UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _______)
Cornerstone Properties, Inc.
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(Name of Issuer)
Common Stock, No Par Value
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(Title of Class of Securities)
-------------------
(CUSIP Number)
Robert F. Dow, 2800 One Atlantic Center,
1201 West Peachtree Street, Atlanta, Georgia 30309-3450
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
11/7/96
-------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
382661.1
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Page 2 of 5
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1 Name of Reporting Person S.S. or I.R.S. Identification
No. of Above Person
Hexalon Real Estate, Inc.
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2 Check the Appropriate Box if a Member of a Group (a)[ ]
(b)[ ]
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3 SEC Use Only
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4 Source of Funds
00
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5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E) [ ]
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6 Citizenship or Place of Organization
United States
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7 Sole Voting Power
4,586,210*
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8 Shared Voting Power
0
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9 Sole Dispositive Power
4,586,210*
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10 Shared Dispositive Power
0
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,586,210*
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12 Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
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13 Percent of Class Represented by Amount in Row (11)
18.2 percent
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14 Type of Reporting Person
CO
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SEE INSTRUCTIONS BEFORE FILLING OUT
* Includes shares of Common Stock issuable upon conversion of the shares
of 8% Cumulative Convertible Preferred Stock, Series A held by the
reporting person.
382661.1
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Page 3 of 5
Item 1. SECURITY AND ISSUER
This statement relates to the Common Stock, no par value, of
Cornerstone Properties, Inc., a Nevada corporation (the "Company"). The
principal executive office of the Company is located at:
126 East 56th Street
New York, NY 10022
Item 2. IDENTITY AND BACKGROUND
1. (a) Hexalon Real Estate, Inc., a Delaware corporation ("HRE"), is a
person filing this statement.
(b) 950 East Paces Ferry Road, Suite 2275, Atlanta, Georgia
30326-1119.
(c) Real estate investment trust.
(d) None.
(e) None.
(f) United States.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On November 7, 1996, HRE acquired 458,621 shares (the "Shares") of the
Company's 8% Cumulative Convertible Preferred Stock, Series A, in exchange for
HRE's common stock of Frick Building, Inc. a Delaware corporation ("Frick"),
which was merged with and into CStone-Pittsburgh Trust, a Maryland business
trust and wholly-owned subsidiary of the Company (the "Sub"), pursuant to the
terms of that certain Agreement and Plan of Merger ("Merger Agreement") dated
November 7, 1996, among the Company, the Sub, Frick, and HRE, a copy of which is
filed herewith as Exhibit 99.1.
Item 4. PURPOSE OF TRANSACTION
The reporting person currently intends to hold the shares for
investment.
(a) None.
(b) See Item 3.
(c) None.
(d) Pursuant to the terms of that certain Stockholders Agreement
("Stockholder Agreement") dated as of November 7, 1996, among the
Company and HRE, a copy of which is filed herewith as Exhibit
99.2, HRE may designate a director nominee, and the Company shall
recommend the election of such nominee to the holders of the
Company's common stock. HRE has designated Cecil Conlee as its
director nominee.
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Page 4 of 5
(e)-(j) None.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) See Items 7-13 of the cover page.
(c) See Item 3. No other transactions in the Company's Preferred
Stock have been effected by the person named in Item 2 above
within the last sixty days.
(d) None.
(e) Not Applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
See Item 4(d). The Stockholders Agreement includes, among other things,
(i) a restriction on the transfer of the Shares without prior written notice to
the Company; (ii) demand and piggyback registration rights for the holders of
the Shares; (iii) a requirement that the holders of the Shares execute a lock-up
agreement in the event of an underwritten public offering. The Certificate of
Designations of the Preferred Stock, a copy of which is filed herewith as
Exhibit 99.3, includes (i) a right by HRE to convert each Share into ten shares
of the Company's common stock, with such conversion ratio subject to adjustment
for dividends paid on the common stock, stock splits, reclassifications, or the
issuance of additional common shares or warrants and (ii) a put right by HRE to
cause the Company to redeem the Shares, at stated value plus any accrued but
unpaid dividends, at any time after January 1, 2001, but only if the Company has
not completed a public offering with net proceeds to the Company of at least $75
million.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
99.1 Agreement and Plan of Merger dated November 7, 1996
99.2 Stockholders Agreement dated November 7, 1996.
99.3 Certificate of 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.
382661.1
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Page 5 of 5
Signature.
