hereof that are qualified by materiality shall be true and
correct in all respects as of the Closing Date, and the representations and
warranties contained in Article III hereof that are not qualified by
materiality shall be true and correct in all material respects, except
(i) to the extent such representations and warranties speak as of an
earlier date, they shall be true in all respects as of such earlier date,
(ii) as otherwise contemplated by this Agreement and (iii) as may result
from any actions or transactions by or involving any of the Buying Entities
or any of their respective affiliates;
(c) the Buying Entities shall have received a certificate signed
by the chief executive officer of the Company, dated the Closing Date, to
the effect that, to such officer's knowledge, the conditions set forth in
Sections 6.3(a), 6.3(b) and 6.3(d) hereof have been satisfied or waived;
(d) the Buying Entities shall have received an opinion of Battle
Fowler LLP, counsel to the Company, dated as of the Closing Date, in the
form previously delivered to the Buying Entities as to the qualification of
the Company as a REIT under the Code; and
(e) all consents, authorizations, orders and approvals of (or
filings or registration with) any governmental commission, board, other
regulatory body or third parties required in connection with the execution,
delivery and performance of this Agreement by the Company shall have been
obtained or made, except for filings in connection with the Merger and any
other documents required to be filed after the Effective Time, and except
for (i) such consents, authorizations, orders and approvals under the
financing agreements related to the properties located at or known as
Corporate Center and 2800 North Central and (ii) such consents,
authorizations, orders and approvals which, if not obtained or made, would
not in the aggregate have a Material Adverse Effect on the Company,
Reckson, Crescent and their respective Subsidiaries, taken as a whole.
(f) all consents, authorizations and approvals required to waive
any default which may arise as a result of the Merger under the agreement
set forth in Schedule 6.3(f) of the Company Disclosure Schedule shall have
been obtained.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Notwithstanding anything herein to
the contrary, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
the parties hereto have obtained stockholder approval:
(a) by the mutual written consent of the Company and the Buying
Entities;
(b) by either the Company, on the one hand, or the Buying
Entities, on the other hand, if the Merger has not been consummated by
March 30, 1999, or such other date, if any, as the Company, on the one
hand, and the Buying Entities, on the other hand, shall agree upon (the
"Outside Termination Date"); provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before
such date;
(c) by either the Company, on the one hand, or the Buying
Entities, on the other hand, if there shall be any law or regulation that
makes consummation of the Merger illegal or if any judgment, injunction,
order or decree enjoining the Buying Entities or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(d) by the Buying Entities, (i) upon a material breach of any
covenant or agreement of the Company set forth in this Agreement which
remains uncured for twenty (20) business days after notice of such breach
has been delivered by the Buying Entities to the Company, or (ii) if any
representation or warranty of the Company shall become untrue, in either
case such that the conditions set forth in Section 6.3(a) hereof or Section
6.3(b) hereof, as the case may be, would be incapable of being satisfied;
(e) by the Company, (i) upon a material breach of any covenant
or agreement of any of the Buying Entities set forth in this Agreement
which remains uncured for twenty (20) business days after notice of such
breach has been delivered by the Company to the Buying Entities, or (ii) if
any representation or warranty of Reckson Operating Partnership, Crescent
Operating Partnership or Buyer shall become untrue, in either case such
that the conditions set forth in Section 6.2(a) hereof or Section 6.2(b)
hereof, as the case may be, would be incapable of being satisfied;
(f) by the Company, if the Board of Directors of the Company
determines to accept an Acquisition Proposal; provided, however, that in
order for the termination of this Agreement pursuant to this Section 7.1(i)
to be deemed effective, the Company shall have complied with the provisions
contained in Section 5.4 hereof, and shall simultaneously make payment of
all amounts due under 7.3 hereof;
(g) by Buyer, if prior to the Company Special Meeting, the Board
of Directors of the Company (i) shall have withdrawn or modified or amended
(or publicly announced an intention to withdraw) in any manner adverse to
Buyer its approval or recommendation of the Merger; (ii) makes any
recommendation with respect to any Acquisition Proposal other than a
recommendation to reject such Acquisition Proposal; (iii) enters into any
agreement which would result in consummation of an Acquisition Proposal
other than this Agreement; or (iv) resolves to do any of the foregoing; or
(h) by the Company or the Buyer, if the stockholders of the
Company fail to approve and adopt this Agreement and the Merger at the
Company Special Meeting or any postponement thereof.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
SECTION 7.2 Effect of Termination.
