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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CORNERSTONE PROPERTIES INC.
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
21922H103
(CUSIP Number)
ANN F. CHAMBERLAIN, ESQ.
RICHARDS & O'NEIL, LLP
885 THIRD AVENUE
NEW YORK, NEW YORK
10022
(212) 207-1200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 18, 1997
(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. / /
Check the following box if a fee is being paid with this statement.
/ /
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SCHEDULE 13D
CUSIP NO. 21922H103
(1) Name of reporting person
STICHTING PENSIOENFONDS VOOR
DE GEZONDHEID GEESTELIJKE EN
MAATSCHAPPELIJKE BELANGEN
S.S. or I.R.S. identification Nos. of
above persons
(2) Check the appropriate box if a member
of a group (a) / /
(see instructions) (b) / /
(3) SEC use only
(4) Source of funds
(see instructions) .................... OO
(5) Check if disclosure of legal proceedings
is required pursuant to items 2(d) or 2(e) / /
(6) Citizenship or place of
organization .. THE NETHERLANDS
Number of shares beneficially owned by each
reporting person with:
(7) Sole voting power ........................ 0
(8) Shared voting power
0
(9) Sole dispositive power ................... 0
(10) Shared dispositive power................. 0
(11) Aggregate amount beneficially owned
by each reporting person ................ 34,187,500
(12) Check box if the aggregate amount in
Row (11) excludes certain shares (see
instructions) ..........................
(13) Percent of class represented by
amount in Row (11) ...................... 41%
(14) Type of reporting person
(see instructions) ...................... HC/EP
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CUSIP NO. 21922H103
(1) Names of reporting person
................................................ DUTCH INSTITUTIONAL HOLDING
COMPANY, INC.
S.S. or I.R.S. identification
Nos. of above persons
(2) Check the appropriate box
if a member of a group (a) / /
(see instructions) (b) / /
(3) SEC use only ...............................
(4) Source of funds (see
instructions) .............................. OO
(5) Check if disclosure of legal procedures is
required pursuant to items 2(d)
or 2(e) .................................. / /
(6) Citizenship or place of
organization .............................. DELAWARE
Number of shares beneficially owned by each
reporting person with:
(7) Sole voting power ......................... 0
(8) Shared voting power ....................... 0
(9) Sole dispositive power .................... 0
(10) Shared dispositive power ................. 0
(11) Aggregate amount beneficially owned by
each reporting person .................... 6,728,750
(12) Check box if the aggregate amount in
Row (11) excludes certain shares (see
instructions) ............................ / /
(13) Percent of class represented by amount
in Row (11) .............................. 8%
(14) Type of reporting person
(see instructions) ....................... CO
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, without par value ("COMMON
STOCK"), of Cornerstone Properties Inc. (the "COMPANY") which, to the best
knowledge of the persons filing this Statement, is a corporation organized under
the laws of Nevada with principal executive offices at 126 East 56th Street, New
York, New York 10022.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by Stichting Pensioenfonds Voor De Gezondheid
Geestelijke en Maatschappelijke Belangen ("PGGM") and Dutch Institutional
Holding Company, Inc. ("DIHC", and, together with PGGM, the "REPORTING
PERSONS").
- Stichting Pensioenfonds Voor De Gezondheid Geestelijke en
Maatschappelijke Belangen
---------------------------------------------------------
(a) Stichting Pensioenfonds Voor De Gezondheid Geestelijke en
Maatschappelijke Belangen.
(b) The business address of PGGM is Kroostweg-Noord 149, 3700 AC
Zeist, The Netherlands. The name and business address of each executive officer
and director of PGGM is set forth on EXHIBIT A and is incorporated by reference
herein.
(c) The principal business of PGGM is to serve as a pension fund in
The Netherlands which invests for the benefit of health care industry workers,
including nurses and medical technicians, but excluding self-employed doctors.
The present principal occupation of each executive officer and director of PGGM
is set forth on EXHIBIT A and is incorporated by reference herein.
(d) Neither PGGM nor any of its executive officers or directors has,
during the last five years, been convicted in any criminal proceeding (excluding
traffic violations and similar misdemeanors).
(e) Neither PGGM nor any of its executive officers or directors has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which proceeding it
or he or she was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws,
decree or final order.
(f) PGGM is a "stichting" organized under the laws of The
Netherlands. The citizenship of each executive officer and director of PGGM is
set forth on EXHIBIT A and is incorporated by reference herein.
- DUTCH INSTITUTIONAL HOLDING COMPANY, INC.
(a) Dutch Institutional Holding Company, Inc., a wholly-owned
subsidiary of PGGM.
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(b) The business address of DIHC is 200 Galleria Parkway, N.W., Suite
2000, Atlanta, Georgia 30339. The name and business address of each executive
officer and director of DIHC is set forth on EXHIBIT B and is incorporated by
reference herein.
(c) The principal business of DIHC is to oversee the acquisition,
ownership, management and disposition of PGGM's direct real estate investments
in the United States. The present principal occupation of each executive
officer and director of DIHC is set forth on EXHIBIT B and is incorporated by
reference herein.
(d) Neither DIHC nor any of its executive officers or directors has,
during the last five years, been convicted in any criminal proceeding (excluding
traffic violations and similar misdemeanors).
(e) Neither DIHC nor any of its executive officers or directors has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which proceeding it
or he or she was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws,
decree or final order.
(f) DIHC is a corporation organized under the laws of Delaware. The
citizenship of each executive officer and director of DIHC is set forth on
EXHIBIT B and is incorporated by reference herein.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Loan Purchase Agreement dated as of August 18, 1997
between PGGM as the "Seller" and the Company as the "Purchaser" (the "LOAN
PURCHASE AGREEMENT") which is attached hereto as EXHIBIT C and is incorporated
by reference herein, PGGM agreed to sell and the Company agreed to purchase,
subject to the terms and conditions in the Loan Purchase Agreement, the
Purchased Loans and the Purchased Loan Documents, as defined in the Loan
Purchase Agreement and as more particularly identified in Schedule 3.07(a) of
the Loan Purchase Agreement, attached hereto as EXHIBIT D, for an aggregate
consideration of $779,432,000.00 payable by the Company to PGGM as follows: (i)
$220,092,000.00 by wire transfer in immediately available funds, (ii) Purchase
Money Notes and Purchase Money Mortgages evidencing a principal amount of
$120,000,000.00, and (iii) 27,458,750 validly issued, fully paid and
nonassessable shares of Common Stock of the Company at an agreed value of $16.00
per share.
Pursuant to the Stock Purchase Agreement dated as of August 18, 1997
between DIHC as the "Seller" and the Company as the "Purchaser" (the "STOCK
PURCHASE AGREEMENT") which is attached hereto as EXHIBIT E and is incorporated
by reference herein, DIHC agreed to sell and the Company agreed to purchase,
subject to the terms and conditions in the Stock Purchase Agreement, the Seller
Subsidiary Shares, as defined in the Stock Purchase Agreement and as more
particularly identified in Schedules 3.02 and 3.03(a) of the Stock Purchase
Agreement, attached hereto as EXHIBIT F, for an aggregate consideration of up to
$277,116,000.00 payable by the Company to DIHC as follows: (i) $39,456,000.00
by wire transfer in immediately available funds, (ii) Purchase Money Notes and
Purchase Money Mortgages evidencing a principal amount of $130,000,000.00, and
(iii) 6,728,750 validly issued, fully paid and nonassessable shares of Common
Stock of the
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Company at an agreed value of $16.00 per share. By selling the Seller
Subsidiary Shares pursuant to the Stock Purchase Agreement, DIHC is selling
indirect interests in the properties listed on Schedule 1.01(l) of the Stock
Purchase Agreement, attached hereto as EXHIBIT G. If any of the Seller
Subsidiary Shares are not transferred under the Stock Purchase Agreement, the
aggregate consideration due and payable by the Company to DIHC will be reduced
accordingly.
Each of the Loan Purchase Agreement and the Stock Purchase Agreement
is subject to approval by the stockholders of the Company, in addition to the
satisfaction of other customary closing conditions.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons intend to acquire the shares of Common Stock
included in this Statement for investment. PGGM also intends to influence
the control of the Company inasmuch as it will have the right to designate
two members to the Board of Directors of the Company (the "Company Board").
PGGM and DIHC may sell and buy shares of the Common Stock from time to time,
subject to the restrictions contained in the Registration Rights and Voting
Agreement described below in Item 6. The Reporting Persons have no plan or
proposal which relates to or would result in any of the actions enumerated in
Item 4 of Schedule 13D, except as described in Item 6 below.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, PGGM has the right to acquire, subject to
the terms and conditions in the Loan Purchase Agreement, 27,458,750 shares of
Common Stock (representing 33% of the outstanding Common Stock after the
issuance of such shares) and DIHC has the right to acquire, subject to the terms
and conditions of the Stock Purchase Agreement, up to 6,728,750 shares of Common
Stock (representing 8% of the outstanding Common Stock after the issuance of
such shares). As the sole stockholder of DIHC, PGGM may be deemed to
beneficially own the shares of Common Stock to be held by DIHC. Accordingly,
PGGM may be deemed to own, in the aggregate, 34,187,500 shares of Common Stock
(representing 41% of the outstanding Common Stock after the issuance of such
shares).
(b) As of the date of filing of this Statement, neither of the
Reporting Persons has the power to vote or to direct the vote of nor to dispose
of the shares of Common Stock which are beneficially owned by it.
(c) None.
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except for the information set forth in Items 3, 4 and 5 of this
Statement and as described below in this Item 6, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) between or
among the persons named in Item 2 above or between such persons and any other
person with respect to the Common Stock.
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1. REGISTRATION RIGHTS AND VOTING AGREEMENT
A. REGISTRATION RIGHTS
DEMAND REGISTRATION. Upon the closing (the "CLOSING") of the transactions
contemplated by the Loan Purchase Agreement and the Stock Purchase Agreement
(collectively, the "PURCHASE AGREEMENTS"), PGGM, DIHC and the Company have
agreed to enter into a Registration Rights and Voting Agreement, the form of
which is attached to the Stock Purchase Agreement as EXHIBIT 1.01(k), which is
attached hereto as EXHIBIT H and is incorporated by reference herein. The
Registration Rights and Voting Agreement will provide that, subject to certain
limitations, upon the Closing, PGGM and DIHC will have the right to demand, on
no more than eight occasions, that the Company register all or a portion of the
shares of Common Stock issued to PGGM and DIHC in connection with the Purchase
Agreements, subject to a requirement that the market value of the shares
requested to be registered as of the date of any demand must equal or exceed $75
million (or the total aggregate amount of shares held by PGGM and DIHC, if less
than $75 million). The Company must use its commercially reasonable efforts to
effect any such registration on demand and will have the ability to defer the
filing of a registration statement relating to a demand in certain
circumstances.
SHELF REGISTRATION. Upon the request of PGGM and DIHC, the Company must
use its commercially reasonable efforts within 20 days after the Closing to
register all of the 34,187,500 shares of Common Stock to be issued at such
Closing (or such lesser amount as is actually issued) on a registration
statement which provides for the offering of such securities on a delayed or
continuous basis. Prior to selling Common Stock under such registration
statement, PGGM and DIHC must give written notice to the Company of their
intent to sell shares of Common Stock. The Company will have the right in
certain circumstances to defer such intended sales.
PIGGYBACK REGISTRATION. In the event that the Company exercises its rights
to defer a requested registration, suspend the effectiveness of the shelf
registration or sales of Common Stock by PGGM and DIHC due to a contemplated
public offering of Common Stock, PGGM and DIHC will have the right to include
their shares in the Company's registration statement relating to such public
offering. These piggyback registration rights will be subject to certain
customary limitations as well as limitations contained in the other agreements
between the Company and its stockholders.
All such registrations will be at the expense of the Company, except
that each of PGGM and DIHC will bear all underwriting discounts and commissions
and fees and expenses of its own counsel.
B. BOARD REPRESENTATION
The Registration Rights and Voting Agreement will provide that as long
as PGGM and DIHC and their affiliates own in the aggregate 5% or more of the
issued and outstanding shares of Common Stock, the Company will take all action
necessary to ensure that two members of the Company Board are individuals
designated by PGGM ("PGGM DIRECTORS"). In addition, until the earlier to occur
of (a) the date on which PGGM and DIHC and their affiliates own in the aggregate
less than 25% of the issued and outstanding shares of Common Stock and (b) the
fifth anniversary of the Closing of the Purchase Agreements, (i) the Company
will take all action necessary to ensure that one PGGM Director is appointed to
the board affairs committee of the Company Board (the "BOARD AFFAIRS
COMMITTEE"), (ii) all nominees for directors of the Company by the Company Board
(other
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than "INCUMBENT DIRECTORS" (as defined below) and PGGM Directors) shall be
persons not affiliated with PGGM or DIHC or any of their affiliates and will be
made with the approval of a majority of the members of the Board Affairs
Committee, which majority will include the approval (which will not be
unreasonably withheld) of the PGGM nominee serving on the Board Affairs
Committee, (iii) each of PGGM and DIHC will vote (or provide written consent
with respect to) all shares of Common Stock over which it will exercise voting
authority in favor of the persons nominated as PGGM Directors all nominees of
the Board nominated in accordance with (ii), above and all Incumbent Directors,
(iv) the Company will take all action necessary to ensure that vacancies on the
Company Board caused by the resignation, removal or death of a PGGM Director are
filled with a PGGM Director, and (v) the number of directors constituting the
full Company Board will not be increased without the prior written consent of
PGGM.
"INCUMBENT DIRECTORS" means (i) all individuals constituting the
Company Board at the Closing, (ii) all individuals thereafter
designated as nominees to the Company Board by New York State
Teachers' Retirement System pursuant to a letter agreement dated
November 22, 1996, (iii) all individuals thereafter designated as
nominees to the Company Board by Hexalon Real Estate, Inc. pursuant to
a letter agreement dated November 7, 1996, and (iv) one individual
thereafter designated by Deutsche Bank AG as a nominee to the Company
Board.
C. TRANSFER RESTRICTIONS; 10% OWNERSHIP LIMITATION
Under the Registration Rights and Voting Agreement, each of PGGM and
DIHC will agree to the following restriction on its rights to transfer and
acquire shares of the Company's Common Stock: until the earlier to occur of the
third anniversary of the Closing and the date as of which PGGM and DIHC and
their affiliates cease to own 25% or more of the issued and outstanding shares
of Common Stock, PGGM and DIHC will agree not to assign, transfer or sell any
shares of Common Stock to any person (other than a permitted transferee that
agrees in writing to be bound by the provisions of the Registration Rights and
Voting Agreement) if as a result of the sale, such person and affiliates of such
person would own collectively more than 10% of the Common Stock then
outstanding. This limitation will not apply in the case of any transferee that
is (a) a mutual fund company, pension fund, insurance company, investment
company, any state, city, or county, or any agency or instrumentality of a
state, city, or county, or any state university or state college, and any
retirement system for the benefit of employees of any of the foregoing, any
religious or educational organization or other passive institutional investor or
(b) a NON-U.S. PERSON (as defined in Section 9.02 of the Amendment to the
Company's Charter (the "CHARTER AMENDMENT")) that is not controlled by a U.S.
Person (as defined in the Charter Amendment). The Charter Amendment is attached
to the Loan Purchase Agreement as Exhibit 5.02(a), which is attached hereto as
EXHIBIT I and is incorporated by reference herein.