After reasonable inquiry each of the undersigned certifies that to the
best of his knowledge and belief the information set forth in this statement is
true, complete and correct.
HEXALON REAL ESTATE, INC.
By:James W. Smith
James W. Smith, its Vice President
382661.1
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. Definitions. 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.
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"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
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(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
384488.1
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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.
384488.1
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"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,
384488.1
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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 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; 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").
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Section 2.03. Effect 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; 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 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 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 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.
384488.1
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ARTICLE III. CERTAIN MATTERS PERTAINING TO
REAL ESTATE AND THE COMPANY
Section 3.01. Delivery 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 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 Deliveries. (a) The Company's Deliveries.
The Company shall deliver or cause to be delivered the following documents to
Sub at the Closing:
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(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
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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 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
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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
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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 Warranties. (a)
The Stockholder hereby makes the following representations and warranties to the
Parent and Sub as of the Closing Date:
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(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)
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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
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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. Section 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq., the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section
7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss.
2601, the Refuse Act, 33 U.S.C. Section 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.
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(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 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 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 Note. Immediately after the
Effective Time, the Stockholder shall assign and transfer the Company Note to
the Parent or its designee.
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ARTICLE IV. CONDITIONS
Section 4.01. Conditions 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 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
384488.1
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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
384488.1
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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 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
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
384488.1
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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%
384488.1
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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
384488.1
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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
384488.1
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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
384488.1
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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 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
384488.1
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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.
384488.1
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(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.
384488.1
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(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. 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 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.
384488.1
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Section 6.03. Debt 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 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. Survival. 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 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 Parent. The Parent shall
indemnify and hold the Stockholder harmless against any and all claims, losses,
damages, penalties, fines,
384488.1
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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 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.
384488.1
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ARTICLE VIII. MISCELLANEOUS
Section 8.01. Expenses. 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. Assignment. 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 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 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. Notices. 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
384488.1
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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 Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 8.07. Entire 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.
384488.1
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Section 8.08. 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 8.09. Amendments. 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. Severability. 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 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 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.
384488.1
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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:
384488.1
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EXHIBIT A
[Stockholders' Agreement Filed as Exhibit 99.2 herewith]
384488.1
<PAGE>
EXHIBIT B
STATE OF MARYLAND
482641
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
I, LEAH HAMM-CURRY ___________ OF THE STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, DO HEREBY CERTIFY THAT SAID DEPARTMENT,
BY THE LAWS OF SAID STATE, IS THE CUSTODIAN OF THE RECORDS OF THIS STATE
RELATING TO THE FORFEITURE OR SUSPENSION OF CORPORATE CHARTERS, OR OF
CORPORATIONS TO TRANSACTION BUSINESS IN THIS STATE; AND I AM THE PROPER OFFICER
TO EXECUTE THIS CERTIFICATE.
I FURTHER CERTIFY THAT CSTONE-PITTSBURGH TRUST ________________ IS A
CORPORATION DULY INCORPORATED AND EXISTING UNDER AND BY VIRTUE OF THE LAWS OF
___________ MARYLAND ____________ AND SAID CORPORATION HAS FILED ALL ANNUAL
REPORTS REQUIRED, HAS NO OUTSTANDING LATE FILING PENALTIES ON THOSE REPORTS, AND
HAS A RESIDENT AGENT. THEREFORE, THE CORPORATION IS AT THE TIME OF THIS
CERTIFICATE IN GOOD STANDING WITH THIS DEPARTMENT AND DULY AUTHORIZED TO
EXERCISE ALL THE POWERS RECITED IN ITS CHARTER OF CERTIFICATE OF INCORPORATION,
AND TO TRANSACT BUSINESS IN THE STATE OF MARYLAND.
