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
November 8, 1996
(Date of earliest event reported)
CORNERSTONE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
Nevada 0-10421 74-2170858
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
Tower 56
126 East 56th Street
New York, NY 10022
(Address of principal executive offices)
(212) 605-7100
(Registrant's telephone number,
including area code)
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Item 2. Acquisition or Disposition of Assets.
On November 8, 1996, through a merger of subsidiaries, the Company issued
$66,500,000 of 8% Cumulative Convertible Preferred Stock Series A to Hexalon
Real Estate, Inc. ("Hexalon") in a transaction exempt from registration under
Section 4(2) of the Securities Act of 1933. The result of the transaction is
that the Company acquired $40,000,000 cash and the Frick Building located in
Pittsburgh, Pennsylvania. The Frick Building is a twenty story, Class A landmark
building, containing 341,421 square feet of rentable area. Hexalon, a large real
estate investment trust, took the preferred shares (which are legended) for
investment. The preferred shares are convertible into the Company's Common Stock
at a conversion price of $14.50 per share, subject to antidilution provisions.
Also on November 8, 1996, the Company acquired One Lincoln Centre, located
in Oakbrook Terrace, Illinois for a purchase price of approximately $49,950,000.
One Lincoln Centre is a Class A, sixteen story office building with 297,330
square feet of rentable area and a 1,056 stall, five level parking garage.
Cornerstone used the proceeds from the Preferred Stock placement discussed above
and general corporate funds to finance the purchase of One Lincoln Centre.
Item 5. Other Events
On November 22, 1996 the Company issued $100,000,000 of 8% Cumulative
Convertible Preferred Stock to New York State Teachers' Retirement System in a
transaction exempt from registration under Section 4(2) of the Securities Act of
1933. The preferred shares are convertible into the Company's Common Stock at a
conversion price of $14.50 per share subject to antidilution provisions.
Item 7. Financial Statements and Exhibits.
(a) and (b) Financial Statements of Property Acquired and Pro
Forma Financial Information
It is impracticable to provide the required financial statements and pro
forma financial information relating to The Frick Building and One Lincoln
Centre at this time. The required material will be filed as an amendment to this
Form 8-K as soon as practicable, but no later than 60 days after the date
hereof.
(c) Exhibits
2.1 AGREEMENT AND PLAN OF MERGER, dated as of November 7, 1996,
among Cornerstone Properties Inc., CStone-Pittsburgh Trust,
Frick Building, Inc., and Hexalon Real Estate, Inc.
2.2 PREFERRED STOCK PURCHASE AGREEMENT, dated as of November 22,
1996, between CORNERSTONE PROPERTIES INC., and the NEW YORK
STATE TEACHERS' RETIREMENT SYSTEM.
4.1 CERTIFICATE OF DESIGNATIONS OF THE VOTING POWERS,
DESIGNATION, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE 8% CUMULATIVE CONVERTIBLE
PREFERRED STOCK OF CORNERSTONE PROPERTIES INC.
4.2 CERTIFICATE OF THE DESIGNATIONS, VOTING POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF 8% CUMULATIVE
CONVERTIBLE PREFERRED STOCK, SERIES A OF CORNERSTONE PROPERTIES
INC.
20.1 STOCKHOLDERS' AGREEMENT, dated as of November 22, 1996, by and
among CORNERSTONE PROPERTIES INC., the NEW YORK STATE TEACHERS'
RETIREMENT SYSTEM together with any other the purchasers of 8%
Preferred Stock.
20.2 STOCKHOLDERS' AGREEMENT, dated as of November 7, 1996, by and
between CORNERSTONE PROPERTIES INC., and HEXALON REAL ESTATE,
INC., and together with any other purchaser(s) of 8% Preferred
Stock Series A.
99.1 News release by Cornerstone Properties Inc. dated November 22,
1996.
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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 thereunto duly authorized.
CORNERSTONE PROPERTIES INC.
(Registrant)
By: /s/ John S. Moody
John S. Moody, President and Chief Executive Officer
Date: December 12, 1996
By: /s/ Thomas P. Loftus
Thomas P. Loftus, Vice President and Controller
(Principal Financial Officer)
Date: December 12, 1996
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER, dated as of November 7, 1996 (this
"Agreement"), among Cornerstone Properties Inc., a Nevada corporation (the
"Parent"), CStone-Pittsburgh Trust, a Maryland business trust and a wholly owned
subsidiary of the Parent ("Sub"), Frick Building, Inc., a Delaware corporation
(the "Company"), and Hexalon Real Estate, Inc., a Delaware corporation, the sole
stockholder of the Company (the "Stockholder").
WHEREAS, the Board of Trustees of Sub and the respective Boards of
Directors of the Parent, the Company and the Stockholder each have determined
that it is in the best interests of their respective companies and stockholders
for Sub and the Company to merge upon the terms and subject to the conditions
set forth herein (the "Merger") and the Parent, Sub, the Company and the
Stockholder have, by duly adopted resolutions, approved and adopted this
Agreement; and
WHEREAS, to induce the Parent and Sub to enter into this Agreement,
the Stockholder has agreed to enter into a stockholders' agreement (the
"Stockholders' Agreement"), in the form set forth as Exhibit A hereto,
simultaneously with the closing of the Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. DefinitionsDefinitions. As used in this Agreement, the
following terms shall have the following meanings:
"Account" means that certain account no. 8801721955 established
at SunTrust Bank in the name of Frick Building, Inc.
"Basic Agreements" means this Agreement and the Stockholders'
Agreement.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participation or other equivalents (however designated)
of such Person's capital stock and all joint venture interests (however
designated) whether now outstanding or issued after the Closing Date,
including, without limitation, all common stock and all preferred stock.
"Capitalized Lease" means, as applied to the Parent, any lease of
property (whether real, personal or mixed) the discounted present value of
the rental obligations of the Parent as lessee under which, in conformity
with GAAP, is required to be or is capitalized on the balance sheet of
that Person.
"Certificate of Merger" has the meaning specified in Section 2.02.
"Charter" means the Certificate of Incorporation of the Parent, as
amended or restated from time to time.
"Closing" has the meaning specified in Section 2.02.
"Closing Date" has the meaning specified in Section 2.02.
"Closing Statement" has the meaning specified in
Section 3.03(a)(x).
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock of the Parent, without par
value.
"Company Note" means the Demand Promissory Note, dated as of July
31, 1989, of the Company to Stockholder in the original principal amount
of $36,000,000.
"Company Shares" has the meaning specified in Section 2.06.
"Contract Rights" means any and all rights of the Company in and
to the Contracts.
"Contracts" means all service, maintenance, supply, construction,
utility and management contracts affecting the construction, use,
ownership, maintenance and/or operation of the Property (including
contracts for the construction of tenant improvements).
"Conversion Shares" means the Common Stock or other securities
issued upon conversion of the 8% Preferred Stock, Series A.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to
protect the Parent against fluctuations in currency values.
"Debt" of the Parent means, at any date (without duplication): (i)
all obligations of the Parent for borrowed money; (ii) all obligations of
the Parent evidenced by bonds, debentures, notes or other similar
instruments; (iii) all obligations of the Parent in respect of letters of
credit, bankers' acceptances or other similar instruments (or
reimbursement obligations with respect thereto); (iv) all obligations of
the Parent to pay the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue); (v) all obligations of
the Parent as lessee under Capitalized Leases; (vi) all obligations of the
Parent in respect of performance bonds or other similar instruments; (vii)
all obligations of others of the types referred to in clauses (i) through
(vi), (viii) and (ix) of this paragraph secured by a Lien on any asset of
the Parent, whether or not any such obligation is assumed by the Parent,
provided that, for purposes of determining the amount of any Debt of the
type described in this clause (vii), if recourse with respect to such Debt
is limited to such asset, the amount of such Debt shall be limited to the
Fair Market Value of such assets; (viii) all obligations of others of the
types referred to in clauses (i) through (vi) and (ix) of this paragraph
which are guaranteed by the Parent; and (ix) to the extent not otherwise
included, obligations under Currency Agreements and Interest Rate
Agreements.
"Delaware Law" means the Delaware General Corporation Law.
"Effective Time" has the meaning specified in Section 2.02.
"8% Preferred Stock" means the 8% Cumulative Convertible Preferred
Stock of the Parent, without par value, to be issued hereafter.
"8% Preferred Stock Series A" has the meaning specified in
Section 2.06.
"Environmental Laws" has the meaning specified in
Section 3.05(a)(vii).
"Executive Summary" has the meaning specified in Section 5.01(i).
"GAAP" means generally accepted accounting principles in the United
States as in effect at the time any particular determination is made.
"Hazardous Materials" has the meaning specified in
Section 3.05(a)(vii).
"Improvements" means all buildings and other improvements located on
or affixed to the Land, including, without limitation, a 21-story office
building with ground floor retail space known as the Frick Building,
Pittsburgh, Pennsylvania, containing approximately 341,421 square feet of
net rentable area, and any and all utility, plumbing, electrical, heating,
air-conditioning and ventilation lines, systems and boilers.
"Incurrence" means the issuance, incurrence, creation, assumption or
in any other manner becoming liable with respect to, or the extension of
the maturity or mandatory redemption date of, or becoming responsible for
the payment of, any Debt, Preferred Stock or Lien. "Incur" and "Incurred"
shall have correlative meanings.
"Intangible Rights" means all right, title and interest of the
Company, if any, in and to intangible and mixed property used in
connection with or relating to the Real Property or Personal Property,
including without limitation all third-party representations, warranties,
guarantees, indemnities, bonds, approvals, licenses, applications,
permits, plans, drawings, specifications, surveys, maps, engineering
reports and other technical descriptions, environmental reports, trade
names and trademarks, telephone numbers and similar property, other than
the Contract Rights and the Leases.
"Interest Rate Agreements" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge agreement, to or under
which the Parent is a party or a beneficiary on the date hereof or becomes
a party or a beneficiary hereafter.
"Land" means that certain parcel of land in Pittsburgh, Pennsylvania
more particularly described on Exhibit R-A attached hereto, together with
all rights, easements, and interests appurtenant thereto.
"Leases" means all of the leases, occupancy agreements and licenses
of space in the Real Property, together with any amendments of any of the
foregoing or any related agreements, including brokerage agreements and
guaranties.
"Lien" means any pledge, mortgage, lien, charge, security interest
or encumbrance of any kind.
"Maryland Law" means Title 8 of Corporations and Associations
Annoted Code of Maryland.
"Material Adverse Effect" means for any entity, a material adverse
effect on the business, operations, properties or condition (financial or
otherwise) of such entity and its Subsidiaries, taken as a whole.
"1934 Act" shall mean the United States Securities Exchange Act of
1934, as amended, and, unless the context indicates otherwise, the rules
and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"1933 Act" shall mean the United States Securities Act of 1933, as
amended, and, unless the context indicates otherwise, the rules and
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a trust, an individual retirement account or
any other entity or organization, including a government or any department
or agency thereof.
"Personal Property" means all right, title and interest of the
Company in and to the tangible personal property of the Company listed in
Exhibit R-B and any other tangible personal property of the Company used
in connection with the operation and/or maintenance of the Real Property,
including without limitation all furniture, fixtures, equipment,
machinery, furnishings, carpets, drapes, blinds and mini-blinds, service
and maintenance equipment, tools, signs, telephones and other
communication equipment, intercom equipment and systems.
"Property" means the Real Property, the Personal Property, the
Intangible Rights, the Leases, and the Contract Rights.
"Real Property" means the Land and the Improvements.
"Rent Roll" has the meaning specified in Section 3.03(a)(i).
"7% Preferred Stock" means the 7% Cumulative Convertible Preferred
Stock of the Parent, without par value.
"Stockholder Knowledge Individuals" has the meaning specified in
Section 3.05(b).
"Subsidiary" means, as to any entity, any company, corporation or
joint venture of which at the time of determination such entity, directly
and/or indirectly through one or more Subsidiaries, owns, or one or more
other Subsidiaries own, more than 50% of the Voting Stock or such entity
controls, or one or more other Subsidiaries control, the composition of
more than 50% of the board of directors or comparable governing body
thereof.
"Surviving Corporation" has the meaning specified in Section 2.01.
"Taxes" mean all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government,
which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to,
federal income taxes and state income taxes), real property gains taxes,
payroll and employee withholding taxes, unemployment insurance taxes,
social security (or similar) taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other governmental charges,
alternative or add-on minimum taxes and other obligations of the same or
of a similar nature to any of the foregoing, whether disputed or not,
which the applicable party is required to pay, withhold or collect.
"Tenant Estoppels" has the meaning specified in
Section 3.03(a)(v).
"Title Company" means Lawyers Title Insurance Company.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock of such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock
has voting power by reason of any contingency) to vote in the election of
members of the board of directors or other governing body of such Person
but does not include Capital Stock having the right to vote in such
election solely upon the happening of a contingency unless and until such
contingency has occurred, and then only so long as such Capital Stock has
voting rights with respect thereto.
ARTICLE II. THE MERGER
Section 2.01. The MergerThe Merger. Upon the terms and subject to
the conditions set forth in Section 3.03 and Article IV, and in accordance with
Maryland Law and Delaware Law, at the Effective Time the Company shall be merged
with and into Sub. As a result of the Merger, the separate corporate existence
of the Company shall cease and Sub shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
Section 2.02. Effective Time; ClosingEffective Time; Closing. As
promptly as practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article IV, the parties hereto shall cause the Merger to
be consummated by filing this Agreement or a certificate of merger (the
"Certificate of Merger") with the Secretaries of State of Maryland and Delaware,
in such form as is required by, and executed in accordance with the relevant
provisions of, Maryland Law and Delaware Law (the date and time of the later of
such filings being the "Effective Time"). Prior to such filings, a closing shall
be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York 10022, on November 7, 1996, or such other place and date as the parties
shall agree, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Section 3.03 and Article IV (such
closing being called the "Closing" and such date being called the "Closing
Date").
Section 2.03. Effect of the MergerEffect of the Merger. At the
Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of Maryland Law and Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Sub and the Company shall vest
in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Sub shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.
Section 2.04. Certificate of Formation; BylawsCertificate of
Formation; Bylaws. (a) At the Effective Time, the Certificate of Formation of
the Surviving Corporation shall be as set forth in Exhibit B, until thereafter
amended as provided by law and such Certificate of Formation.
(b) The Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
Section 2.05. Directors and OfficersDirectors and Officers. The
trustees of Sub immediately prior to the Effective Time shall be the initial
trustees of the Surviving Corporation, each to hold office in accordance with
the Trust Declaration and Bylaws of the Surviving Corporation, and the officers
of the Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
Section 2.06. Conversion of Company SharesConversion of Company
Shares. All the shares of common stock of the Company (the "Company Shares")
issued and outstanding immediately prior to the Effective Time (all of which are
and, immediately prior to the Effective Time will be, owned by the Stockholder)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted in their entirety into and represent the right to receive,
upon surrender to the Parent of the certificates formerly representing the
Company Shares, 458,621 shares of 8% Cumulative Convertible Preferred Stock
Series A, without par value (the "8% Preferred Stock Series A"), of the Parent
having the terms set forth in the Certificate of Designations attached hereto as
Exhibit C.
Section 2.07. Conversion of Sub Common StockConversion of Sub Common
Stock. Each share of common stock, par value $1.00 per share, of Sub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one share of common stock of the Surviving
Corporation.
ARTICLE III. CERTAIN MATTERS PERTAINING TO
REAL ESTATE AND THE COMPANY
Section 3.01. Delivery of Materials for ReviewDelivery of Materials
for Review. In connection with the transactions contemplated hereby, prior to
the Closing Date, the Company delivered to the Parent or otherwise made
available to the Parent for its review the documents and other materials set
forth on the Document List attached hereto as Exhibit R-C.
Section 3.02. As-Is ClauseAs-Is Clause. As a material inducement to
the Stockholder and the Company to execute this Agreement, the Parent and Sub
acknowledge, represent and warrant that, except as expressly provided in this
Agreement, (i) the Parent and Sub will have fully examined and inspected the
Property, including, without limitation, the construction, operation and leasing
of the Property, together with such other documents and materials with respect
to the Property which the Parent and Sub deem necessary or appropriate in
connection with their investigation and examination of the Property, including,
without limitation, all of the documents made available to the Parent or the Sub
at the offices of the Company's property manager, (ii) the Parent and Sub will
have accepted the foregoing and the physical condition, value, presence/absence
of Hazardous Materials, financing status, use, leasing, operation, tax status,
income and expenses of the Property, (iii) the Property will be subject to all
applicable laws and "AS IS" and "WHERE IS" and with all faults and, upon the
Closing, Sub shall assume responsibility for the physical condition of the
Property and (iv) the Parent and Sub will have decided to purchase the Property
solely on the basis of their own independent investigation. Except as expressly
set forth herein, neither the Stockholder nor the Company has made, makes, and
has authorized anyone else to make any representation as to the present or
future physical condition, value, presence/absence of hazardous materials,
financing status, leasing, operation, use, tax status, income and expenses or
any other matter or thing pertaining to the Property, and the Parent and Sub
acknowledge that no such representation or warranty has been made and that in
entering into this Agreement they do not rely on any representation or warranty
other than those expressly set forth in this Agreement. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, NEITHER THE STOCKHOLDER NOR THE COMPANY MAKES ANY
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY. The
provisions of this Section 3.02 shall survive the Closing.
Section 3.03. Closing DeliveriesClosing Deliveries. (a) The
Company's Deliveries. The Company shall deliver or cause to be delivered the
following documents to Sub at the Closing:
(i) The original, signed Leases (or copies thereof certified by the
Stockholder if originals are not available) as well as the Company's
tenant lease files, and a rent roll and delinquency report for the current
month ("Rent Roll") certified by the Stockholder as being true and
complete in all material respects, to Stockholders knowledge.
(ii) A certification duly executed by the Stockholder in the form
attached hereto as Exhibit R-D, stating that the Company is not a "foreign
person" within the meaning of Section 1445 of the Internal Revenue Code of
1986, as amended.
(iii) Originals (or certified copies thereof if originals are not
available) of the Contracts.
(iv) Originals of all books and records in the Company's possession
pertaining to the operation and management of the Property; provided,
however, that the Stockholder may keep copies of all such books and
records.
(v) Estoppel certificates from tenants of the Property occupying
eighty percent (80%) of the rentable square footage of the Property, dated
no earlier than twenty (20) days prior to the Closing Date ("Tenant
Estoppels") in the form attached hereto as Exhibit R-E (provided that if
any Lease specifies the form of estoppel certificate which the tenant
thereunder is obligated to deliver, such form may be delivered in lieu of
the form attached hereto as Exhibit R-E).
(vi) Evidence reasonably satisfactory to Sub and Title Company that
all real estate taxes, sewer and water rates and charges, special
assessments and betterments, and any utility charges the non-payment of
which could result in a lien upon the Property, either have been paid or
are included in the Closing Statement for purposes of apportionment.
(vii) Any and all keys, and lock and safe combinations respecting
the Improvements.
(viii) If the Contracts listed in Exhibit R-C include any Contract
for the construction of tenant improvements, evidence of payment by the
Company of all amounts incurred thereunder through the Closing Date.
(ix) Such other instruments as the Parent or the Sub may
reasonably request.
(b) Satisfaction of Deliveries. Except with respect to any
representations, warranties or covenants of the parties that survive the Closing
in accordance with Section 7.01, the occurrence of the Closing shall be deemed
full and complete satisfaction of the deliveries required pursuant to this
Section 3.03 or the waiver thereof by the party for whose benefit the delivery
is required to be made.
Section 3.04. Closing Costs and ProrationsClosing Costs and
Prorations. At the Closing, closing costs shall be paid and prorations made as
between the Sub and the Stockholder with respect to the Property in accordance
with this Section 3.04.
(a) Closing Costs. The Stockholder and the Parent each agree to
cooperate with each other in making all filings required to confirm that no
state or local real estate transfer tax is due in connection with the
consummation of the transactions contemplated. In the event any such tax shall
be imposed, the Stockholder and the Parent shall each pay one-half of the same
when due, plus any interest and penalties. No filing or communication with any
tax official or authority shall be made by either party without the consent of
the other party. Each party shall bear its own costs and expenses in connection
with all such filings. The Sub shall pay the title insurance premium for the
owner's title insurance policy issued at the Closing to the Sub by Title Company
and any costs for any survey obtained by the Sub.
(b) Prorations. The following prorations shall be made as of
11:59 p.m. the day prior to the Effective Time:
(i) Taxes. Real and personal property taxes and general and
special assessments shall be prorated on the basis of the fiscal
year for such taxes and assessments. If the Closing Date shall occur
before the real property tax rate for such fiscal year is fixed, the
apportionment of taxes shall be made on the basis of the taxes
assessed for the preceding fiscal year. After the real property
taxes are finally fixed for the fiscal year in which the Closing
Date occurs, the Parent and the Stockholder shall make a
recalculation of the apportionment of such taxes, and the Parent or
the Stockholder, as the case may be, shall make an appropriate
payment to the other based on such recalculation. After the Closing
Date, Sub shall have the right to control and pursue exclusively
without the participation of the Stockholder any and all tax
reduction proceedings relating to the Property; provided that if
taxes increase as a result of said proceedings, the Stockholder
shall have no liability for such increases, and provided that Sub
shall cooperate with the Stockholder in pursuing any tax reduction
proceedings for tax year 1996. With respect to 1996 taxes, the
parties shall prorate on the basis of the reduced assessment in
effect on November 4, 1996, and the Stockholder shall be entitled to
the entire 1996 refund, if any. Subject to the immediately preceding
sentence, to the extent any real estate tax refund is received on or
after the Closing Date by any party hereto, the amount of the net
proceeds of such tax refund shall be prorated to but not including
the Closing Date, if, as and when such proceeds are paid by the
applicable governmental taxing authority (it being understood that,
to the extent any tenant leasing space in the Real Property shall be
entitled to any portion of such tax abatement, such portion shall be
turned over to Sub to remit to such tenant and shall be deducted
from any tax refund proceeds in connection with calculating the net
proceeds thereof).
(ii) Rents. Prepaid rent, nondelinquent base rents, additional
rents in the nature of operating expense recoveries, electricity
recoveries, and tax reimbursements under the Leases shall be
prorated. Rents collected after the Closing Date from tenants whose
rental was delinquent on the Closing Date shall be deemed to apply
first to current rental due at the time of payment and second to the
rentals which were delinquent on the Closing Date. Unpaid and
delinquent rents, to which the Stockholder is entitled, shall be
turned over to the Stockholder if collected by the Sub after the
Closing Date within 30 days of collection, less any reasonable
third-party out-of-pocket collection costs actually incurred by the
Sub. The Sub agrees to use good faith efforts to attempt to collect
such rents. On the Closing Date, the Sub shall be entitled to a
credit for any tenant security deposits and interest thereon, if
any, and any other amounts due tenants pursuant to such security
deposits unless such security deposits have been previously applied
by the Company. In the event that any additional rent or the
calculation thereof is subject to adjustment pursuant to the terms
and provisions of any Lease (e.g., year-end adjustments to
escalation charges, tenant audits, and the like), then after the
amount of such additional rent is finally determined by the Parent
(which determination shall be reasonably made), the parties shall
make the proper adjustments so that the proration will be accurate
based upon the actual amount of such additional rent collected for
the period in question, and payment shall be made promptly to the
Sub or the Stockholder, whichever may be entitled to such payment,
by the other party for the purpose of making such adjustment.
(iii) Utilities. Charges and assessments for sewer and water
and other utilities, including charges for consumption of
electricity, steam and gas shall be apportioned by the Sub and the
Stockholder.
(iv) Adjustment of Contracts. Except as provided in (v) below,
payments required or received under all Contracts shall be
apportioned by the Sub and the Stockholder.
(v) Leasing Costs. The Parent shall be entitled to payment at
Closing for all costs and expenses required to be paid, whether
before or after the Closing, in respect of Leases entered into prior
to the Closing for (A) tenant improvement construction contracts
(except with respect to the payment for certain tenant improvement
work required to be made in 1999 under the Meyer, Darragh & Buckler
lease for which the Sub shall be solely responsible), (B) tenant
improvement allowances to tenants and (C) brokerage commissions,
except commissions which may become due in connection with the
extension or renewal of any Lease on or after the Closing Date or in
connection with the exercise after the Closing Date by any tenant of
any expansion or extension option contained in any of the Leases.
(vi) Other. Any other items of income and expense shall
be prorated between the Sub and the Stockholder.
(c) Payment of Apportionment. Any net credit payable by the Sub to
the Stockholder (as a dividend in its capacity as former shareholder of
the Company pursuant to resolution of the Board of Directors of the
Company, dated November 4, 1996) or by the Stockholder to the Sub as a
result of the foregoing prorations shall be paid within five (5) business
days after the Closing Date by wire transfer of immediately available
funds.
(d) Post-Closing Cooperation. After the Closing, the Parent and the
Stockholder shall cooperate with each other, and shall cause their
respective property managers for the Property to cooperate with each
other, including, without limitation, making available books and records
for the Property, in order to respond to any tenant inquiry concerning,
challenge to or audit of, any operating expense or similar additional rent
or rent escalation item. To the extent that any adjustment or proration
required hereunder was based on estimates at the time of the Closing, the
parties shall readjust and re-prorate based upon final numbers, when
available, and make payment as appropriate based upon such readjustment
and re-proration.
(e) A closing statement (the "Closing Statement") reflecting the
adjustments made at the Closing and described in Section 3.04 hereof shall
be executed and delivered by Stockholder and Parent within five (5)
Business Days after the Effective Time.
(f) Survival. The provisions of this Section 3.04 shall survive the
Closing, provided, however, that the Stockholder and the Parent agree to
use reasonable efforts to finalize all prorations on or before the first
anniversary of the Closing Date.
Section 3.05. Stockholder's Representations and
WarrantiesStockholder's Representations and Warranties. (a) The Stockholder
hereby makes the following representations and warranties to the Parent and
Sub as of the Closing Date:
(i) Delivery of Written Materials. Exhibit R-C includes all of the
Leases and Contracts relating to the Property, and the Company has
delivered to Sub true, accurate and complete copies of all of the Leases
and the Contracts and all other documents and reports included in Exhibit
R-C. Sub hereby acknowledges receipt of each of the Leases and Contracts
listed in Exhibit R-C, but said acknowledgement shall in no way diminish
the foregoing representation and warranty of the Stockholder.
(ii) Other Agreements. On the Closing Date, (A) there will be no
Contracts other than the Contracts listed in Exhibit R-C, and (B) there
will be no Leases other than the Leases listed in Exhibit R-C.
(iii) No Conflict. The execution, delivery of and consummation of
the transactions contemplated by this Agreement are not prohibited by, and
will not conflict with, constitute grounds for termination of, or result
in the breach of organizational documents of the Company or the
Stockholder, any of the Leases or the Contracts or any other agreement or
instrument to which the Company is now a party or otherwise subject,
except for such conflicts or breaches of such Contracts or other
agreements or instruments as would not constitute a Material Adverse
Effect either individually or in the aggregate.
(iv) Leases. (A) No rent has been paid by any tenant or occupant of
the Property more than thirty (30) days in advance (except as adjusted in
the Closing Statement), (B) to the Stockholder's knowledge, neither any
tenant nor the Company is in default in the performance of any material
covenant, agreement or condition contained in any of the Leases, (C)
neither the Stockholder nor the Company has received written notice from
any tenant regarding pending or threatened material offsets against rent
or for any material monetary or material claim against the Company and no
future rent concessions have been created which are not disclosed in the
Leases, the Rent Roll, Tenant Estoppels or the Exhibits hereto, (D) to the
Stockholder's knowledge, any and all construction and improvements that
were required to be performed by the Company under any Lease have been
fully completed and accepted by each tenant, except under the Leases and
the Contracts designated with an asterisk in Exhibit R-C, and all leasing
commissions payable on account of any of the Leases have been fully paid,
except those which may become due in connection with the extension or
renewal of any Lease or in connection with the exercise by any tenant of
any expansion or extension option contained in any of the Leases, (E) to
the Stockholder's knowledge, the Leases are in full force and effect and
(F) attached hereto as Exhibit R-H is a true and complete list of all
security deposits posted under the Leases together with interest, if any,
accrued thereon to the Closing Date. The representations and warranties
made in this Subsection 3.05(a)(iv) shall be deemed withdrawn as to each
Lease for which Sub receives a Tenant Estoppel on or before the Closing.
(v) Notices. To the Stockholder's knowledge, neither the
Stockholder nor the Company has received written notice or citation:
(1) from any federal, state, county or municipal authority
alleging any fire, health, safety, building pollution,
environmental, zoning or other violation of any law, regulation,
permit, order or directive in respect of the Property or any part
thereof, which has not been entirely corrected;
(2) from any insurance company or bonding company of any
defects or inadequacies in the Property or any part thereof, which
would materially adversely affect the insurability of the same or of
any termination or threatened termination of any policy of insurance
or bond; or
(3) from any governmental authority with respect to a proposed
eminent domain taking of all or any portion of the Property.