D. STANDSTILL AGREEMENT
Under the Registration Rights and Voting Agreement, each of PGGM and
DIHC will agree that until the earlier to occur of the third anniversary of the
Closing and the date as of which PGGM and DIHC and their affiliates cease to own
at least 25% of the Common Stock they shall not:
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(i) directly or indirectly purchase or otherwise acquire, or
propose or offer to purchase or otherwise acquire, any EQUITY
SECURITIES (as defined below) if, immediately after such purchase or
acquisition, PGGM and DIHC and their respective affiliates would own
41% or more of the Common Stock;
(ii) directly or indirectly propose to the Company or any person
or entity a BUSINESS COMBINATION (as defined below);
(iii) make, or in any way participate in, any "solicitation"
of "proxies" to vote (as such terms are used in the rules promulgated
by the Commission under Section 14(a) of the Securities Exchange Act
of 1934 (the "EXCHANGE ACT") or seek to advise, encourage or influence
any person or entity with respect to the voting of any shares of
capital stock of the Company, initiate, propose or otherwise solicit
stockholders of the Company for the approval of one or more
stockholder proposals or induce or attempt to induce any other person
or entity to initiate any stockholder proposal; or
(iv) deposit any Equity Securities into a voting trust or subject
any Equity Securities to any arrangement or agreement with respect to
the voting of such securities or form, join or in any way participate
in a "group" (within the meaning of Section 13 (d) (3) of the Exchange
Act) with respect to any Equity Securities, other than pursuant to the
provisions described above under "Transfer Restrictions; 10% Ownership
Limitation."
The Registration Rights and Voting Agreement will provide that nothing
in the provisions described in clauses (i), (ii), (iii), and (iv) above limits
the ability of PGGM Directors to function in their capacities as members of the
Company's Board.
The foregoing standstill provision may be waived by the Company only
upon the approval of a majority of its Board, excluding all PGGM Directors, and
is not applicable to actions approved by the majority of the Board, excluding
all PGGM Directors, in circumstances in which the PGGM Directors are "interested
directors" under Section 78.140 of the Nevada General Corporation Law.
"BUSINESS COMBINATION" means any one of the following transactions:
(i) Any merger or consolidation of the Company or any subsidiary
thereof with any person or entity (other than the Company);
(ii) Any sale, lease exchange, mortgage, pledge, transfer or
other disposition by the Company (in one transaction or a series of
transactions) to or with any person or entity of all or a substantial
portion of the assets of the Company and its subsidiaries taken as a
whole.
(iii) The adoption of any plan or proposal for the
liquidation or dissolution of the Company proposed by or on behalf of
either of the Reporting Persons or any affiliate thereof that together
own 25% or more of the issued and outstanding Common Stock; or
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(iv) Any reclassification of securities (including any reverse
stock split), recapitalization of the Company, or any merger or
consolidation of the Company with any subsidiary thereof or any other
transaction to which the Company is a party which has the effect,
directly or indirectly, of increasing the proportionate share of the
Reporting Persons or any affiliate thereof that together own 25% or
more of the issued and outstanding Common Stock (whether or not with
or into or otherwise involving PGGM or any affiliate of PGGM).
"EQUITY SECURITY" means any (i) Common Stock, (ii) securities of the
Company convertible into or exchangeable for Common Stock, and (iii)
options, rights, warrants and similar securities issued by the Company
to acquire Common Stock.
E. LEVERAGE RATIO
The Registration Rights and Voting Agreement will provide that as long
as PGGM and DIHC and their affiliates are the record owner of at least 2.5% of
the issued and outstanding shares of Common Stock, the Company will maintain a
ratio of Indebtedness to Total Market Capitalization ("LEVERAGE RATIO") of at
least 0.45 to 1.
(i) "INDEBTEDNESS" means: (a) all indebtedness, whether or not
contingent, for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services, (c) all
obligations evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by the Company (even though the rights and remedies
of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all
obligations as lessee under leases that have been or should be, in
accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, under acceptance, letter of
credit or similar facilities, (g) all obligations to purchase, redeem,
retire, decease or otherwise acquire for value any capital stock of
the Company or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) the greater of (i) the principal
amount and (ii) the redemption value of any perpetual preferred stock
issued by the Company, (i) all Indebtedness of others referred to in
clauses (a) through (f) above guaranteed directly or indirectly in any
manner by the Company, or in effect guaranteed directly or indirectly
by the Company through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase
of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or
to assure the holder of such Indebtedness against loss, (iii) to
supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (j) all Indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any encumbrance on property (including,
without limitation, accounts and contract rights) owned by the
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Company, even though the Company has not assumed or become liable for
the payment of such Indebtedness.
(ii) "TOTAL MARKET CAPITALIZATION" means on any day: the sum of
(i) the Company's total Indebtedness on such day, plus (ii) the
product of (x) the number of issued and outstanding shares of Common
Stock plus the number of shares of Common Stock issuable upon
conversion of issued and outstanding stock (other than convertible
preferred stock subject to redemption at the option of the holder),
times the average of the closing prices of the Common Stock for the
five-day period immediately preceding the day in question.
Notwithstanding the foregoing, (i) the Company may at any time incur
Indebtedness in an amount which does not exceed the principal amount of
outstanding Indebtedness of the Company extended, refinanced renewed or replaced
with the proceeds thereof, plus any costs associated with the extension
refinancing, renewal or replacement, even if such incurrence causes the Leverage
Ratio to exceed 0.45 to 1, (ii) the Company may incur Indebtedness if, as of
the date on which the Company enters into a binding commitment with respect to
such Indebtedness, the Leverage Ratio including Indebtedness did not exceed 0.45
to 1 and (iii) with respect to lines of credit, the Company may incur
Indebtedness under such line, if, as of the date the Company enters into the
line of credit, the Leverage Ratio including the entire amount of Indebtedness
available under such line did not exceed 0.45 to 1.
F. MINIMUM OFFERING PRICE FOR COMMON STOCK
For the six-month period following the Closing, the Company will agree
under the Registration Rights and Voting Agreement that it will not issue or
sell any shares of Common Stock or other Equity Securities except at a price per
share equal to or greater than $16.00 (appropriately adjusted for stock
dividends, stock splits and like events) and except in the case of (i) the
conversion of securities or Indebtedness of the Company into Common Stock by
Deutsche Bank AG, (ii) the conversion of promissory notes held by Hines Colorado
Limited, (iii) the Company's stock option or management incentive compensation
plans, (iv) the Company's dividend reinvestment plan, and (v) stock splits or
stock dividends. For purposes of the preceding sentence, "price per share"
shall be equal to the sum of the lowest amounts of consideration, if any,
receivable by the Company with respect to each such share of Common Stock upon
the issuance and sale of such shares.
G. LIMITATIONS ON ISSUANCE OF COMMON STOCK OUTSIDE THE UNITED STATES
So long as the Reporting Persons and their affiliates own 2.5% or more
of the issued and outstanding shares of Common Stock, the Company will agree
under the Registration Rights and Voting Agreement that it will not issue any
Equity Securities in connection with any Public Offering or other sale to any
Non-U.S. Person, other than in connection with stock splits or stock dividends
or under the Company's dividend reinvestment plan or stock option or management
incentive compensation plans; provided, however, that the Company in connection
with any offering of Equity Securities, may issue and sell up to 15% of the
securities issued in such Public Offering to Non-U.S. Persons.
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H. ONE NORWEST CENTER POLICY
So long as the Reporting Persons and their affiliates own 2.5% or more
of the issued and outstanding shares of Common Stock, the Company will agree
under the Registration Rights and Voting Agreement that it will not alter the
policy adopted by the Company Board in August 1997 regarding its interest in One
Norwest Center without the prior written consent of PGGM. The policy requires
that the Company not dispose of its interest income derived from One Norwest
Center except in a tax deferred exchange of properties or in a similar tax
deferred manner, and also applies to all properties which the Company may
receive in any such exchange transaction.
I. HOLDBACK PROVISIONS
If prior to December 31, 1998 the managing underwriter in any public
offering by the Company so requests, the Reporting Persons will agree under the
Registration Rights and Voting Agreement that they will not effect any sale or
distribution of Common Stock (other than as part of such public offering) within
such periods prior to and after the effective date of such registration
statement as the managing underwriter may request. The Reporting Persons shall
only be obligated to comply with such a request on no more than one occasion.
After December 31, 1998, the Reporting Persons shall consider, but need not
comply with, any such request by an underwriter.
J. CERTAIN TRANSFERS OF COMMON STOCK TO PGGM
Under the Registration Rights and Voting Agreement, the Company will
agree to take all action necessary to ensure that any transfer of shares of
Common Stock from DIHC or DIHC Market Square, Inc. to PGGM will not be deemed a
violation of Article 8 of the Company's charter or Section 9.01 of the Charter
Amendment.
K. SHARE REPURCHASES
Under the Registration Rights and Voting Agreement, so long as the
Reporting Persons and their affiliates own in the aggregate 25% or more of the
issued and outstanding shares of Common Stock, in the event the Company proposes
to repurchase any shares of Common Stock from any holder thereof owning together
with its affiliates 5% or more of the issued and outstanding shares of Common
Stock, the Reporting Persons shall have the right to require the Company to
repurchase a number of shares of Common Stock held by the Reporting Persons
equal to the product of (i) the total number of shares proposed to be
repurchased and (ii) a fraction, the numerator of which is (A) the number of
shares owned by the Reporting Persons and their affiliates and the denominator
of which is (B) the sum of the number of shares of Common Stock owned by such
holder plus the number of shares of Common Stock owned by the Reporting Persons
and their affiliates.
2. REVISIONS TO THE COMPANY'S CHARTER
The Purchase Agreements require the Company to amend the Company's
charter to include new provisions designed to assist the Company in becoming,
and thereafter remaining, a "domestically controlled REIT" under the Internal
Revenue Code of 1986, as amended (the "CODE"). The Charter Amendment, which
will provide that shares of the Company's stock cannot be transferred from a
U.S. Person to a Non-U.S. Person if such transfer would cause a Non-U.S.
Person to become the direct or indirect owner of more
Page 12 of 15
<PAGE>
than 3% of the value of the outstanding shares of any class of capital stock of
the Company (the "NON U.S. OWNERSHIP LIMIT"). Shares of stock acquired in
excess of the Non-U.S. Ownership Limit will be deemed to be transferred to the
Company as trustee for the benefit of the person to whom the person who acquired
the excess shares later transfers such shares. In addition, excess shares will
be deemed to have been offered for sale to the Company or its designee at their
"fair market value" for a 90-day period.
3. PURCHASE AGREEMENTS
A. DIVIDEND
Under the Purchase Agreements, the Company has agreed that, among
other things and subject to certain exceptions, neither it nor any of its
subsidiaries will, without the prior written consent of the Reporting Persons
prior to the closing:
(i) except for (x) its regular quarterly dividends not in excess
of $0.30 per share of issued and outstanding common stock or (y) its
regular annual dividends not in excess or $1.155 per share of issued
and outstanding preferred stock, declare, set aside or pay any
dividends on, or make any other distribution in respect of, its
outstanding shares of capital stock.
(ii) except for the Company's dividend reinvestment share
purchase plan and the exercise of share options or issuance of shares
pursuant to stock rights, options, restricted share or performance
share awards or warrants outstanding on the date of the Loan Purchase
Agreement, issue, deliver or sell, or grant any option or other right
in respect of, any shares of common stock, any other voting securities
of the Company or any subsidiary or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (except to the Company or a
subsidiary) except the foregoing shall not prohibit the issuance of
Common Stock in connection with the conversion of any currently
outstanding convertible preferred stock or notes or in connection with
the granting of any employee stock options or restricted shares to any
employee in an amount not to exceed $10 million.
B. STANDSTILL PROVISIONS IN THE EVENT THERE IS NO CLOSING
In the event the transactions contemplated under the Purchase
Agreements are not consummated, the Company and the Reporting Persons agree
that, for a period of 24 months after the date of the Purchase Agreements,
unless specifically invited in writing by the other party's board of directors,
neither the Company nor the Reporting Persons (nor any of their respective
affiliates), will in any manner, directly or indirectly, (a) effect or seek,
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in, (i) the acquisition of the other party's securities (or
beneficial ownership thereof) or assets, (ii) any tender or exchange offer,
merger or other business combination involving the other party, (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the other party or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC) or consents to
vote any of the other party's voting securities; (b) form, join or in any way
participate in a "group" (as defined under the Exchange Act) or otherwise act,
alone or in concert with others, to seek to control or influence the other
party's management, Board of Directors or policies; or (c) enter into any
discussion or arrangement with any third party with respect to any of the
foregoing. Notwithstanding the foregoing, in the event either of
Page 13 of 15
<PAGE>
the Company or the Reporting Persons willfully and intentionally breach any of
their respective obligations under either of the Purchase Agreements with the
result that a Closing thereunder does not occur, the non-defaulting party shall
not be bound by such standstill agreement.
4. LOAN PURCHASE AGREEMENT
The Loan Purchase Agreement provides that, at the first meeting of the
Company Board occurring after the Closing, if PGGM so requests, the total
number of persons serving on the Company Board shall be increased to 12 and
two additional persons to be nominated by PGGM after the Closing shall be
appointed by the Company Board to fill the vacancies, effective at such
meeting of the Company Board, thereby created. The Loan Purchase Agreement
further provides that between the Closing and the date such nominees are
appointed to the Company Board, the Company Board shall not take any action
by written consent or otherwise.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT A contains the name, citizenship, office, business address and
present principal occupation of each executive officer and director of PGGM.
EXHIBIT B contains the name, citizenship, office, business address and
present principal occupation of each executive officer and director of DIHC.
EXHIBIT C is the Loan Purchase Agreement by PGGM and the Company dated
as of August 18, 1997.
EXHIBIT D is Schedule 3.07(a) of the Loan Purchase Agreement, which
sets forth the Purchased Loans and the Purchased Loan Documents of PGGM that are
being transferred to the Company.
EXHIBIT E is the Stock Purchase Agreement by DIHC and the Company
dated as of August 18, 1997.
EXHIBIT F are Schedules 3.02 and 3.03(a) of the Stock Purchase
Agreement, which set forth the Seller Subsidiary Shares of DIHC being
transferred to the Company
EXHIBIT G is Schedule 1.01(l) of the Stock Purchase Agreement, which
sets forth the properties of DIHC being transferred to the Company.
EXHIBIT H is the form of the Registration Rights and Voting Agreement
which is proposed to be entered into by PGGM, DIHC, and the Company.
EXHIBIT I is the proposed amendment to the Company's Charter.
EXHIBIT J is the Joint Filing Agreement between PGGM and DIHC.
Page 14 of 15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: August 26, 1997
STICHTING PENSIOENFONDS VOOR DE GEZONDHEID GEESTELIJKE EN MAATSCHAPPELIJKE
BELANGEN
By: /s/ Edwin A. Brassem
------------------------------
Edwin A. Brassem
DUTCH INSTITUTIONAL HOLDING COMPANY, INC.