IN THIS DOCUMENT THE WORD CORPORATION SHOULD BE INTERPRETED TO MEAN REAL ESTATE
INVESTMENT TRUST, CHARTER TO MEAN DECLARATION OF TRUST AND INCORPORATED TO MEAN
FORMED.
IN WITNESS WHEREOF, I HAVE HEREUNTO SET
MY HAND AND AFFIXED THE SEAL OF THE STATE
DEPARTMENT OF ASSESSMENT AND TAXATION OF
MARYLAND AT BALTIMORE THIS 4TH DAY OF
NOVEMBER, 1996.
[STATE SEAL] LEAH HAMM-CURRY
OFFICE SUPERVISOR II
384488.1
<PAGE>
EXHIBIT C
[Certificate of Designation for the 8% Preferred Stock Series A
Filed as Exhibit 99.3 herewith]
384488.1
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EXHIBIT "R-A"
Frick Building, Inc. - TICOR Title Policy Legal
All that certain lot or piece of ground situate in the 2nd Ward of the City of
Pittsburgh, County of Allegheny and Commonwealth of Pennsylvania, being more
particularly bounded and described as follows, to-wit:
BEGINNING at the point formed by the intersection of the Southwesterly line of
Fifth Avenue (60.07 feet wide) and the Northwesterly line of Grant Street
(80.109 feet wide); thence along the Northwesterly line of Grant Street, South
30 degrees 56' 40" West, a distance of 226.12 feet to a point; thence along the
Northeasterly line of Forbes Avenue (55.47 feet wide), formerly Diamond Street,
North 59(0) 57' 20" West, a distance of 100.54 feet to a point; thence along the
Southeasterly line of Scrip Way (20.02 feet wide), North 30 degrees 58' 40"
East, a distance of 226.03 feet to a point; and thence along the Southwesterly
line of Fifth Avenue, South 60 degrees 00' 20" East, a distance of 100.43 feet
to the point at the place of beginning.
BEING designated as Block 2-E, Lot 160 in the Deed Registry Office of Allegheny
County, Pennsylvania.
Being the same property acquired by Frick Building, Inc., under and by virtue of
deed from 437 Grant Street Partners, Ltd. a Pennsylvania limited partnership,
dated July 26, 1989 and recorded August 1, 1989 in the Recorder's Office of
Allegheny County, Pennsylvania in Deed Book Volume 8068, Page 265.
384488.1
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EXHIBIT R-B
THE FRICK BUILDING
PERSONAL PROPERTY LIST
General Building
Appliances
Bathroom accessories
Vertical blinds
Horizontal blinds
Carpet
Curtains and curtain track
Built-in cabinets
Drinking fountains
Special doors
Special hardware
Fire extinguishers
Exit lights
Moveable partitions
Toilet partitions
Shelves
Insert Lenses
HVAC Wall Units
Communications system
Mechanical equipment
Doors and hardware
Bronze Telephone Booths (4) in Lobby
Marble Cutting Machine
Plants and Containers
Lobby Directory Boards
Management Office
Lanier Word Processor
Xerox 6010 memory typewriter
Telrad Electronic Phone System
Xerox Copier
Facsimile Machine
Conference room table and chairs (7)
Round table and chairs (6)
Receptionist's desk and chair
Manager's desk and chair
Filing cabinets (4)
Reception area chairs (4)
Stereo system
Christmas decorations (storage)
Books/chairs/pictures (storage)
Artwork (collage and print)
384488.1
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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.