(vi) Violation of Law. To the Stockholder's knowledge, all
governmental approvals required for the current use of the Property have
been issued and are currently in effect without violation, to
Stockholder's knowledge, the Property is not under investigation for
failure to comply with any statutes, laws, ordinances, rules, regulations,
orders or directives of any and all governmental agencies pertaining to
the use or occupancy of the Property, and, to the Stockholder's knowledge,
the Property is in compliance with, and not in violation in any material
respect of, any applicable statutes, laws, ordinances, rules, regulations,
orders or directives; provided, however, that the Stockholder makes no
representation herein with respect to compliance with the Americans with
Disabilities Act or any rule, regulation or interpretation promulgated
thereunder.
(vii) Hazardous Materials. To the Stockholder's knowledge, except as
disclosed in (A) the Environmental Assessment Report dated July 1989,
prepared by Schneider Engineers for the Frick Building, and (B) the
Environmental Assessment Report dated November 5, 1996, prepared by IVI
Environmental, Inc. for the Frick Building, there are no Hazardous
Materials at the Property except for ordinary cleaning, landscaping,
maintenance, and office supplies consistent with the use of the Property
as an office building which are used and stored in compliance with
applicable Environmental Laws, and to the Stockholder's knowledge, neither
the Company nor any tenant of the Real Property during the Company's
ownership thereof has previously used, manufactured, generated, treated,
stored, disposed of, or released any Hazardous Materials on or under the
Property or transported any Hazardous Materials over the Property in
violation of any applicable Environmental Laws. As used herein, (a) the
term "Environmental Laws" shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. ss.ss. 9601 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 1801 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. ss.ss. 1251 et seq., the Clean Air Act,
42 U.S.C. ss.ss. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C.
ss. 2601, the Refuse Act, 33 U.S.C. ss.ss. 407 et seq., and any other
applicable similar state, federal, county, regional, municipal or local
law, statute, ordinance, rule or regulation governing the control of
substances dangerous to public health or safety, as same may be amended
from time to time; and (b) the term "Hazardous Materials" shall include
but not be limited to asbestos-containing materials, polychlorinated
biphenyls, flammable materials, explosives, radioactive materials,
petroleum products and those materials or substances now or heretofore
defined as "hazardous substances," "hazardous materials," "hazardous
waste," "toxic substances," or other similar designations under the
Environmental Laws.
(viii) Legal Proceedings. Except as set forth in Exhibit R-G
attached hereto, there are no actions, suits or proceedings, pending, or,
to the Stockholder's knowledge, threatened before any court, commission,
agency or other administrative authority against, or affecting the Company
or the Property. The Company has not suffered or confessed any judgment in
or before any such court, commission, agency or other administrative
authority against which remains unsatisfied.
(ix) No Employees. The Company has never employed any person as
an employee.
(x) Leasing Commissions. Except as set forth on Exhibit R-F hereto,
no person is entitled to any leasing commission in connection with the
extension or renewal of any Lease or in connection with the exercise by
any tenant of any expansion or extension option contained in any of the
Leases. Neither the Company nor the Property is subject to any "protection
list" or similar obligation with respect to the future leasing of the
Property except as set forth on Exhibit R-F hereto.
(xi) Assets and Liabilities. Other than the Property and the
Account, the Company has no assets. Other than the Contracts, the Company
Note, the Leases and the matters disclosed in Exhibits R-E, R-F, R-G and
R-H, the Company has no liabilities, whether current, contingent or other.
(xii) The Account. (A) There is $40,000,000 on deposit in the
Account, (B) the Account is not subject to any pledge, claim, offset or
defense and (C) the Company has good and clear title to the Account.
(xiii) No Liens; Acknowledgement. The Company owns all Personal
Property free and clear of all Liens except as set forth in Exhibit R-H.
The Company makes no representation or warranty as to the ownership of
either the bust of Henry Clay Frick or the bronze lion sculptures located
in the lobby of the Improvements.
(b) The Stockholder's Knowledge. Any and all uses of the phrases "to
Stockholder's knowledge" or other references to the Stockholder's knowledge in
this Agreement shall mean the actual, present, conscious knowledge of James W.
Smith, III and Lisa Saylor (the "Stockholder Knowledge Individuals") as to a
fact at the time given. The Parent and Sub acknowledge that, for purposes of the
representations and warranties set forth in this Agreement, such individuals
have not performed and are not obligated to perform any investigation or review
of any files in the possession of the Stockholder or the Company with respect to
the subject matter addressed in the representations and warranties of the
Stockholder set forth in this Agreement. The actual, present, conscious
knowledge of any other individual or entity shall not be imputed to the
Stockholder Knowledge Individuals.
Section 3.06. Brokerage CommissionBrokerage Commission. The
Stockholder and the Parent each warrant to the other party that its sole contact
with the other party or the Property regarding this transaction has been
directly with the other party or with Lazard Freres & Co., LLC, Cushman &
Wakefield, Inc. or Galbreath-Middle Atlantic. The Parent shall be solely
responsible for any investment fees or commissions, payable to Lazard Freres in
connection with the transactions contemplated by this Agreement. The Stockholder
shall be solely responsible for any investment fees or commission payable to
Cushman & Wakefield, Inc. and Galbreath-Middle Atlantic in connection with the
transactions contemplated by this Agreement. The Parent and the Stockholder
further warrant to each other that no other broker or finder can properly claim
a right to a commission or finder's fee based upon contacts between the claimant
and the warranting party with respect to the other party or the Property. The
Parent and the Stockholder shall indemnify, defend and hold the other party
harmless from and against any loss, cost or expense, including, but not limited
to, attorneys' fees and court costs, resulting from any claim for a fee or
commission by any broker or finder in connection with the Property and this
Agreement resulting from the indemnifying party's actions. The foregoing
indemnities shall survive the Closing.
Section 3.07. Company DividendCompany Dividend. The parties hereto
acknowledge that the Board of Directors of the Company on November 4, 1996
declared a dividend payable to shareholder of record of the Company on November
5, 1996.
Section 3.08. Transfer of Company NoteTransfer of Company Note.
Immediately after the Effective Time, the Stockholder shall assign and transfer
the Company Note to the Parent or its designee.
ARTICLE IV. CONDITIONS
Section 4.01. Conditions to the MergerConditions to the Merger. The
respective obligations of all parties to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at or prior
to the Effective Time, of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite
affirmative vote of the stockholder of the Company to the extent required
by Delaware Law and the Certificate of Incorporation of the Company.
(b) No Order. No statute, rule, regulation, order, executive order,
decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has
the effect of prohibiting the consummation of the Merger (it being agreed
that each of the parties hereto shall use their respective best efforts to
have any such injunction lifted).
Section 4.02. Conditions to the Obligations of the
StockholderConditions to the Obligations of the Stockholder. The obligations of
the Stockholder under this Agreement shall be subject to the satisfaction or
waiver of the following conditions on or before the Closing Date:
(a) Opinions of Parent's Counsel. The Stockholder shall have
received from Shearman & Sterling, counsel for the Parent and the Sub, and
from Lionel, Sawyer & Collins, Nevada counsel for the Parent and the Sub,
opinions dated the Closing Date in form and substance satisfactory to the
Stockholder.
(b) Representations and Warranties Complete and Correct. The
representations and warranties of the Parent contained in Section 5.01
hereof shall have been complete and correct in all material respects as of
the Closing Date.
(c) Compliance with this Agreement. The Parent shall have performed
and complied in all material respects with all agreements, covenants and
conditions contained herein which are required to be performed or complied
with by it on or before the Closing Date.
(d) Officers' Certificate. The Stockholder shall have received a
certificate, dated the Closing Date and signed by the President or any
Vice President and attested by the Secretary of the Parent, certifying
that the conditions set forth in Sections 4.02(b) and 4.02(c) are
satisfied on and as of such date.
(e) Consents; Permits. The Parent shall have received all consents,
permits, approvals and other authorizations that may be required from, and
made all such filings and declarations that may be required with, any
person pursuant to any law, statute, regulation or rule (federal, state,
local and foreign), or pursuant to any agreement, order or decree by which
the Parent or any of its assets is bound, in connection with the
transactions contemplated by this Agreement, except for (a) notice
requirements which may be fulfilled subsequent to the Closing Date and (b)
consents, permits, approvals, authorizations, filings and declarations the
failure to obtain or to undertake (i) could not have a Material Adverse
Effect on the Parent or (ii) could not adversely affect the ability of the
Parent to perform its obligations under the Basic Agreements or any
agreement executed in accordance therewith.
(f) Stockholders' Agreement. The Parent shall have executed
and delivered the Stockholders' Agreement.
(g) Rent Rolls. Rent rolls of the Parent, certified as of a
recent date by the Treasurer of the Parent as being true and complete
in all material respects to his knowledge.
(h) Supporting Documents. The Stockholder and its counsel
shall have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by the
appropriate authority of the Parent's jurisdiction of incorporation,
and (B) a certificate of such authority dated as of a recent date as
to the due incorporation and good standing of the Parent, the
payment of all franchise and excise taxes by the Parent and listing
all documents of the Parent on file with said authority;
(ii) a certificate of the Secretary or an Assistant Secretary
of the Parent dated the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the Bylaws of the
Parent as in effect on the date of such certification; (B) that
attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors or a committee thereof or the
stockholders of the Parent authorizing the execution, delivery and
performance of the Basic Agreements, the issuance, sale and delivery
of the Preferred Shares and the reservation, issuance and delivery
of the Conversion Shares, and that all such resolutions are in full
force and effect and are all the resolutions adopted in connection
with the transactions contemplated by the Basic Agreements; (C) that
the Charter has not been amended since the date of the last
amendment or restatement referred to in the certificate delivered
pursuant to clause (i)(B) above; (D) that the Bylaws have not been
amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (ii)(A) above; and (E) the
incumbency and specimen signature of each officer of the Parent
executing any Basic Agreement, the stock certificates representing
the Preferred Shares and any agreement, certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Parent as to the incumbency and signature of the officer signing
the certificate referred to in this clause (ii)(E); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Parent
as the Stockholder may reasonably request.
Section 4.03. Conditions to the Obligations of the ParentConditions
to the Obligations of the Parent. The obligations of the Parent under this
Agreement shall be subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:
(a) Opinion of Stockholder's Counsel. The Parent shall have received
from counsel to the Company and the Stockholder, an opinion of counsel
dated the Closing Date in form and substance satisfactory to the Parent.
(b) Compliance with this Agreement. Each of the Company and the
Stockholder shall have performed and complied in all material respects
with all agreements, covenants and conditions contained herein which are
required to be performed or complied on or before the Closing Date.
(c) Company's and Stockholder's Representations and Warranties
Complete and Correct. The representations and warranties of the Company
and the Stockholder contained in Sections 3.05 and 5.02 of this Agreement
shall be complete and correct when made and shall be complete and correct
at and as of the Closing Date, after giving effect to the transaction
contemplated by this Agreement, as if made on and as of such date.
(d) Other Documentation. The Parent shall have received such
additional supporting documents and other information as the Parent may
reasonably request.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties of the Parent and the
SubRepresentations and Warranties of the Parent and the Sub. Each of the Parent
and Sub, jointly and severally, represents and warrants to the Company and the
Stockholder as follows:
(a) Organization, Good Standing and Qualification. Each of the
Parent and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, and the Parent and its Subsidiaries has all
requisite corporate power and authority under such laws to own or lease
and operate its properties and to carry on its business as now conducted.
The Parent and its Subsidiaries is duly qualified or licensed to do
business as a foreign corporation in good standing in each jurisdiction in
which the nature of the business transacted by it or the character of the
properties owned or leased by it requires it to so qualify or be licensed,
except where the failure to so qualify or be licensed or be in good
standing would not have a Material Adverse Effect. Each of the Parent and
Sub has the corporate power and authority to execute, deliver and perform
the Basic Agreements to which it is a party, and the Parent has the
corporate power and authority to issue, sell and deliver the 8% Preferred
Stock Series A and, upon conversion thereof, to issue and deliver the
Conversion Shares.
(b) Authorization, Enforceability. All corporate action on the part
of the Parent and Sub, and their respective officers, directors and
stockholders necessary for the authorization, execution and delivery of
the Basic Agreements, the performance of all obligations of the Parent and
Sub thereunder and the authorization, issuance, sale and delivery of the
8% Preferred Stock Series A and the Conversion Shares has been taken or
will be taken prior to the Closing. Each of the Basic Agreements has been
duly authorized, executed and delivered by the Parent and Sub and
constitutes valid and legally binding obligations of the Parent,
enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
(c) No Conflict. The execution and delivery by the Parent and Sub of
the Basic Agreements to which they are a party, the performance by the
Parent and Sub of their respective obligations thereunder, the issuance,
sale and delivery of the 8% Preferred Stock Series A and, upon conversion
thereof, the issuance and delivery of the Conversion Shares, will not
violate any provision of law, the Charter or Bylaws of the Parent or Sub,
or, any order of any court or other agency of government, or conflict
with, result in a breach of or constitute (with notice or lapse of time or
both) a default under any indenture, agreement or other instrument by
which the Parent or Sub or any of their respective properties or assets is
bound, or result in the creation or imposition of any lien, charge,
restriction, claim or lien of any nature whatsoever known to the Parent or
Sub upon any of the properties or assets of the Parent or Sub.
(d) Outstanding Options, Etc. As of the Closing Date, there are not
outstanding any options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase
or acquisition from the Parent of any shares of its capital stock except
for (i) the conversion privileges of the 7% Preferred Stock, and the 8%
Preferred Stock Series A and (ii) options to purchase up to 952,500 shares
of Common Stock that have been issued to directors and employees of the
Parent.
(e) Valid Issuance of Securities. (i) The 8% Preferred Stock Series
A to be issued pursuant to this Agreement will be duly and validly issued,
fully paid and nonassessable. The Common Stock issuable upon conversion of
8% Preferred Stock Series A has been duly and validly reserved for
issuance, and upon issuance in accordance with the Charter, shall be duly
and validly issued, fully paid and non-assessable.
(ii) Neither the issuance, sale or delivery of the 8% Preferred
Stock Series A nor, upon the conversion thereof, the issuance or delivery
of the Conversion Shares is subject to any preemptive right of
stockholders of the Parent arising under law or the Charter or Bylaws of
the Parent, to any contractual right of first refusal or other right in
favor of any person.
(f) Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Parent or Sub
that questions the validity of the Basic Agreements or the right of the
Parent or Sub to enter into them, or to consummate the transactions
contemplated thereby, or that might, either individually or in the
aggregate, have a Material Adverse Effect on the Parent, or result in any
change in the current equity ownership of the Parent, nor is the Parent
aware that there is any basis for the foregoing. The Parent is not a party
or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Parent currently pending
or which the Parent intends to initiate.
(g) Governmental Consents. Assuming the accuracy of the
representations and warranties of the Stockholder and the Company set
forth in this Agreement, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with,
any governmental authority on the part of the Parent or Sub is required in
connection with the consummation of the transactions contemplated by this
Agreement.
(h) Compliance with Law and Other Instruments. The Parent is not in
conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to it or by which any of
its property or assets is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which it is a party or by
which the Parent or any property or asset of the Parent is bound or
affected, except for any such conflicts, defaults or violations that would
not, individually or in the aggregate, have a Material Adverse Effect.
(i) Disclosure. The Parent has fully provided the Stockholder with
all the information which the Stockholder has requested for deciding
whether to undertake the transactions contemplated by this Agreement and
all information which the Parent believes is reasonably necessary to
enable the Stockholder to make such decision, including the Parent's
Executive Summary Book and Property Information Book, as amended or
supplemented from time to time prior to date hereof (collectively, the
"Executive Summary"). Neither the Executive Summary, this Agreement nor
any other statement or certificate made or delivered in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein
not misleading, except that, with respect to projections contained in the
Executive Summary, the Parent represents only that such projections were
prepared in good faith and that the Parent believes there is a reasonable
basis for such projections.
(j) Securities Reports. All forms, reports, statements and other
documents filed by the Parent with the Commission were prepared in all
material respects in accordance with the requirements of applicable law
and did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(k) Taxes. The Parent elected to be taxable as a real estate
investment trust for federal income tax purposes beginning in 1982, its
first year of existence. The Parent has filed all material income and
franchise tax returns required by applicable law to be filed by it, and
has timely paid all Taxes shown due on such returns. There is no
agreement, waiver or consent providing for an extension of time with
respect to the assessment of any tax or tax deficiency against the Parent.
There is no action, suit, proceeding, investigation, audit or claim now
pending against, or with respect to, the Parent in respect of any Taxes.
The Parent has not filed any agreement or consent under Section 341(f) of
the Internal Revenue Code of 1986, as amended.
(l) No Material Adverse Change. Subsequent to the respective dates
as of which information is given in the Parent's Form 10K for its fiscal
year ended December 31, 1995, its Form 10Qs for the first three fiscal
quarters of fiscal 1996 and its proxy statement for its June 20, 1996
meeting of stockholders (the "Commission Filings") and prior to the
Effective Time, except as set forth in or contemplated by the Commission
Filings and this Agreement, (i) there has not been any material adverse
change or any development involving a prospective material adverse change,
in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Parent or any Subsidiary,
arising for any reason whatsoever, (ii) neither the Parent nor any
Subsidiary has incurred or will incur any material liabilities or
obligations, direct or contingent, nor has the Parent or any Subsidiary
entered into nor will it enter into any material transactions other than
pursuant to this Agreement and the transactions referred to herein and the
acquisition of One Lincoln Terrace, Oak Book, Illinois and (iii) neither
the Parent nor any Subsidiary has or will have purchased any of its
outstanding capital stock.
(m) Title to Properties. To the Parent's knowledge, the Parent and
the Subsidiaries have good and marketable title to all properties and
assets described in the Commission Filings or the Executive Summary as
owned by them, free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages, defects or restrictions, except such as
are described in the Commission Filings or the Executive Summary or such
as do not have a Material Adverse Effect. To the Parent's knowledge, the
Parent and each Subsidiary owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted, except where the failure to so own or lease would not have a
Material Adverse Effect.
(n) Compliance with Laws. To the Parent's knowledge, (a) the
operations of the Parent and each Subsidiary with respect to any real
property currently leased or owned or by any means controlled by it are in
compliance in all material respects with all applicable federal, state,
and local laws, ordinances, rules, and regulations relating to
occupational health and safety and the environment, and the Parent and
each Subsidiary has all licenses, permits and authorizations necessary to
operate under all such laws, ordinances, rules and regulations and are in
compliance with all terms and conditions of such licenses, permits and
authorizations except where the failure to comply would not have a
Material Adverse Effect; (b) neither the Parent nor any Subsidiary has
authorized or conducted or has knowledge of the generation,
transportation, storage, use, treatment, disposal or release of any
hazardous substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminant, petroleum product,
natural gas, liquefied gas or synthetic gas defined or regulated under any
environmental law on, in or under any real property of the Parent or any
Subsidiary in any amount which has a Material Adverse Effect; and (c)
there is no pending or, to the best knowledge of the Parent, any
threatened claim, litigation or any administrative agency proceeding, nor
has the Parent or any Subsidiary received any written or oral notice from
any governmental entity or third party, that (i) alleges a violation of
any laws, ordinances, rules and regulations by the Parent or such
Subsidiary; (ii) alleges the Parent or such Subsidiary is a liable party
under the Comprehensive Environmental Response Compensation, and Liability
Act, 42 U.S.C. ss. 9601 et seq, or any state superfund law; (iii) alleges
possible contamination of the environment by the Parent or such
Subsidiary; or (iv) alleges possible contamination of real property of the
Parent or any Subsidiary or any case which is likely to have a Material
Adverse Effect.
(o) Losses. Since December 31, 1995, neither the Parent nor any
Subsidiary has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as disclosed in or contemplated by
the Commission Filings or the Executive Summary, which has a Material
Adverse Effect.
(p) Seattle Obligation. The Cumulative Preference Deficit (as
defined in and pursuant to the Partnership Agreement of Third
University Limited Partnership, dated as of October 3, 1986 and as
amended to the date of this Agreement) payable to Arico Seattle Inc. is
$8,107,590.86.
Section 5.02. Representations and Warranties of the Stockholder and
the CompanyRepresentations and Warranties of the Stockholder and the Company.
The Stockholder and the Company, jointly and severally, represent and warrant to
the Parent and Sub as follows:
(a) Incorporation and Authority of the Company and the Stockholder.
Each of the Company and the Stockholder is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has all necessary
corporate power and authority to enter into the Basic Agreements to which
it is a party, to carry out its obligations thereunder and to consummate
the transactions contemplated thereby. The execution and delivery by each
of the Company and the Stockholder of the Basic Agreements to which it is
party, and the consummation by each of the Company and the Stockholder of
the transactions contemplated thereby, have been duly authorized by all
necessary corporate action on the part of the Company and the Stockholder
and no other corporate proceedings on the part of the Company or the
Stockholder are necessary to authorize the Basic Agreements or to
consummate the transactions contemplated thereby. Each of the Company and
the Stockholder has duly executed and delivered each of the Basic
Agreements to which it is a party and, assuming due authorization,
execution and delivery by the other parties thereto, each of the Basic
Agreements constitutes the legal, valid and binding obligation of each of
the Company and the Stockholder enforceable against the Company and the
Stockholder in accordance with their respective terms. The restrictions on
business combinations contained in Section 203 of Delaware Law have been
satisfied with respect to the Merger.
(b) Organization and Qualification of the Company and the
Stockholder. (i) Each of the Company and the Stockholder has the requisite
power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals
would not, individually or in the aggregate, have a Material Adverse
Effect. The Company is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that
would not, individually or in the aggregate, have a Material Adverse
Effect. The Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
(ii) True, complete and correct copies of the Certificate of
Incorporation and Bylaws of the Company, each as in effect on the date
hereof, have been delivered by the Company to the Parent.
(c) Capital Stock of the Company. The authorized capital stock of
the Company consists of 1,000 shares of common stock ("Company Common
Stock"). As of the date hereof, 100 shares of Company Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable. None of the issued and outstanding shares of Company Common
Stock was issued in violation of any preemptive rights. There are no
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the capital stock
of the Company or obligating the Company to issue or sell any shares of
capital stock of, or any other interest in, the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of Company Common Stock or to provide
funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person.
(d) Corporate Books and Records. The minute books of the Company
contain and properly reflect all proceedings of the stockholders, Boards
of Directors and all committees of the Boards of Directors of the Company.
Complete and accurate copies of all such minute books and of the stock
register of the Company have been provided or made available by the
Company to the Parent. The foregoing notwithstanding, copies of the minute
books of the Company made available by the Company to the Parent prior to
the Effective Time do not contain records of proceedings relating to the
consideration of the transactions contemplated by this Agreement or the
alternatives thereto considered by the Boards of Directors (or committees
thereof) of the Company in the discharge of their fiduciary duties.
(e) Taxes. The Company is a qualified REIT subsidiary within the
meaning of Section 856(i) of the Code. The Company has filed all material
income and franchise tax returns required by applicable law to be filed by
it, and has timely paid all Taxes shown due on such returns. There is no
agreement, waiver or consent providing for an extension of time with
respect to the assessment of any Taxes or tax deficiency against the
Company. There is no action, suit, proceeding, investigation, audit or
claim now pending against, or with respect to the Company in respect of
any Taxes. The Company has not filed any agreement or consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended. The
Company has no built-in gain within the meaning of Internal Revenue
Service Notice 88-19. There are no tax liens on any assets or any
subsidiaries of the Company. Neither the Stockholder nor any affiliate is
a party to any agreement or arrangement that would result, separately or
in the aggregate, in the actual or deemed payment by the Company or a
Company subsidiary of any "excess parachute payments" within the meaning
of Section 280G of the Code.
(f) Vote Required. The affirmative vote of the holders of
Company Common Stock, is the only vote of the holders of any class or
series of capital stock of the Company necessary to approve the Merger.
(g) Full Disclosure. No representation or warranty of the Company or
the Stockholder in this Agreement, nor any statement or certificate
furnished or to be furnished to the Parent pursuant to this Agreement, or
in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits
or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
(h) Purchase Entirely for Own Account. The 8% Preferred Stock Series
A will be acquired for investment for the Stockholder's own account, not
as a nominee or agent, and not with a view to the resale or distribution
of any part thereof, and the Stockholder has no present intention of
selling, granting any participation in, or otherwise distributing the
same. The Stockholder further represents that the Stockholder does not
presently have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to
any third person, with respect to any of the 8% Preferred Stock Series A.
(i) Investment Experience. The Stockholder is an experienced
investor and acknowledges that it can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the
investment in the 8% Preferred Stock Series A. The Stockholder also
represents it has not been organized for the purpose of acquiring the 8%
Preferred Stock Series A.
(j) Restricted Securities. The Stockholder understands that the 8%
Preferred Stock Series A, and the shares of Common Stock issuable upon
conversion thereof, are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the
Parent in a transaction not involving a public offering and that under
such laws and applicable regulations such shares may be resold without
registration under the 1933 Act only in certain limited circumstances. In
this connection, the Stockholder represents that it is familiar with SEC
Rules 144 and 144A, as presently in effect, and understands the resale
limitations imposed thereby and otherwise by the 1933 Act.
(k) Access to Information. The Stockholder has had access to the
management and records of the Parent and has had an opportunity to ask
questions of management of the Parent regarding its business and affairs.
ARTICLE VI. COVENANTS OF THE PARENT
The Parent covenants and agrees with the Stockholder that, so long
as any of the 8% Preferred Stock Series A are outstanding:
Section 6.01. Financial Statements, Reports, Etc.Financial
Statements, Reports, Etc. So long as the Stockholder owns shares of 8% Preferred
Stock Series A, the Parent shall furnish to the Stockholder, within 30 days
after the Parent files with the Commission, copies of its annual reports and
other information, documents and reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that it
is required to file with the Commission pursuant to Section 13 or 14 of the 1934
Act.
Section 6.02. Reserve for Conversion SharesReserve for Conversion
Shares. The Parent shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion of the 8% Preferred Stock Series A, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the 8% Preferred Stock Series A from time to time outstanding. If
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of the 8% Preferred Stock Series A,
the Parent shall forthwith take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose. The Parent shall obtain any
authorization, consent, approval or other action by or make any filing with any
court or administrative body that may be required under applicable state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the 8% Preferred Stock Series A.
Section 6.03. Debt RestrictionDebt Restriction. The Parent shall not
Incur any Debt unless after giving effect to such Incurrence the Debt of the
Parent will not exceed 60% of the appraised value of the assets of the Parent;
provided that, notwithstanding the foregoing, the Parent may at any time Incur
Debt in an amount which does not exceed the principal amount of outstanding Debt
of the Parent extended, refinanced, renewed or replaced with the proceeds
thereof, plus any costs associated with the extension, refinancing, renewal or
replacement.
Section 6.04. Payment of Dividends on the 7% Preferred Stock and the
8% Preferred StockPayment of Dividends on the 7% Preferred Stock and the 8%
Preferred Stock. For so long as any 8% Preferred Stock Series A remains
outstanding, the Parent shall continue to pay dividends on the 7% Preferred
Stock and the 8% Preferred Stock in good faith so long as it has funds available
therefor.
ARTICLE VII. SURVIVAL OF REPRESENTATIONS; INDEMNITY
Section 7.01. SurvivalSurvival. Each and every representation and
warranty contained in this Agreement shall survive the Closing and shall not
merge into the documents delivered at the Closing, but instead shall be
independently enforceable except to the extent expressly limited herein;
provided, however, each of the representations and warranties of the Stockholder
contained in Sections 3.05(a)(i) through (vii), (x) and (xiii) shall terminate
on the first anniversary of the Closing Date and each of the other
representations of the Stockholder and each of the representations of the Parent
shall terminate on the sixth anniversary of the Closing Date. No party to this
Agreement shall be permitted to make any claim against any other party for
breach of representation or warranty unless the amount claimed in good faith by
the claiming party exceeds in the aggregate $10,000.
Section 7.02. Indemnification by the StockholderIndemnification by
the Stockholder. The Stockholder shall indemnify and hold each of the Parent and
Sub harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable attorneys' fees and expenses and related costs, expenses
of litigation, judgments, and any other costs, fees and expenses resulting from
(i) a breach of a representation or warranty made by the Stockholder or the
Company under this Agreement, (ii) all Taxes that may be imposed or asserted
with respect to the Company or its assets or operations in respect of any period
or portion thereof ending on or before the Closing Date, and any Taxes arising
as a result of the Merger (whether in accordance with Internal Revenue Service
Notice 88-19, under Section 1445 of the Code, or otherwise), or (iii) an action,
suit or proceeding brought or filed against the Company, the Parent or Sub based
on acts or omissions of the Company occurring prior to the Closing Date.
Section 7.03. Indemnification by the ParentIndemnification by the
Parent. The Parent shall indemnify and hold the Stockholder harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable
attorneys' fees and expenses and related costs, expenses of litigation,
judgments, and any other costs, fees and expenses resulting from a breach of a
representation or warranty made by the Parent under this Agreement.
Section 7.04. Indemnification ProceduresIndemnification Procedures.