By:/s/ Robert T. Sorrentino
-------------------------------
Robert T. Sorrentino
Page 15 of 15
<PAGE>
EXHIBIT A
The name, citizenship, business address and present principal occupation of
each executive officer and director of PGGM is as follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Present Principal
Name and Citizenship Office Occupation and Address
- -------------------- ------ ----------------------
- --------------------------------------------------------------------------------
Dick J. de Beus Executive Officer Chairman, Board of Managing
(The Netherlands) Directors
Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
Gerard Wieringa Executive Officer Managing Director Investments
(The Netherlands) Kroostweg-Noord 149
Pensioenfonds PGGM
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
Ferry C.A. Meijer (Mr.) Executive Officer Managing Director Pensions
(The Netherlands) Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
J.C.J. Lammers (Mr.) Chairman of the Retired
(The Netherlands) Board of Directors of Muidergouw 44
PGGM 1351 PD Almere-Haven
The Netherlands
- --------------------------------------------------------------------------------
W.L. Bonhof (Mr.) Director Director
(The Netherlands) Zon & Schild (Hospital)
Utrechtseweg 266
P.O. Box 3051
3800 DB Amersfoort
The Netherlands
- --------------------------------------------------------------------------------
H.J. van Essen (Mr.) Director Chief Executive Officer
(The Netherlands) Wilhelmina Hospital
P.O. Box 9015
6500 GS Nijmegen
The Netherlands
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Present Principal
Name and Citizenship Office Occupation and Address
- -------------------- ------ ----------------------
- --------------------------------------------------------------------------------
R.G. de Vries (Mr.) Director Vice Director
(The Netherlands) Nederlaudse Zorg Federatie
(Netherlands Health Care
Federation)
P.O. Box 9696 3506 GR Utrecht
The Netherlands
- --------------------------------------------------------------------------------
J. Hillenius (Mr.) Director Retired
(The Netherlands) Meije 342
3474 ME Zegveld
The Netherlands
- --------------------------------------------------------------------------------
H. Vaartjes (Mr.) Director Retired
(The Netherlands) Tabakslaan 25
3958 DA Amerongen
The Netherlands
- --------------------------------------------------------------------------------
J.J. de Kort (Mr.) Director Retired
(The Netherlands) Langbroekerdijk B 28
3947 BB Langbroek
The Netherlands
- --------------------------------------------------------------------------------
P.M. Altenburg (Mrs.) Director Board Member
(The Netherlands) Abvakabo (Trade Union)
P.O. Box 3010
2700 KT Zoetermeer
The Netherlands
- --------------------------------------------------------------------------------
J.P. Bensch (Mr.) Director Trade Union Officer
(The Netherlands) Abvakabo (Trade Union)
P.O. Box 3010
2700 KT, Zoetermeer
The Netherlands
- --------------------------------------------------------------------------------
A.H. Wirtz (Mr.) Director Trade Union Officer
(The Netherlands) Abvakabo (Trade Union)
P.O. Box 3010
2700 KT Zoetermeer
The Netherlands
- --------------------------------------------------------------------------------
E.J. Anneveld (Mr.) Director Chairman
(The Netherlands) CFO (Trade Union)
P.O. Box 84500
7500 AM Den Haag
The Netherlands
- --------------------------------------------------------------------------------
-2-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Present Principal
Name and Citizenship Office Occupation and Address
- -------------------- ------ ----------------------
- --------------------------------------------------------------------------------
K. Kruithof (Mr.) Director Board Member
(The Netherlands) CFO (Trade Union)
Carnegielaen 1
3517 KH Den Haag
The Netherlands
- --------------------------------------------------------------------------------
K. de Jong (Mr.) Director Vice Chairman
(The Netherlands) NU '91 (Trade Union)
Leidseweg 63
Postbox 6001
3503 PA Utrecht
The Netherlands
- --------------------------------------------------------------------------------
-3-
<PAGE>
EXHIBIT B
---------
The name, citizenship, business address and present principal occupation of
each executive officer and director of DIHC is as follows:
- --------------------------------------------------------------------------------
Present Principal
Name and Citizenship Office Occupation and Address
- -------------------- ------ ----------------------
- --------------------------------------------------------------------------------
Craig W. Johnston Assistant Vice President Finance-
(U.S.) Secretary Financial Officer
DIHC Management Corporation
200 Galleria Parkway,
Suite 2000
Atlanta, Georgia 30339
U.S.A.
- --------------------------------------------------------------------------------
Robert T. Sorrentino Vice President Executive Vice President and
(U.S.) and Treasurer Chief Financial Officer
DIHC Management Corporation
200 Galleria Parkway,
Suite 2000
Atlanta, Georgia 30339
U.S.A.
- --------------------------------------------------------------------------------
Pieter S. van den Berg Director Staff Director Controlling
(The Netherlands) Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
Dick van den Bos (Mr.) Director Director of Property
(The Netherlands) Investments
Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 4001
3700 KA Zeist
The Netherlands
- --------------------------------------------------------------------------------
Jan van der Vlist (Mr.) Director Deputy Head of Real Estate
(The Netherlands) Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
Dick J. de Beus (Mr.) Director Chairman, Board of
(The Netherlands) Managing Directors
Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Gerard Wieringa (Mr.) Director Managing Director Investments
(The Netherlands) Pensioenfonds PGGM
Kroostweg-Noord 149
P.O. Box 117
3700 AC Zeist
The Netherlands
- --------------------------------------------------------------------------------
-2-
<PAGE>
EXHIBIT C
---------
LOAN PURCHASE AGREEMENT
SEE ATTACHED
<PAGE>
EXHIBIT C
================================================================================
---------------------------------------
LOAN PURCHASE AGREEMENT
---------------------------------------
BETWEEN
STICHTING PENSIOENFONDS VOOR DE
GEZONDHEID, GEESTELIJKE EN
MAATSCHAPPELIJKE BELANGEN,
AS "SELLER"
AND
CORNERSTONE PROPERTIES INC.,
AS "PURCHASER"
DATED AS OF AUGUST 18, 1997
================================================================================
<PAGE>
LOAN PURCHASE AGREEMENT.
TABLE OF CONTENTS
PAGE
ARTICLE IDEFINITIONS
SECTION 1.01. Certain Defined Terms...........................................1
ARTICLE IIPURCHASE AND SALE
SECTION 2.01. Purchased Loans to Be Sold.....................................11
SECTION 2.02. Assumption and Exclusion of Liabilities........................11
SECTION 2.03. Purchase Price; Payment; Order of Transfers; Allocation of
Purchase Price............................................12
SECTION 2.04. Closing........................................................13
SECTION 2.05. Closing Deliveries by the Seller...............................13
SECTION 2.06. Closing Deliveries by the Purchaser............................13
SECTION 2.07. Record Date for Final Dividend of the Purchaser................14
ARTICLE IIIREPRESENTATIONS AND WARRANTIESOF THE SELLER
SECTION 3.01. Organization and Authority of the Seller.......................14
SECTION 3.02. Noncontravention; Consents.....................................15
SECTION 3.03. Litigation.....................................................15
SECTION 3.04. Full Disclosure................................................16
SECTION 3.05. Brokers........................................................16
SECTION 3.06. Insolvency.....................................................16
SECTION 3.07. Enforceability; Ownership......................................16
SECTION 3.08. Taxes..........................................................17
ARTICLE IVREPRESENTATIONS AND WARRANTIESOF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser....................17
SECTION 4.02. Purchaser Subsidiaries.........................................17
SECTION 4.03. Capital Structure..............................................18
SECTION 4.04. Authority; Noncontravention; Consents..........................19
SECTION 4.05. SEC Documents; Financial Statements; Undisclosed Liabilities...20
SECTION 4.06. Absence of Certain Changes or Events...........................21
SECTION 4.07. Litigation.....................................................21
SECTION 4.08. Purchaser Properties...........................................22
SECTION 4.09. Environmental and Other Permits and Licenses; Related Matters..22
SECTION 4.10. Related Party Transactions.....................................23
SECTION 4.11. Taxes..........................................................24
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<PAGE>
PAGE
SECTION 4.12. Brokers........................................................25
SECTION 4.13. Compliance with Laws...........................................25
SECTION 4.14. Contracts; Debt Instruments....................................25
SECTION 4.15. Absence of Changes in Benefit Plans; ERISA Compliance..........26
SECTION 4.16. Vote Required..................................................27
SECTION 4.17. Space Leases...................................................27
SECTION 4.18. Ground Leases..................................................28
SECTION 4.19. Insurance......................................................28
SECTION 4.20. Insolvency.....................................................28
ARTICLE VADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business by the Purchaser Prior to the Closing......29
SECTION 5.02. Preparation of the Proxy Statement; Shareholders Meeting.......30
SECTION 5.03. Commercially Reasonable Efforts; Notification..................31
SECTION 5.04. Transfer and Gains Taxes.......................................32
SECTION 5.05. Access to Information..........................................32
SECTION 5.06. Confidentiality................................................33
SECTION 5.07. Taxes..........................................................34
SECTION 5.08. Standstill Agreement...........................................35
SECTION 5.09. Board of Directors.............................................35
ARTICLE VICONDITIONS TO CLOSING
SECTION 6.01. Conditions to Obligations of the Seller........................36
SECTION 6.02. Conditions to Obligations of the Purchaser.....................38
SECTION 6.03. Condition to each Parties Obligation to Effect Transaction.....39
ARTICLE VIIINDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties.....................39
SECTION 7.02. Indemnification................................................39
SECTION 7.03. Limitations on Recovery........................................41
ARTICLE VIIITERMINATION
SECTION 8.01. Termination....................................................42
SECTION 8.02. Effect of Termination..........................................43
ARTICLE IXGENERAL PROVISIONS
SECTION 9.01. Expenses.......................................................44
SECTION 9.02. Notices........................................................44
SECTION 9.03. Waiver of Jury Trial...........................................45
SECTION 9.04. Headings.......................................................45
SECTION 9.05. Severability...................................................45
SECTION 9.06. Entire Agreement...............................................45
SECTION 9.07. Assignment.....................................................46
ii
<PAGE>
PAGE
SECTION 9.08. No Third Party Beneficiaries...................................46
SECTION 9.09. Amendment......................................................46
SECTION 9.10. Governing Law..................................................46
SECTION 9.11. Counterparts...................................................46
SECTION 9.12. Waiver.........................................................46
SECTION 9.13. No Purchaser's Lien............................................47
SECTION 9.14. Closing under Loan Purchase Agreement..........................47
SECTION 9.15. Limited Survival...............................................47
iii
<PAGE>
LOAN PURCHASE AGREEMENT, dated as of August 18, 1997, between PENSIOENFONDS
VOOR DE GEZONDHEID, GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN (the "SELLER"), and
CORNERSTONE PROPERTIES INC., a Nevada corporation (the "PURCHASER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller owns certain secured and unsecured loans, as set forth
on Schedule 3.07(a); and
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller such loans, all upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Seller hereby agree
as follows:
ARTICLE
DEFINITIONS
SECTION CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"ADA" means the Americans with Disabilities Act.
"ADDITIONAL CHARTER PROVISIONS" shall mean the following proposed
additions to the Charter Amendment: (i) "Nothing in these Restated Articles
of Incorporation shall preclude the settlement of any transaction with
respect to the Common Stock of the Corporation entered into through the
facilities of the New York Stock Exchange;" and (ii) "The aggregate number
of shares that the Corporation shall have the authority to issue is Two
Hundred Sixty-Five Million (265,000,000) shares of Capital Stock consisting
of Fifteen Million (15,000,000) shares of Preferred Stock with no par value
per share and Two Hundred Fifty Million (250,000,000) shares of Common
Stock with no par value per share."
<PAGE>
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AGREEMENT" or "THIS AGREEMENT" means this Loan Purchase Agreement,
dated as of August 18, 1997 between the Seller and the Purchaser (including
the Exhibits hereto and the Schedules) and all amendments hereto made in
accordance with the provisions of SECTION 9.09.
"ANCILLARY AGREEMENTS" means the Assignment of Mortgages and other
Purchase Loan Documents, the Purchase Money Notes, the Purchase Money
Mortgages, the Registration Rights and Voting Agreement, and the Stock
Purchase Agreement.
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.02(a).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in New
York, New York or Atlanta, Georgia.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. SECTIONs 9601 ET SEQ., as amended
through the date hereof.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation, and Liability Information System, as updated through the date
hereof.
"CHARTER AMENDMENT" has the meaning specified in SECTION 5.02(a).
"CLOSING" has the meaning specified in SECTION 2.04.
"CLOSING DATE" has the meaning specified in SECTION 2.04.
"CODE" means the Internal Revenue Code of 1986, as amended through the
date hereof.
"control" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as
2
<PAGE>
trustee personal representative or executor, of the power to direct or
cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee, personal
representative or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body
governing the affairs of such Person.
"DIHC" means Dutch Institutional Holding Company, Inc., a wholly-owned
subsidiary of the Seller.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of
ownership.
"ENVIRONMENT" means all surface waters, groundwaters, soil, drinking
water supplies, sediments associated with any water body, subsurface
strata, and ambient air and any workplace at any real property.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims (whether based on
strict liability or otherwise), liens, notices of potential responsibility,
notices of potential liability, notices of non-compliance or violation,
abatement orders, enforcement actions, investigations, proceedings,
settlements, consent decrees, consent orders or consent agreements relating
in any way to any Environmental Law, Environmental Permit or any Hazardous
Material (hereinafter "CLAIMS"), including, without limitation, any and
all Claims by Governmental Authorities or any Person for enforcement, cost
recovery, compensation, penalties, fines, restitution, injunctive relief,
cleanup, removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law or applicable Environmental Permit and
any and all Claims by any Person or Governmental Authority seeking damages,
contribution, indemnification, cost recovery, cleanup, removal, response,
remedial or other actions, compensation or injunctive relief relating to a
Release of a Hazardous Material or arising from an alleged or actual injury
or threat of injury to health, safety,
3
<PAGE>
natural resources (including, without limitation, all flora and fauna) or
the Environment.
"ENVIRONMENTAL CONDITION" means a condition relating to or arising or
resulting from a failure or alleged failure to comply with any applicable
Environmental Law or applicable Environmental Permit or relating to or
arising or resulting from an actual or a threatened Release of a Hazardous
Material.
"ENVIRONMENTAL LAWS" means any Law, now or hereafter in effect and as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, order or
judgment, relating to the Environment, health, safety, natural resources
(including, without limitation, all flora and fauna) or Hazardous Materials
including, without limitation, the CERCLA; the Resource Conservation and
Recovery Act, 42 U.S.C. SECTIONs 6901 ET SEQ.; the Hazardous Materials
Transportation Act, 49 U.S.C. SECTIONs 1801 ET SEQ.; the Clean Water Act,
33 U.S.C. SECTIONs 1251 ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. SECTIONs 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. SECTIONs 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. SECTIONs 300f ET SEQ.; the
Atomic Energy Act, 42 U.S.C. SECTIONs 2011 ET SEQ.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. SECTIONs 136 ET SEQ.;
the Occupational Safety and Health Act, 29 U.S.C. SECTIONs 651 ET SEQ.;
the Endangered Species Act, 16 U.S.C. SECTIONs 1531 ET SEQ.; the Oil
Pollution Act, 33 U.S.C. SECTIONs 2701 ET SEQ.; the Emergency Planning and
Community Right-To-Know Act, 42 U.S.C. SECTIONs 11001 ET SEQ.; and the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. SECTIONs 301 ET SEQ.
"ENVIRONMENTAL PERMITS" means all permits, approvals, identification
numbers, licenses, registrations and other authorizations and notices
required under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE OF THE PURCHASER" has the meaning ascribed to it in
SECTION 4.15(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED LIABILITIES" has the meaning specified in SECTION 2.02(b).
4
<PAGE>
"FINAL PURCHASER DIVIDEND" has the meaning specified in SECTION 2.07.
"FINANCIAL STATEMENT DATE" has the meaning specified in SECTION 4.06.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or
arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HAZARDOUS MATERIALS" means those substances, materials, and items, in
any form, whether solid, liquid, gaseous, semisolid, or any combination
thereof, whether waste materials, raw materials, chemicals, finished
products, byproducts, or any other material or article, which are regulated
by or form the basis of liability under any applicable Environmental Law
including, without limitation: wastes, materials, chemicals, and
substances defined as or included within the definition of "hazardous
wastes," "hazardous substances," "pollutants," "contaminants," "hazardous
materials," "hazardous chemicals," "extremely hazardous substances," "toxic
substances," "toxic pollutants," "hazardous pollutants," or words of
similar import, under any applicable Environmental Law; and asbestos in
any form, polychlorinated biphenyls ("PCBS"), transformers or other
equipment containing PCBs, petroleum (including, but not limited to, crude
oil, petroleum-derived substances, wastes, or breakdown or decomposition
products thereof, or any fraction thereof), radioactive substances, radon
gas, and urea formaldehyde.
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness
of such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
5
<PAGE>
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been or should
be, in accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of such Person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable preferred stock, at
the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) all Indebtedness of others referred to in
clauses (a) through (f) above guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Indebtedness
or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (iii) to supply funds to or in
any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services are rendered) or (iv) otherwise to assure a creditor against
loss, and (i) all Indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Encumbrance on
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
"INDEMNIFIED PARTY" has the meaning specified in SECTION 7.02(b).
"INDEMNITOR" has the meaning specified in SECTION 7.02(c).
"INITIAL CASH PAYMENT" has the meaning specified in SECTION
2.03(b)(i).
"IRS" means the Internal Revenue Service of the United States.
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"KNOWLEDGE" and correlative terms such as "KNOWLEDGE OF," KNOWS OF,
"IS AWARE OF," or "BEST KNOWLEDGE" when used herein with respect to the
Purchaser shall mean the actual knowledge of the Persons named on SCHEDULE
1.01(D) and where used with respect to the Seller shall mean the actual
knowledge of the Persons named on SCHEDULE 1.01(E).