(a) Except for any breach of this Agreement by any party hereto
(which breach and liability therefor shall not be affected by the
termination of this Agreement), if this Agreement is terminated pursuant to
Section 7.1 hereof, then this Agreement shall become void and of no effect
with no liability on the part of any party hereto; provided that the
agreements contained in Sections 7.2, 7.3, 8.2, 8.4 hereof and the second
proviso to the first sentence of Section 5.3 hereof shall survive the
termination hereof; and provided further that the Confidentiality
Agreements shall remain in full force and effect.
(b) Buyer agrees that neither the Company nor its directors,
officers, employees, representatives or agents, nor any Person who shall
make an Acquisition Proposal shall be deemed, by reason of the making of
such proposal or any actions taken in connection with it not otherwise in
violation of this Agreement, to have tortiously or otherwise wrongfully
interfered with or caused a breach of this Agreement, or other agreements,
instruments and documents executed in connection herewith, or the rights of
Buyer or any of its affiliates hereunder.
SECTION 7.3 Fees and Expenses.
(a) If this Agreement shall have been terminated (i) pursuant to
Section 7.1(f) or 7.1(g) hereof or (ii) pursuant to Section 7.1(h) hereof
and, at the time of such stockholder vote, an Acquisition Proposal shall
have been publicly announced and not withdrawn, terminated or lapsed, which
provides for consideration per share of Common Stock for all such shares
which is greater than $24 and which is reasonably capable of being financed
by the Person making such proposal or (iii) pursuant to Section 7.1(h) in
circumstances where clause (ii) above does not apply, then the Company
shall, promptly, but in no event later than one business day after the
termination of this Agreement (or in the case of clause (i) above by reason
of a termination pursuant to Section 7.1(f) hereof, simultaneously with
such termination), pay each of Reckson and Crescent an amount equal to the
Applicable Break-Up Fee (as defined hereafter); provided that none of
Reckson, Crescent or Buyer was in material breach of any of its
representations, warranties, covenants or agreements hereunder at the time
of termination. Only one fee in an amount not to exceed the amount of the
Applicable Break-up Fee shall be payable to each of Reckson and Crescent
pursuant to this Section 7.3(a). Payment of the Applicable Break-Up Fee
shall be made, as directed by the Party entitled thereto, by wire transfer
in immediately available funds promptly, but in no event later than two (2)
business days following such termination. Each "Applicable Break-Up Fee"
shall be an amount equal to the lesser of (x) $9 million in the case of
clause (i), $4.5 million in the case of clause (ii) and $1.75 million in
the case of clause (iii) plus, in the case of a Break-Up Fee payable
pursuant to clause (i) or (ii) above, the Expense Amount (as defined
hereafter) (the "Base Amount") and (y) the maximum amount that can be paid
to the party entitled to the Applicable Breakup Fee in the year in which
this Agreement is terminated (the "Termination Year") and in all relevant
taxable years thereafter without causing it to fail to meet the
requirements of sections 856(c)(2) and (3) of the Code (the "REIT
Requirements") for such year, determined as if the payment of such amount
did not constitute income described in sections 856(c)(2)(A)-(H) and
856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as determined by
independent accountants to the party entitled to the Applicable Breakup
Fee. Notwithstanding the foregoing, in the event the party entitled to the
Applicable Breakup Fee receives a ruling from the Internal Revenue Service
(a "Break-Up Fee Ruling") holding that such party's receipt of the Base
Amount would either constitute Qualifying Income or would be excluded from
gross income within the meaning of the REIT Requirements, such party's
Applicable Break-Up Fee shall be an amount equal to the Base Amount. If
the amount payable for the Termination Year to the party entitled to the
Applicable Break-up Fee under the preceding sentence is less than the Base
Amount, the Company shall place the remaining portion of the Base Amount in
escrow and shall not release any portion thereof to such party unless and
until the Company receives either of the following: (i) a letter from such
party's independent accountants indicating that additional amounts can be
paid at that time to such party without causing such party to fail to meet
the REIT Requirements for any relevant taxable year, in which event the
Company shall pay to such party such amount, or (ii) a Break-Up Fee Ruling,
in which event the Company shall pay to such party the unpaid Base Amount.
The Company's obligation to pay any unpaid portion of either party's
Applicable Break-Up Fee shall terminate three years from the date of this
Agreement and the Company shall have no obligation to make any further
payments notwithstanding that the entire Base Amount relating to such
Applicable Break-Up Fee has not been paid as of such date. The "Expense
Amount" relating to each Applicable Break-Up Fee shall be the amount of
actual, direct out-of-pocket expenses incurred by the party entitled to the
Applicable Break-Up Fee in connection with the transactions contemplated by
this Agreement; provided, however, in no event shall the Expense Amount
relating to each Applicable Break-Up Fee exceed $1.75 million in the
aggregate.