Promptly after receipt by an indemnified party under this Article VII of notice
of the commencement of any action such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this Article
VII, notify the indemnifying party in writing of the commencement thereof;
provided, however, that the failure so to notify the indemnifying party will not
relieve it from any liability which it may have under this Article VII except to
the extent it has been materially prejudiced by such failure and, provided,
further, that the failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Article VII. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and to the extent that it may wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party). After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such claim or action, the indemnifying party will not
be liable to such indemnified party under this Article VII for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
that the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict or potential conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the commencement of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. No
indemnifying party shall be liable for any settlement of any action or claim for
monetary damages which an indemnified party may effect without the consent of
the indemnifying party, which consent shall not be unreasonably withheld. The
indemnification obligations hereunder are payable as they are incurred.
ARTICLE VIII. MISCELLANEOUS
Section 8.01. ExpensesExpenses. The Parent agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Stockholder in connection
with the execution and delivery of the Basic Agreements and the other documents
to be delivered under the Basic Agreements.
Section 8.02. AssignmentAssignment. This Agreement may not be
assigned by operation of law or otherwise without the express written consent of
each of the parties hereto.
Section 8.03. Benefit; Successors and AssignsBenefit; Successors and
Assigns. Except as otherwise provided herein, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that this Agreement shall
not inure to the benefit of any successor or assignee unless such assignee shall
have complied with the terms of Section 8.02. Nothing in this Agreement either
express or implied is intended to confer on any person, other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies or obligations under or by reason of this Agreement.
Section 8.04. Specific PerformanceSpecific Performance. The parties
hereto agree that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 8.05. NoticesNotices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be delivered in
person or mailed by certified or registered mail, return receipt requested, or
telecopied in the case of non-U.S. residents, addressed as follows:
(a) if to the Parent or the Sub:
126 East 56th Street
New York, New York 10022
Attention: President
Fax: (212) 605-7199
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: F. H. Moore, Jr.
Fax: (212) 848-7179
(b) if to the Stockholder or the Company:
CGR Advisors
950 East Paces Ferry Road
Suite 2275
Atlanta GA 30326-1119
Attention: President
Fax: (404) 239-6069
with a copy to:
Arnall, Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3400
Attention: James E. Dorsey
Fax: (404) 873-8609
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, if sent by mail, telecopier or telex, with receipt
acknowledged.
Section 8.06. Governing LawGoverning Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York.
Section 8.07. Entire AgreementEntire Agreement. This Agreement,
including the Schedules and Exhibits hereto, constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof. All
Schedules and Exhibits hereto are hereby incorporated herein by reference.
Section 8.08. CounterpartsCounterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Section 8.09. AmendmentsAmendments. This Agreement may not be
amended or modified, and no provisions hereof may be waived, without the written
consent of the Parent and the Stockholder.
Section 8.10. SeverabilitySeverability. If any provision of this
Agreement shall be declared void or unenforceable by any judicial or
administrative authority, the validity of any other provision and of the entire
Agreement shall not be affected thereby.
Section 8.11. Titles and SubtitlesTitles and Subtitles. The titles
and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting any term or provision of this
Agreement.
Section 8.12. Further AssurancesFurther Assurances. From and after
the date of this Agreement, upon the request of the Parent or the Stockholder,
the Parent and the Stockholder shall execute and deliver such instruments,
documents and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parent, Sub, the Company and the Stockholder
have executed this Agreement as of the day and year first above written.
CORNERSTONE PROPERTIES INC.
By:
Name:
Title:
CSTONE-PITTSBURGH TRUST
By:
Name:
Title:
HEXALON REAL ESTATE, INC.
By:
Name:
Title:
FRICK BUILDING INC.
By:
Name:
Title:
<PAGE>
EXHIBIT A
[Stockholders' Agreement dated November [__], 1996 between the Parent and the
Stockholder - Recital]
<PAGE>
EXHIBIT B
[Certificate of Formation of the Surviving Corporations - 2.04]
<PAGE>
EXHIBIT C
[Certificate of Designation for the 8% Preferred Stock Series A - 2.06]
35
<PAGE>
EXHIBIT R-A
[Property Description]
36
<PAGE>
EXHIBIT R-B
[Personal Property List]
37
<PAGE>
EXHIBIT R-C
[Document List]
1
<PAGE>
EXHIBIT R-D
Form of Non-Foreign Certificate
NON-FOREIGN CERTIFICATE
The Frick Building
Pittsburgh, Pennsylvania
To inform Cornerstone Properties Inc., a Nevada corporation (the
"Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended (the "Code"), will not be required upon the
transfer of certain real property to the Transferee by _____________, a
_________________ (the "Transferor"), the undersigned hereby certifies the
following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and
the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is
__________; and
3. The Transferor's office address is:
The Transferor understands that this Certificate may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalty of perjury, I declare that I have examined this Certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of the
Transferor.
Date: November __, 1996
"Transferor"
FRICK BUILDING, INC.
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT R-E
Form of Tenant Estoppel
To: Cornerstone Properties Inc. ("Buyer")
Re: The Frick Building, Pittsburgh, Pennsylvania (the "Property")
The undersigned ______________________________, a _____________
("Tenant"), is the tenant under that certain lease dated _____________ (the
"Lease," which term shall include the amendments, if any, referred to below) by
and between Tenant and Frick Building, Inc., as lessor ("Landlord"), covering
premises commonly known as [Suite ____________] in the Property (the "Leased
Premises"). Tenant hereby certifies the following as of the date hereof:
1. Tenant is the tenant under the Lease demising the Leased
Premises. The term of the Lease commenced on ___________________ and will
expire on _________________.
2. Tenant certifies to Buyer that:
i. the Lease is in full force and effect and has not been cancelled,
modified, assigned, extended or amended except as follows:
ii. the current monthly rent for the Leased Premises as of
___________ is $_______ and has been paid through
------------------;
iii. the total current additional/escalation rent for common area
maintenance, real estate taxes, insurance and the like (all charges
other than fixed rent) as of October 1, 1996 is $_______ and such
additional rent is payable monthly;
iv. no installment of rent under the Lease has been paid more than
thirty (30) days in advance;
v. the Lease has been neither assigned nor any portion of the Leased
Premises subleased by Tenant except as follows:
vi. Tenant has no existing defenses, offsets, deductions, liens, claims
or credits against the rentals under the Lease or against the
enforcement of the Lease by Landlord, and, to the best of Tenant's
knowledge, Landlord is not in default under the Lease; and
vii. Tenant has paid a security deposit in the amount of $___________.
3. This certification is made to induce Buyer to acquire the Property of
which the Leased Premises are part. Tenant further acknowledges and agrees that
the addressees hereof and their respective successors and assigns and the holder
of any mortgage at any time encumbering the Property from and after the date of
this Tenant Estoppel Certificate shall have the right to rely on this Tenant
Estoppel Certificate.
4. Tenant acknowledges that in connection with the sale of the Property by
Landlord to Buyer all of the interest of the Landlord in and to the Lease will
be duly assigned to Buyer and that, after notice from Landlord and Buyer, all
rent payments under the Lease shall be paid to Buyer or its authorized agent,
from and after the date of sale.
5. The undersigned is authorized to execute this Tenant Estoppel
Certificate on behalf of Tenant.
Dated this ___ day of ___________, 1996.
[Tenant]
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT R-F
[Leasing Commissions]
<PAGE>
EXHIBIT R-G
[Litigation]
<PAGE>
EXHIBIT R-H
[Liens on Personal Property]
<PAGE>
EXHIBIT R-I
[Security Deposits]
<PAGE>
AGREEMENT AND PLAN OF MERGER
Among
CORNERSTONE PROPERTIES INC.,
CSTONE - PITTSBURGH TRUST,
FRICK BUILDING, INC.
and
HEXALON REAL ESTATE, INC.
Dated as of November 7, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.................................................... 1
Section 1.01. Definitions........................................... 1
ARTICLE II. THE MERGER.................................................... 6
Section 2.01. The Merger............................................ 6
Section 2.02. Effective Time; Closing............................... 6
Section 2.03. Effect of the Merger.................................. 6
Section 2.04. Certificate of Formation; Bylaws...................... 6
Section 2.05. Directors and Officers................................ 7
Section 2.06. Conversion of Company Shares.......................... 7
Section 2.07. Conversion of Sub Common Stock........................ 7
ARTICLE III. CERTAIN MATTERS PERTAINING TO
REAL ESTATE AND THE COMPANY...................... 7
Section 3.01. Delivery of Materials for Review...................... 7
Section 3.02. As-Is Clause.......................................... 7
Section 3.03. Closing Deliveries.................................... 8
Section 3.04. Closing Costs and Prorations.......................... 9
Section 3.05. Stockholder's Representations and Warranties.......... 12
Section 3.06. Brokerage Commission.................................. 15
Section 3.07. Company Dividend...................................... 16
Section 3.08. Transfer of Company Note.............................. 16
ARTICLE IV. CONDITIONS.................................................... 16
Section 4.01. Conditions to the Merger.............................. 16
Section 4.02. Conditions to the Obligations of the Stockholder...... 16
Section 4.03. Conditions to the Obligations of the Parent........... 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES................................. 18
Section 5.01. Representations and Warranties of the Parent and
the Sub........................................................ 18
Section 5.02. Representations and Warranties of the Stockholder
and the Company................................................ 23
ARTICLE VI. COVENANTS OF THE PARENT....................................... 26
Section 6.01. Financial Statements, Reports, Etc.................... 26
Section 6.02. Reserve for Conversion Shares......................... 26
Section 6.03. Debt Restriction...................................... 26
Section 6.04. Payment of Dividends on the 7% Preferred Stock and
the 8% Preferred Stock......................................... 26
ARTICLE VII. SURVIVAL OF REPRESENTATIONS; INDEMNITY....................... 27
Section 7.01. Survival.............................................. 27
Section 7.02. Indemnification by the Stockholder.................... 27
Section 7.03. Indemnification by the Parent......................... 27
Section 7.04. Indemnification Procedures............................ 27
ARTICLE VIII. MISCELLANEOUS............................................... 28
Section 8.01. Expenses.............................................. 28
Section 8.02. Assignment............................................ 28
Section 8.03. Benefit; Successors and Assigns....................... 28
Section 8.04. Specific Performance.................................. 29
Section 8.05. Notices............................................... 29
Section 8.06. Governing Law......................................... 30
Section 8.07. Entire Agreement...................................... 30
Section 8.08. Counterparts.......................................... 30
Section 8.09. Amendments............................................ 30
Section 8.10. Severability.......................................... 30
Section 8.11. Titles and Subtitles.................................. 30
Section 8.12. Further Assurances.................................... 30
EXHIBIT A Stockholders' Agreement dated November 7, 1996 between the
Parent and the Stockholder - Recital
EXHIBIT B Certificate of Formation of the Surviving Corporation - 2.04
EXHIBIT C Certificate of Designation for the 8% Preferred Stock Series A
- 2.06
EXHIBIT R-A Property Description EXHIBIT R-B Personal Property List EXHIBIT R-C
Document List EXHIBIT R-D Form of Non-Foreign Certificate EXHIBIT R-E Form of
Tenant Estoppel
EXHIBIT R-F Leasing Commissions-Protection Lists EXHIBIT R-G Litigation EXHIBIT
R-H Liens on Personal Property EXHIBIT R-I Security Deposits
EXHIBIT 2.2
PREFERRED STOCK PURCHASE AGREEMENT dated as of November 22, 1996
between CORNERSTONE PROPERTIES INC., a Nevada corporation (the "Company"), the
NEW YORK STATE TEACHERS' RETIREMENT SYSTEM (the "Purchaser").-
WHEREAS, the Company wishes to issue and sell to the Purchaser an
aggregate of 689,655 shares (the "Preferred Shares") of the 1,034,483 authorized
but unissued shares of 8% Cumulative Convertible Preferred Stock, without par
value, of the Company (the "8% Preferred Stock"); and
WHEREAS, the Purchaser, wishes to purchase the Preferred Shares on
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. DefinitionsDefinitions. As used in this Agreement, the
following terms shall have the following meanings:
"Aggregate Purchase Price" means the amount set forth opposite the
Purchaser's name on Schedule 2.01 hereto under the caption "Aggregate
Purchase Price."
"Basic Agreements" means this Agreement and the Stockholders'
Agreement.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are required by law or authorized to
close in New York City.
"By-laws" means the By-laws of the Company, as amended from time
to time.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however
designated) of such Person's capital stock and all joint venture interests
(however designated) whether now outstanding or issued after the Closing
Date, including, without limitation, all common stock and all preferred
stock.
"Charter" means the Certificate of Incorporation of the Company, as
amended or restated from time to time.
"Closing" has the meaning specified in Section 2.02.
"Closing Date" has the meaning specified in Section 2.02.
"Commission" means the United States Securities and Exchange
Commission.
"Commission Filings" has the meaning specified in Section 4.01(1).
"Common Stock" means the common stock of the Company, without par
value.
"Conversion Shares" means the Common Stock or other securities
issued upon conversion of the 8% Preferred Stock.
"8% Preferred Stock Series A" means the 8% Cumulative Convertible
Preferred Stock Series A of the Company, without par value.
"Fair Market Value" means the fair market value of the item in
question as determined by a majority of the Board of Directors of the
Company acting in good faith and in exercise of its fiduciary duties and
evidenced by a resolution of the Board of Directors.
"Lien" means, with respect to any Property, any pledge, mortgage,
lien, charge, security interest or encumbrance of any kind in respect of
such Property, except that Lien shall not mean any license or right to use
intellectual property of the Company granted by the Company or any rights
of banks to set off deposits against debts to said banks.
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole.
"1933 Act" means the United States Securities Act of 1933, as
amended, and the rules and, unless the context indicates otherwise,
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"1934 Act" means the United States Securities Exchange Act of 1934,
as amended, and, unless the context indicates otherwise, the rules and
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
"Public Offering" means an underwritten public offering of equity
securities of the Company pursuant to an effective registration statement
under the 1933 Act.
"Purchaser" means the New York State Teachers' Retirement System.
"Qualified Public Offering" means a Public Offering of Common Stock
to be listed on the New York Stock Exchange in which (i) the aggregate net
proceeds to the Company (after payment of all fees and expenses of the
offering and pay-down of any then remaining debt under the Term Loan
Agreement, dated as of August 8, 1995, between the Company and Deutsche
Bank AG (London)) together with the net proceeds of any prior public
offerings of Common Stock listed on the New York Stock Exchange equal or
exceed US$200 million, (ii) the expected distributions on shares of Common
Stock of the Company for the 12 months following the Qualified Public
Offering (as certified by the treasurer or chief financial officer of the
Company) divided by the public offering price is less than or equal to
7.75% and (iii) (A) if the Qualified Public Offering is completed in the
calendar year 1997 the public offering price is at least $16.00 per share,
(B) if the Qualified Public Offering is completed in the calendar year
1998 the public offering price is at least $16.50 per share and (C) if the
Qualified Public Offering is completed in the calendar year 1999, the
public offering price is at least $17.00 per share; provided, however,
that a Qualified Public Offering shall be deemed to occur on the first
business day after any day the condition set forth in item (i) above and
each of the following conditions is true: (x) the day is after a Public
Offering and prior to January 1, 2000, (y) the average of the closing
prices for shares of Common Stock as reported on the New York Stock
Exchange composite tape for the 20 consecutive trading days immediately
preceding such day (the "Composite Average") equals or exceeds the
applicable minimum price for a public offering to be considered a
Qualified Public Offering at such time and (z) the expected distributions
on shares of Common Stock of the Company for the 12 months following such
day (as certified by the treasurer or chief financial officer of the
Company) divided by the Composite Average is less than or equal to 7.75%.
"Real Property Leases" has the meaning specified in Section
4.01(p).
"7% Preferred Stock" means the 7% Cumulative Convertible Preferred
Stock of the Company, without par value.
"Stockholders' Agreement" means the Stockholders' Agreement dated as
of November 22, 1996, among the Company, the Purchaser and such other
purchasers of 8% Preferred Stock as may become party thereto from time to
time, set forth as Exhibit A hereto.
"Subsidiary" means any company, corporation or joint venture of
which at the time of determination the Company, directly and/or indirectly
through one or more Subsidiaries, owns, or one or more other Subsidiaries
own, more than 50% of the Voting Stock or the Company controls, or one or
more other Subsidiaries control, the composition of more than 50% of the
board of directors or comparable governing body thereof.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock of such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock
has voting power by reason of any contingency) to vote in the election of
members of the board of directors or other governing body of such Person
but does not include Capital Stock having the right to vote in such
election solely upon the happening of a contingency unless and until such
contingency has occurred, and then only so long as such Capital Stock has
voting rights with respect thereto.
ARTICLE II. THE SALE AND PURCHASE OF PREFERRED SHARES
Section 2.01. Obligations to Sell and Purchase the Preferred
SharesObligations to Sell and Purchase the Preferred Shares. In reliance upon
the representations and warranties made herein and subject to the satisfaction
or waiver of the conditions set forth herein, the Company agrees to issue and
sell to the Purchaser, and the Purchaser agrees to purchase from the Company,
the number of Preferred Shares set forth opposite the name of the Purchaser
under the heading "Number of Preferred Shares to be Purchased" on Schedule 2.01,
at the aggregate purchase price set forth opposite the name of the Purchaser
under the heading "Aggregate Purchase Price" on Schedule 2.01.
Section 2.02. The Closing.The Closing. The closing shall take place
at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022, on November 22, 1996, or at such other location, date and time as may be
agreed upon between the Purchaser and the Company (such closing being called the
"Closing" and such date and time being called the "Closing Date"). At the
Closing, the Company shall issue and deliver to the Purchaser a stock
certificate or certificates in definitive form, registered in the name of the
Purchaser, representing the Preferred Shares being purchased by it at the
Closing. As payment in full for the Preferred Shares being purchased by it under
this Agreement, and against delivery of the stock certificate or certificates
therefor on the Closing Date, the Purchaser shall deliver to the Company a check
payable to the order of the Company in the amount set forth opposite the name of
the Purchaser under the heading "Aggregate Purchase Price" on Schedule 2.01, or
shall transfer such amount to the account of the Company by wire transfer.
Section 2.03. Further Action.Further Action. During the period from
the date hereof to the Closing Date, the Company and the Purchaser shall use its
best efforts and take all action necessary or appropriate to satisfy the closing
conditions contained in Section 3 hereof and to cause its respective
representations and warranties contained in Section 4 hereof to be complete and
correct as of the Closing Date, after giving effect to the transactions
contemplated by this Agreement.
ARTICLE III. CONDITIONS
Section 3.01. Conditions to the Obligations of the
PurchaserConditions to the Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement shall be subject to the satisfaction or waiver of
the following conditions on or before the Closing Date:
(a) Stock Certificates. The Company shall have issued and
delivered to the Purchaser a stock certificate or certificates in
definitive form, registered in the name of the Purchaser, representing
the Preferred Shares being purchased by the Purchaser on the Closing
Date;
(b) Opinions of Company's Counsel. The Purchaser shall have received
from Shearman & Sterling, counsel for the Company, and from Lionel, Sawyer
& Collins, Nevada counsel for the Company, opinions dated the Closing Date
in form and substance satisfactory to the Purchaser.
(c) Representations and Warranties Complete and Correct. The
representations and warranties of the Company contained in Section 4.01
hereof shall have been complete and correct in all material respects as of
the Closing Date.
(d) Compliance with this Agreement. The Company shall have performed
and complied in all material respects with all agreements, covenants and
conditions contained herein which are required to be performed or complied
with by it on or before the Closing Date.
(e) Officers' Certificate. The Purchaser shall have received a
certificate, dated the Closing Date and signed by the President or any
Vice President and attested by the Secretary of the Company, certifying
that the conditions set forth in Sections 3.01(c) and 3.01(d) are
satisfied on and as of such date.
(f) Consents; Permits. The Company shall have received all consents,
permits, approvals and other authorizations that may be required from, and
made all such filings and declarations that may be required with, any
person pursuant to any law, statute, regulation or rule (federal, state,
local and foreign), or pursuant to any agreement, order or decree by which
the Company or any of its assets is bound, in connection with the
transactions contemplated by this Agreement, except for (a) notice
requirements which may be fulfilled subsequent to the Closing Date and (b)
consents, permits, approvals, authorizations, filings and declarations the
failure to obtain or to undertake (i) could not have a Material Adverse
Effect on the Company or (ii) could not adversely affect the ability of
the Company to perform its obligations under the Basic Agreements or any
agreement executed in accordance therewith.
(g) Stockholders' Agreement. The Company shall have executed
and delivered the Stockholders' Agreement.
(h) [Reserved].
(i) Supporting Documents. The Purchaser and its counsel shall
have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by the
appropriate authority of the Company's jurisdiction of
incorporation, and (B) a certificate of such authority dated as of a
recent date as to the due incorporation and good standing of the
Company, the payment of all franchise and excise taxes by the
Company and listing all documents of the Company on file with said
authority;
(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the Closing Date and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of the Company as
in effect on the date of such certification; (B) that attached
thereto is a true and complete copy of all resolutions adopted by
the Board of Directors or the stockholders of the Company
authorizing the execution, delivery and performance of the Basic
Agreements, the issuance, sale and delivery of the Preferred Shares
and the reservation, issuance and delivery of the Conversion Shares,
and that all such resolutions are in full force and effect and are
all the resolutions adopted in connection with the transactions
contemplated by the Basic Agreements; (C) that the Charter has not
been amended since the date of the last amendment or restatement
referred to in the certificate delivered pursuant to clause (i)(B)
above; (D) that the By-laws have not been amended since the date of
the last amendment referred to in the certificate delivered pursuant
to clause (ii)(A) above; and (E) the incumbency and specimen
signature of each officer of the Company executing any Basic
Agreement, the stock certificates representing the Preferred Shares
and any agreement, certificate or instrument furnished pursuant
hereto, and a certification by another officer of the Company as to
the incumbency and signature of the officer signing the certificate
referred to in this clause (ii)(E); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the
Purchaser may reasonably request.
Section 3.02. Conditions to the Obligations of the CompanyConditions
to the Obligations of the Company. The Company's obligations under this
Agreement shall be subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:
(a) Opinion of Purchaser's Counsel. The Company shall have received
from the Purchaser and from King & Spalding, special counsel to the
Purchaser, opinions dated the Closing Date in form and substance
satisfactory to the Company.
(b) Compliance with this Agreement. The Purchaser shall have
performed and complied in all material respects with all agreements,
covenants and conditions contained herein which are required to be
performed or complied with by it on or before the Closing Date.
(c) Purchaser's Representations and Warranties Complete and Correct.
The Purchaser's representations and warranties contained in Section 4.02
of this Agreement shall be complete and correct when made and shall be
complete and correct at and as of the Closing Date, after giving effect to
the transactions contemplated by this Agreement, as if made on and as of
such date.
(d) Officers' Certificate. The Company shall have received a
certificate, dated the Closing Date and signed by the President or any
Vice President and attested by the Secretary of the Purchaser, certifying
that the conditions set forth in Sections 3.02(b) and 3.02(c) are
satisfied on and as of such date.
(e) Additional Documents. The Company shall have received such
additional supporting documents and other information with respect to the
operations and affairs of the Purchaser as the Company may reasonably
request.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the
CompanyRepresentations and Warranties of the Company. The Company represents
and warrants to the Purchaser as follows:
(a) Organization, Good Standing and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each of the Company and its Subsidiaries has all
requisite corporate power and authority under such laws to own or lease
and operate its properties and to carry on its business as now conducted.
Each of the Company and its Subsidiaries is duly qualified or licensed to
do business as a foreign corporation in good standing in each jurisdiction
in which the nature of the business transacted by it or the character of
the properties owned or leased by it requires it to so qualify or be
licensed, except where the failure to so qualify or be licensed or be in
good standing would not have a Material Adverse Effect. The Company has
the corporate power and authority to execute, deliver and perform the
Basic Agreements, to issue, sell and deliver the Preferred Shares and,
upon conversion thereof, to issue and deliver the Conversion Shares.
(b) Authorization, Enforceability. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of the Basic Agreements, the
performance of all obligations of the Company thereunder and the
authorization, issuance, sale and delivery of the Preferred Shares and the
Conversion Shares has been taken or will be taken prior to the Closing.
The Basic Agreements have been duly authorized, executed and delivered by
the Company and constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
(c) No Conflict. The execution and delivery by the Company of the
Basic Agreements, the performance by the Company of its obligations
thereunder, the issuance, sale and delivery of the Preferred Shares and,
upon conversion thereof, the issuance and delivery of the Conversion
Shares, will not violate any provision of law, the Charter or By-laws of
the Company, or, any order of any court or other agency of government, or
conflict with, result in a breach of or constitute (with notice or lapse
of time or both) a default under any indenture, agreement or other
instrument by which the Company or any of its properties or assets is
bound, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever known to the
Company upon any of the properties or assets of the Company or trigger any
remedy provision in any agreement or cause an adjustment in the Company's
equity interest in any partnership or joint venture.
(d) Outstanding Options, Etc. As of the Closing Date, there are not
outstanding any options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase
or acquisition from the Company of any shares of its capital stock except
for (1) the conversion privileges of the 7% Preferred Stock, the 8%
Preferred Stock and the 8% Preferred Stock Series A and (2) options to
purchase up to 952,500 shares of Common Stock that have been issued to
directors and employees of the Company.
(e) Valid Issuance of Securities.
(i) The Preferred Shares, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and
nonassessable. The Common Stock issuable upon conversion of 8%
Preferred Stock has been duly and validly reserved for issuance, and
upon issuance in accordance with the Charter, shall be duly and
validly issued, fully paid and non-assessable.
(ii) Neither the issuance, sale or delivery of the Preferred Shares
nor, upon the conversion thereof, the issuance or delivery of the
Conversion Shares is subject to any preemptive right of stockholders
of the Company arising under law or the Charter or By-laws of the
Company, to any contractual right of first refusal or other right in
favor of any person.
(f) Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that
questions the validity of the Basic Agreements or the right of the Company
to enter into them, or to consummate the transactions contemplated
thereby, or that might, either individually or in the aggregate, have a
Material Adverse Effect on the Company, or result in any change in the
current equity ownership of the Company, nor is the Company aware that
there is any basis for the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
(g) Governmental Consents. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in this
Agreement, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement.
(h) Compliance with Law and Other Instruments. The Company is not in
conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to it or by which any of
its property or assets is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which it is a party or by
which the Company or any property or asset of the Company is bound or
affected, except for any such conflicts, defaults or violations that would
not, individually or in the aggregate, have a Material Adverse Effect.
(i) Disclosure. The Company has fully provided each Purchaser with
all the information which such Purchaser has requested for deciding
whether to acquire the Preferred Shares and all information which the
Company believes is reasonably necessary to enable such Purchaser to make
such decision, including the Company's Executive Summary and Property
Information Book, as amended or supplemented from time to time (the
"Executive Summary"). Neither the Executive Summary, this Agreement nor
any other statement or certificate made or delivered in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein
not misleading, except that, with respect to projections contained in the
Executive Summary, the Company represents only that such projections were
prepared in good faith and that the Company believes there is a reasonable
basis for such projections.
(j) Securities Reports. All forms, reports, statements and other
documents filed by the Company with the Commission were prepared in all
material respects in accordance with the requirements of applicable law
and did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(k) Taxes. The Company elected to be taxable as a real estate
investment trust for federal income tax purposes beginning with 1982, its
first year of existence. The Company has filed all material income and
franchise tax returns required by applicable law to be filed by it, and
has timely paid all taxes shown due on such returns. There is no
agreement, waiver or consent providing for an extension of time with
respect to the assessment of any tax or tax deficiency against the
Company. There is no action, suit, proceeding, investigation, audit or
claim now pending against, or with respect to, the Company in respect of
any tax. The Company has not filed any agreement or consent under Section
341(f) of the Internal Revenue Code of 1986, as amended.
(l) No Material Adverse Change. Subsequent to December 31, 1995 and
prior to the Effective Time, except as set forth in or contemplated by the
Company's Form 10K for its fiscal year ended December 31, 1995, its Form
10Qs for the first three fiscal quarters of fiscal 1996, its proxy
statement for its June 20, 1996 meeting of stockholders (the "Commission
Filings") and this Agreement, (i) there has not been any material adverse
change or any development involving a prospective material adverse change,
in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole, arising for any reason whatsoever, (ii) neither the
Company nor any Subsidiary has incurred or will incur any material
liabilities or obligations, direct or contingent, nor has the Company or
any Subsidiary entered into nor will it enter into any material
transactions other than pursuant to this Agreement, the issuance of
$66,500,000 of 8% Cumulative Convertible Preferred Stock, Series A, the
acquisition of the Frick Building in Pittsburgh, Pennsylvania and the
acquisition of One Lincoln Centre, Oakbrook Terrace, Illinois and (iii)
neither the Company nor any Subsidiary has or will have purchased any of
its outstanding capital stock.
(m) Title to Properties. To the Company's knowledge, the Company and
the Subsidiaries have good and marketable title to [the Frick Building],
One Lincoln Centre, Oakbrook Terrace, Illinois and all properties and
assets described in the Commission Filings or the Executive Summary as
owned by them, free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages, defects or restrictions, except such as
are described in the Commission Filings or the Executive Summary or such
as do not have a Material Adverse Effect.