384488.1
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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:
384488.1
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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
384488.1
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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:
384488.1
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<PAGE>
EXHIBIT R-F
THE FRICK BUILDING
LEASING COMMISSIONS
TENANT SPACE COMMISSIONS DUE
William Sittig 803 $250.00*
Commissions which may become due under and by virtue of that certain Real Estate
Leasing and Management Agreement ("Management Agreement") between Frick
Building, Inc. and Galbreath-Middle Atlantic, dated August 1, 1995, on or after
November ___, 1996 ("Closing Date") as a result of any extension or renewal of
any leases or in connection with the exercise, on or after the Closing Date, of
any expansion or extension option contained in any leases respecting the Frick
Building.
Any "protection list" or similar obligation with respect to the future leasing
of the property in accordance with the Management Agreement.
* Estimated as of closing.
384488.1
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EXHIBIT R-H
THE FRICK BUILDING
LIENS ON PERSONAL PROPERTY
1. Matters as shown on Title Insurance Commitment (Case No. 181901)
issued by Lawyers Title Insurance Corporation in connection with the
Frick Building located in Pittsburgh, PA., effective October 15, 1996,
as may be amended from time to time, and such matters as will
ultimately be shown in Schedule B of the Owner's Title Insurance
Policy to be issued in connection with the merger of Frick Building,
Inc. and Cornerstone Properties, Inc.
384488.1
<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
384488.1
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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
384488.1
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PAGE
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 filed as Exhibit 99.2 herewith
EXHIBIT B State of Maryland, State Dept. of Assessments and Taxation
EXHIBIT C Certificate of Designation for the 8% Preferred Stock Series filed
as Exhibit 99.3 herewith
EXHIBIT R-A Frick Building, Inc. - TICOR Title Policy Legal
EXHIBIT R-B The Frick Building Personal Properly List
EXHIBIT R-C The Frick Building Outstanding Tenant Improvement Allowances and
Service Contracts as of October 31, 1996*
EXHIBIT R-D Form of Non-Foreign Certificate
EXHIBIT R-E Form of Tenant Estoppel
EXHIBIT R-F The Frick Building Leasing Commissions
EXHIBIT R-G The Frick Building Litigation*
EXHIBIT R-H The Frick Building Liens on Personal Property
EXHIBIT R-I The Frick Building Security Deposits*
*Exhibit omitted as immaterial
384488.1
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<PAGE>
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.
383917.1
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"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.
383917.1
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<PAGE>
"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
383917.1
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<PAGE>
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.
383917.1
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<PAGE>
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."
383917.1
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(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
383917.1
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<PAGE>
"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.
(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
383917.1
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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,
383917.1
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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
383917.1
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<PAGE>
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
383917.1
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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
383917.1
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<PAGE>
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
383917.1
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<PAGE>
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
383917.1
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<PAGE>
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
383917.1
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<PAGE>
15
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.
383917.1
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<PAGE>
16
(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.
383917.1
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<PAGE>
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.
383917.1
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<PAGE>
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.
383917.1
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<PAGE>
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.
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.
383917.1
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<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
383917.1
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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:
I. 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.
II. 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
384442.1
<PAGE>
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.
384442.1
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<PAGE>
III. 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.
IV. 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
384442.1
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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 a. pay a dividend (or make
a distribution) on its outstanding shares of Common Stock in
Common Stock, b. subdivide or split its outstanding shares of
Common Stock into a larger number of shares by reclassification
or otherwise, c. combine its outstanding shares of Common Stock
into a smaller number of shares by reclassification or otherwise,
or d. issue any shares of Common Stock by reclassification, the
384442.1
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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
384442.1
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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 a. 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
384442.1
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<PAGE>
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;
384442.1
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<PAGE>
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
384442.1
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<PAGE>
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
384442.1
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<PAGE>
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.
V. 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
384442.1
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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:
a. 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;
b. 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;
384442.1
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<PAGE>
c. 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;
d. 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
e. 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.
384442.1
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VI. 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.
VII. 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.
VIII. 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).
384442.1
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IX. 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
384442.1
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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.
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(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.
X. 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");
384442.1
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(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
384442.1
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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.
XI. 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.
XII. 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
384442.1
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(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.
384442.1
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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
384442.1
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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%.
384442.1
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