(b) Except as provided otherwise in this Section 7.3, all costs
and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses.
(c) In the event of a suit by any party hereto for a breach of
this Agreement, the prevailing party shall be entitled to actual, out-of-
pocket litigation expenses incurred by such prevailing party in such
action.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this
Agreement to any party hereunder shall be in writing and deemed given upon
(a) personal delivery, (b) transmitter's confirmation of a receipt of a
facsimile transmission, (c) confirmed delivery by a standard overnight
carrier or when delivered by hand or (d) when received in the United States
by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by notice given hereunder):
If to Reckson to:
Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, New York
Fax: (516) 622-6788
Attention: Jason Barnett, General Counsel
with a copy to:
Brown & Wood LLP
One World Trade Center
New York, New York 10048
Fax: (212) 839-5599
Attention: Joseph W. Armbrust Jr., Esq.
Peter T. Simor, Esq.
If to Crescent to:
Crescent Real Estate Equities, Ltd.
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Fax: (817) 321-2000
Attention: Gerald Haddock
with a copy to:
David M. Dean, Esq.
Crescent Real Estate Equities, Ltd.
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Fax: (817) 321-2000
and with a copy to:
Shaw, Pittman, Potts & Trowbridge
2300 N. Street, NW
Washington, D.C. 20037-1128
Fax: (212) 663-8007
Attention: Robert Robbins
If to Buyer, to:
Metropolitan Partners LLC
c/o Reckson Associates Realty Corp.
225 Broadhollow Road
Melville, NY 11747
Fax: (516) 622-6786
Attention: Jason M. Barnett, Esq.
with a copy to:
Metropolitan Partners LLC
c/o Crescent Real Estate Equities Company
777 Main Street, Suite 2100
Fort Worth, TX 76102
Fax: (817) 878-0429
Attention: David M. Dean, Esq.
If to the Company, to:
Tower Realty Trust, Inc.
292 Madison Avenue
New York, New York 10017
Fax: (212) 448-1865
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-9931
Fax: (212) 735-2000
Attention: Lou R. Kling, Esq.
Howard L. Ellin, Esq.
and with a copy to:
Battle Fowler L.L.P.
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Fax: (212) 339-9150
Attention: Steven L. Lichtenfeld, Esq.
SECTION 8.2 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective
Time. All other representations, warranties and covenants contained herein
which by their terms are to be performed in whole or in part, or which
prohibit actions, subsequent to the Effective Time, shall survive the
Merger in accordance with their terms.
SECTION 8.3 Interpretation. References in this Agreement to
"reasonable best efforts" shall not require a Person obligated to use its
reasonable best efforts to incur other than de minimis out-of-pocket
expenses or indebtedness in connection with such obligation under this
Agreement, including to obtain any consent of a third party or, except as
expressly provided herein, to institute litigation. References herein to
the "knowledge of the Company" shall mean the actual knowledge of the
officers (as such term is defined in Rule 3b-2 promulgated under the
Exchange Act) of the Company or its Subsidiaries, or such knowledge that
such officers would have had but for the gross negligence or bad faith of
such officers. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words
"without limitation." The phrase "made available" when used in this
Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. As used in this Agreement, the terms "affiliate(s)" and
"associates" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement. Any matter disclosed pursuant to any
Schedule of the Company Disclosure Schedule or the Buyer Disclosure
Schedule shall not be deemed to be an admission or representation as to the
materiality of the item so disclosed.
SECTION 8.4 Amendments, Modification and Waiver.
(a) Except as may otherwise be provided herein, any provision of
this Agreement may be amended, modified or waived by the parties hereto, by
action taken by or authorized by their respective Board of Directors, prior
to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company and the
Buying Entities or, in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of this
Agreement by the stockholders of the Company, no such amendment shall be
made except as allowed under applicable law.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 8.5 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto.
SECTION 8.6 Specific Performance. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy
and accordingly the parties agree that, in addition to any other remedies,
each shall be entitled to enforce the terms of this Agreement by a decree
of specific performance without the necessity of proving the inadequacy of
money damages as a remedy.
SECTION 8.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof and except to the extent that the
validity and effectiveness of the Merger are required to be governed by the
laws of the State of Maryland or the State of Delaware) as to all matters,
including, but not limited to, matters of validity, construction, effect,
performance and remedies. Each of the Company and the Buying Entities
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States of America located in the State of New York (the "New York Courts")
for any litigation arising out of or relating to this Agreement or the
Transactions (and agrees not to commence litigation relating thereto except
in such courts), waives any objection to the laying of venue of any such
litigation in the New York Courts and agrees not to plead or claim in any
New York Court that such litigation brought therein has been brought in any
inconvenient forum.