(n) Compliance with Laws. To the Company's knowledge, (a) the
operations of the Company and each Subsidiary with respect to any real
property currently leased or owned or by any means controlled by it are in
compliance in all material respects with all applicable federal, state,
and local laws, ordinances, rules, and regulations relating to
occupational health and safety and the environment, and the Company and
each Subsidiary has all licenses, permits and authorizations necessary to
operate under all such laws, ordinances, rules and regulations and are in
compliance with all terms and conditions of such licenses, permits and
authorizations except where the failure to comply would not have a
Material Adverse Effect; (b) neither the Company nor any Subsidiary has
authorized or conducted or has knowledge of the generation,
transportation, storage, use, treatment, disposal or release of any
hazardous substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminant, petroleum product,
natural gas, liquefied gas or synthetic gas defined or regulated under any
environmental law on, in or under any real property of the Company or any
Subsidiary in any amount which has a Material Adverse Effect; and (c)
there is no pending or, to the best knowledge of the Company, any
threatened claim, litigation or any administrative agency proceeding, nor
has the Company or any Subsidiary received any written or oral notice from
any governmental entity or third party, that (i) alleges a violation of
any laws, ordinances, rules and regulations by the Company or such
Subsidiary; (ii) alleges the Company or such Subsidiary is a liable party
under the Comprehensive Environmental Response Compensation, and Liability
Act, 42 U.S.C. ss. 9601 et seq, or any state superfund law; (iii) alleges
possible contamination of the environment by the Company or such
Subsidiary; or (iv) alleges possible contamination of real property of the
Company or any Subsidiary, which, in any such case, is likely to have a
Material Adverse Effect.
(o) Insurance. Each parcel of real property currently owned or
leased by the Company or any of its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged and the Company has no reason to believe that the Company or
any of its Subsidiaries will not be able to renew their existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue their businesses at
a cost that would not have a Material Adverse Effect.
(p) Real Property Leases. The leases set forth on Schedule 4.01(p)
hereto (the "Real Property Leases") are all of the leases with tenants who
leased from the Company or any of its Subsidiaries 50,000 square feet or
more in any one of the Frick Building, Pittsburgh, Pennsylvania, One
Lincoln Centre, Oakbrook Terrace, Illinois, or any of the other office
buildings described in the Commission Filings as owned by the Company or
any of its Subsidiaries. Each of the Real Property Leases is valid and
enforceable in accordance with its terms with respect to the Company or
the Subsidiary of the Company party thereto, and, to the knowledge of the
Company, is valid and enforceable in accordance with its terms with
respect to each other party thereto. To the knowledge of the Company,
there is no existing breach, default or event of default or any event that
with notice or lapse of time or both would constitute a breach, default or
event of default by the Company or any Subsidiary of the Company under any
of the Real Property Leases. Neither the Company nor any of its
Subsidiaries has received notice of, or made a claim with respect to, any
breach or default by any other party to any of the Real Property Leases.
Neither the Company nor any Subsidiary of the Company has received notice,
or has actual knowledge, that any of the Real Property Leases which is
subject to renewal will not be renewed, or that a tenant a party to a Real
Property Lease will vacate the premises upon expiration of such lease,
except for the lease by Apache Corporation of 160,000 square feet in One
Norwest Center, Denver, Colorado.
Section 4.02. Representations and Warranties of the
Purchaser.Representations and Warranties of the Purchaser. The Purchaser
understands that the Preferred Shares are being offered and sold without
registration under the 1933 Act in reliance upon the exemption provided in
Section 4(2) of the 1933 Act. The Purchaser further understands that such
exemption depends in part upon, and such Preferred Shares are being sold in
reliance on, the representations and warranties set forth in this Section. The
Purchaser represents and warrants to the Company that:
(a) Authorization. The Purchaser has full power and authority to
enter into this Agreement. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether enforcement is sought by proceedings in equity or at law).
(b) Purchase Entirely for Own Account. The Preferred Shares will be
acquired for investment for the Purchaser's own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part
thereof, and the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same. The Purchaser
further represents that it does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect
to any of the Preferred Shares.
(c) Investment Experience. The Purchaser is an experienced investor
and acknowledges that it can bear the economic risk of its investment and
has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment in the
Preferred Shares.
(d) Restricted Securities. The Purchaser understands that the
Preferred Shares, and the shares of Common Stock issuable upon conversion
thereof, are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such shares may be resold without registration
under the 1933 Act only in certain limited circumstances. In this
connection, the Purchaser represents that it is familiar with SEC Rules
144 and 144A, as presently in effect, and understands the resale
limitations imposed thereby and otherwise by the 1933 Act.
(e) Access to Information. The Purchaser has had access to the
management and records of the Company and has had an opportunity to ask
questions of management of the Company regarding its business and affairs.
ARTICLE V. MISCELLANEOUS
Section 5.01. ExpensesExpenses. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Purchaser in connection
with the execution and delivery of the Basic Documents and the other documents
to be delivered under the Basic Documents.
Section 5.02. AssignmentAssignment. This Agreement may not be
assigned by operation of law or otherwise without the express written consent of
the Company (which consent may be granted or withheld in the sole discretion of
the Company) and provided, that any such permitted assignee shall execute the
Basic Agreements and become party thereto.
Section 5.03. Benefit; Successors and AssignsBenefit; Successors and
Assigns. Except as otherwise provided herein, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that this Agreement shall
not inure to the benefit of any successor or assignee unless such assignee shall
have complied with the terms of Section 5.02. Nothing in this Agreement either
express or implied is intended to confer on any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies or obligations under or by reason of this Agreement.
Section 5.04. NoticesNotices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be delivered in
person or mailed by certified or registered mail, return receipt requested, or
telecopied in the case of non-U.S. residents, addressed as follows:
(a) if to the Company:
126 East 56th Street
New York, New York 10022
Attention: President
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: F. H. Moore, Jr.
(b) if to the Purchaser, to the address set forth below the
signature block for the Purchaser;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, if sent by mail, telecopier or telex, with receipt
acknowledged.
Section 5.05. Governing LawGoverning Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York.
Section 5.06. Entire AgreementEntire Agreement. This Agreement,
including the Schedules and Exhibits hereto, constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof. All
Schedules and Exhibits hereto are hereby incorporated herein by reference.
Section 5.07. CounterpartsCounterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Section 5.08. AmendmentsAmendments. This Agreement may not be
amended or modified, and no provisions hereof may be waived, without the written
consent of the Company and the holders of at least a majority of the outstanding
shares of 8% Preferred Stock.
Section 5.09. SeverabilitySeverability. If any provision of this
Agreement shall be declared void or unenforceable by any judicial or
administrative authority, the validity of any other provision and of the entire
Agreement shall not be affected thereby.
Section 5.10. Titles and SubtitlesTitles and Subtitles. The titles
and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting any term or provision of this
Agreement.
Section 5.11. Further AssurancesFurther Assurances. From and after
the date of this Agreement, upon the request of any Purchaser or the Company,
the Company and the Purchaser shall execute and deliver such instruments,
documents and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement and the Preferred Shares.
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
CORNERSTONE PROPERTIES INC.
By:
Name:
Title:
NEW YORK STATE TEACHERS' RETIREMENT
SYSTEM
By:
Name:
Title:
<PAGE>
Schedule 2.01
To
Preferred Stock Purchase Agreement
dated as of November 22, 1996 between Cornerstone Properties Inc.,
and the New York State Teachers' Retirement System.
Number of Preferred
Purchaser Shares To Be Purchased Aggregate Purchase Price
New York State Teachers'
Retirement System 689,655 $100,000,000
<PAGE>
Schedule 4.01(p)
To
Preferred Stock Purchase Agreement
dated as of November 22, 1996 between Cornerstone Properties Inc.,
and the New York State Teachers' Retirement System.
Cornerstone Properties
Leases Greater Than 50,000 Square Feet
============================---------------------------------------============
Building Tenant Name Sq. Ft. Expiration
============================---------------------------------------============
Norwest Center Norwest Corporation 451,079 2018
Faegre & Benson 195,918 1998
KPMG Peat Marwick 75,152 2009
Merchant, Gould, et al. 55,895 2000
============================---------------------------------------============
One Norwest Center Norwest Bank Denver N.A. 582,766 2013
Newmont Gold Company 166,659 1999
Apache Corporation 160,455 1997
============================---------------------------------------============
Washington Mutual Tower Perkins Coie 182,152 2004
Washington Mutual Savings 151,519 2007
Bank 50,574 2004
Karr Tuttle Campbell
============================---------------------------------------============
125 Summer Street Deloitte & Touche 120,624 1999
Bank of Tokyo Financial 94,211 2002
Corp. 85,169 2000
Burns & Levinson
============================---------------------------------------============
One Lincoln Centre Superior Bank 56,645 2002
===============================================================================
===============================================================================
<PAGE>
EXHIBIT A
[Stockholders' Agreement]
<PAGE>
PREFERRED STOCK
PURCHASE AGREEMENT
between
CORNERSTONE PROPERTIES INC.
and
NEW YORK STATE TEACHERS' RETIREMENT SYSTEM
Dated as of November 22, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.................................................... 1
Section 1.01. Definitions........................................... 1
ARTICLE II. THE SALE AND PURCHASE OF PREFERRED SHARES..................... 4
Section 2.01. Obligations to Sell and Purchase the Preferred
Shares......................................................... 4
Section 2.02. The Closing........................................... 4
Section 2.03. Further Action........................................ 4
ARTICLE III. CONDITIONS................................................... 4
Section 3.01. Conditions to the Obligations of the Purchaser........ 5
Section 3.02. Conditions to the Obligations of the Company.......... 6
ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................ 7
Section 4.01. Representations and Warranties of the Company......... 7
Section 4.02. Representations and Warranties of the Purchaser....... 12
ARTICLE V. MISCELLANEOUS.................................................. 13
Section 5.01. Expenses.............................................. 13
Section 5.02. Assignment............................................ 13
Section 5.03. Benefit; Successors and Assigns....................... 13
Section 5.04. Notices............................................... 13
Section 5.05. Governing Law......................................... 14
Section 5.06. Entire Agreement...................................... 14
Section 5.07. Counterparts.......................................... 14
Section 5.08. Amendments............................................ 14
Section 5.09. Severability.......................................... 14
Section 5.10. Titles and Subtitles.................................. 15
Section 5.11. Further Assurances.................................... 15
Schedule 2.01 Purchaser Schedule
Schedule 4.01(p) Schedule of Real Property Leases
EXHIBIT A Stockholders' Agreement, dated as of November 22, 1996, between
the Company and the Purchaser
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
The undersigned hereby certify that they are the duly elected and
acting Executive Vice President and Secretary of CORNERSTONE PROPERTIES INC.,
a Nevada corporation (the "Corporation"), and pursuant to Nev. Rev. Stat. ss.
78.1955, DO HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by ARTICLE 4 of the Amended and Restated Articles of
Incorporation (the "Articles") and conferred upon the Administrative Committee
by the Board of Directors, the Administrative Committee of the Board of
Directors of the Corporation adopted on November 21, 1996 the following
resolution creating a series of Preferred Stock designated as 8% Cumulative
Convertible Preferred Stock:
RESOLVED, that pursuant to the authority expressly vested in the
Board of Directors in accordance with the provisions of its Articles of
Incorporation, a series of Preferred Stock of the Corporation, without par
value, be and it hereby is, created and that the designation and amount thereof
and the voting powers, preferences, and relative rights of the shares of such
series, and the limitations and restrictions thereof, are as follows:
1. Designation and Amount; Fractional Shares. The designation for
such series of the Preferred Stock authorized by this resolution shall be the 8%
Cumulative Convertible Preferred Stock, without par value, with a stated value
of $145.00 per share (the "8% Preferred Stock"). The stated value per share of
8% Preferred Stock shall not for any purpose be considered to be a determination
by the Board of Directors with respect to the capital and surplus of the
Corporation. The maximum number of shares of 8% Preferred Stock shall be
1,034,483. The 8% Preferred Stock is issuable in whole shares only.
2. Dividends. Holders of shares of 8% Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors out of
assets of the Corporation legally available for payment, cash dividends payable
quarterly at the rate of 8% per annum. Dividends on the 8% Preferred Stock will
be payable quarterly on March 31, June 30, September 30 and December 31 (the
"dividend payment dates"). Dividends on shares of the 8% Preferred Stock will be
cumulative on a daily basis from the date of initial issuance of such shares of
8% Preferred Stock. Dividends will be payable, in arrears, to holders of record
as they appear on the stock books of the Corporation on such record dates, not
more than 60 days nor less than 10 days preceding the payment dates thereof, as
shall be fixed by the Board of Directors. The amount of dividends payable for
each full dividend period shall be computed by dividing the annual dividend
payment by four. The amount of dividends payable for the initial dividend period
or any period shorter or longer than a full dividend period shall be calculated
on the basis of a 360-day year of twelve 30-day months. No dividends may be
declared or paid or set apart for payment on any Parity Preferred Stock (as
defined in paragraph 11(b) below) with regard to the payment of dividends unless
there shall also be or have been declared and paid or set apart for payment on
the 8% Preferred Stock, like dividends for all dividend payment periods of the
8% Preferred Stock ending on or before the dividend payment date of such Parity
Preferred Stock, ratably in proportion to the respective amounts of dividends
(x) accumulated and unpaid or payable on such Parity Preferred Stock, on the one
hand, and (y) accumulated and unpaid through the dividend payment period or
periods of the 8% Preferred Stock next preceding such dividend payment date, on
the other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the 8% Preferred Stock have been paid, no dividends
(other than in Common Stock of the Corporation) may be paid or declared and set
aside for payment or other distribution made upon the Common Stock or on any
other stock of the Corporation ranking junior to or on a parity with the 8%
Preferred Stock as to dividends, nor may any Common Stock or any other stock of
the Corporation ranking junior to or on a parity with the 8% Preferred Stock as
to dividends be redeemed, purchased or otherwise acquired for any consideration
(or any payment be made to or available for a sinking fund for the redemption of
any shares of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any Preferred Stock of the
Corporation in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such Preferred Stock in
accordance with the terms of such sinking fund, regardless of whether at the
time of such application full cumulative dividends upon shares of the 8%
Preferred Stock outstanding to the last dividend payment date shall have been
paid or declared and set apart for payment) by the Corporation; provided that
any such junior stock or Parity Preferred Stock or the Common Stock may be
converted into or exchanged for stock of the Corporation ranking junior to the
8% Preferred Stock as to dividends, and, provided, further, that any such junior
stock or Parity Preferred Stock or the Common Stock may be purchased by the
Corporation pursuant to Article 8 of the Restated Articles of Incorporation to
preserve the Corporation's status as a real estate investment trust.
3. Liquidation Preference. The shares of 8% Preferred Stock shall
rank, as to liquidation, dissolution or winding up of the Corporation, prior to
the shares of Common Stock and any other class of stock of the Corporation
ranking junior to the 8% Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Corporation, so that in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the 8% Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any distribution
is made to holders of shares of Common Stock or any other such junior stock, an
amount equal to $145.00 per share (the "Liquidation Preference" of a share of 8%
of Preferred Stock) plus an amount equal to all dividends (whether or not earned
or declared) accrued and accumulated and unpaid on the shares of 8% Preferred
Stock to the date of final distribution. The holders of the 8% Preferred Stock
will not be entitled to receive the Liquidation Preference until the liquidation
preference of any other class of stock of the Corporation ranking senior to the
8% Preferred Stock as to rights upon liquidation, dissolution or winding up
shall have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. After payment of the full amount of the Liquidation Preference
and such dividends, the holders of shares of 8% Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of shares of Parity Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributable among such holders ratably in accordance with
the respective amounts which would be payable on such shares if all amounts
payable thereon were paid in full. For the purposes hereof, neither a
consolidation or merger of the Corporation with or into another corporation, nor
a merger of any other corporation with or into the Corporation, nor a sale or
transfer of all or any part of the Corporation's assets for cash or securities
shall be considered a liquidation, dissolution or winding up of the Corporation.
4. Conversion.
I. The holders of shares of 8% Preferred Stock shall have the right, at
their option, to convert shares of 8% Preferred Stock into shares of Common
Stock at any time, on and subject to the following terms and conditions:
(a) The shares of 8% Preferred Stock shall be convertible at the
office of any transfer agent for the 8% Preferred Stock, and at such other
office or offices, if any, as the Board of Directors may designate, into
fully paid and nonassessable shares (calculated as to each conversion to
the nearest 1/100th of a share) of Common Stock, at the conversion price,
determined as hereinafter provided, in effect at the time of conversion,
each share of 8% Preferred Stock being taken at $145.00 for the purpose of
such conversion. The price at which shares of Common Stock shall be
delivered upon conversion (the "conversion price") shall be initially
$14.50 per share of Common Stock. The conversion price shall be adjusted
as provided in paragraph (d) below.
(b) In order to convert shares of the 8% Preferred Stock into Common
Stock, the holder thereof shall surrender at any office hereinabove
mentioned the certificate or certificates therefor, duly endorsed to the
Corporation or in blank, and give written notice to the Corporation at
said office that such holder elects to convert such shares. No payment or
adjustment shall be made upon any conversion on account of any dividends
accrued on the shares of 8% Preferred Stock surrendered for conversion or
on account of any dividends on the Common Stock issued upon such
conversion. Shares of the 8% Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of
surrender of such shares for conversion in accordance with the foregoing
provisions (the "conversion date"), and the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the conversion date, the
Corporation shall issue and shall deliver at said office a certificate or
certificates for the number of full shares of Common Stock issuable upon
such conversion, together with a cash payment in lieu of any fraction of a
share, as hereinafter provided, to the person or persons entitled to
receive the same.
(c) No fractional shares of Common Stock shall be issued upon
conversion of shares of 8% Preferred Stock, but, in lieu of any fraction
of a share of Common Stock which would otherwise be issuable in respect of
the aggregate number of shares of 8% Preferred Stock surrendered for
conversion at one time by the same holder, the Corporation shall pay in
cash as an adjustment of such fraction an amount equal to the same
fraction of the Closing Price (as defined below) on the date on which such
shares of the 8% Preferred Stock were duly surrendered for conversion, or,
if such date is not a Trading Date (as defined below), on the next Trading
Date.
(d) The conversion price shall be adjusted from time to time as
follows:
(1) In case the Corporation shall (i) pay a dividend (or make
a distribution) on its outstanding shares of Common Stock in Common
Stock, (ii) subdivide or split its outstanding shares of Common
Stock into a larger number of shares by reclassification or
otherwise, (iii) combine its outstanding shares of Common Stock into
a smaller number of shares by reclassification or otherwise, or (iv)
issue any shares of Common Stock by reclassification, the conversion
price in effect at the time of the record date for such dividend or
distribution or other effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder
of any shares of 8% Preferred Stock surrendered for conversion after
such time shall be entitled to receive the number of shares of
Common Stock which he would have owned or been entitled to receive
had such shares of the 8% Preferred Stock been converted immediately
prior to such time.
(2) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
current market price per share (determined as provided in clause (4)
below) on the record date for the distribution of such rights or
warrants, the conversion price in effect at the opening of business
on such record date shall be adjusted so that the same shall equal
the price determined by multiplying the conversion price then in
effect by a fraction, of which the numerator shall be the number of
shares of Common Stock then outstanding plus the number of shares of
Common Stock which the aggregate exercise price of such warrants or
rights exercised would purchase at such current market price and of
which the denominator shall be the number of shares of Common Stock
then outstanding plus the number of additional shares of Common
Stock issued upon the exercise of such warrants or rights. Such
adjustment shall become effective at the opening of business on the
business day next following the computation thereof. If the
conversion price shall be adjusted at any time under or by reason of
provisions in this clause (2), then, in case of the delivery of
Common Stock upon the exercise of any such right or warrant the
conversion price then in effect hereunder shall forthwith be
adjusted to such respective amount as would have been obtained had
such right or warrant never been issued as to such Common Stock and
had adjustments been made upon the issuance of the shares of Common
Stock delivered as aforesaid.
(3) In case the Corporation shall distribute to all holders of
its Common Stock evidences of its indebtedness or assets (excluding
any cash or stock dividends or distributions and dividends referred
to in clause (1) above) or rights or warrants to subscribe for or
purchase securities of the Corporation or any of its subsidiaries
(other than shares of Common Stock referred to in clause (2) above),
then in each such case the conversion price shall be adjusted so
that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in clause (4)
below) of the Common Stock on the record date mentioned below less
the then fair market value (as determined by the Board of Directors,
whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness or rights or warrants so
distributed applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the
Common Stock. Such adjustment shall become effective on the opening
of business on the business day next following the record date for
the determination of stockholders entitled to receive such
distribution.
(4) For the purpose of any computation under clause (1), (2),
or (3) above, the current market price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing
Prices for the 30 consecutive Trading Dates commencing not more than
45 Trading Dates before the day in question, such 30 consecutive
Trading Date period to be specified by the Board of Directors prior
to the commencement of 45 Trading Dates before the day in question,
or in the event the Board of Directors fails to specify such 30
consecutive Trading Dates, such 30 consecutive Trading Dates shall
be deemed to have commenced on the 40th Trading Date before the day
in question.
(5) No adjustment in the conversion price pursuant to this
paragraph 4 shall be required unless (i) such adjustment would
require an increase or decrease of at least 1% in such price;
provided that any adjustment which by reason of this paragraph
(d)(5) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment and will be made not more
than three years after the time it would have been made but for the
provisions of this paragraph (d)(5); provided further that, at the
time of any adjustment, such adjustment shall include all
adjustments to the date thereof then being carried forward. All
calculations under this paragraph 4 shall be made to the nearest
1/100th of a cent or to the nearest 1/100th of a share, as the case
may be.
(e) In case of any consolidation or merger of the Corporation with
or into another corporation or in the case of any sale or conveyance to
another corporation (other than a wholly-owned subsidiary of the
Corporation) of all or substantially all of the property and assets of the
Corporation, the holder of a share of the 8% Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of
shares of stock and other securities and properties receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock into which such share of 8% Preferred Stock might
have been converted immediately prior to such consolidation, merger, sale
or conveyance and shall have no other conversion rights with regard to
such share of 8% Preferred Stock. In the event of such a consolidation,
merger, sale or conveyance, effective provision shall be made in the
certificate of incorporation of the resulting or surviving corporation or
otherwise for the protection of the conversion rights of the shares of the
8% Preferred Stock, which shall be applicable, as nearly as reasonably may
be, to any such other shares of stock and other securities and property
deliverable upon conversion of shares of the 8% Preferred Stock. In case
securities or properties other than Common Stock shall be issuable or
deliverable upon conversion as aforesaid, then all references in this
paragraph 4 shall be deemed to apply, so far as appropriate and as nearly
as may be, to such other securities or properties.
(f) Whenever the conversion price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted conversion
price in accordance with this paragraph 4 and shall prepare a
certificate signed by the President or one of the Vice Presidents
and the Treasurer or one of the Assistant Treasurers of the
Corporation setting forth the adjusted conversion price, and such
certificate shall forthwith be filed with the transfer agent or
agents for the 8% Preferred Stock; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall, as
soon as practicable, be mailed to the holders of record of the
outstanding shares of 8% Preferred Stock.
(g) In case at any time:
(1) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out
of profits or surplus; or
(2) the Corporation shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or series or of any other
rights; or
(3) of any reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or
merger to which the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the property and assets of
the Corporation, or of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be mailed to the transfer agent or
agents for the 8% Preferred Stock and to the holders of record of the
outstanding shares of 8% Preferred Stock at least 20 days (or 10 days in
any case specified in clause (1) or (2) above) prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution or
rights, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as
of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up.
(h) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the shares of the 8%
Preferred Stock, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of 8% Preferred Stock then
outstanding.
(i) The Corporation will pay any and all transfer taxes that may be
payable in respect of the issuance or delivery of shares of Common Stock
on conversion of shares of 8% Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of 8%
Preferred Stock so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting such issue
has paid to the Corporation the amount of any such tax, or has
established, to the satisfaction of the Corporation, that such tax has
been paid.
(j) For the purpose of this paragraph 4, the term "Common Stock"
shall include any stock of any class of the Corporation which has no
preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and which is not subject to redemption by the Corporation.
However, shares issuable on conversion of shares of the 8% Preferred Stock
shall include only shares of Common Stock as such Common Stock exists on
the date of this Certificate or shares of any class or classes resulting
from any reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and which are not subject to redemption by the Corporation,
provided that if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(k) As used in this paragraph 4, the term "Closing Price" on any day
shall mean the reported last sales price on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices, in each case on the New York Stock Exchange, or, if the
Common Stock is not listed or admitted to trading on such Exchange, on the
Frankfurt Stock Exchange, or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal securities exchange
on which the Common Stock is listed or admitted to trading on which prices
are quoted in U.S. dollars, or, if not listed or admitted to trading on
any such securities exchange, the average of the closing bid and asked
prices as furnished in U.S. dollars by any broker/dealer selected from
time to time by the Board of Directors for that purpose; and the term
"Trading Date" shall mean a date on which the New York Stock Exchange, the
Frankfurt Stock Exchange or other applicable securities market used for
determining the Closing Price is open for the transaction of business. To
the extent required, a Closing Price shall be converted to U.S. dollars
from deutsche marks or to deutsche marks from U.S. dollars at the noon
buying rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York for
the date in question.
II. The Corporation shall have the right, at its option, to convert all
shares of 8% Preferred Stock then outstanding into shares of Common Stock upon
the consummation (the "Qualified Public Offering Closing Date") of a "Qualified
Public Offering" (as defined in paragraph 5(e) below), on and subject to the
same terms and conditions as apply to conversions of the 8% Preferred Stock at
the option of the holders thereof pursuant to subparagraph I of this paragraph
4, except that the following provisions shall be applicable to a conversion by
the Corporation pursuant to this subparagraph II:
(a) Such conversion shall be at the conversion price in effect
immediately prior to the close of business on the Qualified Public
Offering Closing Date.
(b) Unless the Corporation gives notice to the contrary to the
transfer agent or agents for the 8% Preferred Stock at least three
business days prior to the Qualified Public Offering Closing Date, it will
be deemed to have elected to convert all outstanding shares of 8%
Preferred Stock immediately prior to the close of business on the
Qualified Public Offering Closing Date.
(c) Whenever the 8% Preferred Stock is converted pursuant to this
subparagraph II, a notice to that effect shall, as soon as practicable, be
mailed to the holders of record of the outstanding shares of 8% Preferred
Stock. In order to receive a certificate or certificates for the Common
Stock issuable upon such conversion and any cash payment in lieu of any
fraction of a share, the holders of 8% Preferred Stock shall surrender at
the office of any transfer agent for the 8% Preferred Stock, or at such
other office or offices, if any, as the Board of Directors may designate,
the certificate or certificates for the 8% Preferred Stock, duly endorsed
to the Corporation or in blank. No payment or adjustment shall be made
upon any conversion pursuant hereto on account of any dividends accrued on
the shares of 8% Preferred Stock converted by the Corporation or on
account of any dividends on the Common Stock issued upon such conversion.
(d) Except as superseded by the foregoing, the provisions of
subparagraph I of this paragraph 4 shall apply, so far as appropriate and
as nearly as may be, to this subparagraph II.
5. Voting Rights. The holders of shares of 8% Preferred Stock
shall have no voting rights whatsoever, except for any voting rights to which
they may be entitled under the laws of the State of Nevada, and except as
follows:
(a) The holders of shares of 8% Preferred Stock (voting together as
a class) shall be entitled to elect one member of the Board of Directors
of the Corporation.
(b) At any time an Approved Purchaser shall be designated, the
holders of shares of 8% Preferred Stock (voting together as a class),
shall be entitled to elect one additional member of the Board of Directors
of the Corporation. Upon any failure of the Approved Purchaser to hold
shares of 8% Preferred Stock with an aggregate stated value equal to or in
excess of the Required Amount, the right of the holders of shares of 8%
Preferred Stock to elect a member of the Board of Directors of the
Corporation under this paragraph 5(b) shall terminate without the
possibility of revesting. "Approved Purchaser" means any one holder of 8%
Preferred Stock other than the New York State Teachers' Retirement System
(or its nominee) which holds shares of 8% Preferred Stock with aggregate
stated value equal to or in excess of $50,000,000 or such other lesser
amount designated by the Administrative Committee of the Board of
Directors of the Corporation (the "Required Amount") and which is
designated by the New York State Teachers' Retirement System (in its
reasonable judgment) in writing at the time such purchaser acquires its
shares of 8% Preferred Stock equal to or in excess of the Required Amount.
Any such Approved Purchaser shall cease to be the Approved Purchaser
immediately upon any failure to hold shares of 8% Preferred Stock with
aggregate stated value equal to or in excess of the Required Amount.
(c) If a Triggering Event (as defined below) shall occur and be
continuing the holders of shares of 8% Preferred Stock (voting together as
a class) shall have the right to elect members of the Board of Directors
(additional to those elected pursuant to paragraphs 5(a) and 5(b) as
follows until such rights shall terminate in accordance with the
provisions of this paragraph 5 or in accordance with applicable laws: (A)
at any time an Approved Purchaser shall be designated, two members of the
Board of Directors; and (B) at all other times, one member of the Board of
Directors. The total number of additional directors elected pursuant to
this paragraph 5(c) shall not exceed the foregoing numbers if more than
one Triggering Event shall have occurred and be continuing. A "Triggering
Event" means: (i) the failure of the Corporation to have completed a
Qualified Public Offering on or prior to December 31, 1999, (ii) the
existence, at any time or times, of dividends on the shares of 8%
Preferred Stock in arrears for two consecutive calendar quarters or more
or (iii) the Incurrence by the Corporation of any Debt if, after giving
effect to such Incurrence, the Debt (as both terms are defined in Exhibit
B hereto) of the Corporation exceeds 60% of the appraised value of the
assets of the Corporation; (provided, that, notwithstanding the foregoing,
the Corporation may at any time Incur Debt in an amount which does not
exceed the principal amount of outstanding Debt of the Corporation
extended, refinanced, renewed or replaced with the proceeds thereof, plus
any costs associated with the extension, refinancing, renewal or
replacement and such Incurrence shall not constitute a Triggering Event).