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, requirement or rule of common
law.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising
under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"LOSS" has the meaning specified in SECTION 7.02(b).
"NON-CONFIDENTIAL INFORMATION" has meaning specified in SECTION 5.06.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITS" means, with respect to any real property, all environmental,
health, safety and other permits, licenses, authorization, identification
numbers, certificates, registrations, notifications and approval of
Governmental Authority applicable to the ownership or operation thereof.
"PERMITTED ENCUMBRANCES" means the following: liens for taxes,
assessments and governmental charges of Governmental Authorities or levies
not yet due and payable; rights of tenants, as tenants only, under the
Purchaser Space Leases; and minor survey exceptions and other easements,
rights-of-way, covenants and restrictions and title exceptions that (i) do
not render title to the property encumbered
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thereby unmarketable, (ii) do not, individually or in the aggregate, have a
material adverse effect on the value of or the use of the property
encumbered thereby for its present purposes, and (iii) do not interfere
with the ordinary conduct of the property encumbered thereby or detract
from the value or usefulness thereof.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as
any syndicate or group that would be deemed to be a person under SECTION
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PROPERTY RESTRICTION" means, with respect to any real property, any
applicable deed restrictions or other applicable Laws, covenants,
restrictions, agreements, existing site plan approvals, zoning or
subdivision regulations or urban redevelopment plans as modified by any
duly issued variances.
"PROXY STATEMENT" has the meaning specified in SECTION 4.04.
"PURCHASE MONEY MORTGAGES" means the mortgages, deeds to secure debts,
deeds of trust, assignments of leases and rents, stock pledge agreements,
collateral note assignments, collateral mortgage assignments, assignments
of partnership interests, guaranty agreements, UCC-1 financing statements
and other security documents and instruments to be executed by the
Purchaser and Purchaser Subsidiaries and delivered to the Seller or DIHC on
the Closing Date in form acceptable to the Seller (in its sole discretion),
but consistent with the terms and provisions contained in EXHIBIT 1.01(D),
to secure the indebtedness evidenced by the Purchase Money Notes.
"PURCHASE MONEY NOTES" means the four (4) Promissory Notes to be
executed by the Purchaser and delivered to the Seller or DIHC on the
Closing Date in form acceptable to the Seller (in its sole discretion), but
consistent with the terms and provisions contained in EXHIBIT 1.01(D), to
evidence the $250,000,000.00 purchase money loans being made by the Seller
and DIHC to the Purchaser to finance, in part, the acquisition of the
Seller Subsidiary Shares under the Stock Purchase Agreement and the
Purchased Loans hereunder, on the terms more particularly described
therein.
"PURCHASE PRICE" has the meaning specified in SECTION 2.03.
"PURCHASED LOANS" means the loans described on SCHEDULE 3.07(A) hereof
owned by the Seller.
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"PURCHASED LOAN DOCUMENTS" means all documents, agreements,
instruments and certificates creating, evidencing or securing the Purchased
Loans and being listed on SCHEDULE 3.07(A) hereof.
"PURCHASER" has the meaning specified in the recitals to this
Agreement.
"PURCHASER BENEFIT PLANS" has the meaning specified in SECTION
4.15(a).
"PURCHASER CHANGE OF CONTROL" shall mean any of the following
occurrences:
(a) securities of the Purchaser representing 30% or more of the
combined voting power of the Purchaser's then outstanding voting securities
are acquired pursuant to a tender offer or an exchange offer; or
(b) a merger or consolidation is consummated in which the
Purchaser is a constituent corporation and which results in less than 50%
of the outstanding voting securities of the surviving or resulting entity
being owned by the former stockholders of the Purchaser; or
(c) any person becomes the beneficial owner, directly or
indirectly, of securities of the Purchaser representing 30% or more of the
combined voting power of the Purchaser's then outstanding securities.
PROVIDED that a "Purchaser Change of Control" shall in no event refer to
any of the foregoing if, as a result thereof, control of the Purchaser is
held by a Person who is an Affiliate of the Purchaser as of the date
hereof.
"PURCHASER COMMON SHARES" means the common stock of the Purchaser with
no par value.
"PURCHASER INDEMNIFIED PARTY" has the meaning specified in SECTION
7.02(a).
"PURCHASER MATERIAL ADVERSE CHANGE" has the meaning specified in
SECTION 4.06.
"PURCHASER MATERIAL ADVERSE EFFECT" means any circumstance, change in,
or effect on, the Purchaser Properties (including, without limitation, any
casualty or condemnation affecting any of the Purchaser Properties), the
Purchaser or any Purchaser Subsidiary
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that, individually or in the aggregate with any other circumstances,
changes in, or effect on, the Purchaser, any Purchaser Subsidiaries or the
Purchaser Properties: (a) is, or could be, materially adverse to the
business, operations, assets or liabilities (including, without limitation,
contingent liabilities), results of operations or the condition (financial
or otherwise) of any of the Purchaser or the Purchaser Subsidiaries or any
one or more of the Purchaser Properties or (b) could materially adversely
affect the ability of the Purchaser to operate any one or more of the
Purchaser Properties in the manner in which they are currently operated by
the Purchaser and the Purchaser Subsidiaries.
"PURCHASER PREFERRED SHARES" means the preferred shares of stock of
the Purchaser.
"PURCHASER PROPERTIES" means the real property described on SCHEDULE
1.01(J) hereof in which the Purchaser or a Purchaser Subsidiary owns a
direct or indirect fee simple or leasehold interest, together with the
Purchaser's or Purchaser Subsidiaries' rights in and to all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"PURCHASER SEC DOCUMENTS" has the meaning specified in SECTION 4.05.
"PURCHASER SHAREHOLDER APPROVALS" has the meaning specified in SECTION
4.04.
"PURCHASER SHAREHOLDER MEETING" has the meaning specified in SECTION
5.02(b).
"PURCHASER SPACE LEASES" has the meaning specified in SECTION 4.17.
"PURCHASER SUBSIDIARIES" means the corporations listed on SCHEDULE
1.01(F) (each of which corporations is individually referred to herein as a
"PURCHASER SUBSIDIARY").
"PURCHASER'S CHARTER" has the meaning specified in SECTION 4.01.
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"REGISTRATION RIGHTS AND VOTING AGREEMENT" means the Registration
Rights and Voting Agreement to be executed by the Purchaser, the Seller and
DIHC on the Closing Date substantially in the form of EXHIBIT 1.01(F).
"REGULATIONS" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"REIT" has the meaning specified in SECTION 4.11(e).
"RELEASE" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and like
actions or events (including, without limitation, the abandonment or
discarding of barrels, containers, drums, tanks, or other closed
receptacles containing any Hazardous Materials) resulting in the placement
of any Hazardous Material on, under, about, or in any medium of the
Environment.
"REMEDIAL ACTION" means all action reasonably necessary or required
under any applicable Environmental Law or applicable Environmental Permit
and all actions required by a Governmental Authority to investigate,
mitigate, clean up, remove, treat, store, dispose of, handle or respond in
any other way to Hazardous Materials in the Environment affecting human
health, affecting the Environment or affecting natural resources; prevent,
control, or otherwise respond to the Release of Hazardous Materials so that
they do not migrate, endanger or threaten to endanger public health,
natural resources or the Environment; perform remedial investigations,
feasibility studies, health assessments, natural resource damage
assessments, corrective actions, closures, and postremedial or postclosure
studies, investigations, operations, maintenance and monitoring at, on,
under, about or in any real property, or at any other location affected by
Hazardous Materials associated with the real property; or come into
compliance with any applicable Environmental Law or any applicable
Environmental Permit.
"SEC" means the United States Securities and Exchange Commission.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning specified in the recitals to this Agreement.
"SELLER INDEMNIFIED PARTY" has the meaning specified in SECTION
7.02(b).
"SELLER MATERIAL ADVERSE EFFECT" means any circumstance, change in, or
effect on, any one or more of the Purchased Loans or the Seller that,
individually or in the aggregate with any other circumstances, changes in,
or effect on, the Purchased Loans or the Seller is, or could be, materially
adverse to any one or more of the Purchased Loans.
"SELLER SUBSIDIARY" has the meaning specified in the Stock Purchase
Agreement.
"SELLER SUBSIDIARY SHARES" has the meaning specified in the Stock
Purchase Agreement.
"SEC" means the United States Securities and Exchange Commission.
"SHARE ISSUANCE" has the meaning specified in SECTION 4.04.
"STOCK PURCHASE AGREEMENT" means that certain Stock Purchase Agreement
between the Purchaser and DIHC entered into on the date hereof.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any foreign, U.S., state and local government
or taxing authority, including, without limitation: taxes or other charges
on or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth;
taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, mortgage recording, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and
similar charges.
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"THIRD PARTY CLAIMS" has the meaning specified in SECTION 7.02(c).
"TRANSFER AND GAINS TAXES" has the meaning specified in SECTION 5.04.
"U.S. GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied consistently
throughout the periods involved.
"USTs" means underground storage tanks (and associated underground
piping), as such term is defined in the Resource Conservation and Recovery
Act, as amended, and the regulations promulgated thereunder, or any other
applicable Environmental Law.
ARTICLE
PURCHASE AND SALE
SECTION 2.1. PURCHASED LOANS TO BE SOLD. On the terms and subject to the
conditions of this Agreement, the Seller shall, on the Closing Date, sell,
assign, transfer, convey and deliver to the Purchaser or the Purchaser
Subsidiary designated by Purchaser, and the Purchaser shall purchase from the
Seller, on the Closing Date, the Purchased Loans and the Purchased Loan
Documents.
SECTION 2.2. ASSUMPTION AND EXCLUSION OF LIABILITIES.
(a) On the terms and subject to the conditions of this Agreement, the
Purchaser shall, on the Closing Date, assume and shall pay, perform and
discharge when due all Liabilities of the Seller arising out of or relating to
the Purchased Loans and relating to any period, or any portion of any period,
ending from and after the Closing Date (the Assumed Liabilities).
(b) The Seller shall retain, and shall be responsible for paying,
performing and discharging when due, and the Purchaser shall not assume or have
any responsibility for, all Liabilities of the Seller other than the Assumed
Liabilities, or attributable to the Purchased Loans and relating to any period,
or any portion of any period, ending on or prior to the Closing Date (the
Excluded Liabilities).
SECTION 2.3. PURCHASE PRICE; PAYMENT; ORDER OF TRANSFERS; ALLOCATION OF
PURCHASE PRICE.
(a) The aggregate purchase price for the Purchased Loans shall be SEVEN
HUNDRED SEVENTY NINE MILLION, FOUR HUNDRED
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THIRTY-TWO THOUSAND AND NO/100 DOLLARS ($779,432,000.00) (the Purchase Price)
which shall be payable in the manner described herein.
(b) The Purchase Price shall be payable by the Purchaser as follows:
(i) At the Closing, the Purchaser shall pay to the Seller the
amount of TWO HUNDRED TWENTY MILLION NINETY-TWO THOUSAND AND NO/100 DOLLARS
($220,092,000.00) (the "INITIAL CASH PAYMENT") by wire transfer in
immediately available funds, to an account or accounts designated at least
two (2) Business Days prior to the Closing Date by the Seller in a written
notice to the Purchaser;
(ii) At the Closing the Purchaser shall execute and deliver to
the Seller or the Seller's designee the Purchase Money Notes and Purchase
Money Mortgages evidencing the principal amount of ONE HUNDRED TWENTY
MILLION AND NO/100 DOLLARS ($120,000,000.00); and
(iii) On the Closing Date, Purchaser shall issue to the Seller
27,458,750 validly issued, fully paid and nonassessable Purchaser Common
Shares (adjusted as necessary to reflect fully the effect of any stock
split, reverse stock split, or stock dividend with respect to the Purchaser
Common Shares occurring after the date hereof and prior to the Closing
Date) at an agreed value of $16 per share and not subject to adjustment
notwithstanding any changes in the stock price between the date of this
Agreement and the Closing Date.
(c) The Purchaser and the Seller agree and acknowledge that the transfer
of the Purchased Loans shall be effected in the order and priority described on
SCHEDULE 2.03(C).
(d) The Purchase Price shall be allocated among the Purchased Loans as of
the Closing Date in accordance with EXHIBIT 2.03(D). For all Tax purposes, the
Purchaser and the Seller agree to report the transactions contemplated in this
Agreement in a manner consistent with the terms of this Agreement, including the
allocation under EXHIBIT 2.03(D), and that neither of the parties will take any
position inconsistent therewith in any Tax Return, in any refund claim, in any
litigation, or otherwise.
(e) Provided that the Seller complies with SECTION 2.05(e) hereof, the
Purchaser shall not withhold any U.S. withholding tax from the payment of the
Purchase Price.
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(f) Interest and other debt service on the Purchased Loans shall be
prorated between the Purchaser and the Seller as of the Closing Date with the
Seller being entitled to all interest accruing for periods occurring prior to
the Closing Date and the Purchaser being entitied to all interest accruing on or
after the Closing Date.
SECTION 2.4. CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Purchased Loans shall take place at a
closing (the Closing) to be held at the offices of King & Spalding, 1185 Avenue
of the Americas, New York, New York at 10:00 A.M. New York City time on the date
which is two (2) Business Days after the date on which the conditions set forth
herein with respect thereto and the conditions set forth in the Stock Purchase
Agreement with respect to the Closing thereunder shall be satisfied or duly
waived, or at such other place or at such other time or on such other date as
the Seller and the Purchaser may mutually agree upon in writing (the day on
which the Closing takes place being the Closing Date).
SECTION 2.5. CLOSING DELIVERIES BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser:
(a) the original promissory notes evidencing the Purchased Loans duly
endorsed as directed by the Purchaser, an assignment of the Purchased Loan
Documents and such other instruments, all in form and substance reasonably
satisfactory to the Purchaser, as may be requested by the Purchaser to transfer
the Purchased Loans to the Purchaser (PROVIDED, HOWEVER, that if any such
original Purchased Loan Documents are lost, and the Seller, after making
commercially reasonable efforts, is unable to obtain replacement Purchased Loan
Documents, the Purchaser agrees to accept a lost document affidavit and
indemnity from the Seller with respect to such lost Purchased Loan Documents);
(b) an executed counterpart of the Registration Rights and Voting
Agreement by DIHC and the Seller and the other Ancillary Agreements to which the
Seller is a party;
(b) a receipt for that portion of the Purchase Price paid at Closing;
(c) the opinions, certificates and other documents required to be
delivered pursuant to SECTION 6.02; and
(d) IRS Form 1001 indicating that Seller is exempt from U.S.
withholding tax with respect to interest on the Loans.
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SECTION 2.6. CLOSING DELIVERIES BY THE PURCHASER. At the Closing, the
Purchaser shall deliver to the Seller:
(a) the cash portion of Purchase Price described in clause (i) of
SECTION 2.03(b) above;
(b) the Purchase Money Notes and the Purchase Money Mortgages
described in clause (ii) of SECTION 2.03(b) above;
(c) stock certificates evidencing the Purchaser Common Shares to be
issued to Seller pursuant to clause (iii) of SECTION 2.03(b) above;
(d) an executed counterpart of the Registration Rights and Voting
Agreement by the Purchaser and the other Ancillary Agreements to which the
Purchaser is a party; and
(e) the opinions, certificates and other documents required to be
delivered pursuant to SECTION 6.01.
SECTION 2.7. RECORD DATE FOR FINAL DIVIDEND OF THE PURCHASER. The
Purchaser shall declare a dividend (the "FINAL PURCHASER DIVIDEND") to holders
of the Purchaser Common Shares, the record date for which shall be the close of
business on the last business day prior to the Closing Date in an amount equal
to the Purchaser's most recent quarterly dividend of $0.30 per share, multiplied
by the number of days elapsed since the last dividend record date through and
including the Closing Date and divided by 90.