SECTION 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions are not affected in any
manner materially adverse to any party hereto. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner.
SECTION 8.9 Third Party Beneficiaries. This Agreement is
solely for the benefit of the Company and its successors and permitted
assigns, with respect to the obligations of Buyer under this Agreement, and
for the benefit of the Buying Entities, and their respective successors and
permitted assigns, with respect to the obligations of the Company under
this Agreement, and this Agreement shall not, except to the extent
necessary to enforce the provisions of Section 5.6 hereof be deemed to
confer upon or give to any other third party any remedy, claim, liability,
reimbursement, cause of action or other right.
SECTION 8.10 Entire Agreement. This Agreement, including any
exhibits or schedules hereto, and the Confidentiality Agreement,
constitutes the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements or
understandings, both written and oral, between the parties or any of them
with respect to the subject matter hereof.
SECTION 8.11 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be deemed an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
TOWER REALTY TRUST, INC.
By: /s/ Robert L. Cox
---------------------------------
Name: Robert L. Cox
Title: Executive Vice President &
Chief Operating Officer
METROPOLITAN PARTNERS LLC
By: /s/ Scott H. Rechler
---------------------------------
Name: Scott H. Rechler
Title:
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Scott H. Rechler
---------------------------------
Name: Scott H. Rechler
Title: President &
Chief Operating Officer
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ David M. Dean
---------------------------------
Name: David M. Dean
Title: Senior Vice President,
Law & Secretary
EXHIBIT 99.1
TOWER REALTY TRUST ANNOUNCES SALE TO JOINT VENTURE
New York, NY (July 9, 1998) -- Tower Realty Trust (NYSE:TOW) announced
today an agreement under which Metropolitan Partners, a 50/50 joint venture
between Reckson Associates Realty Corporation and Crescent Real Estate
Equities Company will acquire the company for $24.00 per share in cash.
Tower stockholders will have the right to elect to receive .4615 of a share
of Reckson common stock and .3523 of a share of Crescent Common Stock in
lieu of the $24 in cash, for up to an aggregate of 40% of the total
consideration payable in the transaction.
The merger agreement provides such that if the average closing stock
price for Crescent Common Stock or Reckson Common Stock during the fifteen
trading days ending on the tenth trading day prior to the Tower
stockholders meeting to approve the Merger is equal to or greater than
$36.4469 (in the case of Crescent) or $27.82 (in the case of Reckson), then
the above ratios will be adjusted to equal the quotient of 12.84 divided by
such average stock prices. Partnership units in Tower Realty Operating
Partnership L.P., will be treated in the same way as Tower stock in the
transaction. The transaction is valued at approximately $734 million,
including the assumption of Tower debt.
The closing of the merger is subject to certain customary conditions,
including approval by Tower stockholders. The deal is expected to be
completed during the second half of 1998. Merrill Lynch acted as exclusive
financial advisor to Tower Realty and provided a fairness opinion to the
Board of Tower.
"We believe this transaction provides excellent value to Tower Realty
Trust shareholders and the opportunity to participate in the growth of two
prominent REITs," said Lester S. Garfinkel, Chief Financial Officer and
Executive Vice President for Finance and Administration. "The priority of
the Board of Directors and management has been to position Tower Realty to
build the long term value of its portfolio and, in turn, its return to
shareholders. The merger is consistent with this priority. Tower's real
estate properties will now become part of an enterprise which will have far
greater resources. This transaction provides Tower shareholders with the
opportunity to receive a cash payment which is higher than Tower's 1998
stock price range or, if they so choose, the ability to receive an ongoing
equity interest in Crescent and Reckson."
Tower Realty Trust is a self-managed real estate investment trust
engaged in the development, acquisition, ownership, renovation, management
and leasing of office properties.
Tower Realty Trust owns interests in 25 office buildings with an
aggregate of approximately 4.6 million square feet (as of June 19, 1998) in
the Manhattan, Phoenix/Tucson and Orlando markets, with two-thirds of the
Company's rental stream derived from its Manhattan office properties. In
addition, the Company owns or has options to acquire approximately 50 acres
of land upon which it can build 2.2 million square feet.
/CONTACT: Lester S. Garfinkel, Chief Financial Officer of Tower Realty
Trust, Inc., 212-448-1864.