<PAGE>
(d) Any right to elect a director which arises because dividends
payable on the shares of 8% Preferred Stock have been in arrears for two
consecutive calendar quarters or more shall continue until such arrearages
have been paid or set apart for payment, at which time such right shall
terminate, except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of the
character above mentioned. Any right to elect a director which arises
because of a violation of the Debt to total assets test shall continue
until the Corporation again comes into compliance with such test, at which
time such right shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and every subsequent
default of the character above mentioned.
(e) A "Qualified Public Offering" shall mean an underwritten public
offering of Common Stock to be listed on the New York Stock Exchange in
which (i) the aggregate net proceeds to the Corporation (after payment of
all fees and expenses of the offering and pay-down of any then remaining
debt under the Term Loan Agreement, dated as of August 8, 1995, between
the Corporation and Deutsche Bank AG (London)) together with the net
proceeds of any prior public offerings of Common Stock listed on the New
York Stock Exchange equal or exceed US$200 million, (ii) the expected
distributions on shares of Common Stock of the Corporation for the 12
months following the Qualified Public Offering (as certified by the
treasurer or chief financial officer of the Corporation) divided by the
public offering price is less than or equal to 7.75% and (iii) (A) if the
Qualified Public Offering is completed in calendar year 1997, the public
offering price is at least $16.00 per share, (B) if the Qualified Public
Offering is completed in calendar year 1998, the public offering price is
at least $16.50 per share and (C) if the Qualified Public Offering is
completed in calendar year 1999, the public offering price is at least
$17.00 per share; provided, however, that a Qualified Public Offering
shall be deemed to occur on the first business day following any day the
condition set forth in item (i) above and each of the following conditions
is satisfied: (x) the day is prior to January 1, 2000, (y) the average of
the closing prices for shares of Common Stock as reported on the New York
Stock Exchange composite tape for the 20 consecutive
<PAGE>
trading days immediately preceding such day (the "Composite Average")
equals or exceeds the applicable minimum price for a public offering to be
considered a Qualified Public Offering at such time and (z) the expected
distributions on shares of Common Stock for the 12 months following such
day (as certified by the treasurer or chief financial officer of the
Corporation) divided by the Composite Average is less than or equal to
7.75%.
(f) The term of office of any director then in office elected by
holders of shares of 8% Preferred Stock due to the failure of the
Corporation to complete a Qualified Public Offering prior to December 31,
1999 or because of a violation of the Debt to total assets test shall
terminate upon the completion of a Qualified Public Offering by the
Corporation. The term of office of any director then in office elected by
the holders of shares of 8% Preferred Stock because dividends payable on
the shares of 8% Preferred Stock have been in arrears for two consecutive
calendar quarters or more shall terminate 18 months following any
termination of the right of the holders of shares of 8% Preferred Stock as
a class to vote for directors as herein provided. Whenever the term of
office of a director elected by the holders of shares of the 8% Preferred
Stock who are entitled to vote in such manner shall end, the number of the
directors of the Corporation shall be reduced correspondingly. Any
director who shall have been elected pursuant to this paragraph 5 may be
removed at any time, either with or without cause by a majority of the
holders of the outstanding shares of 8% Preferred Stock. Any vacancy
thereby created may be filled only by the affirmative vote of the holders
of shares of 8% Preferred Stock voting separately as a class. At elections
for such directors, each holder of shares of 8% Preferred Stock shall be
entitled to one vote for each share held.
(g) The consent of the holders of at least a majority of the shares
of 8% Preferred Stock outstanding at the time (voting as a class) given in
person or by proxy, either in writing or at any meeting called for the
purpose, shall be necessary to permit, effect or validate any one or more
of the following:
(i) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation (including this resolution or any
provision hereof) that would materially and adversely affect any
power, preference or special right of the shares of 8% Preferred
Stock or of the holders thereof; provided, that, the creation and
issuance of other series of Common Stock or Preferred Stock, in each
case ranking junior to the shares of 8% Preferred Stock with respect
to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such powers, preferences or special
rights;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation or Bylaws of the Corporation which would
have the effect of increasing the size of the Board of Directors of
the Corporation to greater than nine members, provided, that, the
Board of Directors may be increased in order to allow one or more
directors elected by holders of 8% Preferred Stock or Cumulative
Convertible 8% Preferred Stock, Series A to be seated;
(iii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation (including this resolution or any
provision hereof) that would increase the amount of authorized
Common Stock or authorized Preferred Stock;
(iv) the creation of any other class or series of stock of the
Corporation ranking prior to or on a parity with the 8% Preferred
Stock (as those terms are defined in paragraph 11 hereof or the
increase of the maximum number of shares of 8% Preferred Stock); or
(v) the repurchase or other acquisition of shares of Common
Stock or Preferred Stock, other than pursuant to paragraph 7 or
paragraph 9 hereof or in the ordinary course of business.
(h) The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of 8% Preferred
Stock shall have been redeemed or called for redemption and sufficient
funds shall have been deposited in trust to effect such redemption.
6. Authorization and Issuance of Other Securities. No consent of the
holders of the 8% Preferred Stock shall be required for (a) the creation of any
indebtedness of any kind of the Corporation, (b) the creation, or increase or
decrease in the amount, of any class or series of stock of the Corporation
ranking junior as to dividends or upon liquidation, dissolution or winding up to
the 8% Preferred Stock or (c) any increase, decrease or change in the par value
of the Common Stock or in any other terms thereof.
7. Redemption at the Option of the Corporation. The shares of 8%
Preferred Stock which have not previously been converted may be redeemed by the
Corporation as a whole in cash at the Redemption Price (as defined below) at any
time on or after the fifth anniversary of the date of original issuance of the
first share of 8% Preferred Stock, on the date fixed for redemption (the
"Redemption Date"). The "Redemption Price" shall be $145 per share, plus a sum
equal to all dividends accrued and unpaid thereon to the Redemption Date, plus a
redemption premium (the "Redemption Premium") calculated to cause the holders of
the 8% Preferred Stock to have received an internal rate of return of 12%. The
method of calculating the Redemption Premium is set forth in Exhibit A hereto.
8. Procedure for Redemption. The Corporation shall cause a notice
(the "Redemption Notice") to be mailed, first-class postage prepaid, at least 30
days, but not more than 90 days, prior to the Redemption Date, to each holder of
record of shares of 8% Preferred Stock to be redeemed. Such Redemption Notice
shall be mailed to such record holders at their respective addresses as they
appear upon the books of the Corporation and shall set forth the Redemption
Date, the Redemption Price and the place or places for surrender of certificates
for shares to be redeemed.
Any Redemption Notice which is mailed by the Corporation as provided
in this paragraph 8 shall be conclusively presumed to have been duly given,
whether or not the stockholder receives such Redemption Notice, and failure to
give such notice by mail, or any defect in such notice, to the holders of any
shares of 8% Preferred Stock shall not affect the validity of the proceedings
for the redemption of any other shares. On or after the Redemption Date
specified in such Redemption Notice, each holder of the shares called for
redemption shall surrender the certificate or certificates evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive the Redemption Price. If, on the Redemption
Date, funds necessary for the redemption shall be available therefor and shall
have been irrevocably deposited or set aside, then, notwithstanding that the
certificates evidencing such shares of 8% Preferred Stock shall not have been
surrendered, the dividends with respect to the shares of 8% Preferred Stock
shall cease to accrue after the Redemption Date, the shares shall no longer be
deemed to be outstanding, the holders thereof shall cease to be stockholders of
the Corporation, and all rights with respect to such shares shall forthwith
terminate (except the right to receive the amount payable upon redemption of the
shares to be redeemed, without interest).
9. Change in Control. (a) Upon the occurrence of a "Change in
Control", each holder of 8% Preferred Stock shall have the right to require the
redemption of its 8% Preferred Stock by the Corporation in cash, pursuant to the
offer described below (the "Change in Control Offer") at a price equal to 101%
of the stated value per share plus a sum equal to all dividends accrued and
unpaid thereon (if any) to the related Change in Control Redemption Date. A
"Change in Control" shall mean (i) a merger, consolidation or reorganization of
the Corporation, if, after giving effect thereto, the holders of the Common
Stock prior to such transaction shall fail to own at least 51% of the capital
stock entitled to vote for the election of directors in the successor entity,
(ii) the sale of a majority or more of the assets of the Corporation in any
single transaction or in any series of related transactions, or (iii) a change
in the composition of the Board of Directors of the Corporation such that during
any period of two consecutive years the individuals who at the beginning of such
period were directors of the Corporation shall cease for any reason to
constitute a majority of the directors then in office (and not designated to the
Board by any holder of Preferred Stock) unless the individuals replacing such
directors were elected or nominated by the Board of Directors of the
Corporation.
(b) Within 30 days of any Change in Control the Corporation shall
mail a notice (the "Change in Control Notice") to each holder of record of the
8% Preferred Stock stating:
(i) that a Change in Control has occurred, that the Change in
Control Offer is being made pursuant to the terms of the 8% Preferred
Stock and that all shares of 8% Preferred Stock validly tendered will be
accepted for redemption;
(ii) the redemption price and the date of redemption (which shall be
a business day no earlier than 30 days nor later than 60 days from the
date such notice is mailed) (the "Change in Control Redemption Date");
(iii) that any shares of 8% Preferred Stock not tendered will
continue to accumulate dividends;
(iv) that, unless the Corporation defaults in the payment of the
Change in Control redemption price, any shares of 8% Preferred Stock
accepted for redemption pursuant to the Change in Control Offer shall
cease to accumulate dividends after the Change in Control Redemption Date;
(v) that holders of 8% Preferred Stock electing to have any shares
of 8% Preferred Stock redeemed pursuant to the Change in Control Offer
will be required to surrender the certificates representing such shares of
8% Preferred Stock to the transfer agent for the 8% Preferred Stock at the
address specified in the notice prior to 1:00 P.M., New York City time, on
the business day immediately preceding the Change in Control Redemption
Date; and
(vi) that holders whose shares of 8% Preferred Stock are being
redeemed only in part will be issued new certificates representing shares
of 8% Preferred Stock equal in number to the unredeemed portion of the
shares of 8% Preferred Stock surrendered; provided that each certificate
representing shares of 8% Preferred Stock redeemed and each new
certificate representing shares of 8% Preferred Stock issued shall be in
whole shares.
(c) On or before the Change in Control Redemption Date:
(i) the transfer agent for the 8% Preferred Stock shall deliver to
the Corporation a certificate specifying the aggregate number of shares of
8% Preferred Stock delivered for purchase by the holders of 8% Preferred
Stock prior to the Change in Control Payment Date pursuant to the Change
in Control Offer;
(ii) the Corporation shall accept for redemption shares of 8%
Preferred Stock or portions thereof tendered pursuant to the Change in
Control Offer;
(iii) the Corporation shall deposit with the transfer agent for the
8% Preferred Stock money sufficient to pay the Change in Control price of
all shares of 8% Preferred Stock or portions thereof so accepted; and
(iv) the Corporation shall deliver, or cause to be delivered, to the
transfer agent for the 8% Preferred Stock an officers' certificate
specifying the shares of 8% Preferred Stock or portions thereof accepted
for payment by the Corporation.
(d) The transfer agent for the 8% Preferred Stock shall promptly
mail to the holders of 8% Preferred Stock so accepted payment in an amount equal
to the redemption price, and the transfer agent for the 8% Preferred Stock shall
promptly authenticate and mail to such holders of 8% Preferred Stock a new
certificate representing shares of 8% Preferred Stock equal in number to any
unredeemed shares of 8% Preferred Stock surrendered; provided that each share of
8% Preferred Stock redeemed and each new certificate representing shares of 8%
Preferred Stock issued shall be in whole shares. The Corporation will notify the
holders of 8% Preferred Stock of the results of the Change in Control Offer on
or as soon as practicable after the Change in Control Redemption Date.
10. Amendment of Resolution. The Board of Directors reserves the
right (subject to the provisions of clause 5(g)(iv) above) by subsequent
amendment of this resolution from time to time to increase or decrease the
number of shares that constitute the 8% Preferred Stock (but not below the
number of shares thereof then outstanding) and in other respects to amend this
resolution within the limitations provided by law, this resolution and the
Articles of Incorporation.
11. Rank. (a) For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
(i) prior to shares of the 8% Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if the
holders of stock of such class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference
or priority to the holders of shares of the 8% Preferred Stock;
(ii) on a parity with shares of the 8% Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, whether
or not the dividend payment dates, or redemption or liquidation prices per
share thereof, be different from those of the 8% Preferred Stock, if the
holders of stock of such class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts distributed upon
liquidation, dissolution or winding up, as the case may be, in proportion
to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of
such stock and the holders of shares of 8% Preferred Stock (the term
"Parity Preferred Stock" being used to refer to any stock on a parity with
the shares of 8% Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, as the context may
require); and
(iii) junior to shares of the 8% Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if such
class shall be Common Stock or if the holders of the 8% Preferred Stock
shall be entitled to the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in
preference or priority to the holders of stock of such class or classes.
(b) The 8% Preferred Stock shall rank on a parity with all shares of 7%
Cumulative Convertible Preferred Stock of the Corporation as to dividends and
upon liquidation and prior to all shares of 8% Cumulative Convertible Preferred
Stock, Series A as to dividends and upon liquidation.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly
executed in its corporate name on this 21st day of November, 1996.
Sworn to me this CORNERSTONE PROPERTIES INC.
___ day of November, 1996
By: __________________________
______________________ Name:
Notary Public Title:
By: __________________________
Sworn to me this Name:
___ day of November, 1996 Title:
- ----------------------
Notary Public
<PAGE>
EXHIBIT A
Calculation of Internal Rate of Return and Redemption Premium
For purposes of paragraph 7, the Redemption Premium (if any) shall equal an
amount such that (i) the sum of the accreted values (determined as of such time
by using an annual interest rate of 12% compounded quarterly from the date on
which the related distribution was made) of all distributions by the Corporation
to the holder(s) of 8% Preferred Stock as of such date (including the Redemption
Premium, if any), equals (ii) the sum of the accreted values (determined as of
such time by using an annual interest rate of 12% compounded quarterly from the
date on which the related purchase was made) of all purchases of 8% Preferred
Stock made by the holder(s) of 8% Preferred Stock. For the purpose of
calculating the accreted value of distributions or purchases of 8% Preferred
Stock made other than on the first day of a month, interest shall be calculated
on the basis of a 30-day month and a 360-day year. The interest rate applied on
a quarterly basis for purposes of calculating the accreted value of
distributions or purchases of 8% Preferred Stock shall be 2.873%.
<PAGE>
EXHIBIT B
Definitions
For purposes of paragraph 5(c), the following terms shall have the following
respective meanings:
"Capitalized Lease" means, as applied to the Corporation, any lease
of property (whether real, personal or mixed) the discounted present value
of the rental obligations of the Corporation as lessee under which, in
conformity with GAAP, is required to be or is capitalized on the balance
sheet of that person.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to
protect the Parent against fluctuations in currency values.
"Debt" of the Corporation means, at any date (without duplication):
(i) all obligations of the Corporation for borrowed money; (ii) all
obligations of the Corporation evidenced by bonds, debentures, notes or
other similar instruments; (iii) all obligations of the Corporation in
respect of letters of credit, bankers' acceptances or other similar
instruments (or reimbursement obligations with respect thereto); (iv) all
obligations of the Corporation to pay the deferred purchase price of
property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue); (v) all obligations of the Corporation as lessee under
Capitalized Leases; (vi) all obligations of the Corporation in respect of
performance bonds or other similar instruments; (vii) all obligations of
others of the types referred to in clauses (i) through (vi), (viii) and
(ix) of this paragraph secured by a Lien on any asset of the Corporation,
whether or not any such obligation is assumed by the Corporation, provided
that, for purposes of determining the amount of any Debt of the type
described in this clause (vii), if recourse with respect to such Debt is
limited to such asset, the amount of such Debt shall be limited to the
fair market value of such assets; (viii) all obligations of others of the
types referred to in clauses (i) through (vi) and (ix) of this paragraph
which are guaranteed by the Corporation; and (ix) to the extent not
otherwise included, obligations under Currency Agreements and Interest
Rate Agreements.
"GAAP" means generally accepted accounting principles in the United
States as in effect at the time any particular determination is made.
"Incurrence" means the issuance, incurrence, creation, assumption or
in any other manner becoming liable with respect to, or the extension of
the maturity or mandatory redemption date of, or becoming responsible for
the payment of, any Debt, preferred stock or Lien. "Incur" and "Incurred"
shall have correlative meanings.
"Interest Rate Agreements" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge agreement, to or under
which the Corporation is a party or a beneficiary on the date hereof or
becomes a party or a beneficiary hereafter.
"Lien" means any pledge, mortgage, lien, charge, security interest
or encumbrance of any kind.
EXHIBIT 4.2
CERTIFICATE OF THE DESIGNATIONS, VOTING POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK,
SERIES A OF CORNERSTONE PROPERTIES INC.
The undersigned hereby certify that they are the duly elected and
acting Executive Vice President and Secretary of CORNERSTONE PROPERTIES INC., a
Nevada corporation (the "Corporation"), and pursuant to Nev. Rev. Stat. ss.
78.1955, DO HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by ARTICLE 4 of the Amended and Restated Articles of
Incorporation (the "Articles") and conferred upon the Administrative Committee
by the Board of Directors, the Administrative Committee of the Board of
Directors of the Corporation by unanimous written consent dated November 7, 1996
adopted the following resolution creating a series of Preferred Stock designated
as 8% Cumulative Convertible Preferred Stock, Series A:
RESOLVED, that pursuant to the authority expressly vested in the
Board of Directors in accordance with the provisions of its Articles of
Incorporation, a series of Preferred Stock of the Corporation, without par
value, be and it hereby is, created and that the designation and amount thereof
and the voting powers, preferences, and relative rights of the shares of such
series, and the limitations and restrictions thereof, are as follows:
1. Designation and Amount; Fractional Shares. The designation for
such series of the Preferred Stock authorized by this resolution shall be the 8%
Cumulative Convertible Preferred Stock, Series A, without par value, with a
stated value of $145.00 per share (the "8% Preferred Stock, Series A"). The
stated value per share of 8% Preferred Stock, Series A shall not for any purpose
be considered to be a determination by the Board of Directors with respect to
the capital and surplus of the Corporation. The maximum number of shares of 8%
Preferred Stock, Series A shall be 458,621. The 8% Preferred Stock, Series A is
issuable in whole shares only.
2. Dividends. Holders of shares of 8% Preferred Stock, Series A will
be entitled to receive, when, as and if declared by the Board of Directors out
of assets of the Corporation legally available for payment, cash dividends
payable quarterly at the rate of 8% per annum. Dividends on the 8% Preferred
Stock, Series A will be payable quarterly on March 31, June 30, September 30 and
December 31 (the "dividend payment dates"). Dividends on shares of the 8%
Preferred Stock, Series A will be cumulative from the date of initial issuance
of such shares of 8% Preferred Stock, Series A. Dividends will be payable, in
arrears, to holders of record as they appear on the stock books of the
Corporation on such record dates, not more than 60 days nor less than 10 days
preceding the payment dates thereof, as shall be fixed by the Board of
Directors. The amount of dividends payable for each full dividend period shall
be computed by dividing the annual dividend payment by four. The amount of
dividends payable for the initial dividend period or any period shorter or
longer than a full dividend period shall be calculated on the basis of a 360-day
year of twelve 30-day months. No dividends may be declared or paid or set apart
for payment on any Parity Preferred Stock (as defined in paragraph 12(a) below)
with regard to the payment of dividends unless there shall also be or have been
declared and paid or set apart for payment on the 8% Preferred Stock, Series A,
like dividends for all dividend payment periods of the 8% Preferred Stock,
Series A ending on or before the dividend payment date of such Parity Preferred
Stock, ratably in proportion to the respective amounts of dividends (x)
accumulated and unpaid or payable on such Parity Preferred Stock, on the one
hand, and (y) accumulated and unpaid through the dividend payment period or
periods of the 8% Preferred Stock, Series A next preceding such dividend payment
date, on the other hand. All dividends payable in respect of the 8% Preferred
Stock, Series A will, to the extent permitted under the Internal Revenue Code of
1986, as amended (the "Code") and not preferential within the meaning of Section
562(c) of the Code, be paid first out of earnings and profits (within the
meaning of Section 316 of the Code) other than earnings and profits attributable
to gains from sales or exchanges of United States real property interests
(within the meaning of Section 897 of the Code).
Except as set forth in the preceding sentence, unless full
cumulative dividends on the 8% Preferred Stock, Series A have been paid, no
dividends (other than in Common Stock of the Corporation) may be paid or
declared and set aside for payment or other distribution made upon the Common
Stock or on any other stock of the Corporation ranking junior to or on a parity
with the 8% Preferred Stock, Series A as to dividends, nor may any Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
8% Preferred Stock, Series A as to dividends be redeemed, purchased or otherwise
acquired for any consideration (or any payment be made to or available for a
sinking fund for the redemption of any shares of such stock; provided, however,
that any moneys theretofore deposited in any sinking fund with respect to any
Preferred Stock of the Corporation in compliance with the provisions of such
sinking fund may thereafter be applied to the purchase or redemption of such
Preferred Stock in accordance with the terms of such sinking fund, regardless of
whether at the time of such application full cumulative dividends upon shares of
the 8% Preferred Stock, Series A outstanding to the last dividend payment date
shall have been paid or declared and set apart for payment) by the Corporation;
provided further that any such junior stock or Parity Preferred Stock or the
Common Stock may be converted into or exchanged for stock of the Corporation
ranking junior to the 8% Preferred Stock, Series A as to dividends; and,
provided further, that any such junior stock or Parity Preferred Stock or the
Common Stock may be purchased by the Corporation pursuant to Article 8 of the
Restated Articles of Incorporation to preserve the Corporation's status as a
real estate investment trust.
3. Liquidation Preference. The shares of 8% Preferred Stock, Series
A shall rank, as to liquidation, dissolution or winding up of the Corporation,
prior to the shares of Common Stock and any other class of stock of the
Corporation ranking junior to the 8% Preferred Stock, Series A as to rights upon
liquidation, dissolution or winding up of the Corporation, so that in the event
of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the 8% Preferred Stock, Series A shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other such junior stock, an amount equal to $145.00 per share (the "Liquidation
Preference" of a share of 8% Preferred Stock, Series A) plus an amount equal to
all dividends (whether or not earned or declared) accrued and accumulated and
unpaid on the shares of 8% Preferred Stock, Series A to the date of final
distribution. The holders of the 8% Preferred Stock, Series A will not be
entitled to receive the Liquidation Preference until the liquidation preference
of any other class of stock of the Corporation ranking senior to the 8%
Preferred Stock, Series A as to rights upon liquidation, dissolution or winding
up shall have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. After payment of the full amount of the Liquidation Preference
and such dividends, the holders of shares of 8% Preferred Stock, Series A will
not be entitled to any further participation in any distribution of assets by
the Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of shares of Parity Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributable among such holders ratably in accordance with
the respective amounts which would be payable on such shares if all amounts
payable thereon were paid in full. For the purposes hereof, neither a
consolidation or merger of the Corporation with or into another corporation, nor
a merger of any other corporation with or into the Corporation, nor a sale or
transfer of all or any part of the Corporation's assets for cash or securities
shall be considered a liquidation, dissolution or winding up of the Corporation.
4. Conversion.
I. The holders of shares of 8% Preferred Stock, Series A shall have the
right, at their option, to convert shares of 8% Preferred Stock, Series A into
shares of Common Stock at any time, on and subject to the following terms and
conditions:
(a) The shares of 8% Preferred Stock, Series A shall be convertible
at the office of any transfer agent for the 8% Preferred Stock, Series A,
and at such other office or offices, if any, as the Board of Directors may
designate, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock, at the
conversion price, determined as hereinafter provided, in effect at the
time of conversion, each share of 8% Preferred Stock, Series A being taken
at $145.00 for the purpose of such conversion. The price at which shares
of Common Stock shall be delivered upon conversion (the "conversion
price") shall be initially $14.50 per share of Common Stock. The
conversion price shall be adjusted as provided in paragraph (d) below.
(b) In order to convert shares of the 8% Preferred Stock, Series A
into Common Stock, the holder thereof shall surrender at any office
hereinabove mentioned the certificate or certificates therefor, duly
endorsed to the Corporation or in blank, and give written notice to the
Corporation at said office that such holder elects to convert such shares.
No payment or adjustment shall be made upon any conversion on account of
any dividends accrued on the shares of 8% Preferred Stock, Series A
surrendered for conversion or on account of any dividends on the Common
Stock issued upon such conversion. Shares of the 8% Preferred Stock,
Series A shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such shares for conversion in
accordance with the foregoing provisions (the "conversion date"), and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such Common Stock at such time. As promptly as practicable on
or after the conversion date, the Corporation shall issue and shall
deliver at said office a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion, together with a
cash payment in lieu of any fraction of a share, as hereinafter provided,
to the person or persons entitled to receive the same.
(c) No fractional shares of Common Stock shall be issued upon
conversion of shares of 8% Preferred Stock, Series A, but, in lieu of any
fraction of a share of Common Stock which would otherwise be issuable in
respect of the aggregate number of shares of 8% Preferred Stock, Series A
surrendered for conversion at one time by the same holder, the Corporation
shall pay in cash as an adjustment of such fraction an amount equal to the
same fraction of the Closing Price (as defined below) on the date on which
such shares of the 8% Preferred Stock, Series A were duly surrendered for
conversion, or, if such date is not a Trading Date (as defined below), on
the next Trading Date.
(d) The conversion price shall be adjusted from time to time as
follows:
(1) In case the Corporation shall (i) pay a dividend (or make
a distribution) on its outstanding shares of Common Stock in Common
Stock, (ii) subdivide or split its outstanding shares of Common
Stock into a larger number of shares by reclassification or
otherwise, (iii) combine its outstanding shares of Common Stock into
a smaller number of shares by reclassification or otherwise, or (iv)
issue any shares of Common Stock by reclassification, the conversion
price in effect at the time of the record date for such dividend or
distribution or other effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder
of any shares of 8% Preferred Stock, Series A surrendered for
conversion after such time shall be entitled to receive the number
of shares of Common Stock which he would have owned or been entitled
to receive had such shares of the 8% Preferred Stock, Series A been
converted immediately prior to such time.
(2) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
current market price per share (determined as provided in clause (4)
below) on the record date for the distribution of such rights or
warrants, the conversion price in effect at the opening of business
on such record date shall be adjusted so that the same shall equal
the price determined by multiplying the conversion price then in
effect by a fraction, of which the numerator shall be the number of
shares of Common Stock then outstanding plus the number of shares of
Common Stock which the aggregate exercise price of such warrants or
rights exercised would purchase at such current market price and of
which the denominator shall be the number of shares of Common Stock
then outstanding plus the number of additional shares of Common
Stock issued upon the exercise of such warrants or rights. Such
adjustment shall become effective at the opening of business on the
business day next following the computation thereof. If the
conversion price shall be adjusted at any time under or by reason of
provisions in this clause (2), then, in case of the delivery of
Common Stock upon the exercise of any such right or warrant the
conversion price then in effect hereunder shall forthwith be
adjusted to such respective amount as would have been obtained had
such right or warrant never been issued as to such Common Stock and
had adjustments been made upon the issuance of the shares of Common
Stock delivered as aforesaid.
(3) In case the Corporation shall distribute to all holders of
its Common Stock evidences of its indebtedness or assets (excluding
any cash or stock dividends or distributions and dividends referred
to in clause (1) above) or rights or warrants to subscribe for or
purchase securities of the Corporation or any of its subsidiaries
(other than shares of Common Stock referred to in clause (2) above),
then in each such case the conversion price shall be adjusted so
that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in clause (4)
below) of the Common Stock on the record date mentioned below less
the then fair market value (as determined by the Board of Directors,
whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness or rights or warrants so
distributed applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the
Common Stock. Such adjustment shall become effective on the opening
of business on the business day next following the record date for
the determination of stockholders entitled to receive such
distribution.
(4) For the purpose of any computation under clause (1), (2),
or (3) above, the current market price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing
Prices for the 30 consecutive Trading Dates commencing not more than
45 Trading Dates before the day in question, such 30 consecutive
Trading Date period to be specified by the Board of Directors prior
to the commencement of 45 Trading Dates before the day in question,
or in the event the Board of Directors fails to specify such 30
consecutive Trading Dates, such 30 consecutive Trading Dates shall
be deemed to have commenced on the 40th Trading Date before the day
in question.