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
hereby represents and warrants to the Purchaser as follows:
SECTION 3.1. ORGANIZATION AND AUTHORITY OF THE SELLER. The Seller is a
stichting duly organized, validly existing and in good standing under the laws
of The Netherlands and has all necessary power and authority to enter into this
Agreement and the Ancillary Agreements to which it is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Seller is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the operation of
its businesses makes such licensing or qualification necessary other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Seller
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Material Adverse Effect. The execution and delivery by the Seller of this
Agreement and the Ancillary Agreements to which it is a party, the performance
by the Seller of its obligations hereunder and thereunder and the consummation
by the Seller of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Seller. This Agreement
has been, and upon their execution the Ancillary Agreements to which the Seller
is a party will be, duly executed and delivered by the Seller and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Ancillary Agreements to which the
Seller is a party will constitute, legal, valid and binding obligations of the
Seller enforceable against the Seller in accordance with their respective terms
subject to applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights and equitable principles.
SECTION 3.2. NONCONTRAVENTION; CONSENTS. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Agreements to
which it is a party do not and will not conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Encumbrance upon any of the Purchased Loans under the charter and
bylaws, as amended, of the Seller, any loan or credit agreement, note, bond,
mortgage, indenture, reciprocal easement agreement, lease or other agreement,
instrument, permit, concession, contract, franchise or license applicable to the
Seller or the Purchased Loans or subject to the governmental filings and other
matters referred to in the following sentence, any Laws applicable to the Seller
or the Purchased Loans, other than, in the case of clause (ii) or (iii), any
such conflicts, violations, defaults, rights or Encumbrances that either
individually or in the aggregate would not (x) have a Seller Material Adverse
Effect or (y) prevent the consummation of the transactions contemplated by this
Agreement. To the Knowledge of the Seller, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required by or with respect to the Seller in connection with the
execution and delivery of this Agreement by the Seller or the consummation by
the Seller of the transactions contemplated by this Agreement, except for such
filings as may be required in connection with the payment of any Transfer and
Gains Taxes, filings required under the Exchange Act, and such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
are set forth in SCHEDULE 3.02, or which, if not obtained or made, would not
prevent or delay in any material respect the consummation of any of the
transactions contemplated by this Agreement or otherwise prevent the Seller from
performing its
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obligations under this Agreement or the Ancillary Agreements in any material
respect or have, individually or in the aggregate, a Seller Material Adverse
Effect.
SECTION 3.3. LITIGATION. Except as set forth in SCHEDULE 3.03 (which,
with respect to each Action disclosed therein, sets forth the parties, nature of
the proceeding, date and method commenced, amount of damages or other relief
sought and, if applicable, paid or granted), there are no Actions by or against
the Seller affecting any of the Purchased Loans pending before any Governmental
Authority (or, to the Knowledge of the Seller after due inquiry, threatened to
be brought by or before any Governmental Authority) which could reasonably be
expected to have a Seller Material Adverse Effect. To the Knowledge of the
Seller, none of the matters disclosed in SCHEDULE 3.03 has had or could
reasonably be expected to have a Seller Material Adverse Effect or could affect
the legality, validity or enforceability of this Agreement, any Ancillary
Agreement, the Purchased Loan Documents or the consummation of the transactions
contemplated hereby or thereby. To the Knowledge of the Seller, except as set
forth in SCHEDULE 3.03, none of the Seller nor any of the Purchased Loans is
subject to any Governmental Order (nor, to the Knowledge of the Seller, are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority) which has had or could reasonably be expected to have a Seller
Material Adverse Effect.
SECTION 3.4. FULL DISCLOSURE. The Seller is not aware of any facts
pertaining to the Seller or the Purchased Loans which would, or would be
reasonably likely to have a Seller Material Adverse Effect which have not been
disclosed in this Agreement, the Schedules hereto or otherwise disclosed to the
Purchaser by the Seller in writing.
SECTION 3.5. BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Seller.
SECTION 3.6. INSOLVENCY. There has not been filed by nor has the Seller
received notice of a petition in bankruptcy or any other insolvency proceeding,
or for the reorganization or appointment of a receiver or trustee, nor has the
Seller made an assignment for the benefit of creditors, nor filed a petition for
arrangement, nor entered into any arrangement of creditors, nor admitted in
writing its inability to pay debts as they become due.
SECTION 3.7. ENFORCEABILITY; OWNERSHIP. To the Seller's Knowledge, the
Purchased Loan Documents constitute the
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legal, valid and binding obligation of the parties thereto, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights and
principles of equity. The Seller, as the "LENDER", is the owner of the
Purchased Loans and the Purchased Loan Documents free and clear of all
Encumbrances. To the Seller's Knowledge, no borrower under the Purchased Loan
Documents has asserted any offset, counterclaim or defense against the holder of
such Purchased Loan Documents with respect to any Purchased Loans. There is no
material default by any party to the Purchased Loan Documents and, to the
Seller's Knowledge, no event has occurred that, with the giving of notice or
passage of time, or both, would constitute a default thereunder. True, complete
and correct copies of the Purchased Loan Documents have been provided to
Purchaser (together with any and all amendments and modifications thereto) and
are listed on SCHEDULE 3.07(A). The outstanding principal balance of each of
the Purchased Loans, the interest rate payable thereon and the date through
which interest has been paid are set forth on SCHEDULE 3.07(B). From the date
hereof through the Closing or the earlier termination of this Agreement, the
Seller covenants that it shall not, (i) modify or amend any term or provision of
any of the Purchased Loan Documents, (ii) waive any rights of the "lender"
thereunder or (iii) grant any consent or approval required from the "lender"
thereunder without Purchaser's prior written consent, which consent shall not be
unreasonably withheld.
SECTION 3.8. TAXES.
(a) FIRPTA. The Purchased Loans do not constitute a "United States
real property interest" within the meaning of SECTION 897 of the Code and
Treasury Regulation SECTION 1.897-1(d).
(b) TAX LIENS. There are no Tax liens on any of the Purchased Loans.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller as follows:
SECTION 4.1. ORGANIZATION AND AUTHORITY OF THE PURCHASER. The Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the requisite power and authority to carry
on its business as now being conducted. The Purchaser is duly
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qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Seller Material Adverse
Effect. The Purchaser has delivered to the Seller complete and correct copies
of its Restated Articles of Incorporation (the "PURCHASER'S CHARTER") and
Bylaws, as amended to the date of this Agreement.
SECTION 4.2. PURCHASER SUBSIDIARIES. SCHEDULE 4.02 to this Agreement sets
forth each Purchaser Subsidiary and the ownership interest therein of the
Purchaser. Except as set forth on SCHEDULE 4.02, all the outstanding shares of
capital stock of each Purchaser Subsidiary that is a corporation have been
validly issued and are fully paid and nonassessable, are owned by the Purchaser
or by another Purchaser Subsidiary free and clear of all Encumbrances and all
equity interests in each Purchaser Subsidiary that is a partnership, joint
venture, limited liability company or trust are owned by the Purchaser, by
another Purchaser Subsidiary, or by the Purchaser and another Purchaser
Subsidiary, or by two or more Purchaser Subsidiaries free and clear of all
Encumbrances. Except for the capital stock of or other equity or ownership
interests in the Purchaser Subsidiaries, and except as set forth on SCHEDULE
4.02, the Purchaser does not own, directly or indirectly, any capital stock or
other ownership interest in any Person. Each Purchaser Subsidiary that is a
corporation is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each Purchaser
Subsidiary that is a partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its business
as now being conducted. Each Purchaser Subsidiary is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a Purchaser Material Adverse Effect. True, complete and correct copies
of the articles of incorporation, bylaws, organization documents and partnership
and joint venture agreements of each Purchaser Subsidiary, as amended to the
date of this Agreement, have been previously delivered or made available to
Purchaser.
SECTION 4.3. CAPITAL STRUCTURE. The authorized capital stock of the
Purchaser consists of 100,000,000 shares of Purchaser Common Shares and
15,000,000 shares of Purchaser
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Preferred Shares. On the date hereof 48,856,742 shares of Purchaser Common
Shares are issued and outstanding, 3,030,303 shares of Purchaser Preferred
Shares are issued and outstanding, 51,143,258 shares of Purchaser Common Shares
are authorized but not issued, no shares of Purchaser Common Shares are
reserved for issuance under the Purchaser's employee benefit or incentive plans
pursuant to awards granted by the Purchaser (the "PURCHASER EMPLOYEE STOCK
PLANS"), 1,757,500 shares of Purchaser Common Shares are issuable upon the
exercise of outstanding options (the "PURCHASER OPTIONS") to purchase Purchaser
Common Shares, no shares of Purchaser Preferred Shares are issuable upon the
exercise of outstanding options, no Purchaser Common Shares are reserved for
issuance for the Purchaser's Dividend Reinvestment Share Purchase Plan, and no
Purchaser Common Shares are reserved for issuance pursuant to the Purchaser's
Employee Share Purchase Plan. On the date of this Agreement, except as set
forth above in this SECTION 4.03, no shares of stock or other voting securities
of the Purchaser were issued, reserved for issuance or outstanding. The
Purchaser has no outstanding stock appreciation rights relating to the shares of
the Purchaser. All outstanding shares of common stock and preferred stock of
the Purchaser are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. Except as set forth on SCHEDULE 4.03,
there are no bonds, debentures, notes or other indebtedness of the Purchaser
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of the Purchaser
may vote. Except as set forth in this SECTION 4.03, or as set forth in
SCHEDULE 4.03, as of the date of this Agreement there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Purchaser or any Purchaser
Subsidiary is a party or by which such entity is bound, obligating the Purchaser
or any Purchaser Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock, voting securities or
securities convertible into voting securities or other ownership interests of
the Purchaser or any Purchaser Subsidiary or obligating the Purchaser or any
Purchaser Subsidiary to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking
(other than to the Purchaser or a Purchaser Subsidiary). Except as set forth on
SCHEDULE 4.03, there are no outstanding contractual obligations of the Purchaser
or any Purchaser Subsidiary to repurchase, redeem or otherwise acquire any
beneficial shares of interest of the Purchaser or any capital stock, voting
securities or other ownership interests in any Purchaser Subsidiary or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any Person (other than a Purchaser Subsidiary).
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SECTION 4.4 AUTHORITY; NONCONTRAVENTION; CONSENTS. The Purchaser has the
requisite power and authority to enter into this Agreement and, subject to (i)
the approval of the issuance (the "SHARE ISSUANCE") of Purchaser Common Shares
under this Agreement by an affirmative vote of the holders of a majority of the
Purchaser Common Shares present at a duly convened meeting of the stockholders
of the Company in accordance with the requirements of the New York Stock
Exchange and (ii) the approval of the Charter Amendment by an affirmative vote
of the holders of a majority of the issued and outstanding Purchaser Common
Shares and an affirmative vote of the holders of a majority of the issued and
outstanding shares of Purchaser Preferred Shares in accordance with the
requirements of Nevada law and the Purchaser's articles of incorporation (the
approval of the Share Issuance and the approval of the Charter Amendment
together referred to as the "PURCHASER SHAREHOLDER APPROVALS"). The execution
and delivery of this Agreement by the Purchaser and the consummation by the
Purchaser of the transactions contemplated by this Agreement and the Ancillary
Agreements to which the Purchaser is a party have been duly authorized by all
necessary action on the part of the Purchaser, subject to the Purchaser
Shareholder Approvals. This Agreement has been duly executed and delivered by
the Purchaser and constitutes, and upon their execution by the Purchaser and the
Purchaser Subsidiaries the Ancillary Agreements will constitute, the legal,
valid and binding obligation of the Purchaser and the Purchaser Subsidiaries,
enforceable against the Purchaser and the Purchaser Subsidiaries in accordance
with their respective terms, subject to applicable bankruptcy, insolvency or
similar laws affecting the enforcement to creditors' rights and equitable
principles. The execution and delivery by the Purchaser of this Agreement and
the Ancillary Agreements to which it is a party does not, and the consummation
by the Purchaser of the transactions contemplated by this Agreement and the
Ancillary Agreements to which it is a party and compliance by the Purchaser with
the provisions of this Agreement and the Ancillary Agreements to which it is a
party will not, conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit or alteration of rights or obligations under, or result in the creation
of any Encumbrance upon any of the properties or assets of the Purchaser or any
Purchaser Subsidiary under the Charter and Bylaws, as amended, of the Purchaser
or the comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any Purchaser Subsidiary, (i) any loan or
credit agreement, note, bond, mortgage, indenture, reciprocal easement
agreement, lease or other agreement, instrument, permit, concession, contract,
franchise or license applicable to the Purchaser or any Purchaser Subsidiary or
their respective properties or assets or (i)
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subject to the governmental filings and other matters referred to in the
following sentence, any Laws applicable to the Purchaser or any Purchaser
Subsidiary, or their respective properties or assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights or
Encumbrances that either individually or in the aggregate would not (x) have a
Purchaser Material Adverse Effect or (y) materially delay or prevent the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements. Without limiting the foregoing, the Purchaser has taken
all action necessary to ensure that the issuance of the Purchaser Common Shares
to Seller pursuant hereto shall not be deemed a violation of SECTION 8.01(a) of
the Purchaser's Charter. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to the Purchaser or any Purchaser Subsidiary in connection
with the execution and delivery of this Agreement by the Purchaser or the
consummation by the Purchaser of the transactions contemplated by this Agreement
and the Ancillary Agreements, except for the filing with the SEC of (x) a proxy
statement relating to the approval by the Purchaser's shareholders of the
transactions contemplated by this Agreement and the Ancillary Agreements (as
amended or supplemented from time to time, the "PROXY STATEMENT") and (y) such
reports under SECTION 13(a) of the Exchange Act, as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, such filings as maybe required in connection with the payment of any
Transfer and Gains Taxes, the filing of the Charter Amendment with the Nevada
Secretary of State, and such other consents, approvals, orders, authorizations,
registrations, declarations and filings as are set forth in SCHEDULE 4.04, or
which, if not obtained or made, would not prevent or delay in any material
respect the consummation of any of the transactions contemplated by this
Agreement or otherwise prevent the Purchaser from performing its obligations
under this Agreement in any material respect or have, individually or in the
aggregate, a Purchaser Material Adverse Effect.
SECTION 4.5. SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
The Purchaser has timely filed all required reports, schedules, forms,
statements and other documents required to be filed with the SEC (the "PURCHASER
SEC DOCUMENTS"). All of the Purchaser SEC Documents, as of their respective
filing dates, complied, or will comply, as the case may be, in all material
respects with all applicable requirements of the Securities Act, and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
applicable to such Purchaser SEC Documents. No SEC "stop order" has been issued
or is effective with respect to the Purchaser. None of the Purchaser SEC
Documents (including, without limitation, the
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Proxy Statement) at the time of filing or effectiveness contained, or will
contain, as the case may be, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent such statements have been
amended, modified or superseded by later Purchaser SEC Documents (including,
without limitation, the Proxy Statement). The consolidated financial statements
of the Purchaser included in the Purchaser SEC Documents (including, without
limitation, the Proxy Statement) complied, or will comply, as the case may be,
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with U.S. GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q promulgated under the Exchange Act)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented, or will present, as the
case may be, in accordance with the applicable requirements of U.S. GAAP, the
consolidated financial position of the Purchaser and the Purchaser Subsidiaries
as of the dates thereof and the consolidated results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments). Except as set forth in the
Purchaser SEC Documents filed with the SEC prior to the date hereof or in
SCHEDULE 4.05, neither the Purchaser nor any Purchaser Subsidiary has any
Liabilities required by U.S. GAAP to be set forth on a consolidated balance
sheet of the Purchaser and the Purchaser Subsidiaries or, to the Knowledge of
the Purchaser, or in the notes thereto and which, individually or in the
aggregate, would have a Purchaser Material Adverse Effect.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Purchaser SEC Documents filed with the SEC prior to the date hereof or in
SCHEDULE 4.06, since the date of the most recent financial statements included
in the Purchaser SEC Documents (the Financial Statement Date) and to the date of
this Agreement, the Purchaser and the Purchaser Subsidiaries have conducted
their business only in the ordinary course and there has not been any change
that would have a Purchaser Material Adverse Effect (a Purchaser Material
Adverse Change), nor has there been any occurrence or circumstance that with the
passage of time would reasonably be expected to result in a Purchaser Material
Adverse Change, except for regular quarterly dividends not in excess of $.30
per share of Purchaser Common Shares and regular annual dividends not in excess
of $1.155 per share of Purchaser Preferred Shares with customary record and
payment dates, any split, combination or reclassification of any of the
Purchaser's capital stock or any issuance or the authorization of any issuance
of any other securities in respect
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of, in lieu of or in substitution for, or giving the right to acquire by
exchange or exercise, shares of its capital stock or any issuance of an
ownership interest in, any Purchaser Subsidiary, any damage, destruction or
loss to the Purchaser's and the Purchaser Subsidiaries' property, not covered by
insurance, that has or would have a Purchaser Material Adverse Effect or any
change in accounting methods, principles or practices by the Purchaser or any
Purchaser Subsidiary, except insofar as required by a change in U.S. GAAP.