(5) No adjustment in the conversion price pursuant to this
paragraph 4 shall be required unless (i) such adjustment would
require an increase or decrease of at least 1% in such price;
provided that any adjustment which by reason of this paragraph
(d)(5) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment and will be made not more
than three years after the time it would have been made but for the
provisions of this paragraph (d)(5); provided further that, at the
time of any adjustment, such adjustment shall include all
adjustments to the date thereof then being carried forward. All
calculations under this paragraph 4 shall be made to the nearest
1/100th of a cent or to the nearest 1/100th of a share, as the case
may be.
(e) In case of any consolidation or merger of the Corporation with
or into another corporation or in the case of any sale or conveyance to
another corporation (other than a wholly-owned subsidiary of the
Corporation) of all or substantially all of the property and assets of the
Corporation, the holder of a share of the 8% Preferred Stock, Series A
shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and properties receivable
upon such consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock into which such share of 8% Preferred
Stock, Series A might have been converted immediately prior to such
consolidation, merger, sale or conveyance and shall have no other
conversion rights with regard to such share of 8% Preferred Stock, Series
A. In the event of such a consolidation, merger, sale or conveyance,
effective provision shall be made in the certificate of incorporation of
the resulting or surviving corporation or otherwise for the protection of
the conversion rights of the shares of the 8% Preferred Stock, Series A
which shall be applicable, as nearly as reasonably may be, to any such
other shares of stock and other securities and property deliverable upon
conversion of shares of the 8% Preferred Stock, Series A. In case
securities or properties other than Common Stock shall be issuable or
deliverable upon conversion as aforesaid, then all references in this
paragraph 4 shall be deemed to apply, so far as appropriate and as nearly
as may be, to such other securities or properties.
(f) Whenever the conversion price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted conversion
price in accordance with this paragraph 4 and shall prepare a
certificate signed by the President or one of the Vice Presidents
and the Treasurer or one of the Assistant Treasurers of the
Corporation setting forth the adjusted conversion price, and such
certificate shall forthwith be filed with the transfer agent or
agents for the 8% Preferred Stock, Series A; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall, as
soon as practicable, be mailed to the holders of record of the
outstanding shares of 8% Preferred Stock, Series A.
(g) In case at any time:
(1) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out
of profits or surplus; or
(2) the Corporation shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or series or of any other
rights; or
(3) of any reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or
merger to which the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the property and assets of
the Corporation, or of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be mailed to the transfer agent or
agents for the 8% Preferred Stock, Series A and to the holders of record
of the outstanding shares of 8% Preferred Stock, Series A, at least 20
days (or 10 days in any case specified in clause (1) or (2) above) prior
to the applicable record date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up.
(h) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the shares of the 8%
Preferred Stock, Series A, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of 8% Preferred Stock,
Series A then outstanding.
(i) The Corporation will pay any and all transfer taxes that may be
payable in respect of the issuance or delivery of shares of Common Stock
on conversion of shares of 8% Preferred Stock, Series A pursuant hereto.
The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery
of shares of Common Stock in a name other than that in which the shares of
8% Preferred Stock, Series A so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of any such tax, or has
established, to the satisfaction of the Corporation, that such tax has
been paid.
(j) For the purpose of this paragraph 4, the term "Common Stock"
shall include any stock of any class of the Corporation which has no
preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and which is not subject to redemption by the Corporation.
However, shares issuable on conversion of shares of the 8% Preferred
Stock, Series A shall include only shares of Common Stock as such Common
Stock exists on the date of this Certificate or shares of any class or
classes resulting from any reclassification or reclassifications thereof
and which have no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and which are not subject to redemption by
the Corporation, provided that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total
number of shares of all such classes resulting from all such
reclassifications.
(k) As used in this paragraph 4, the term "Closing Price" on any day
shall mean the reported last sales price on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices, in each case on the New York Stock Exchange, or, if the
Common Stock is not listed or admitted to trading on such Exchange, on the
Frankfurt Stock Exchange, or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal securities exchange
on which the Common Stock is listed or admitted to trading on which prices
are quoted in U.S. dollars, or, if not listed or admitted to trading on
any such securities exchange, the average of the closing bid and asked
prices as furnished in U.S. dollars by any broker/dealer selected from
time to time by the Board of Directors for that purpose; and the term
"Trading Date" shall mean a date on which the New York Stock Exchange, the
Frankfurt Stock Exchange or other applicable securities market used for
determining the Closing Price is open for the transaction of business. To
the extent required, a Closing Price shall be converted to U.S. dollars
from deutsche marks or to deutsche marks from U. S. dollars at the noon
buying rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York for
the date in question.
II. The Corporation shall have the right, at its option, to convert all
shares of 8% Preferred Stock, Series A then outstanding into shares of Common
Stock upon the consummation (the "Qualified Public Offering Closing Date") of a
"Qualified Public Offering" (as defined in paragraph 5(e) below), on and subject
to the same terms and conditions as apply to conversions of the 8% Preferred
Stock, Series A at the option of the holders thereof pursuant to subparagraph I
of this paragraph 4, except that the following provisions shall be applicable to
a conversion by the Corporation pursuant to this subparagraph II:
(a) Such conversion shall be at the conversion price in effect
immediately prior to the close of business on the Qualified Public
Offering Closing Date.
(b) Unless the Corporation gives notice to the contrary to the
transfer agent or agents for the 8% Preferred Stock, Series A at least
three business days prior to the Qualified Public Offering Closing Date,
it will be deemed to have elected to convert all outstanding shares of 8%
Preferred Stock, Series A immediately prior to the close of business on
the Qualified Public Offering Closing Date.
(c) Whenever the 8% Preferred Stock, Series A is converted pursuant
to this subparagraph II, a notice to that effect shall, as soon as
practicable, be mailed to the holders of record of the outstanding shares
of 8% Preferred Stock, Series A. In order to receive a certificate or
certificates for the Common Stock issuable upon such conversion and any
cash payment in lieu of any fraction of a share, the holders of 8%
Preferred Stock, Series A shall surrender at the office of any transfer
agent for the 8% Preferred Stock, Series A, or at such other office or
offices, if any, as the Board of Directors may designate, the certificate
or certificates for the 8% Preferred Stock, Series A, duly endorsed to the
Corporation or in blank. No payment or adjustment shall be made upon any
conversion pursuant hereto on account of any dividends accrued on the
shares of 8% Preferred Stock, Series A converted by the Corporation or on
account of any dividends on the Common Stock issued upon such conversion.
(d) Except as superseded by the foregoing, the provisions of
subparagraph I of this paragraph 4 shall apply, so far as appropriate and
as nearly as may be, to this subparagraph II.
Notwithstanding the foregoing, in no event shall the 8% Preferred
Stock, Series A be converted pursuant to this subparagraph II of paragraph 4
unless all shares of 8% Cumulative Convertible Preferred Stock of the
Corporation then outstanding are also converted by the Corporation into Common
Stock at the same time.
5. Voting Rights. The holders of shares of 8% Preferred Stock,
Series A shall have no voting rights whatsoever, except for any voting rights to
which they may be entitled under the laws of the State of Nevada, and except as
follows:
(a) In the event that, at any time or times, dividends payable on
the shares of 8% Preferred Stock, Series A shall be in arrears for two
consecutive calendar quarters or more, the holders of the outstanding
shares of 8% Preferred Stock, Series A shall have the right (voting
together as a class) to elect one member of the Board of Directors at such
time or times and thereafter until such rights shall terminate in
accordance with the provisions of this paragraph 5 or in accordance with
applicable laws. Such director shall be an additional director of the then
existing Board of Directors.
(b) Any right to elect a director which arises because dividends
payable on the shares of 8% Preferred Stock, Series A have been in arrears
for two consecutive calendar quarters or more shall continue until such
arrearages have been paid or set apart for payment, at which time such
right shall terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every subsequent default of
the character above mentioned.
(c) The term of office of any director then in office elected by the
holders of shares of 8% Preferred Stock, Series A because dividends
payable on the shares of 8% Preferred Stock, Series A have been in arrears
for two consecutive calendar quarters or more shall terminate 18 months
following any termination of the right of the holders of shares of 8%
Preferred Stock, Series A as a class to vote for directors as herein
provided. Whenever the term of office of any director elected by the
holders of shares of the 8% Preferred Stock, Series A who are entitled to
vote in such manner shall end, the number of the directors of the
Corporation shall be reduced correspondingly. Any director who shall have
been elected pursuant to this paragraph 5 may be removed at any time,
either with or without cause by the holders of the outstanding shares of
8% Preferred Stock, Series A, voting separately as a class. Any vacancy
thereby created may be filled only by the affirmative vote of the holders
of shares of 8% Preferred Stock, Series A voting separately as a class. If
the office of any director elected by the holders of shares of 8%
Preferred Stock, Series A voting as a class becomes vacant for any reason
other than the removal from office as aforesaid, any remaining director or
directors elected pursuant to this paragraph may choose a successor who
shall hold office for the unexpired term in respect of which such vacancy
occurred. At elections for such directors, each holder of shares of 8%
Preferred Stock, Series A shall be entitled to one vote for each share
held.
(d) Prior to the completion of a Qualified Public Offering, the
consent of the holders of at least a majority of the shares of 8%
Preferred Stock, Series A outstanding at the time (voting as a class)
given in person or by proxy, either in writing or at any meeting called
for the purpose, shall be necessary to permit, effect or validate any one
or more of the following:
(i) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation (including this resolution or any
provision hereof) that would materially and adversely affect any
power, preference or special right of the shares of 8% Preferred
Stock, Series A or of the holders thereof; provided that the
creation and issuance of other series of Common Stock or Preferred
Stock, in each case ranking junior to the shares of 8% Preferred
Stock, Series A with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such powers,
preferences or special rights;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation or Bylaws of the Corporation which would
have the effect of increasing the size of the Board of Directors of
the Corporation to greater than nine members, provided that the
Board of Directors may be increased in order to allow one or more
directors elected by holders of 8% Preferred Stock, Series A to be
seated;
(iii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Articles of Incorporation (including this resolution or any
provision hereof) that would increase the amount of authorized
Common Stock or authorized Preferred Stock;
(iv) the creation of any other class or series of stock of the
Corporation ranking prior to or on a parity with the 8% Preferred
Stock, Series A (as those terms are defined in paragraph 12(a)
hereof); or
(v) the repurchase or other acquisition of shares of Common
Stock or Preferred Stock, other than pursuant to paragraph 8,
paragraph 9 or paragraph 10 hereof or in the ordinary course of
business.
(e) As used herein, the term "Public Offering" shall mean an
underwritten public offering of Common Stock pursuant to an effective
registration statement under the 1933 Act and listed on the New York Stock
Exchange. A "Qualified Public Offering" shall mean: a Public Offering
prior to January 1, 2000 in which (i) the aggregate net proceeds to the
Corporation (after payment of all fees and expenses of the offering)
together with the net proceeds of any prior Public Offerings of Common
Stock listed on the New York Stock Exchange equal or exceed the Minimum
Amount (as defined below) and (ii) (a) if the Public Offering is completed
in calendar year 1997, the initial public offering price is at least
$16.00 per share, (b) if the Public Offering is completed in calendar year
1998, the initial public offering price is at least $16.50 per share or
(c) if the Public Offering is completed in calendar year 1999, the initial
public offering price is at least $17.00 per share; provided, however,
that a Qualified Public Offering shall be deemed to occur on the first
business day which follows any period of 20 trading days after a Public
Offering and prior to January 1, 2000, in which the average of the closing
prices for shares of the Common Stock as reported on the New York Stock
Exchange composite tape equals or exceeds the applicable minimum price for
a Public Offering to be considered a Qualified Public Offering at such
time. "Minimum Amount" shall mean, at any time, the sum of (i) $75 million
plus (ii) the product of .5618 multiplied by the stated value of all
shares of 8% Cumulative Convertible Preferred Stock issued by the
Corporation prior to such time and after November 1, 1996.
(f) The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of 8% Preferred
Stock, Series A shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such
redemption.
6. Authorization and Issuance of Other Securities. No consent of the
holders of the 8% Preferred Stock, Series A shall be required for (a) the
creation of any indebtedness of any kind of the Corporation, (b) the creation,
or increase or decrease in the amount, of any class or series of stock of the
Corporation ranking junior as to dividends or upon liquidation, dissolution or
winding up to the 8% Preferred Stock, Series A or (c) any increase, decrease or
change in the par value of the Common Stock or in any other terms thereof.
7. Redemption at the Option of the Corporation. The shares of 8%
Preferred Stock, Series A which have not previously been converted may be
redeemed by the Corporation as a whole in cash at the Redemption Price (as
defined below), at any time on or after December 31, 2001, on the date fixed for
redemption (the "Redemption Date"). The "Redemption Price" shall be $145 per
share, plus a sum equal to all dividends accrued and unpaid thereon to the
Redemption Date, plus a redemption premium (the "Redemption Premium") calculated
to cause the holders of the 8% Preferred Stock, Series A to have received an
internal rate of return of 12%. The method of calculating the Redemption Premium
is set forth in Exhibit A hereto.
8. Procedure for Redemption. The Corporation shall cause a notice
(the "Redemption Notice") to be mailed, first-class postage prepaid, at least 30
days, but not more than 90 days, prior to the Redemption Date, to each holder of
record of shares of 8% Preferred Stock, Series A to be redeemed. Such Redemption
Notice shall be mailed to such record holders at their respective addresses as
they appear upon the books of the Corporation and shall set forth the Redemption
Date, the Redemption Price and the place or places for surrender of certificates
for shares to be redeemed.
Any Redemption Notice which is mailed by the Corporation as provided
in this paragraph 8 shall be conclusively presumed to have been duly given,
whether or not the stockholder receives such Redemption Notice, and failure to
give such notice by mail, or any defect in such notice, to the holders of any
shares of 8% Preferred Stock, Series A shall not affect the validity of the
proceedings for the redemption of any other shares. On or after the Redemption
Date specified in such Redemption Notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive the Redemption Price. If, on the Redemption Date, funds
necessary for the redemption shall be available therefor and shall have been
irrevocably deposited or set aside, then, notwithstanding that the certificates
evidencing such shares of 8% Preferred Stock, Series A shall not have been
surrendered, the dividends with respect to the shares of 8% Preferred Stock,
Series A shall cease to accrue after the Redemption Date, the shares shall no
longer be deemed to be outstanding, the holders thereof shall cease to be
stockholders of the Corporation, and all rights with respect to such shares
shall forthwith terminate (except the right to receive the amount payable upon
redemption of the shares to be redeemed, without interest).
9. Redemption at the Option of the Holder. (a) If the Corporation
has not completed, prior to January 1, 2001, a Public Offering in which the
aggregate net proceeds to the Corporation (after payment of all fees and
expenses of the offering) equal or exceed $75,000,000, each holder of shares of
8% Preferred Stock, Series A shall have the right to require redemption of its
shares of 8% Preferred Stock, Series A by the Corporation in cash, pursuant to
the offer described below (the "Put Offer") at a price equal to 100% of the
stated value per share plus a sum equal to all dividends accrued and unpaid
thereon (if any) to the related Put Date defined below (the "Put Payment"). The
right to require redemption of the 8% Preferred Stock, Series A pursuant to this
paragraph 9 shall arise on January 1, 2001 or on the first day thereafter which
is the first day of a month and on which there are no accumulated and unpaid
dividends on the 7% Cumulative Convertible Preferred Stock of the Corporation or
on any other class or series of preferred stock of the Corporation ranking prior
to or on a parity with the 8% Preferred Stock, Series A (the "Option
Commencement Date"). The right to require redemption of the 8% Preferred Stock,
Series A shall extend from the Option Commencement Date to the date which is
three calendar months thereafter (the "Option Period").
(b) Within 10 days of the commencement of the Option Period, the
Corporation shall mail a notice (the "Put Notice") to each holder of record of
the 8% Preferred Stock, Series A stating:
(i) that the Option Period has commenced, that the Put Offer is
being made pursuant to the terms of the 8% Preferred Stock, Series A and
that all shares of 8% Preferred Stock, Series A validly tendered will be
accepted for redemption, provided, that the holders of such shares provide
notice to the Corporation on or prior to the last day of the Option Period
of their intention to redeem and of the number shares to be redeemed;
(ii) the redemption price and the date of redemption (which, subject
to the provisions of subparagraph (e) below, shall be a business day no
earlier than 30 days from the date such notice is mailed and no later than
the first anniversary of the Option Commencement Date) (the "Put Date");
(iii) that any shares of 8% Preferred Stock, Series A not tendered
will continue to accumulate dividends;
(iv) that, unless the Corporation defaults in the payment of the Put
Payment, any shares of 8% Preferred Stock, Series A accepted for
redemption pursuant to the Put Offer shall cease to accumulate dividends
after the Put Date;
(v) that holders of 8% Preferred Stock, Series A electing to have
any shares of 8% Preferred Stock, Series A redeemed pursuant to the Put
Offer will be required to surrender the certificates representing such
shares of 8% Preferred Stock, Series A to the transfer agent for the 8%
Preferred Stock, Series A at the address specified in the notice prior to
1:00 P.M., New York City time, on the business day immediately preceding
the Put Date; and
(vi) that holders whose shares of 8% Preferred Stock, Series A are
being redeemed only in part will be issued new certificates representing
shares of 8% Preferred Stock, Series A equal in number to the unredeemed
portion of the shares of 8% Preferred Stock, Series A surrendered;
provided that each certificate representing shares of 8% Preferred Stock,
Series A redeemed and each new certificate representing shares of 8%
Preferred Stock, Series A issued shall be in whole shares.
(c) On or before the Put Date:
(i) the transfer agent for the 8% Preferred Stock, Series A shall
deliver to the Corporation a certificate specifying the aggregate number
of shares of 8% Preferred Stock, Series A delivered for purchase by the
holders of 8% Preferred Stock, Series A prior to the Put Payment Date
pursuant to the Change in Control Offer;
(ii) the Corporation shall accept for redemption shares of 8%
Preferred Stock, Series A or portions thereof tendered pursuant to the Put
Offer;
(iii) the Corporation shall deposit with the transfer agent for the
8% Preferred Stock, Series A money sufficient to pay the purchase price of
all shares of 8% Preferred Stock, Series A or portions thereof so
accepted; and
(iv) the Corporation shall deliver, or cause to be delivered, to the
transfer agent for the 8% Preferred Stock, Series A an officers'
certificate specifying the shares of 8% Preferred Stock, Series A or
portions thereof accepted for payment by the Corporation.
(d) The transfer agent for the 8% Preferred Stock, Series A shall promptly
mail to the holders of 8% Preferred Stock, Series A so accepted payment in an
amount equal to the purchase price, and the transfer agent for the 8% Preferred
Stock, Series A shall promptly authenticate and mail to such holders of 8%
Preferred Stock, Series A a new certificate representing shares of 8% Preferred
Stock, Series A equal in number to any unpurchased portion of the certificate
representing 8% Preferred Stock, Series A surrendered; provided that each share
of 8% Preferred Stock, Series A purchased and each new certificate representing
shares of 8% Preferred Stock, Series A issued shall be in whole shares. The
Corporation will notify the holders of 8% Preferred Stock, Series A of the
results of the Put Offer on or as soon as practicable after the Put Payment
Date.
(e) In the event the Corporation is unable to make the Put Payment due to
the existence of accumulated and unpaid dividends on any class or series of
preferred stock of the Corporation, the Put Date shall be deemed to occur on the
business day ( the "Revised Put Date") which falls 10 business days following
the first date which is the first day of a month, which the Corporation notifies
to the holders of record of the 8% Preferred Stock Series A and on which there
are no accumulated and unpaid dividends on any class or series of preferred
stock of the Corporation, provided, that there shall be no requirement for any
holder of shares of 8% Preferred Stock, Series A to tender shares for redemption
on the Revised Put Date, and all rights of holders of 8% Preferred Stock, Series
A to redeem such shares shall expire if such shares are not tendered for
redemption on or prior to the Revised Put Date.
10. Change in Control. (a) Upon the occurrence of a "Change in
Control", each holder of 8% Preferred Stock, Series A shall have the right to
require the redemption of his 8% Preferred Stock, Series A by the Corporation in
cash, pursuant to the offer described below (the "Change in Control Offer"), at
a price equal to 101% of the stated value per share plus a sum equal to all
dividends accrued and unpaid thereon (if any) to the related Change in Control
Redemption Date. A "Change in Control" shall mean (i) a merger, consolidation or
reorganization of the Corporation, if, after giving effect thereto, the holders
of the Common Stock prior to such transaction shall fail to own at least 51% of
the capital stock entitled to vote for the election of directors in the
successor entity, (ii) the sale of a majority or more of the assets of the
Corporation in any single transaction or in any series of related transactions,
or (iii) a change in the composition of the Board of Directors of the
Corporation such that during any period of two consecutive years the individuals
who at the beginning of such period were directors of the Corporation shall
cease for any reason to constitute a majority of the directors then in office
(and not designated to the Board by any holder of Preferred Stock) unless the
individuals replacing such directors were elected or nominated by the Board of
Directors of the Corporation.
(b) Within 30 days of any Change in Control, the Corporation shall
mail a notice (the "Change in Control Notice") to each holder of record of the
8% Preferred Stock, Series A stating:
(i) that a Change in Control has occurred, that the Change in
Control Offer is being made pursuant to the terms of the 8% Preferred
Stock, Series A and that all shares of 8% Preferred Stock, Series A
validly tendered will be accepted for redemption;
(ii) the redemption price and the date of redemption (which shall be
a business day no earlier than 30 days nor later than 60 days from the
date such notice is mailed) (the "Change in Control Redemption Date");
(iii) that any shares of 8% Preferred Stock, Series A not tendered
will continue to accumulate dividends;
(iv) that, unless the Corporation defaults in the payment of the
Change in Control redemption price, any shares of 8% Preferred Stock,
Series A accepted for redemption pursuant to the Change in Control Offer
shall cease to accumulate dividends after the Change in Control Redemption
Date;
(v) that holders of 8% Preferred Stock, Series A electing to have
any shares of 8% Preferred Stock, Series A redeemed pursuant to the Change
in Control Offer will be required to surrender the certificates
representing such shares of 8% Preferred Stock, Series A to the transfer
agent for the 8% Preferred Stock, Series A at the address specified in the
notice prior to 1:00 P.M., New York City time, on the business day
immediately preceding the Change in Control Redemption Date; and
(vi) that holders whose shares of 8% Preferred Stock, Series A are
being purchased only in part will be issued new certificates representing
shares of 8% Preferred Stock, Series A equal in number to the unredeemed
portion of the shares of 8% Preferred Stock, Series A surrendered;
provided that each certificate representing shares of 8% Preferred Stock,
Series A redeemed and each new certificate representing shares of 8%
Preferred Stock, Series A issued shall be in whole shares.
(c) On or before the Change in Control Redemption Date:
(i) the transfer agent for the 8% Preferred Stock, Series A shall
deliver to the Corporation a certificate specifying the aggregate number
of shares of 8% Preferred Stock, Series A delivered for purchase by the
holders of 8% Preferred Stock, Series A prior to the Change in Control
Payment Date pursuant to the Change in Control Offer;
(ii) the Corporation shall accept for redemption shares of 8%
Preferred Stock, Series A or portions thereof tendered pursuant to the
Change in Control Offer;
(iii) the Corporation shall deposit with the transfer agent for the
8% Preferred Stock, Series A money sufficient to pay the Change in Control
redemption price of all shares of 8% Preferred Stock, Series A or portions
thereof so accepted; and
(iv) the Corporation shall deliver, or cause to be delivered, to the
transfer agent for the 8% Preferred Stock, Series A an officers'
certificate specifying the shares of 8% Preferred Stock, Series A or
portions thereof accepted for payment by the Corporation.
(d) The transfer agent for the 8% Preferred Stock, Series A shall
promptly mail to the holders of 8% Preferred Stock, Series A so accepted payment
in an amount equal to the purchase price, and the transfer agent for the 8%
Preferred Stock, Series A shall promptly authenticate and mail to such holders
of shares of 8% Preferred Stock, Series A a new certificate representing 8%
Preferred Stock, Series A equal in number to any unredeemed shares of 8%
Preferred Stock, Series A surrendered; provided that each share of 8% Preferred
Stock, Series A purchased and each new certificate representing shares of 8%
Preferred Stock, Series A issued shall be in whole shares. The Corporation will
notify the holders of 8% Preferred Stock, Series A of the results of the Change
of Control Offer on or as soon as practicable after the Change in Control
Redemption Date.
11. Amendment of Resolution. The Board of Directors reserves the
right by subsequent amendment of this resolution from time to time to increase
or decrease the number of shares that constitute the 8% Preferred Stock, Series
A (but not below the number of shares thereof then outstanding) and in other
respects to amend this resolution within the limitations provided by law, this
resolution and the Articles of Incorporation.
12. Rank. (a) For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
(i) prior to shares of the 8% Preferred Stock, Series A, either as
to dividends or upon liquidation, dissolution or winding up, or both, if
the holders of stock of such class or classes shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference
or priority to the holders of shares of the 8% Preferred Stock, Series A;
(ii) on a parity with shares of the 8% Preferred Stock, Series A,
either as to dividends or upon liquidation, dissolution or winding up, or
both, whether or not the dividend payment dates, or redemption or
liquidation prices per share thereof, be different from those of the 8%
Preferred Stock, Series A, if the holders of stock of such class or
classes shall be entitled by the terms thereof to the receipt of dividends
or of amounts distributed upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority of one over the other
as between the holders of such stock and the holders of shares of 8%
Preferred Stock, Series A (the term "Parity Preferred Stock" being used to
refer to any stock on a parity with the shares of 8% Preferred Stock,
Series A, either as to dividends or upon liquidation, dissolution or
winding up, or both, as the context may require); and
(iii) junior to shares of the 8% Preferred Stock, Series A, either
as to dividends or upon liquidation, dissolution or winding up, or both,
if such class shall be Common Stock or if the holders of the 8% Preferred
Stock, Series A shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of stock of such
class or classes.
(b) the 8% Preferred Stock, Series A shall rank junior as to
dividends and upon liquidation to all shares of the 7% Cumulative Convertible
Preferred Stock of the Corporation and to all shares of 8% Cumulative
Convertible Preferred Stock of the Corporation.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly
executed in its corporate name on this 7th day of November, 1996.
Sworn to me this CORNERSTONE PROPERTIES INC.
___ day of November, 1996
By: __________________________
______________________ Name:
Notary Public Title:
By: __________________________
Sworn to me this Name:
___ day of November, 1996 Title:
- ----------------------
Notary Public
<PAGE>
EXHIBIT A
Calculation of Internal Rate of Return and Redemption Premium
For purposes of paragraph 7, the Redemption Premium (if any) shall equal an
amount such that (i) the sum of the accreted values (determined as of such time
by using an annual interest rate of 12% compounded quarterly from the date on
which the related distribution was made) of all distributions by the Corporation
to the holder(s) of 8% Preferred Stock, Series A as of such date (including the
Redemption Premium, if any) equals (ii) the sum of the accreted values
(determined as of such time by using an annual interest rate of 12% compounded
quarterly from the date on which the related purchase was made) of all purchases
of 8% Preferred Stock, Series A made by the holder(s) of 8% Preferred Stock,
Series A. For the purpose of calculating the accreted value of distributions or
purchases of 8% Preferred Stock, Series A made other than on the first day of a
month, interest shall be calculated on the basis of a 30-day month and a 360-day
year. The interest rate applied on a quarterly basis for purposes of calculating
the accreted value of distributions or purchases of 8% Preferred Stock, Series A
shall be 2.873%.
EXHIBIT 20.1
STOCKHOLDERS' AGREEMENT, dated as of November 22, 1996, by and among
CORNERSTONE PROPERTIES INC., a Nevada corporation (the "Company"), the NEW YORK
STATE TEACHERS' RETIREMENT SYSTEM (the "Lead Purchaser") and the purchasers of
8% Preferred Stock (as defined below) which may become party hereto from time to
time (each individually a "Stockholder", and collectively, together with the
Lead Purchaser, the "Stockholders").
R E C I T A L S
WHEREAS the Lead Purchaser is purchasing 689,655 shares of the
1,034,483 authorized shares of the 8% Cumulative Convertible Preferred Stock,
without par value, of the Company (the "8% Preferred Stock"), pursuant to that
certain Preferred Stock Purchase Agreement, dated November 22, 1996 (the
"Purchase Agreement"), between the Company and the Lead Purchaser; and
WHEREAS the Company and the Lead Purchaser wish to set forth certain
agreements regarding their relationship to which they and other purchasers of 8%
Preferred Stock shall be bound.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions and References. For purposes of this
Agreement, in addition to the definitions set forth above and elsewhere herein,
the following terms shall have the following respective meanings:
"Affiliate", with respect to any Person, means any other Person
directly or indirectly controlling, controlled by or under common control
with, such Person. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" or
"under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Approved Purchaser" shall have the meaning specified in the
Certificate of Designations.
"Certificate of Designations" means the Certificate of Designations
of the voting powers, designation, preferences and relative, optional or
other special rights and qualifications, limitations and restrictions of
the 8% Cumulative Convertible Preferred Stock.
"Closing Date" means November 22, 1996.
"Commission" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.
"Common Stock" shall mean the common stock of the Company, without
par value.