SECTION 4.7. LITIGATION. To the Knowledge of the Purchaser, except as set
forth in SCHEDULE 4.07 (which, with respect to each Action disclosed therein,
sets forth the parties, nature of the proceeding, date and method commenced,
amount of damages or other relief sought and, if applicable, paid or granted),
there are no Actions by or against the Purchaser or any Purchaser Subsidiary,
pending before any Governmental Authority (or, to the Knowledge of the
Purchaser, threatened to be brought by or before any Governmental Authority)
which has had or could reasonably be expected to have a Purchaser Material
Adverse Effect. To the Knowledge of the Purchaser, none of the matters
disclosed in SCHEDULE 4.07 has had or could reasonably be expected to have a
Purchaser Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation of
the transactions contemplated hereby or thereby. To the Knowledge of the
Purchaser, except as set forth in SCHEDULE 4.07, none of the Purchaser, the
Purchaser Subsidiaries nor any of their respective assets or properties, is
subject to any Governmental Order, including any stop order by the SEC (nor, to
the Knowledge of the Purchaser, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has had or could
reasonably be expected to have a Purchaser Material Adverse Effect.
SECTION 4.8. PURCHASER PROPERTIES.
(a) To the Purchaser's Knowledge, Purchaser Subsidiary own fee simple
title (or where indicated, a leasehold estate) to each of the Purchaser
Properties in each case free of all Encumbrances except for Permitted
Encumbrances. Except as described in SCHEDULE 4.08, to the Purchaser's
Knowledge, there is no material violations of any Law (including, without
limitation, any building, planning or zoning Law) relating to any of the
Purchaser Properties.
(b) To the Knowledge of the Purchaser, no improvements on the
Purchaser Properties and none of the current uses and conditions thereof violate
in any material respect any Property Restrictions, and no material permits,
licenses or certificates pertaining to the ownership or operation of all
improvements on
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the Purchaser Properties, other than those which are available to the Purchaser
Properties, are required by any Governmental Authority having jurisdiction over
the Purchaser Properties. Neither the Purchaser nor any of the Purchaser's
Subsidiaries have Knowledge of (i) any condemnation or rezoning proceedings are
pending or threatened with respect to any of the Purchaser Properties or (ii)
any Property Restriction will be violated in any material respect by the
continued maintenance, operation or use of any of the buildings or other
improvements on any of the Purchaser Properties for their current use.
SECTION 4.9. ENVIRONMENTAL AND OTHER PERMITS AND LICENSES; RELATED
MATTERS. To the Knowledge of the Purchaser, except as disclosed in the reports
referenced in SCHEDULE 4.09, the Purchaser and the Purchaser Subsidiaries
currently hold all of the Permits, including, without limitation, Environmental
Permits, required, necessary or proper for the current use, occupancy and
operation of each Purchaser Property, and all such Permits and Environmental
Permits are in full force and effect; (a) there is no existing practice, action
or activity of the Purchaser or any Purchaser Subsidiary and no existing
condition of or condition associated with the Purchaser Properties which would
give rise to any civil or criminal Liability under, or violate or prevent
compliance with, any applicable Environmental Law, applicable Permits or
applicable Environmental Permits or other applicable law; neither the Purchaser
nor any Purchaser Subsidiary has received any notice from any Governmental
Authority proposing to or actually revoking, canceling, rescinding, materially
modifying or refusing to renew any Permit or Environmental Permit or providing
written notice of violations under any applicable Environmental Law or
applicable Environmental Permit; the Purchaser, and each Purchaser Subsidiary
is in all respects in compliance with the Permits, all applicable Environmental
Laws and the requirements of all Environmental Permits; Hazardous Materials
have not been generated, used, treated, handled or stored on, or transported to
or from, any Purchaser Property (other than such activities that have been
conducted in strict accordance with all applicable Environmental Laws and
Environmental Permits consistent with the nature of the applicable Purchaser
Property and that would not have a Purchaser Material Adverse Effect); (a)
Hazardous Materials (regardless of the source) have not been Released on any
Purchaser Property or otherwise contaminated any Purchaser Property and
Hazardous Materials have not been Released on or contaminated any property
adjoining any Purchaser Property (except in either instance, Releases or
contamination involving only de minimis amounts of Hazardous Materials, the
Release of which or contamination by would not violate any applicable
Environmental Law, violate any Environmental Permit, trigger any reporting
obligation, or trigger any obligation to investigate, remediate, cleanup or
otherwise respond to such Hazardous
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Material); (a) the Purchaser and the Purchaser Subsidiaries have disposed of all
wastes, including those consisting of or containing Hazardous Materials, in
compliance in all material respects with all applicable Environmental Laws and
Environmental Permits; there are no past, pending or threatened Environmental
Claims against the Purchaser, any Purchaser Subsidiary or any Purchaser
Property; no Purchaser Property or any property adjoining any Purchaser
Property is listed or proposed for listing on the National Priorities List under
CERCLA or on the CERCLIS or any analogous state list of sites requiring
investigation or cleanup of Hazardous Materials; and neither the Purchaser nor
any Purchaser Subsidiary has used or arranged for the use of any location for
the treatment, storage, disposal, Release or other handling of any Hazardous
Materials or transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the CERCLIS or any analogous state list or
which is the subject of any Environmental Claim; there are not now and never
have been any USTs located on any Purchaser Property or on any property
adjoining any Purchaser Property; and there is not now any asbestos in, on, or
about any Purchaser Property.
SECTION 4.10. RELATED PARTY TRANSACTIONS. Set forth in SCHEDULE 4.10, or
in the Purchaser SEC Documents including the Purchaser's definitive proxy
statements for the Annual Meetings of the Purchaser's shareholders held on June
2, 1997, June 20, 1996 and June 19, 1995, or in the Proxy Statement, is a list
of all arrangements, agreements and contracts entered into by the Purchaser or
any of the Purchaser Subsidiaries with any Person who is an executive officer,
director or Affiliate of the Purchaser or any of the Purchaser Subsidiaries, or
any entity of which any of the foregoing is an Affiliate which would be required
to be disclosed under Item 404 of Regulation S-K promulgated under the
Securities Act and the Exchange Act or acquired Purchaser Common Shares in a
private placement. Such documents, copies of all of which have been previously
delivered or made available to Seller, are listed in SCHEDULE 4.10, in the
Purchaser SEC Documents, in the Purchaser's definitive proxy statements for the
Annual Meetings of the Purchaser's shareholders held on June 2, 1997, June 20,
1996 and June 19, 1995, or in the Proxy Statement.
SECTION 4.11 TAXES.
(a) (i) All returns and reports in respect of Taxes required to be filed
with respect to the Purchaser and each Purchaser Subsidiary have been timely
filed (taking into account any valid extensions of time for filing); (ii) all
Taxes required to be shown on such returns and reports or otherwise due have
been timely paid; (iii) all such returns and reports are true,
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correct and complete in all material respects; (iv) no adjustment relating to
such returns has been proposed formally or informally by any Tax authority and,
to the Knowledge of the Purchaser, no basis exists for any such adjustment; (v)
there are no pending or, to the Knowledge of the Purchaser, threatened actions
or proceedings for the assessment or collection of Taxes against the Purchaser
or any Purchaser Subsidiary or (insofar as either relates to the activities or
income of the Purchaser, any Purchaser Subsidiary or could result in liability
of any Purchaser Subsidiary on the basis of joint and/or several liability) any
corporation that was includible in the filing of a return with the Purchaser on
a consolidated or combined basis; (vi) no consent under SECTION 341(f) of the
Code has been filed with respect to the Purchaser or any Purchaser Subsidiary;
and (vii) there are no Tax liens on any assets of the Purchaser or any
Purchaser Subsidiary.
(b) (i) There are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the
Purchaser or any Purchaser Subsidiary may be subject; (ii) there are no requests
for information currently outstanding that could affect the Taxes of the
Purchaser or any Purchaser Subsidiary; (iii) there are no proposed reassessments
of any property owned by the Purchaser or any Purchaser Subsidiary or other
proposals that could materially increase the amount of any Tax to which the
Purchaser or any Purchaser Subsidiary would be subject; and (iv) no power of
attorney that is currently in force has been granted with respect to any matter
relating to Taxes that could affect any Purchaser Subsidiary.
(c) Each of the Purchaser and the Purchaser Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(d) None of the Purchaser and the Purchaser Subsidiaries is a party
to any Tax allocation or sharing agreement. None of the Purchaser and the
Purchaser Subsidiaries (i) has been a member of an "affiliated group" (as
defined in SECTION 1504(a)(1) of the Code) filing a consolidated federal income
Tax return (other than a group the common parent of which was the Purchaser) or
(ii) has any Liability for the Taxes of any Person (other than any of the
Purchaser and the Purchaser Subsidiaries) under SECTION 1.1502-6 of the Treasury
Regulations (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.
(e) The Purchaser for the period commencing with the taxable year
ending December 31, 1988 to the present has been organized and operated in
conformity with the requirements for
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qualification as a real estate investment trust (a "REIT") (within the meaning
of SECTION 856 of the Code) under the Code and has been subject to taxation as a
REIT and has satisfied all requirements to qualify as a REIT for such periods,
has operated, and intends to continue to operate, in such a manner as to
qualify as a REIT for the tax year ending December 31, 1997, and has not taken
or omitted to take any action which would reasonably be expected to result in a
challenge to its status as a REIT, and to the Purchaser's Knowledge, no such
challenge is pending or threatened. Each Purchaser Subsidiary which is a
partnership, joint venture or limited liability company has been during and
since its formation and continues to be treated for federal income tax purposes
as a partnership and not as a corporation or an association taxable as a
corporation. Each Purchaser Subsidiary which is a corporation for federal
income tax purposes is a "qualified REIT subsidiary," as defined in SECTION
856(i) of the Code. The Purchaser did not incur in its 1996 tax year any
liability for taxes under SECTION 857(b), 860(c) or 4981 of the Code.
SECTION 4.12. BROKERS. No broker, investment banker, financial advisor or
other Person, other than Merrill Lynch & Co., Lazard FrVres & Co. LLC, and
Triton Pacific Capital LLC, the fees and expenses of which have previously been
disclosed to Seller and will be paid by the Purchaser, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser or any Purchaser Subsidiary.
SECTION 4.13 COMPLIANCE WITH LAWS. To the Knowledge of the Purchaser, the
Purchaser and the Purchaser Subsidiaries have each conducted and continue to
conduct their respective businesses and operations in accordance with all Laws
and Governmental Orders applicable to the Purchaser or any Purchaser Subsidiary
or any of their properties or assets and neither the Purchaser nor any Purchaser
Subsidiary is in violation of any such Law or Governmental Order which has had
or could have a Purchaser Material Adverse Effect. Notwithstanding the
foregoing, the Purchaser makes no representation or warranty regarding the
compliance of the Purchaser Properties with ADA requirements.
SECTION 4.14 CONTRACTS; DEBT INSTRUMENTS.
(a) To the Knowledge of the Purchaser, neither the Purchaser nor any
Purchaser Subsidiary is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any material loan or
credit agreement, note, bond, mortgage, indenture, lease, permit,
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concession, franchise, license or any other material contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except as set forth in SCHEDULE 4.14 and
except for violations or defaults that would not, individually or in the
aggregate, result in a Purchaser Material Adverse Effect.
(b) Except for any of the following expressly identified in the
Purchaser SEC Documents, SCHEDULE 4.14 sets forth a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the Purchaser or any of the
Purchaser Subsidiaries, other than indebtedness payable to the Purchaser or a
Purchaser Subsidiary or to any third-party partner or joint venturer in any
Purchaser Subsidiary, in an aggregate principal amount in excess of $500,000 per
item is outstanding or may be incurred.
SECTION 4.15 ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA COMPLIANCE.
(a) Except as disclosed in the Purchaser SEC Documents or in SCHEDULE
4.15(A) and except as permitted by SECTION 5.02 (for the purpose of this
sentence, as if SECTION 5.02 had been in effect since December 31, 1996), since
the Financial Statement Date, there has not been any adoption or amendment by
the Purchaser, any Purchaser Subsidiary or any Person affiliated with the
Purchaser under SECTION 414(b), (c), (m) or (o) of the Code (each, an ERISA
Affiliate of the Purchaser) of any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding, or oral or in writing) providing
benefits to any current or former employee, officer or director of the
Purchaser, any Purchaser Subsidiary, or any ERISA Affiliate of the Purchaser
(collectively, Purchaser Benefit Plans). No Purchaser Benefit Plan is subject
to Title IV of ERISA or to SECTION 412 of the Code or SECTION 302 of ERISA.
(b) Each Purchaser Benefit Plan is listed in SCHEDULE 4.15(B),
including, with respect to terminated Purchaser Benefit Plans, the date of
termination. True and correct copies of each of the following have been made
available to the Seller: (i) the most recent annual report (Form 5500) relating
to each such Purchaser Benefit Plan filed with the IRS, (ii) each such Purchaser
Benefit Plan, (iii) the trust agreement, if any, relating to each such Purchaser
Benefit Plan, (iv) the most recent summary plan description for each such
Purchaser Benefit Plan for which a summary plan description is required by
ERISA,
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and (v) the most recent determination letter, if any, issued by the IRS with
respect to any such Purchaser Benefit Plan qualified under SECTION 401 of the
Code.
(c) Except as set forth in SCHEDULE 4.15(C), as to any such Purchaser
Benefit Plan intended to be qualified under SECTION 401 of the Code, such
Purchaser Benefit Plan satisfies in form the requirements of such SECTION and
there has been no termination or partial termination of such Purchaser Benefit
Plan within the meaning of SECTION 411(d)(3) of the Code. As to any such
terminated Purchaser Benefit Plan intended to have been qualified under SECTION
401 of the Code, such terminated Purchaser Benefit Plan received a favorable
determination letter from the IRS with respect to its termination.
(d) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of the Purchaser, threatened against,
or with respect to, any of such Purchaser Benefit Plans or their assets that
could reasonably be expected to have a Purchaser Material Adverse Effect. To
the Knowledge of the Purchaser, there is no matter pending before the IRS, the
Department of Labor or the PBGC with respect to any of such Purchaser Benefit
Plans. All contributions required to be made to such Purchaser Benefit Plans
pursuant to their terms and provisions have been timely made. Except as set
forth in SCHEDULE 4.15(A), neither the Purchaser nor any Purchaser Subsidiary is
a party to or is bound by any severance agreement, program or policy. True and
correct copies of all employment agreements with officers of the Purchaser and
Purchaser Subsidiaries, and all vacation, overtime and other compensation
policies of the Purchaser and Purchaser Subsidiaries relating to their employees
have been made available to the Purchaser.
(e) Except as described in the Purchaser SEC Documents or as would
not have a Purchaser Material Adverse Effect, (i) all Purchaser Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in SECTION
3(3) of ERISA, are in compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) other than claims for benefits in the
normal course, neither the Purchaser, any Purchaser Subsidiary nor any ERISA
Affiliate of the Purchaser has any liabilities or obligations with respect to
any such Purchaser Benefit Plan, whether accrued, contingent or otherwise, nor
to the Knowledge of the Purchaser are any such liabilities or obligations
expected to be incurred. The execution of, and performance of the transactions
contemplated in, this Agreement will not constitute an event under any Purchaser
Benefit Plan, policy, arrangement or agreement or any trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting,
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distribution, increase in benefits or obligation to fund benefits with respect
to any employee or director of the Purchaser, any Purchaser Subsidiary, or any
ERISA Affiliate of the Purchaser.
SECTION 4.16. VOTE REQUIRED. The Purchaser Shareholder Approvals are the
only votes of the holders of any class or series of the Purchaser's shares
necessary (under applicable Law or otherwise) to approve the Share Issuance and
the Charter Amendment.
SECTION 4.17. SPACE LEASES. To the Knowledge of Purchaser, each lease,
tenancy or occupancy agreement and operating agreement with tenants and
operators currently occupying space in the Purchaser Properties (herein, the
"PURCHASER SPACE LEASES") constitutes the legal, valid, binding, and enforceable
obligation of the landlord and tenant thereunder, is in full force and effect
and the term of the same and the obligation to pay rent thereunder has commenced
and the tenant thereunder is in full possession and actual occupancy thereof,
and all tenant improvements required under the provisions thereof are completed.
To the Knowledge of the Purchaser, neither the Purchaser nor any Purchaser
Subsidiary has any Knowledge of the cancellation or termination of any Purchaser
Space Lease. To the Knowledge of the Purchaser, neither Purchaser nor any
Purchaser Subsidiary, nor to the Knowledge of Purchaser, any other party is in
breach or default in any material respect under any Purchaser Space Lease. To
the Knowledge of Purchaser, no tenant is currently asserting any material claim,
defense, offset or lien against Purchaser, any Purchaser Subsidiary or against
any Purchaser Properties.
SECTION 4.18. GROUND LEASES. To the Knowledge of the Purchaser, each
ground lease affecting a Purchaser Property is valid and in full force and
effect and the copy of each such ground lease provided to the Seller is true,
correct and complete and constitutes the entire agreement between the ground
lessor and ground lessee thereunder and there have been no amendments thereto
(either orally or in writing). To the Knowledge of the Purchaser, there is no
material default by either the ground lessor or ground lessee under any such
ground lease and no conditions exists that, with the passage of time or the
giving of notice or both, would constitute a material default thereunder and no
notice of termination has been given by either a ground lessor or a ground
lessee under any such ground lease. To the Knowledge of the Purchaser, the
applicable Purchaser Subsidiaries' interest in each such ground lease is free of
all Encumbrances except for the Permitted Encumbrances.
SECTION 4.19 INSURANCE. SCHEDULE 4.19 lists all casualty, liability,
business interruption and other insurance policies insuring the Purchaser
Subsidiaries. All such insurance
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policies are in full force and effect. To the Knowledge of the Purchaser, all
material assets, properties and risks of the Purchaser and each Purchaser
Subsidiary are covered by valid and, except for policies that have expired under
their terms in the ordinary course, currently effective insurance policies or
binders of insurance (including, without limitation, general liability
insurance, property insurance and workers' compensation insurance) issued in
favor of the Purchaser or a Purchaser Subsidiary, as the case may be, in each
case with responsible insurance companies, in such types and amounts and
covering such risks as are consistent with customary practices and standards of
companies engaged in businesses and operations similar to those of the Purchaser
or such Purchaser Subsidiary.
SECTION 4.20. INSOLVENCY. There has not been filed by nor has the
Purchaser or any Purchaser Subsidiary received notice of a petition in
bankruptcy or any other insolvency proceeding, or for the reorganization or
appointment of a receiver or trustee, nor has the Purchaser or any Purchaser
Subsidiary made an assignment for the benefit of creditors, nor filed a petition
for arrangement, nor entered into any arrangement of creditors, nor admitted in
writing its inability to pay debts as they become due.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. CONDUCT OF BUSINESS BY THE PURCHASER PRIOR TO THE CLOSING.
During the period from the date of this Agreement through the Closing or earlier
termination of this Agreement, the Purchaser shall, and shall cause the
Purchaser Subsidiaries each to, carry on their respective businesses in the
ordinary and usual course of business and consistent with the Purchaser's and
the Purchaser Subsidiaries' prior practice and shall use its reasonable best
efforts to preserve intact the goodwill and advantageous relationships of the
Purchaser and the Purchaser Subsidiaries with tenants, customers, suppliers,
independent contractors and other Persons material to the operation of the
Purchaser Properties and shall not wilfully or knowingly take or permit any
action or omission which would cause any of its representations or warranties
contained herein to become inaccurate in any respect or any of the covenants
made by it to be breached in any material respect. Without limiting the
generality of the foregoing, the following additional restrictions shall apply:
during the period from the date of this Agreement until the earlier of the
termination of this Agreement or Closing, the Purchaser shall not and shall
cause the Purchaser Subsidiaries not to (and not to authorize or commit or agree
to) without the prior written consent of the Seller
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(which such consent shall not be unreasonably withheld or delayed):
(a) except for (i) its regular quarterly dividends not in excess of
$.30 per share of issued and outstanding Purchaser Common Shares or (ii) its
regular annual dividends not in excess of $1.155 per share of issued and
outstanding Purchaser Preferred Shares with customary record and payment dates,
declare, set aside or pay any dividends on, or make any other distributions in
respect of any of the Purchaser Common Shares or Purchaser Preferred Shares;
(b) except for the Purchaser's Dividend Reinvestment Share Purchase
Plan and the exercise of share options or issuance of shares pursuant to stock
rights, options, restricted share or performance share awards or warrants
outstanding on the date of this Agreement, issue, deliver or sell, or grant any
option or other right in respect of, any shares of common stock, any other
voting securities of the Purchaser or any Purchaser Subsidiary or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (except to the Purchaser or
a Purchaser Subsidiary), except the foregoing shall not prohibit the issuance of
shares of Common Stock of the Purchaser in connection with the conversion of any
currently outstanding convertible preferred stock or convertible notes or in
connection with the granting of any employee stock options or restricted shares
to any employee of Purchaser in an amount not to exceed $10,000,000;
(c) except as otherwise contemplated by this Agreement, amend the
articles or certificate of incorporation, charter, bylaws, partnership agreement
or other comparable charter or organizational documents of the Purchaser or any
Purchaser Subsidiary;
(d) in the case of the Purchaser or any other Purchaser Subsidiary,
merge or consolidate with any Person;
(e) in any transaction or series of related transactions involving
capital, securities or other assets or Indebtedness of the Purchaser, a
Purchaser Subsidiary, or any combination thereof in excess of $10,000,000:
acquire by merging or consolidating with, or by purchasing all or a substantial
portion of the equity securities or all or substantially all of the assets of,
or by any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association, real estate investment trust,
business trust or other business organization or division thereof or interest
therein; subject to any Encumbrance, sell, lease or otherwise dispose of any of
the Purchaser Properties or any material assets or assign or encumber the right
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to receive income, dividends, distributions and the like; or incur any
Indebtedness, issue or refinance any Indebtedness or make any loans, advances or
capital contributions to, or investments in, any other Person; excluding (y) the
Purchaser's proposed $200 million line of credit with Bankers Trust Company and
The Chase Manhattan Bank and (z) financial transactions undertaken by Purchaser
or Purchaser's Subsidiaries in accordance with their respective ordinary cash
management practices such as investments or deposits in commercial paper,
obligations of the United States of America or its agencies or
instrumentalities, certificates of deposit, time deposits, repurchase agreements
and similar financial arrangements;
(f) adopt any new employee benefit plan, incentive plan, severance
plan, stock option or similar plan, grant new stock appreciation rights or amend
any existing plan or rights, except such changes as are required by Law or which
are not more favorable to participants than provisions presently in effect; and
(g) enter into or amend or otherwise modify any agreement or
arrangement with Persons that are Affiliates or, as of the date hereof, are
executive officers, trust managers or directors of the Purchaser or any
Purchaser Subsidiary.
SECTION 5.2. PREPARATION OF THE PROXY STATEMENT; SHAREHOLDERS MEETING.
(a) As soon as practicable following the date of this Agreement but
not later than August 29, 1997, the Purchaser shall finalize and file with the
SEC a preliminary Proxy Statement in form and substance satisfactory to
Purchaser. The Purchaser shall use its reasonable best efforts to respond to
any comments of the SEC and the Purchaser will use its reasonable best efforts
to cause the Proxy Statement to be mailed to the Purchaser's shareholders as
promptly as practicable. The Purchaser will notify the Seller of any comments
from the SEC and of any request by the SEC for amendments or supplements to the
Proxy Statement or for additional information. The Proxy Statement shall comply
in all material respects with all applicable requirements of Law. The Seller
shall furnish all information concerning the Seller and the Purchased Loans as
the Purchaser may reasonably request in connection with such actions and the
preparation of the Proxy Statement. The Proxy Statement shall include a
proposal to amend the Purchaser's Charter in the form of the Charter amendment
attached hereto as EXHIBIT 5.02(a) (the "CHARTER AMENDMENT") and the
recommendations of the Board of Directors of Purchaser in favor of the Share
Issuance and the Charter Amendment. The Seller hereby approves the form of
Charter Amendment attached hereto as EXHIBIT 5.02(a) and consents to the
Additional Charter Provisions and agrees that the Additional Charter Provisions
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shall be included in the Charter Amendments, provided, however that the
Purchaser and the Seller agree that the approval of the Additional Charter
Provisions by the shareholders of the Purchaser shall not be a condition
precedent hereunder to the parties obligation to effect the Closing.
(b) The Purchaser will submit the Share Issuance and the Charter
Amendment to a vote of the Purchaser's shareholders at a special meeting (the
"PURCHASER SHAREHOLDERS MEETING") for the purpose of obtaining the Purchaser
Shareholder Approvals.
(c) The information supplied by the Seller for inclusion in the Proxy
Statement shall not, (i) at the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stockholders of the
Purchaser, (ii) at the time of the Purchaser Shareholders Meeting, and (iii) the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. The Purchaser shall provide the Seller a
reasonable opportunity to review the preliminary Proxy Statement, including the
information supplied by Seller for inclusion therein under the terms of this
SECTION 5.03, prior to the filing of such Proxy Statement with the SEC. If at
any time prior to the Closing Date any event or circumstances relating to the
Seller should be discovered by the Seller which should be set forth in an
amendment or a supplement to the Proxy Statement, the Seller shall promptly
inform the Purchaser. The Seller shall have no liability for the accuracy or
inaccuracy of any information set forth in the Proxy Statement or otherwise in
connection with the Proxy Statement except in respect of any breach by the
Seller of the covenants set forth in this clause (c).
SECTION 5.3. COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Subject to the terms and conditions herein provided, the
Purchaser and Seller shall: (a) use all commercially reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Closing with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions and any third parties in connection with the execution
and delivery of this Agreement, and the consummation of the transactions
contemplated by such Agreement and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits and authorizations, (b) use
all commercially reasonable efforts to obtain in writing any consents required
from third parties to effectuate the transactions contemplated by this
Agreement, such
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consents to be in reasonably satisfactory form to the Seller and Purchaser; and
(c) use all commercially reasonable efforts to take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement.
(b) Prior to the Closing, the Seller and the Purchaser shall deliver
to the other information supplementing or amending the representations,
warranties, Schedules and other disclosures provided in Articles III and IV of
this Agreement to set forth the information relating to any event or
circumstance arising after date of this Agreement, or, with respect to matters
that are limited to the Knowledge of either party, information that becomes a
matter within the Knowledge of such party following the date of this Agreement,
in order to make such representations and warranties, Schedules or other
disclosures complete and accurate as of the date of such supplement or
amendment. Each representation or warranty contained herein and the statements
contained in Articles III and IV (including the Schedules hereto and the other
disclosures) shall be deemed to have been amended by any such supplement or
amendment. All references herein to any such representation, warranty or
statement (including the Schedules hereto and other disclosures) provided
hereby, to the extent such supplement or amendment refers specifically to such
representation, warranty or statement, shall be deemed to refer to the same as
so amended or supplemented. Any amendments or supplements given to either party
pursuant to this SECTION 5.03(b) may be a basis for the termination of this
Agreement as provided for in SECTIONs 8.01(b) and 8.01(c); provided the
terminating party exercises its right to terminate this Agreement under SECTION
8.01(b) or 8.01(c), as applicable, with twenty (20) days after receipt of the
amending or supplementary information giving rise to such termination right.
SECTION 5.4. TRANSFER AND GAINS TAXES. Seller and the Purchaser shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, mortgage recording, intangible, value
added stock transfer and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes which become payable in connection with the
transactions contemplated hereby, excluding state and federal income taxes
(together with any related interests, penalties or additions to tax, Transfer
and Gains Taxes).
SECTION 5.5. ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable notice,
each party and their respective Affiliates and
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their respective officers, directors, employees, agents, accountants and counsel
shall: (i) afford the officers, employees and authorized agents, accountants,
counsel, financing sources and representatives of the other party reasonable
access, during normal business hours, to the properties, offices, other
facilities, books and records of such party and its Affiliates and to those
officers, directors, employees, agents, accountants and counsel of such party
and its Affiliates who have any knowledge relating to such party, its
Affiliates, its properties or the Purchased Loans and (ii) furnish to the
officers, employees and authorized agents, accountants, counsel, financing
sources and representatives of the other party such additional financial and
operating data and other information regarding it and its Affiliates properties
and the Purchased Loans as the other party may from time to time reasonably
request.
(b) In order to facilitate the resolution of any claims made against
or incurred by the Seller prior to the Closing, for a period of seven years
after the Closing, the Purchaser shall (i) retain the books and records of the
Seller which are transferred to the Purchaser pursuant to this Agreement
relating to periods prior to the Closing in a manner reasonably consistent with
the prior practices of the Seller and (ii) upon reasonable notice, afford the
officers, employees and authorized agents and representatives of the Seller
reasonable access (including the right to make, at the Seller's expense,
photocopies), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser after the Closing or for any other
reasonable purpose, for a period of seven years following the Closing, the
Seller shall (i) retain all books and records of the Seller which are not
transferred to the Purchaser pursuant to this Agreement and which relate to the
Seller or the Purchased Loans for periods prior to the Closing and which shall
not otherwise have been delivered to the Purchaser and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and representatives
of the Purchaser, reasonable access (including the right to make photocopies at
the expense of the Purchaser), during normal business hours, to such books and
records.
SECTION 5.6. CONFIDENTIALITY. Each of the Purchaser and Seller covenant
that they shall not, without the prior written consent of the other, divulge,
furnish or make accessible any information or documents provided to the other in
connection with their due diligence review of the other party's operations and
the Purchased Loans (other than "Non-confidential Information" as hereinafter
defined) to any other Person (other than as required by law, including
applicable securities law or
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stock exchange regulations, and other than to their respective employees,
accountants, attorneys, consultants, investment bankers, financial advisors,
creditors, outside partners or co-venturers in, and property managers of, any of
the parties' properties and other agents who will be bound by the terms of this
SECTION 5.06). The term "NON-CONFIDENTIAL INFORMATION" shall mean information
generally available to the public, previously known or in the possession of the
other party or which becomes available prior to any disclosure or use thereof
from some other source not restricted as to disclosure. Purchaser and Seller
agree that if this Agreement is terminated, each shall return to the other all
documents previously delivered to it in connection with the transactions
contemplated by this Agreement and shall destroy all copies of such documents
made by it and (to the extent not prohibited by law or contrary to customary
internal corporate policy) all memoranda, notes and other written material and
work-product related thereto. Each of the Purchaser and Seller shall promptly
notify the other of any request or demand by any court, governmental agency or
other person asserting a demand or request for confidential information supplied
to such party so that the other party may seek an appropriate protective order.
In the absence of such protective order or receipt of a waiver hereunder, if
Purchaser or Seller (or any of their respective representatives) are, in the
reasonable opinion of such party's counsel, compelled to disclose confidential
information or else stand liable for contempt or suffer other censure or
significant penalty, the Purchaser or Seller may disclose that portion of the
requested information which such party's counsel advises it that it is compelled
to disclose. If such party proposes to make disclosure based upon the opinion
of its counsel as aforesaid, such party will (to the extent reasonably possible
and permitted) advise and consult with the other party prior to such disclosure
concerning the information it proposes to disclose.
SECTION 5.7. TAXES.