"Conversion Stock" shall mean the Common Stock or other securities
issued on conversion of the 8% Preferred Stock.
"Encumbrance" means any lien, security interest, pledge, claim, or
option, right of first refusal, marital right or other encumbrance with
respect to any Preferred Share or share of Conversion Stock.
"1933 Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and, unless the context indicates otherwise, the
rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and, unless the context indicates
otherwise, the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a trust, an individual retirement account or
any other entity or organization, including a government or any department
or agency thereof.
"Public Offering" means an underwritten public offering of equity
securities of the Company pursuant an effective registration statement
under the 1933 Act.
"Qualified Public Offering" means a Public Offering of Common Stock
to be listed on the New York Stock Exchange in which (i) the aggregate net
proceeds to the Company (after payment of all fees and expenses of the
offering and pay-down of any then existing debt under the Term Loan
Agreement, dated as of August 8, 1995, between the Company and Deutsche
Bank AG (London)) together with the net proceeds of any prior public
offerings of Common Stock listed on the New York Stock Exchange equal or
exceed $200,000,000, (ii) the expected distributions on shares of Common
Stock of the Company for the 12 months following the Qualified Public
Offering (as certified by the treasurer or chief financial officer of the
Company) divided by the public offering price is less than or equal to
7.75% and (iii) (A) if the Qualified Public Offering is completed in the
calendar year 1997, the initial public offering price is at least $16.00
per share, (B) if the Qualified Public Offering is completed in the
calendar year 1998, the initial public offering price is at least $16.50
per share and (C) if the Qualified Public Offering is completed in the
calendar year 1999, or thereafter, the public offering price is at least
$17.00 per share; provided, however, that a Qualified Public Offering
shall be deemed to occur on the first business day following any day the
condition set forth in (i) above and each of the following conditions is
true: (x) the day is after a Public Offering and prior to January 1, 2000,
(y) the average of the closing prices for shares of Common Stock as
reported on the New York Stock Exchange composite tape for the 20
consecutive trading days immediately preceding such day (the "Composite
Average") equals or exceeds the applicable minimum price for a Public
Offering to be considered a Qualified Public Offering at such time and (z)
the expected distributions on shares of Common Stock for the 12 months
following such day (as certified by the treasurer or chief financial
officer of the Company) divided by the Composite Average is less than or
equal to 7.75%.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act and the declaration or
ordering of effectiveness of such registration statement or document.
"Registrable Stock" shall mean (i) the Conversion Stock, (ii) any
stock issued as (or issuable upon the conversion or exercise of any
warrant, right, option or other convertible security which is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Conversion Stock, and (iii) any stock issued by way of
a stock split of the Conversion Stock referred to in clauses (i) or (ii)
above. For purposes of this Agreement, any Registrable Stock shall cease
to be Registrable Stock when (x) a registration statement covering such
Registrable Stock has been declared effective and such Registrable Stock
has been disposed of pursuant to such effective registration statement,
(y) such Registrable Stock is sold by a person in a transaction in which
the rights under the provisions of this Agreement are not assigned or (z)
such Registrable Stock may be sold pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the 1933 Act without
registration under the 1933 Act.
"Required Amount" shall have the meaning specified in the
Certificate of Designations.
"Restricted Stock" means all shares of 8% Preferred Stock and
Conversion Stock other than (a) shares that have been registered under a
registration statement pursuant to the 1933 Act, (b) shares with respect
to which a Sale has been made in reliance on and in accordance with Rule
144 or (c) shares with respect to which the holder thereof shall have
delivered to the Company either (i) an opinion, in form and substance
satisfactory to the Company, of counsel, who shall be satisfactory to the
Company, or (ii) a "no action" letter from the Commission, to the effect
that subsequent transfers of such shares may be effected without
registration under the 1933 Act.
"Rule 144" means Rule 144 (or any successor provision) under the
1933 Act.
"Rule 144A" means Rule 144A (or any successor provision) under the
1933 Act.
"Sale" means any sale, assignment, transfer, distribution (whether
by a partnership to any of its partners or otherwise) or other disposition
of 8% Preferred Stock or Conversion Stock or of a participation therein.
"Stockholder" means each Person (other than the Company) that shall
be a party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 4.11 or
otherwise, so long as such Person shall beneficially own any shares.
ARTICLE II
CERTAIN AGREEMENTS
SECTION 2.01. Additional Purchasers; Approved Purchasers. (a) the
Company may appoint one or more additional purchasers ("Additional Purchasers")
of 8% Preferred Stock, provided that (i) each such Additional Purchaser shall
execute this Stockholders' Agreement and become a party hereto (and thereafter
the term "Stockholder" as used herein shall mean the Stockholders and such
Additional Purchaser) and (ii) the Stockholders are given written notice of each
appointment of an Additional Purchaser as promptly as practicable after such
appointment.
SECTION 2.02. Board of Directors. (a) For so long as the Lead
Purchaser holds shares of 8% Preferred Stock with aggregate stated value equal
to or in excess of $50,000,000, the Lead Purchaser shall be entitled to
designate the one director whom the holders of the 8% Preferred Stock are
entitled to elect to the Board of Directors of the Company while any shares of
8% Preferred Stock remain outstanding. Upon any failure of the Lead Purchaser to
hold shares of 8% Preferred Stock with aggregate stated value equal to or in
excess of $50,000,000, the right of the Lead Purchaser to designate a director
pursuant to this Section 2.02(a) shall terminate, without the possibility of
revesting.
(b) At any time when an Approved Purchaser holds shares of 8%
Preferred Stock with an aggregate stated value equal to or in excess of the
Required Amount, such holder shall be entitled to designate the second of the
two directors whom the holders of 8% Preferred Stock are entitled to elect at
such time. Upon any failure of the Approved Purchaser to hold shares of 8%
Preferred Stock with an aggregate stated value equal to or in excess of the
Required Amount, the right of the Approved Purchaser to designate a director for
election pursuant to this Section 2.02(b) shall terminate without the
possibility of revesting.
(c) At any time or times when holders of 8% Preferred Stock are
entitled to elect one or more additional directors (the "Additional Directors")
of the Company due to (i) the failure of the Company to complete a Qualified
Public Offering on or prior to December 31, 1999, (ii) the non-payment of
dividends on the 8% Preferred Stock for any two consecutive quarters or (iii)
the breach of the debt to total assets test set forth in Paragraph 5(c)(iii) of
the Certificate of Designations, the Lead Purchaser shall be entitled to
designate one Additional Director for election if at such time it holds shares
of 8% Preferred Stock with aggregate stated value equal to or in excess of
$50,000,000 and the Approved Purchaser shall be entitled to designate one of the
two Additional Directors for election if at such time it holds shares of 8%
Preferred Stock with aggregate stated value in excess of the Required Amount.
(d) Each Stockholder then entitled to vote for the election of
directors of the Company shall vote all shares of 8% Preferred Stock owned or
held of record by such holder at any meeting of stockholders, or execute a
written consent with respect to all shares of 8% Preferred Stock owned or held
of record by such Stockholder, in favor of the election of any director named
pursuant to Section 2.02(a), Section 2.02(b) or Section 2.02(c).
(e) Each Stockholder hereby agrees that, if it is then entitled to
vote for the election or removal of directors, it will not vote any of its
shares of 8% Preferred Stock in favor of the removal of any director that shall
have been nominated pursuant to Section 2.02(a), Section 2.02(b) or Section
2.02(c) unless such removal shall be for Cause or the party which nominated such
director shall have consented to such removal in writing. For the purposes of
this Section 2.02(e), "Cause" shall mean the commission by a director of a
felony which, in the opinion of a majority of the Company's Board of Directors,
is injurious to the business reputation of the Company or any subsidiary thereof
or the wilful commission by a director of a dishonest act affecting the Company
or any subsidiary thereof.
SECTION 2.03. Listing. (a) Each Stockholder agrees to cooperate
in amending or eliminating paragraphs 5(a) and 5(b) of the Certificate of
Designations if, and to the extent, necessary in order for the Company's Common
Stock to become listed on the New York Stock Exchange.
(b) The Company agrees to recommend to the holders of Common Stock
the election of directors designated by the holders of 8% Preferred Stock in
such manner as to preserve as closely as may be possible the rights of such
holders under said paragraphs 5(a) and 5(b) if such provisions must be amended
or eliminated pursuant to subsection 2.03(a) above.
ARTICLE III
RESTRICTIONS ON TRANSFER
SECTION 3.01. General Restrictions. No Stockholder shall, directly
or indirectly, make or solicit any Sale of, or create, incur, solicit or assume
any Encumbrance with respect to, any share of 8% Preferred Stock or Conversion
Stock, except in compliance with the 1933 Act and this Agreement.
SECTION 3.02. Legends. (a) Each certificate representing shares
of 8% Preferred Stock or Conversion Stock shall, except as otherwise provided in
this Section 3.02 or in Section 3.03, be stamped or otherwise imprinted with a
legend substantially in the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT
DOES NOT APPLY,
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS' AGREEMENT,
DATED AS OF NOVEMBER 22, 1996, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF
TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER
UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
(b) In the event that any shares of 8% Preferred Stock or Conversion
Stock shall cease to be Restricted Stock, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such shares without the first paragraph of the legend required by Section
3.02(a) endorsed thereon. In the event that any shares of 8% Preferred Stock or
Conversion Stock shall cease to be subject to the restrictions on transfer set
forth in this Agreement, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate evidencing such shares of
8% Preferred Stock or Conversion Stock without the second paragraph of the
legend required by Section 3.02(a).
SECTION 3.03. Notice of Proposed Transfer. Each Stockholder agrees
that it will not, directly or indirectly, make or solicit any Sale of, or
create, incur or assume any Encumbrance with respect to, any share of 8%
Preferred Stock or Conversion Stock held by such Stockholder unless, prior to
any such action, the holder thereof shall give written notice to the Company of
its intention. Each such notice shall describe the manner of the proposed
transfer and, if requested by the Company, shall be accompanied by an opinion of
counsel satisfactory to the Company to the effect that the proposed transfer may
be effected without registration under the 1933 Act, whereupon the holder of
such stock shall be entitled to transfer such stock in accordance with the terms
of its notice; provided, however, that no such opinion of counsel shall be
required for a transfer to one or more partners of the transferor (in the case
of a transferor that is a partnership) or to an Affiliated corporation (in the
case of a transferor that is a corporation). Each certificate for 8% Preferred
Stock or Conversion Stock transferred as above provided shall bear the legend
set forth in Section 3.02, except that such certificate shall not bear the first
paragraph of such legend if (i) such transfer is in accordance with the
provisions of Rule 144 or Rule 144A (or any other rule permitting public sale
without registration under the 1933 Act) or (ii) the opinion of counsel referred
to above is to the further effect that the transferee and any subsequent
transferee (other than an Affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration under the 1933
Act. The restrictions provided for in this Section 3.03 shall not apply to
securities which are not required to bear the first paragraph of the legend
prescribed by Section 3.02(a) in accordance with the provisions of that Section.
SECTION 3.04. Certain Persons to Execute Agreement. (a) Each
Stockholder agrees that it will not directly or indirectly make any Sale of, or
create, incur or assume any Encumbrance with respect to, any shares of 8%
Preferred Stock or Conversion Stock held by such Stockholder, unless, prior to
the consummation of any such Sale or the creation, incurrence or assumption of
any such Encumbrance, the Person to whom such Sale is proposed to be made or the
Person in whose favor such Encumbrance is proposed to be created, incurred or
assumed (for purposes of this Section 3.04, a "Prospective Transferee") (i)
executes and delivers to the Company an agreement, in form and substance
satisfactory to the Company, whereby such Prospective Transferee confirms that,
with respect to the shares of 8% Preferred Stock or Conversion Stock that are
subject of such Sale or Encumbrance, it shall be deemed to be a "Stockholder"
for the purposes of this Agreement and agrees to be bound by all the terms of
this Agreement and (ii) unless such Prospective Transferee is a recognized
institutional investor, delivers to the Company an opinion of counsel,
satisfactory in form and substance to the Company, to the effect that the
agreement referred to above that is delivered by such Prospective Transferee is
a legal, valid and binding obligation of such Prospective Transferee enforceable
against such Prospective Transferee in accordance with its terms. Upon the
execution and delivery by such Prospective Transferee of the agreement referred
to in clause (i) of the next preceding sentence and, if required, the delivery
of the opinion of counsel referred to in clause (ii) of the next preceding
sentence, such Prospective Transferee shall be deemed a "Stockholder" for the
purposes of this Agreement, and shall have the rights and be subject to the
obligations of a Stockholder hereunder with respect to the shares held by such
Prospective Transferee or in respect of which such Encumbrance shall have been
created, incurred or assumed.
(b) Anything in this Section 3.04 or in Section 3.03 to the contrary
notwithstanding, the provisions of this Section 3.04 will not be applicable to
any Sale of shares pursuant to a Public Offering.
SECTION 3.05. Certain Information. The Company shall file all
reports and other information required to be filed by Section 13 or 15(d) under
the 1934 Act, as the case may be, as shall be necessary in order that the
conditions to the availability of Rule 144 in connection with any Sale of shares
of Common Stock by a Stockholder shall be met.
SECTION 3.06. Improper Sale or Encumbrance. Any attempt to make any
Sale of, or create, incur or assume any Encumbrance with respect to, any share
of 8% Preferred Stock or Conversion Stock not in compliance with this Agreement
shall be null and void and the Company shall not give any effect in the
Company's stock records to such attempted Sale or Encumbrance.
SECTION 3.07. Notice of Qualified Public Offering. So long as any 8%
Preferred Stock is outstanding, the Company shall endeavor to notify the
Stockholders no less than 30 days prior to the completion of any contemplated
Qualified Public Offering. If requested, the Company will consult in advance
with any holder of shares of 8% Preferred Stock with an aggregate stated value
of at least $100 million with respect to the managing underwriters and possible
range of public offering prices of the Common Stock.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.01. Request for Registration.
(a) On and after the earlier of (i) the date which is six months
after the date the registration statement filed by the Company covering a
Qualified Public Offering shall have become effective, and (ii) December
31, 1999 if a Qualified Public Offering shall not have been completed on
or prior to such date, the Stockholders of at least 25% of the Registrable
Stock issued or issuable upon conversion of the 8% Preferred Stock (the
"Initiating Holders") may request in a written notice that the Company
file a registration statement under the 1933 Act (or a similar document
pursuant to any other statute then in effect corresponding to the 1933
Act) covering the registration of any or all Registrable Stock held by
such Initiating Holders in the manner specified in such notice, provided
that there must be included in such registration at least 25% of the
Registrable Stock issued or issuable upon conversion of the 8% Preferred
Stock (or any lesser percentage if the anticipated aggregate offering
proceeds would exceed $100 million). Following receipt of any notice under
this Section 4.01(a) the Company shall (x) within 20 days notify all other
Stockholders of such request in writing and (y) use its best efforts to
cause to be registered under the 1933 Act all Registrable Stock that the
Initiating Holders and such other Stockholders have, within ten days after
the Company has given such notice, requested be registered in accordance
with the manner of disposition specified in such notice by the Initiating
Holders.
(b) If the Initiating Holders intend to have the Registrable Stock
distributed by means of an underwritten offering, the Company shall
include such information in the written notice referred to in clause (x)
of Section 4.01(a) above. In such event, the right of any Stockholder to
include its Registrable Stock in such registration shall be conditioned
upon such Stockholder's participation in such underwritten offering and
the inclusion of such Stockholder's Registrable Stock in the underwritten
offering (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Stockholder) to the extent provided below.
All Stockholders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. Such underwriter or
underwriters shall be selected by a majority in interest of the Initiating
Holders and shall be approved by the Company, which approval shall not be
unreasonably withheld. If any Stockholder of Registrable Stock disapproves
of the terms of the underwriting, such Stockholder may elect to withdraw
all its Registrable Stock by written notice to the Company, the managing
underwriter and the Initiating Holders. The securities so withdrawn shall
also be withdrawn from registration.
(c) Notwithstanding any provision of this Agreement to the
contrary,
(i) the Company shall not be required to effect a
registration pursuant to this Section 4.01 during the
period starting with the date of filing by the Company
of, and ending on a date 120 days following the
effective date of, a registration statement pertaining
to a public offering of securities for the account of
the Company or on behalf of the selling stockholders
under any other registration rights agreement which the
Stockholder have been entitled to join pursuant to
Section 4.02; provided, that the Company shall actively
--------
employ in good faith all reasonable efforts to cause
such registration statement to become effective as soon
as possible; and
(ii) if the Company shall furnish to such Stockholders a
certificate signed by the President of the Company
stating that in the good faith opinion of the board of
directors of the Company such registration would
interfere with any material transaction then being
pursued by the Company, then the Company's obligation to
use its best efforts to file a registration statement
shall be deferred for a period not to exceed 120 days.
(d) The Company shall not be obligated to effect and pay for more
than one registration pursuant to this Section 4.01 prior to the
completion of a Qualified Public Offering and three registrations pursuant
to this Section 4.01 after the completion of a Qualified Public Offering;
provided that a registration requested pursuant to this Section 4.01 shall
not be deemed to have been effected for purposes of this Section 4.01(d)
unless (i) it has been declared effective by the Commission, (ii) it has
remained effective for the period set forth in Section 4.03(a), (iii)
Stockholders of Registrable Stock included in such registration have not
withdrawn sufficient shares from such registration such that the remaining
holders requesting registration would not have been able to request
registration under the provisions of Section 4 and (iv) the offering of
Registrable Stock pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the Commission (other
than any such stop order, injunction, or other requirement of the
Commission prompted by any act or omission of Stockholders of Registrable
Stock).
SECTION 4.02. Incidental Registration. Subject to Section 4.06, if
at any time the Company determines that it shall file a registration statement
under the 1933 Act (other than a registration statement on Form S-4 or S-8 or
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its Common Stock to be sold for cash, the Company shall each
such time promptly give each Stockholder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 60 days from the date of such
notice, and advising each Stockholder of its right to have Registrable Stock
included in such registration. Upon the written request of any Stockholder
received by the Company no later than 30 days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Stockholder has so
requested to be registered. If, in the written opinion of the managing
underwriter (or, in the case of a non-underwritten offering, in the written
opinion of the Company), the total amount of such securities to be so
registered, including such Registrable Stock, will exceed the maximum amount of
the Company's securities which can be marketed (i) at a price reasonably related
to the then current market value of such securities, or (ii) without otherwise
materially and adversely affecting the entire offering, then the Company shall
be entitled to reduce the number of shares of Registrable Stock to not less than
one-third of the total number of shares in such offering except in the case of
the initial firm commitment underwritten public offering of the Company, in
which case the managing underwriter may reduce the number of shares of
Registrable Stock to be included in such offering to zero. Any such reduction of
Registrable Stock shall be allocated among all such Stockholders in proportion
(as nearly as practicable) to the amount of Registrable Stock owned by each
Stockholder at the time of filing the registration statement.
SECTION 4.03. Obligations of the Company. Whenever required under
Section 4.01 to use its best efforts to effect the registration of any
Registrable Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to cause
such registration statement to become and remain effective for the period
of the distribution contemplated thereby determined as provided hereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the 1933 Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to the Stockholders such numbers of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto in
conformity with the requirements of the 1933 Act and such other documents
and information as they may reasonably request;
(d) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto
Rico as shall be reasonably appropriate for the distribution of the
Registrable Stock covered by the registration statement; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business in or to file a general
consent to service of process in any jurisdiction wherein it would not but
for the requirements of this paragraph (d) be obligated to do so; and
provided further that the Company shall not be required to qualify such
Registrable Stock in any jurisdiction in which the securities regulatory
authority requires that any Stockholder submit any shares of its
Registrable Stock to the terms, provisions and restrictions of any escrow,
lockup or similar agreement(s) for consent to sell Registrable Stock in
such jurisdiction unless such Stockholder agrees to do so;
(e) promptly notify each Stockholder with Registrable Stock covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening
of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and at the request
of any such Stockholder promptly prepare and furnish to such Stockholder a
reasonable number of copies of such supplement to or amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
(f) furnish, at the request of any Stockholder requesting
registration of Registrable Stock pursuant to Section 4.01, if the method
of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration, or if such Registrable Stock is not being
sold through underwriters, on the date that the registration statement
with respect to such shares of Registrable Stock becomes effective, (1) a
signed opinion, dated such date, of the independent legal counsel
representing the Company for the purpose of such registration, addressed
to the underwriters, if any, and if such Registrable Stock is not being
sold through underwriters, then to the Stockholders making such request,
as to such matters as such underwriters or the Stockholders holding a
majority of the Registrable Stock included in such registration, as the
case may be, may reasonably request and as would be customary in such a
transaction; and (2) letters dated such date and the date the offering is
priced from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable Stock is
not being sold through underwriters, then to the Stockholders making such
request and, if such accountants refuse to deliver such letters to such
Stockholders, then to the Company (i) stating that they are independent
certified public accountants within the meaning of the 1933 Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of
the 1933 Act and (ii) covering such other financial matters (including
information as to the period ending not more than five business days prior
to the date of such letters) with respect to the registration in respect
of which such letter is being given as such underwriters or the
Stockholders holding a majority of the Registrable Stock included in such
registration, as the case may be, may reasonably request and as would be
customary in such a transaction;
(g) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock
to be so included in the registration statement;
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such registration statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the 1933 Act; and
(i) use its best efforts to list the Registrable Stock covered by
such registration statement with the New York Stock Exchange.
For purposes of Sections 4.03(a) and 4.03(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 4.04. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Agreement
that the Stockholders shall furnish to the Company such information regarding
themselves, the Registrable Stock held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
SECTION 4.05. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Section 4.01 and Section 4.02 of
this Agreement, excluding underwriters' discounts and commissions, but including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state securities or blue sky laws, fees and
disbursements of counsel for the Company, and the fees and disbursements of one
counsel for the selling Stockholders (which counsel shall be selected by the
Stockholders holding a majority in interest of the Registrable Stock being
registered), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 4.01 of this Agreement is subsequently
withdrawn at the request of the Stockholders of a number of shares of
Registrable Stock such that the remaining Stockholders requesting registration
would not have been able to request registration under the provisions of Section
4.01 of this Agreement, such withdrawing Stockholders shall bear such expenses
unless such withdrawing Stockholders shall forfeit their right to one requested
registration pursuant to Section 4.01 of this Agreement. The Stockholders shall
bear and pay the underwriting commissions and discounts applicable to securities
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
SECTION 4.06. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 4.02 to
include shares of Registrable Stock in such underwritten offering unless the
Stockholders holding such shares of Registrable Stock accept the terms of the
underwriting of such offering that have been reasonably agreed upon between the
Company and the underwriters selected by the Company.
SECTION 4.07. Rule 144 Information. With a view to making available
the benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Stock to the public without registration
the Company agrees to:
(i) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
1934 Act; and
(ii) furnish to each Stockholder holding Registrable Stock forthwith
upon request a written statement by the Company as to its compliance with
the reporting requirements of the 1934 Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as such Stockholder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing such Stockholder to sell any Registrable Stock without
registration.
SECTION 4.08. Indemnification. In the event any Registrable Stock
is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Stockholder,
such Stockholder's directors and officers, each person who participates in
the offering of such Registrable Stock, including underwriters (as defined
in the 1933 Act), and each person, if any, who controls such Stockholder
or participating person within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities, joint or several, to which they
may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of any
material fact contained in such registration statement on the effective
date thereof (including any prospectus filed under Rule 424 under the 1933
Act or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each such Stockholder, such
Stockholder's directors and officers, such participating person or
controlling person for any legal or other expenses reasonably incurred by
them (but not in excess of expenses incurred in respect of one counsel for
all of them unless there is an actual conflict of interest between any
indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 4.08(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company;
provided, further, that the Company shall not be liable to any
Stockholder, such Stockholder's directors and officers, participating
person or controlling person in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Stockholder, such Stockholder's directors and officers, participating
person or controlling person. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any
such Stockholder, such Stockholder's directors and officers, participating
person or controlling person, and shall survive the transfer of such
securities by such Stockholder.
(b) Each Stockholder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless the Company,
each of its directors and officers, each person, if any, who controls the
Company within the meaning of the 1933 Act, and each agent and any
underwriter for the Company (within the meaning of the 1933 Act) against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person, agent or
underwriter may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration
statement on the effective date thereof (including any prospectus filed
under Rule 424 under the 1933 Act or any amendments or supplements
thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished by or on behalf of such Stockholder expressly for
use in connection with such registration; and each such Stockholder shall
reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, controlling person, agent or underwriter
(but not in excess of expenses incurred in respect of one counsel for all
of them unless there is an actual conflict of interest between any
indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 4.08(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such
Stockholder (which consent shall not be unreasonably withheld), and
provided further that the liability of each Stockholder hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the net proceeds from the
sale of the shares sold by such Stockholder under such registration
statement bears to the total net proceeds from the sale of all securities
sold thereunder, but not in any event to exceed the net proceeds received
by such Stockholder from the sale of Registrable Stock covered by such
registration statement.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have
the right to participate in and assume the defense thereof with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party; provided, however, that an indemnified party shall have
the right to retain its own counsel, with all fees and expenses thereof to
be paid by such indemnified party, and to be apprised of all progress in
any proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if and to the extent prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section, but the
omission so to notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.08(d) were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
SECTION 4.09. Lock-up. Each Stockholder shall, in connection with
any registration of the Company's securities, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than that included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from the effective date of such registration as the
Company or the underwriters may specify; provided, however, that all executive
officers and directors of the Company shall also have agreed not to effect any
sale, disposition or distribution of any Registrable Stock under the
circumstances and pursuant to the terms set forth in this Section 4.09.
SECTION 4.10. Transfer of Registration Rights. The registration
rights of any Stockholder under this Agreement with respect to any Registrable
Stock may be transferred to (a) any transferee of such Registrable Stock who
acquires at least 20% of such Stockholder's shares of Registrable Stock
(adjusted for stock splits and stock consolidations after the effective date of
this Agreement) or (b) an Affiliate of such Stockholder; provided, however, that
(i) the transferring Stockholder shall give the Company written notice at or
prior to the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; (ii) such transferee shall agree in
writing, in form and substance reasonably satisfactory to the Company, to be
bound as a Stockholder by the provisions of this Agreement; and (iii)
immediately following such transfer the further disposition of such securities
by such transferee is restricted under the 1933 Act. Except as set forth in this
Section 4.10, no transfer of Registrable Stock shall cause such Registrable
Stock to lose such status.
ARTICLE V. COVENANTS OF THE COMPANY
The Company covenants and agrees with the Stockholders that so long
as any of the 8% Preferred Stock is outstanding:
Section 5.01. Financial Statements, Reports, Etc.Financial
Statements, Reports, Etc. So long as the Lead Purchaser owns shares of 8%
Preferred Stock, the Company shall furnish to the Lead Purchaser, within 30 days
after the Company files with the Commission, copies of its annual reports and
other information, documents and reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that it
is required to file with the Commission pursuant to Section 13 or 14 of the 1934
Act.
Section 5.02. Reserve for Conversion SharesReserve for Conversion
Shares. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion of the shares of 8% Preferred Stock, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the shares of 8% Preferred Stock from time to time outstanding. If
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of the shares of 8% Preferred Stock,
the Company shall forthwith take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose. The Company shall obtain any
authorization, consent, approval or other action by or make any filing with any
court or administrative body that may be required under applicable state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the shares of 8% Preferred Stock.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Termination. The portions of this Agreement that shall
be deemed to constitute a voting agreement or a voting trust pursuant to Section
78.365 of the Revised Statutes of the State of Nevada (or pursuant to any
similar provision) shall terminate on the fifteenth anniversary of the execution
and delivery hereof.
SECTION 6.02. Representations. Each of the parties hereto represents
that this Agreement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 6.03. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 6.04. Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any such term may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of (a) the Company and (b) Stockholders holding shares of 8%
Preferred Stock representing 80% of the then outstanding shares of 8% Preferred
Stock held by all the Stockholders. Each Stockholder shall be bound by any
amendment or waiver authorized by this Section 6.04, whether or not such
Stockholder shall have consented thereto.
SECTION 6.05. Benefit; Successors and Assigns. Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns; provided, however, that this Agreement shall not inure to the benefit
of any Prospective Transferee unless such Prospective Transferee shall have
complied with the terms of Section 3.03. No Stockholder may assign any of its
rights hereunder to any Person other than a transferee that has complied with
the requirements of Section 3.03 in all respects. Nothing in this Agreement
either express or implied is intended to confer on any person other than the
parties hereto and their respective successors and permitted assigns, any
rights, remedies or obligations under or by reason of this Agreement.
SECTION 6.06. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 6.07. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 6.08. Titles. The titles of the Sections of this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
SECTION 6.09. Notices. Any notice required or permitted under this
Agreement shall be in writing and shall be delivered in person or mailed by
certified or registered mail, return receipt requested, or transmitted by
telecopier, directed to (a) the Company at the address set forth below its
signature hereof or (b) to a Stockholder at the address therefor as set forth in
the Company's records or at the address set forth below its signature hereof or,
in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. The giving of any notice
required hereunder may be waived in writing by the parties hereto. Every notice
or other communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, or on the date actually
received, if sent by mail or telecopier, with receipt acknowledged.
<PAGE>
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SECTION 6.10. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
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SECTION 6.11. Entire Agreement. All prior agreements of the parties
concerning the subject matter of this Agreement are expressly superseded by this
Agreement. This Agreement contains the entire Agreement of the parties
concerning the subject matter hereof. Any oral representations or modifications
of this Agreement shall be of no effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CORNERSTONE PROPERTIES INC.
By:
Name:
Title:
Address For Notices:
126 East 56th Street
New York, NY 10022
Attention:
Telecopier: (212) 605-7199
NEW YORK STATE TEACHERS'
RETIREMENT SYSTEM
By:
Name:
Title:
Address For Notices:
10 Corporate Woods Drive
Albany, New York 12211-2395
Attention: Wayne Schneider
Telecopier: (518) 447-2679
EXHIBIT 20.2
STOCKHOLDERS' AGREEMENT, dated as of November 7, 1996, by and
between CORNERSTONE PROPERTIES INC., a Nevada corporation (the "Company"), and
HEXALON REAL ESTATE, INC., a Delaware corporation (the "Initial Stockholder" and
individually a "Stockholder" and together with any other purchaser(s) of 8%
Preferred Stock Series A which may become party hereto from time to time, the
"Stockholders").
R E C I T A L S
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
November 7, 1996 (the "Merger Agreement"), between the Company,
CStone-Pittsburgh Trust, a Maryland business trust and a wholly owned subsidiary
of the Company (the "Sub"), Frick Building, Inc., a Delaware corporation
("Frick"), and the Initial Stockholder, Frick has merged with and into the Sub,
with the Sub as the surviving corporation (the "Merger");
WHEREAS, after giving effect to the Merger the Initial Stockholder
will be the holder of 458,621 shares (the "Series A Preferred Shares") of the
Company's 8% Cumulative Convertible Preferred Stock Series A, without par value
(the "8% Preferred Stock Series A");
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions and References. For purposes of this
Agreement, in addition to the definitions set forth above and elsewhere herein,
the following terms shall have the following respective meanings:
"Affiliate", with respect to any Person, means any other Person
directly or indirectly controlling, controlled by or under common control
with, such Person. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" or
"under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Closing Date" means November 7, 1996.
"Commission" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.
"Common Stock" shall mean the common stock of the Company, without
par value.
"Conversion Stock" means the Common Stock or other securities issued
on conversion of the 8% Preferred Stock Series A.
"8% Preferred Stock" means the 8% Cumulative Convertible Preferred
Stock of the Company, without par value.
"Encumbrance" means any lien, security interest, pledge, claim, or
option, right of first refusal, marital right or other encumbrance with
respect to any Series A Preferred Share or share of Conversion Stock.
"Minimum Amount" means, at any time, the sum of (i) $75 million plus
(ii) the product of .5618 multiplied by the stated value of all shares of
8% Preferred Stock issued by the Company prior to such time and after
November 1, 1996.
"1933 Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and, unless the context indicates otherwise, the
rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"1934 Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and, unless the context indicates otherwise,
the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a trust, an individual retirement account or
any other entity or organization, including a government or any department
or agency thereof.
"Public Offering" means an underwritten public offering of Common
Stock pursuant to an effective registration statement under the 1933 Act
and listed on the New York Stock Exchange.
"Qualified Public Offering" means a Public Offering prior to January
1, 2000 in which (i) the aggregate net proceeds to the Company (after
payment of all fees and expenses of the offering) together with the net
proceeds of any prior Public Offerings equal or exceed the Minimum Amount
and (ii) (a) if the Public Offering is completed in the calendar year
1997, the initial public offering price is at least $16.00 per share, (b)
if the Public Offering is completed in the calendar year 1998, the initial
public offering price is at least $16.50 per share, or (c) if the Public
Offering is completed in the calendar year 1999, the initial public
offering price is at least $17.00 per share; provided, however, that a
Qualified Public Offering shall be deemed to occur on the first business
day which follows any period of 20 trading days after a Public Offering
and prior to January 1, 2000, in which the average of the closing prices
for shares of the Common Stock as reported on the New York Stock Exchange
composite tape equals or exceeds the applicable minimum price for a Public
Offering to be considered a Qualified Public Offering at such time.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act and the declaration or
ordering of effectiveness of such registration statement or document.
"Registrable Stock" shall mean (i) the Conversion Stock, (ii) any
common stock issued as (or issuable upon the conversion or exercise of any
warrant, right, option or other convertible security which is issued as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Conversion Stock, and (iii) any common stock issued by
way of a stock split of the Conversion Stock referred to in clause (i) or
(ii) above. For purposes of this Agreement, any Registrable Stock shall
cease to be Registrable Stock when (x) a registration statement covering
such Registrable Stock has been declared effective and such Registrable
Stock has been disposed of pursuant to such effective registration
statement, (y) such Registrable Stock is sold by a Person in a transaction
in which the rights under the provisions of this Agreement are not
assigned or (z) such Registrable Stock may be sold pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act without registration under the 1933 Act.
"Restricted Stock" means all shares of 8% Preferred Stock Series A
and Conversion Stock other than (a) shares that have been registered under
a registration statement pursuant to the 1933 Act, (b) shares with respect
to which a Sale has been made in reliance on and in accordance with Rule
144 or (c) shares with respect to which the holder thereof shall have
delivered to the Company either (i) an opinion, in form and substance
satisfactory to the Company, of counsel, who shall be satisfactory to the
Company, or (ii) a "no action" letter from the Commission, to the effect
that subsequent transfers of such shares may be effected without
registration under the 1933 Act.
"Rule 144" means Rule 144 (or any successor provision) under the
1933 Act.
"Rule 144 Transaction" means any Sale of 8% Preferred Stock Series A
or Conversion Shares made in reliance on Rule 144 (as in effect on the
date hereof) which complies with paragraphs (d), (e), (f) and (g) thereof
(as in effect on the date hereof), regardless of whether at the time of
such sale the seller is entitled to rely upon paragraph (k) of Rule 144 in
connection with the Sale of such shares.
"Rule 144A" means Rule 144A (or any successor provision) under the
1933 Act.
"Sale" means any sale, assignment, transfer, distribution (whether
by a partnership to any of its partners or otherwise) or other disposition
of 8% Preferred Stock Series A or Conversion Stock or of a participation
therein.
"Stockholder" means each Person (other than the Company) that shall
be a party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 4.11 or
otherwise, so long as such Person shall beneficially own any shares of the
8% Preferred Stock Series A.
ARTICLE II
CERTAIN AGREEMENTS
SECTION 2.01. Board of Directors. Prior to the completion of a
Public Offering in which the aggregate net proceeds to the Company (after
payment of all fees and expenses of the offering) equal or exceed $75,000,000,
if requested by the holders of a majority of the stated value of all shares of
8% Preferred Stock Series A outstanding at such time, the Company shall
recommend the election of one director chosen by such holders to the holders of
Common Stock.
SECTION 2.02. Limitation on Issuance of 8% Preferred Stock Series A.
So long as any 8% Preferred Stock Series A is outstanding, the aggregate stated
value of all shares of 8% Preferred Stock issued by the Company shall not exceed
$150,000,000.
SECTION 2.03. Notice of Public Offering. So long as any 8% Preferred
Stock Series A is outstanding, the Company shall endeavor to notify the
Stockholders no less than 30 days or more than 60 days prior to the completion
of any contemplated Public Offering. Within 15 days thereafter, each Stockholder
shall inform the Company whether they intend to convert the 8% Preferred Stock
Series A to Common Stock prior to the completion of the Public Offering.
ARTICLE III
RESTRICTIONS ON TRANSFER
SECTION 3.01. General Restrictions. No Stockholder shall, directly
or indirectly, make or solicit any Sale of, or create, incur, solicit or assume
any Encumbrance with respect to, any share of 8% Preferred Stock Series A or
Conversion Stock, except in compliance with the 1933 Act and this Agreement.
SECTION 3.02. Legends. (a) Each certificate representing shares of
8% Preferred Stock Series A or Conversion Stock shall, except as otherwise
provided in this Section 3.02 or in Section 3.03, be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT
DOES NOT APPLY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS' AGREEMENT,
DATED AS OF NOVEMBER 7, 1996, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF
TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER
UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
(b) In the event that any shares of 8% Preferred Stock Series A or
Conversion Stock shall cease to be Restricted Stock, the Company shall, upon the
written request of the holder thereof, issue to such holder a new certificate
evidencing such shares without the first paragraph of the legend required by
Section 3.02(a) endorsed thereon. In the event that any shares of 8% Preferred
Stock Series A or Conversion Stock shall cease to be subject to the restrictions
on transfer set forth in this Agreement, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such shares of 8% Preferred Stock Series A or Conversion Stock without the
second paragraph of the legend required by Section 3.02(a).
SECTION 3.03. Notice of Proposed Transfer. Each Stockholder agrees
that it will not, directly or indirectly, make or solicit any Sale of, or
create, incur or assume any Encumbrance with respect to, any share of 8%
Preferred Stock Series A or Conversion Stock held by such Stockholder unless,
prior to any such action, the holder thereof shall give written notice to the
Company of its intention. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Company, shall be accompanied by an
opinion of counsel satisfactory to the Company to the effect that the proposed
transfer may be effected without registration under the 1933 Act, whereupon the
holder of such stock shall be entitled to transfer such stock in accordance with
the terms of its notice; provided, however, that no such opinion of counsel
shall be required for a transfer to one or more partners of the transferor (in
the case of a transferor that is a partnership) or to an Affiliated corporation
(in the case of a transferor that is a corporation). Each certificate for 8%
Preferred Stock Series A or Conversion Stock transferred as above provided shall
bear the legend set forth in Section 3.02, except that such certificate shall
not bear the first paragraph of such legend if (i) such transfer is in
accordance with the provisions of Rule 144 or Rule 144A (or any other rule
permitting public sale without registration under the 1933 Act) or (ii) the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an Affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the 1933 Act. The restrictions provided for in this Section
3.03 shall not apply to securities which are not required to bear the first
paragraph of the legend prescribed by Section 3.02(a) in accordance with the
provisions of that Section.
SECTION 3.04. Certain Persons to Execute Agreement. (a) Each
Stockholder agrees that it will not directly or indirectly make any Sale of, or
create, incur or assume any Encumbrance with respect to, any shares of 8%
Preferred Stock Series A or Conversion Stock held by such Stockholder, unless,
prior to the consummation of any such Sale or the creation, incurrence or
assumption of any such Encumbrance, the Person to whom such Sale is proposed to
be made or the Person in whose favor such Encumbrance is proposed to be created,
incurred or assumed (for purposes of this Section 3.04, a "Prospective
Transferee") (i) executes and delivers to the Company an agreement, in form and
substance satisfactory to the Company, whereby such Prospective Transferee
confirms that, with respect to the shares of 8% Preferred Stock Series A or
Conversion Stock that are the subject of such Sale or Encumbrance, it shall be
deemed to be a "Stockholder" for the purposes of this Agreement and agrees to be
bound by all the terms of this Agreement and (ii) unless such Prospective
Transferee is a recognized institutional investor, delivers to the Company an
opinion of counsel, satisfactory in form and substance to the Company, to the
effect that the agreement referred to above that is delivered by such
Prospective Transferee is a legal, valid and binding obligation of such
Prospective Transferee enforceable against such Prospective Transferee in
accordance with its terms. Upon the execution and delivery by such Prospective
Transferee of the agreement referred to in clause (i) of the next preceding
sentence and, if required, the delivery of the opinion of counsel referred to in
clause (ii) of the next preceding sentence, such Prospective Transferee shall be
deemed a "Stockholder" for the purposes of this Agreement, and shall have the
rights and be subject to the obligations of a Stockholder hereunder with respect
to the shares held by such Prospective Transferee or in respect of which such
Encumbrance shall have been created, incurred or assumed.
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(b) Anything in this Section 3.04 or in Section 3.03 to the contrary
notwithstanding, the provisions of this Section 3.04 will not be applicable to
(i) any Sale of shares of 8% Preferred Stock Series A or Conversion Stock
pursuant to a Public Offering or (ii) any Sale of shares of 8% Preferred Stock
Series A or Conversion Stock in a Rule 144 Transaction which is consummated
after the date of a Public Offering.
SECTION 3.05. Certain Information. The Company shall file all
reports and other information required to be filed by Section 13 or 15(d) under
the 1934 Act, as the case may be, as shall be necessary in order that the
conditions to the availability of Rule 144 in connection with any Sale of shares
of Common Stock by a Stockholder shall be met.
SECTION 3.06. Improper Sale or Encumbrance. Any attempt to make any
Sale of, or create, incur or assume any Encumbrance with respect to, any share
of 8% Preferred Stock Series A or Conversion Stock not in compliance with this
Agreement shall be null and void and the Company shall not give any effect in
the Company's stock records to such attempted Sale or Encumbrance.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.01. Request for Registration. (a) On and after the earlier
of (i) the date which is six months after the date the registration statement
filed by the Company covering a Public Offering shall have become effective, and
(ii) December 31, 2000 if a Qualified Public Offering shall not have been
completed on or prior to such date, the Stockholders of all of the Registrable
Stock issued or issuable upon conversion of the 8% Preferred Stock Series A (the
"Initiating Holders") may request in a written notice that the Company file a
registration statement under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 1933 Act) covering the
registration of any or all Registrable Stock held by such Initiating Holders in
the manner specified in such notice, provided that there must be included in
such registration at least 100% of the Registrable Stock issued or issuable upon
conversion of the 8% Preferred Stock Series A (or any lesser percentage if the
anticipated aggregate offering proceeds from the Registrable Stock and other
shares to be offered under such registration statement would exceed $75
million). Following receipt of any notice under this Section 4.01(a) the Company
shall (x) within 20 days notify all other Stockholders of such request in
writing and (y) use its best efforts to cause to be registered under the 1933
Act all Registrable Stock that the Initiating Holders and such other
Stockholders have, within ten days after the Company has given such notice,
requested be registered in accordance with the manner of disposition specified
in such notice by the Initiating Holders.
(b) If the Initiating Holders intend to have the Registrable Stock
distributed by means of an underwritten offering, the Company shall include such
information in the written notice referred to in clause (x) of Section 4.01(a)
above. In such event, the right of any Stockholder to include its Registrable
Stock in such registration shall be conditioned upon such Stockholder's
participation in such underwritten offering and the inclusion of such
Stockholder's Registrable Stock in the underwritten offering (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Stockholder) to the extent provided below. All Stockholders proposing to
distribute Registrable Stock through such underwritten offering shall enter into
an underwriting agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be selected by a majority
in interest of the Initiating Holders and shall be approved by the Company,
which approval shall not be unreasonably withheld. If any Stockholder of
Registrable Stock disapproves of the terms of the underwriting, such Stockholder
may elect to withdraw all its Registrable Stock by written notice to the
Company, the managing underwriter and the Initiating Holders. The securities so
withdrawn shall also be withdrawn from registration.
(c) Notwithstanding any provision of this Agreement to the
contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 4.01 during the period starting with the date of
filing by the Company of, and ending on a date 120 days following the
effective date of, a registration statement pertaining to a public
offering of securities for the account of the Company or on behalf of the
selling stockholders under any other registration rights agreement which
the Stockholders have been entitled to join pursuant to Section 4.02;
provided that the Company shall actively employ in good faith all
reasonable efforts to cause such registration statement to become
effective as soon as possible; and
(ii) if the Company shall furnish to such Stockholders a certificate
signed by the President of the Company stating that in the good faith
opinion of the board of directors of the Company such registration would
interfere with any material transaction then being pursued by the Company,
then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 120
days.
(d) The Company shall not be obligated to effect and pay for more
than one registration pursuant to this Section 4.01 prior to the completion of a
Public Offering and more than three registrations pursuant to this Section 4.01
after the completion of a Public Offering; provided that a registration
requested pursuant to this Section 4.01 shall not be deemed to have been
effected for purposes of this Section 4.01(d) unless (i) it has been declared
effective by the Commission, (ii) it has remained effective for the period set
forth in Section 4.03(a), (iii) Stockholders of Registrable Stock included in
such registration have not withdrawn sufficient shares from such registration
such that the remaining holders requesting registration would not have been able
to request registration under the provisions of Section 4 and (iv) the offering
of Registrable Stock pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the Commission (other than
any such stop order, injunction, or other requirement of the Commission prompted
by any act or omission of Stockholders of Registrable Stock).
SECTION 4.02. Incidental Registration. Subject to Section 4.06, if
at any time the Company determines that it shall file a registration statement
under the 1933 Act (other than a registration statement on Form S-4 or S-8 or
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its common stock to be sold for cash, the Company shall each
such time promptly give each Stockholder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 60 days from the date of such
notice, and advising each Stockholder of its right to have Registrable Stock
included in such registration. Upon the written request of any Stockholder
received by the Company no later than 30 days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Stockholder has so
requested to be registered. If, in the written opinion of the managing
underwriter (or, in the case of a non-underwritten offering, in the written
opinion of the Company), the total amount of such securities to be so
registered, including such Registrable Stock, will exceed the maximum amount of
the Company's securities which can be marketed (i) at a price reasonably related
to the then current market value of such securities, or (ii) without otherwise
materially and adversely affecting the entire offering, then the Company shall
be entitled to reduce the number of shares of Registrable Stock to not less than
one-third of the total number of shares in such offering except in the case of
the initial firm commitment underwritten public offering of the Company, in
which case the managing underwriter may reduce the number of shares of
Registrable Stock to be included in such offering to zero. Such reduction shall
be allocated among all such Stockholders in proportion (as nearly as
practicable) to the amount of Registrable Stock owned by each Stockholder at the
time of filing the registration statement.
SECTION 4.03. Obligations of the Company. Whenever required under
Section 4.01 to use its best efforts to effect the registration of any
Registrable Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to cause
such registration statement to become and remain effective for the period
of the distribution contemplated thereby determined as provided hereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the 1933 Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to the Stockholders such numbers of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto in
conformity with the requirements of the 1933 Act and such other documents
and information as they may reasonably request);
(d) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto
Rico as shall be reasonably appropriate for the distribution of the
Registrable Stock covered by the registration statement; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business in or to file a general
consent to service of process in any jurisdiction wherein it would not but
for the requirements of this paragraph (d) be obligated to do so; and
provided further that the Company shall not be required to qualify such
Registrable Stock in any jurisdiction in which the securities regulatory
authority requires that any Stockholder submit any shares of its
Registrable Stock to the terms, provisions and restrictions of any escrow,
lockup or similar agreement(s) for consent to sell Registrable Stock in
such jurisdiction unless such Stockholder agrees to do so;
(e) promptly notify each Stockholder with Registrable Stock covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening
of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and at the request
of any such Stockholder promptly prepare and furnish to such Stockholder a
reasonable number of copies of such supplement to or amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
(f) furnish, at the request of any Stockholder requesting
registration of Registrable Stock pursuant to Section 4.01, if the method
of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration, or if such Registrable Stock is not being
sold through underwriters, on the date that the registration statement
with respect to such shares of Registrable Stock becomes effective, (1) a
signed opinion, dated such date, of the independent legal counsel
representing the Company for the purpose of such registration, addressed
to the underwriters, if any, and if such Registrable Stock is not being
sold through underwriters, then to the Stockholders making such request,
as to such matters as such underwriters or the Stockholders holding a
majority of the Registrable Stock included in such registration, as the
case may be, may reasonably request and as would be customary in such a
transaction; and (2) letters dated such date and the date the offering is
priced from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable Stock is
not being sold through underwriters, then to the Stockholders making such
request and, if such accountants refuse to deliver such letters to such
Stockholders, then to the Company (i) stating that they are independent
certified public accountants within the meaning of the 1933 Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of
the 1933 Act and (ii) covering such other financial matters (including
information as to the period ending not more than five business days prior
to the date of such letters) with respect to the registration in respect
of which such letter is being given as such underwriters or the
Stockholders holding a majority of the Registrable Stock included in such
registration, as the case may be, may reasonably request and as would be
customary in such a transaction;
(g) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock
to be so included in the registration statement;
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such registration statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the 1933 Act; and
(i) use its best efforts to list the Registrable Stock covered by
such registration statement with the New York Stock Exchange.
For purposes of Sections 4.03(a) and 4.03(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 4.04. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Agreement
that the Stockholders shall furnish to the Company such information regarding
themselves, the Registrable Stock held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
SECTION 4.05. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Section 4.01 and Section 4.02 of
this Agreement, excluding underwriters' discounts and commissions, but including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state securities or blue sky laws, fees and
disbursements of counsel for the Company, and the fees and disbursements of one
counsel for the selling Stockholders (which counsel shall be selected by the
Stockholders holding a majority in interest of the Registrable Stock being
registered), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 4.01 of this Agreement is subsequently
withdrawn at the request of the Stockholders of a number of shares of
Registrable Stock such that the remaining Stockholders requesting registration
would not have been able to request registration under the provisions of Section
4.01 of this Agreement, such withdrawing Stockholders shall bear such expenses
unless such withdrawing Stockholders shall forfeit their right to one requested
registration pursuant to Section 4.01 of this Agreement. The Stockholders shall
bear and pay the underwriting commissions and discounts applicable to securities
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
SECTION 4.06. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 4.02 to
include shares of Registrable Stock in such underwritten offering unless the
Stockholders holding such shares of Registrable Stock accept the terms of the
underwriting of such offering that have been reasonably agreed upon between the
Company and the underwriters selected by the Company.
SECTION 4.07. Rule 144 Information. With a view to making available
the benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Stock to the public without registration
the Company agrees to:
(i) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
1934 Act; and
(ii) furnish to each Stockholder holding Registrable Stock forthwith
upon request a written statement by the Company as to its compliance with
the reporting requirements of the 1934 Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as such Stockholder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing such Stockholder to sell any Registrable Stock without
registration.
SECTION 4.08. Indemnification. In the event any Registrable Stock
is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Stockholder,
such Stockholder's directors and officers, each person who participates in
the offering of such Registrable Stock, including underwriters (as defined
in the 1933 Act), and each person, if any, who controls such Stockholder
or participating person within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities, joint or several, to which they
may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of any
material fact contained in such registration statement on the effective
date thereof (including any prospectus filed under Rule 424 under the 1933
Act or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each such Stockholder, such
Stockholder's directors and officers, such participating person or
controlling person for any legal or other expenses reasonably incurred by
them (but not in excess of expenses incurred in respect of one counsel for
all of them unless there is an actual conflict of interest between any
indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 4.08(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company;
provided further that the Company shall not be liable to any Stockholder,
such Stockholder's directors and officers, participating person or
controlling person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement, preliminary
prospectus, final prospectus or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Stockholder, such Stockholder's directors and officers, participating
person or controlling person. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any
such Stockholder, such Stockholder's directors and officers, participating
person or controlling person, and shall survive the transfer of such
securities by such Stockholder.
(b) Each Stockholder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless the Company,
each of its directors and officers, each person, if any, who controls the
Company within the meaning of the 1933 Act, and each agent and any
underwriter for the Company (within the meaning of the 1933 Act) against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person, agent or
underwriter may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration
statement on the effective date thereof (including any prospectus filed
under Rule 424 under the 1933 Act or any amendments or supplements
thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished by or on behalf of such Stockholder expressly for
use in connection with such registration; and each such Stockholder shall
reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, controlling person, agent or underwriter
(but not in excess of expenses incurred in respect of one counsel for all
of them unless there is an actual conflict of interest between any
indemnified parties, which indemnified parties may be represented by
separate counsel) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 4.08(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such
Stockholder (which consent shall not be unreasonably withheld), and
provided further that the liability of each Stockholder hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the net proceeds from the
sale of the shares sold by such Stockholder under such registration
statement bears to the total net proceeds from the sale of all securities
sold thereunder, but not in any event to exceed the net proceeds received
by such Stockholder from the sale of Registrable Stock covered by such
registration statement.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have
the right to participate in and assume the defense thereof with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party; provided, however, that an indemnified party shall have
the right to retain its own counsel, with all fees and expenses thereof to
be paid by such indemnified party, and to be apprised of all progress in
any proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if and to the extent prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section, but the
omission so to notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.08(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
SECTION 4.09. Limitation on Registration Rights. Notwithstanding any
other provisions of this Agreement to the contrary, the Company shall not be
required to register any Registrable Stock under this Agreement with respect to
any request or requests made by any Stockholder after December 31, 2005.
SECTION 4.10. Lock-up. Each Stockholder shall, in connection with
any registration of the Company's securities, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than that included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from the effective date of such registration as the
Company or the underwriters may specify; provided, however, that all executive
officers and directors of the Company shall also have agreed not to effect any
sale, disposition or distribution of any Registrable Stock under the
circumstances and pursuant to the terms set forth in this Section 4.10.
SECTION 4.11. Transfer of Registration Rights. The registration
rights of any Stockholder under this Agreement with respect to any Registrable
Stock may be transferred to (a) any transferee of such Registrable Stock who
acquires at least 50% of such Stockholder's shares of Registrable Stock
(adjusted for stock splits and stock consolidations after the effective date of
this Agreement) or (b) an Affiliate of such Stockholder; provided, however, that
(i) the transferring Stockholder shall give the Company written notice at or
prior to the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which the rights under
this Agreement are being transferred; (ii) such transferee shall agree in
writing, in form and substance reasonably satisfactory to the Company, to be
bound as a Stockholder by the provisions of this Agreement; and (iii)
immediately following such transfer the further disposition of such securities
by such transferee is restricted under the 1933 Act. Except as set forth in this
Section 4.11, no transfer of Registrable Stock shall cause such Registrable
Stock to lose such status.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Termination. This Agreement shall terminate on the
tenth anniversary of the execution and delivery hereof.
SECTION 5.02. Representations. Each of the parties hereto represents
that this Agreement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 5.03. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 5.04. Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any such term may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of (a) the Company and (b) Stockholders holding shares of 8%
Preferred Stock Series A representing 80% of the then outstanding shares of 8%
Preferred Stock Series A held by all the Stockholders. Each Stockholder shall be
bound by any amendment or waiver authorized by this Section 5.04, whether or not
such Stockholder shall have consented thereto.
SECTION 5.05. Benefit; Successors and Assigns. Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns; provided, however, that this Agreement shall not inure to the benefit
of any Prospective Transferee unless such Prospective Transferee shall have
complied with the terms of Section 3.04. No Stockholder may assign any of its
rights hereunder to any Person other than a transferee that has complied with
the requirements of Section 3.04 in all respects. Nothing in this Agreement
either express or implied is intended to confer on any person other than the
parties hereto and their respective successors and permitted assigns, any
rights, remedies or obligations under or by reason of this Agreement.
SECTION 5.06. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 5.07. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 5.08. Titles. The titles of the Sections of this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
SECTION 5.09. Notices. Any notice required or permitted under this
Agreement shall be in writing and shall be delivered in person or mailed by
certified or registered mail, return receipt requested, or transmitted by
telecopier, directed to (a) the Company at the address set forth below its
signature hereof or (b) to a Stockholder at the address therefor as set forth in
the Company's records or at the address set forth below its signature hereof or,
in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. The giving of any notice
required hereunder may be waived in writing by the parties hereto. Every notice
or other communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, or on the date actually
received, if sent by mail or telecopier, with receipt acknowledged.
<PAGE>
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SECTION 5.10. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
================================================================================
SECTION 5.11. Entire Agreement. All prior agreements of the parties
concerning the subject matter of this Agreement are expressly superseded by this
Agreement. This Agreement contains the entire Agreement of the parties
concerning the subject matter hereof. Any oral representations or modifications
of this Agreement shall be of no effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CORNERSTONE PROPERTIES INC.
By:
Name:
Title:
Address For Notices:
126 East 56th Street
New York, NY 10022
Attention:
Telecopier: (212) 605-7199
HEXALON REAL ESTATE, INC.
By:
Name:
Title:
Address For Notices:
950 East Paces Ferry Road,
Suite 2275
Atlanta, GA 30326-1119
Attention:
Telecopier: (404) 239-6096
CORNERSTONE PROPERTIES AND NEW YORK STATE TEACHERS ANNOUNCE STRATEGIC
INVESTMENT
NEW YORK, NEW YORK November 22, 1996 -- Cornerstone Properties Inc.
("Cornerstone") and The New York State Teachers' Retirement System ("NYSTRS")
announced today that NYSTRS has made in investment of $100 million in
Cornerstone, a leading U.S. office REIT. The investment consisted of a cash
purchase of convertible preferred stock of Cornerstone. NYSTRS was advised
by Equitable Real Estate Investment Management Inc. and Cornerstone was
advised by Lazard Freres & Co. LLC.
G. Abbott Davis, who is in charge of NYSTRS' $3.75 billion mortgage and real
estate investment program, said, "We believe investing in real estate operating
companies will be an important part of pension fund portfolios and we are very
pleased to be playing a key role in the growth of Cornerstone."
John S. Moody, Cornerstone's President and CEO, said, "We are very excited by
this strong expression of support from NYSTRS as we seek to expand Cornerstone's
position as one of the country's major owners of premier office buildings."
Cornerstone has recently purchased high quality office buildings in Boston, New
York, Chicago and Pittsburgh and will use the NYSTRS investment to make
additional acquisitions. The Cornerstone portfolio presently comprises seven
buildings totaling 4.7 million square feet with 97% occupancy.