(a) Provided that Seller furnishes to the Purchaser such forms and
statements as may be reasonably requested by the Purchaser (including IRS Form
1001) to qualify the Seller for exemption from US tax pursuant to any tax treaty
or provision of the Code or Regulations, the Purchaser shall not withhold any
Tax from payments made to Seller with respect to the Purchase Money Notes
(including notes originally issued to DIHC).
(b) Provided that Seller furnishes to the Purchaser such forms and
statements as may be reasonably requested by the Purchaser (including IRS Form
1001) to qualify the Seller for exemption from US tax pursuant to any tax treaty
or provision of the Code or Regulations, the Purchaser shall not withhold Tax
under SECTION 1442 of the Code from ordinary dividends distributed to Seller on
Purchaser Common Shares (including shares originally issued to DIHC).
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(c) If Purchaser recognizes a net capital gain in 1997, then to the
extent possible, the Purchaser shall designate as capital gain dividends an
amount of dividends distributed in 1997 prior to the Closing Date equal to the
amount of the Purchaser's net capital gain.
(d) The Purchaser shall withhold Taxes with respect to any
distribution to the Seller to the extent required by SECTION 1445 of the Code
and the Regulations thereunder; PROVIDED, HOWEVER, that the Purchaser shall
cooperate with any Seller applications or withholding certificates described in
SECTION 1445 and any Regulations and revenue procedures thereunder.
(e) In the event the Purchaser intends to make a deduction or
withholding of Taxes in consistent herewith, it shall advise the Seller prior to
actually deducting and withholding such Taxes. In the event the Purchaser shall
so deduct or withhold Taxes, it (i) shall pay to or deposit with the appropriate
taxing authority in a timely manner the full amount of Taxes it has deducted or
withheld; (ii) shall provide, within thirty days of the payment or deposit
thereof, evidence of payment of such Taxes to, or the deposit thereof with, the
appropriate taxing authority and a statement setting forth the amount of Taxes
deducted or withheld, the applicable rate, and any other information or
documentation reasonably requested by the Seller for the purpose of (x)
assisting in obtaining any applicable credits or deductions for such Taxes in
any jurisdiction in which the Seller is subject to tax or (y) satisfying any
information reporting requirements; and (iii) shall forward to such person(s) as
soon as possible any official tax receipts or other documentation with respect
to the payment or deposit of the deducted or withheld Taxes as may be issued
from time to time by the appropriate taxing authority.
(f) Within 60 days after the close of each calendar year and at such
other times as the Seller shall reasonably request, the Purchaser shall provide
to the Seller a certificate of an officer of the Purchaser stating the officer's
belief as to the status of the Purchaser as a domestically controlled REIT as of
the close of such year and any schedules or summaries setting forth the
computations used by the Purchaser to determine such status.
SECTION 5.8. STANDSTILL AGREEMENT. In the event the Closing does not
occur, the Purchaser and the Seller agree that, for a period of 24 months after
the date of this Agreement, unless specifically invited in writing by the other
party's Board of Directors, neither the Purchaser nor the Seller (nor any of
their respective Affiliates), will in any manner, directly or indirectly, (a)
effect or seek, offer or propose (whether publicly or otherwise) to effect, or
cause or participate in, (i) the acquisition of the other party's securities (or
beneficial ownership thereof) or assets, (ii) any tender or exchange offer,
merger or other business combination involving the other party, (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the other party or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC) or consents to
vote any of the other party's voting securities; (b) form, join or in any way
participate in a "group" (as defined under the Exchange Act) or otherwise act,
alone or in
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concern with others, to seek to control or influence the other party's
management, Board of Directors or policies; or (c) enter into any discussion or
arrangement with any third party with respect to any of the foregoing; PROVIDED,
HOWEVER, that the restrictions set forth in this paragraph shall not apply to
professional asset managers or investment advisers retained by the Purchaser or
the Seller or their respective Affiliates who are authorized to exercise
discretion with respect to all or a portion of the assets which they manage for
the Purchaser or the Seller or their respective Affiliates. Notwithstanding the
foregoing, in the event either of the Purchaser or the Seller willfully and
intentionally breach any of their respective obligations under this Agreement
with the result that a Closing hereunder does not occur, the non-defaulting
party shall not be bound by the covenants in this SECTION 5.08.
SECTION 5.9. BOARD OF DIRECTORS. At the first meeting of the Board of
Directors occurring after the Closing Date, if the Seller so requests, the total
number of persons serving on the Board of Directors of Purchaser shall be
increased to 12 and two additional persons to be nominated by Seller after the
Closing Date shall be appointed by the Board of Directors of Purchaser to fill
the vacancies, effective at such meeting of the Board, thereby created. Between
the Closing Date and the date such nominees are appointed to the Board, the
Board of Directors shall not take any action by written consent or otherwise.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions unless waived by the Seller:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Purchaser contained in this Agreement shall have been true
and correct when made and shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the Closing
Date, other than such representations and warranties as are made as of another
date, the covenants and agreements contained in this Agreement to be complied
with by the Purchaser on or before the Closing shall have been complied with in
all material respects, and the Seller shall have received a certificate from the
Purchaser to such effect signed by the chief executive officer or chief
financial officer of the Purchaser. This condition shall be deemed satisfied
unless breaches of the Purchaser's representations, warranties and covenants in
this Agreement are in the aggregate reasonably expected to have or have had a
Purchaser Material Adverse Effect or adversely affect any of the Seller's
collateral under the Purchase Money Mortgages in any material respect;
(b) NO PROCEEDING OR LITIGATION. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement
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which, in the reasonable, good faith determination of the Seller, is likely to
render it impossible or unlawful to consummate such transactions; PROVIDED,
HOWEVER, that the provisions of this SECTION 6.01(b) shall not apply if the
Seller has directly or indirectly solicited or encouraged any such Action;
(c) RESOLUTIONS. The Seller shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary of the Purchaser, of
the resolutions duly and validly adopted by the Board of Directors of the
Purchaser evidencing its authorization of the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby;
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall not have been any change, circumstance or event in the business or
prospects of the Purchaser which has had or would reasonably be expected to have
a Purchaser Material Adverse Effect or adversely affect any of the Seller's
collateral under the Purchase Money Mortgages in any material respect and Seller
shall have received a certificate of the chief executive officer or chief
financial officer of the Purchaser certifying to such effect;
(e) OPINIONS RELATING TO REIT. Seller shall have received an opinion
of counsel to the Purchaser, dated as of the Closing Date, reasonably
satisfactory to Seller that, commencing with its taxable year ending December
31, 1993, the Purchaser was organized and is operated in conformity with the
requirements for qualification as a REIT under the Code;
(f) CONSENTS. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained, other than such consents and waivers from
third parties, which, if not obtained, would not result individually or in the
aggregate, in a Seller Material Adverse Effect or a Purchaser Material Adverse
Effect;
(g) CLOSING UNDER STOCK PURCHASE AGREEMENT. All conditions precedent
to a closing under the Stock Purchase Agreement shall have been satisfied;
(h) OTHER LEGAL OPINIONS. The Seller shall have received opinions of
counsel to the Purchaser, dated as of Closing Date, regarding the enforceability
(and, where applicable, the due authorization, execution and delivery) of the
Registration Rights and Voting Agreement, the Proxy Statement, the Charter
Amendment and the other Ancillary Agreements to which the Purchaser or any
Purchaser Subsidiary is a party, the due authorization and issuance of the
Purchaser Common Shares being issued to Seller and DIHC on the Closing Date, and
such other matters as the Seller shall reasonably require.
(i) AMENDMENT OF ARTICLES. The Articles shall be amended by
Purchaser Shareholder Approvals to add a new Article 9.
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(j) ORGANIZATIONAL DOCUMENTS. The Seller shall have received a copy
of (i) the Certificate of Incorporation, as amended, of the Purchaser certified
by the secretary of state of the jurisdiction in which such entity is
incorporated or organized, as of a date not earlier than fifteen Business Days
prior to the Closing Date and accompanied by a certificate of the Secretary or
Assistant Secretary of the Purchaser, dated as of the Closing Date, stating that
no amendments have been made to such Certificate of Incorporation since such
date except as contemplated in this Agreement, and (ii) the By-laws of the
Purchaser, certified by the Secretary or Assistant Secretary of the Purchaser;
and
(k) GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Seller shall
have received a good standing certificate for the Purchaser from the secretary
of state of the jurisdiction in which such entity is incorporated or organized
and from the secretary of state in each other jurisdiction in which the
properties owned or leased by the Purchaser, or the operation of its business in
such jurisdiction, requires the Purchaser to qualify to do business as a foreign
entity, in each case dated as of a date not earlier than fifteen Business Days
prior to the Closing Date.
SECTION 6.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations
of the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions unless waived by the Purchaser:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Seller contained in this Agreement shall have been true
and correct when made and shall be true and correct in all material respects as
of the Closing with the same force and effect as if made as of the Closing,
other than such representations and warranties as are made as of another date,
the covenants and agreements contained in this Agreement to be complied with by
the Seller on or before the Closing shall have been complied with in all
material respects, and the Purchaser shall have received a certificate of the
Seller to such effect signed by the chief executive officer or the chief
financial officer of the Seller. This condition shall be deemed satisfied
unless breaches of the Seller's representations, warranties and covenants in
this Agreement are in the aggregate reasonably expected to have or have a Seller
Material Adverse Effect;
(b) NO PROCEEDING OR LITIGATION. No Action shall have been commenced
or threatened by or before any Governmental Authority against either the Seller
or the Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated hereby which the Purchaser believes, in its sole and
absolute discretion, is likely to render it impossible or unlawful to consummate
the transactions contemplated by this Agreement or which could have a Seller
Material Adverse Effect; PROVIDED, HOWEVER, that the provisions of this SECTION
6.02(b), shall not apply if the Purchaser has solicited or encouraged any such
Action;
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(c) LEGAL OPINIONS. The Purchaser shall have received legal opinions
of counsel to the Seller, dated as of the Closing Date, regarding the
enforceability (and, where applicable, the due authorization, execution and
delivery) of the Registration Rights and Voting Agreement and the other
Ancillary Agreements to which the Seller is a party and to consummate the
transactions contemplated hereby and thereby;
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall not have been any change, circumstance or event in the Purchased
Loans or the business or prospects of the Seller which has had or would
reasonably be expected to have a Seller Material Adverse Effect and the
Purchaser shall have received a certificate of the chief executive officer or
chief financial officer of the Seller certifying to such effect;
(e) CONSENTS. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained, other than such consents and waivers from
third parties, which, if not obtained, would not result individually or in the
aggregate in a Seller Material Adverse Effect or a Purchaser Material Adverse
Effect; and
(f) CLOSING UNDER STOCK PURCHASE AGREEMENT. All conditions precedent
to a closing under the Stock Purchase Agreement shall have been satisfied.
SECTION 6.3. CONDITION TO EACH PARTIES OBLIGATION TO EFFECT TRANSACTION.
The respective obligation of each party to consummate the transactions
contemplated under this Agreement is subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) PURCHASER SHAREHOLDER APPROVALS. The Purchaser Shareholder
Approvals shall have been obtained.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect.
(c) RELATED TRANSACTIONS. The Registration Rights and Voting
Agreement substantially in the form attached hereto as Exhibit 1.01(f) shall
have been duly executed and delivered by the parties thereto and shall remain in
full force and effect.
(d) CHARTER AMENDMENT. The Charter Amendment shall have been duly
filed with the Secretary of State of the State of Nevada.
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ARTICLE VII
INDEMNIFICATION
SECTION 7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller and the Purchaser contained in this
Agreement and the Ancillary Agreements shall survive the Closing until March 31,
1999. Neither the period of survival nor the liability of either party hereto
with respect to such party's representations and warranties shall be reduced by
any investigation made at any time by or on behalf of the party seeking
indemnification. If written notice of a claim has been given prior to the
expiration of the applicable representations and warranties by the party seeking
indemnification to the other party, then the relevant representations and
warranties shall survive as to such claim until the claim has been finally
resolved.
SECTION 7.2. INDEMNIFICATION. (a) The Purchaser and its Affiliates
(including, without limitation, the Seller Subsidiaries from and after the
Closing Date), officers, directors, employees, agents, successors and assigns
(each a Purchaser Indemnified Party) shall be indemnified and held harmless by
the Seller for any and all Loss arising out of or resulting from the breach of
any representation or warranty made by the Seller contained in this Agreement or
the Ancillary Agreements; or the breach of any covenant or agreement by the
Seller contained in this Agreement or the Ancillary Agreements; or Liabilities,
whether arising before or after the Closing Date, that are not expressly assumed
by the Purchaser pursuant to this Agreement, including, without limitation, the
Excluded Liabilities.
(b) The Seller and its Affiliates, officers, directors, employees,
agents, successors and assigns (each a "SELLER INDEMNIFIED PARTY"; a Purchaser
Indemnified Party or a Seller Indemnified Party sometimes herein referred to as
an "INDEMNIFIED PARTY") shall be indemnified and held harmless by the Purchaser
for any and all losses arising out of or resulting from the breach of any
representation or warranty made by the Purchaser contained in this Agreement or
the Ancillary Agreements or the breach of any covenant or agreement by the
Purchaser contained in this Agreement or the Ancillary Agreements.
As used herein the term "LOSS" or "LOSSES" means any Liabilities,
losses, damages, claims, costs and expenses, interests, awards, judgments and
penalties (including, without limitation, attorneys' and consultants' fees and
expenses) actually suffered or incurred by any Indemnified Party (including,
without limitation, any Action brought or otherwise initiated by any Indemnified
Party). In the event of any Loss incurred by the Seller on any Affiliate
thereof, for purposes of determining the amount the Seller is entitled to
recover hereunder on account of such Loss (but not for purposes of determining
the threshold amount of Losses or the cap on liability under SECTION 7.03), the
Seller's Loss shall be "grossed up" to an amount equal to the quotient of (i)
the amount of such Loss DIVIDED BY (ii) a fraction the numerator of which is the
aggregate number of issued and outstanding shares of Purchaser Common Shares and
Purchaser Preferred Shares owned by Persons other than the Seller and DIHC as of
the date on which any payment is made by the Purchaser on account of such Loss
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and the denominator of which is the aggregate amount of issued and outstanding
Purchaser Common Shares and Purchaser Preferred Shares as of such date.
To the extent that the Seller's or the Purchaser's undertakings set
forth in this SECTION 7.02 may be unenforceable, the Seller or the Purchaser
which is liable for the undertaking shall contribute the maximum amount that it
is permitted to contribute under applicable Law to the payment and satisfaction
of all Losses incurred by the other party.
(c) An Indemnified Party shall give the party from which it is
seeking indemnification hereunder (the "INDEMNITOR" ) notice of any matter which
an Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, within 30 days of such determination,
stating the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises. The obligations and
Liabilities of the Indemnitor under this Article VII with respect to Losses
arising from claims of any third party which are subject to the indemnification
provided for in this Article VII (Third Party Claims) shall be governed by and
contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnitor notice of such Third Party Claim within 30 days
of the receipt by the Indemnified Party of such notice; PROVIDED, HOWEVER, that
the failure to provide such notice shall not release the Indemnitor from any of
its obligations under this Article VII except to the extent the Indemnitor is
materially prejudiced by such failure and shall not relieve the Indemnitor from
any other obligation or liability that it may have to any Indemnified Party
otherwise than under this Article VII. If the Indemnitor acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then the Indemnitor shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within five days of the receipt of such notice
from the Indemnified Party; PROVIDED, HOWEVER, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the Indemnified Party for the same
counsel to represent both the Indemnified Party and the Indemnitor, then the
Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required, at
the expense of the Indemnitor. In the event the Indemnitor exercises the right
to undertake any such defense against any such Third Party Claim as provided
above, the Indemnified Party shall cooperate with the Indemnitor in such defense
and make available to the Indemnitor, at the Indemnitor's expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnitor. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnitor shall cooperate with the Indemnified
Party in such defense and make available to the Indemnified Party, at the
Indemnitor's expense, all such witnesses, records, materials and information in
the Indemnitor's possession or under the Indemnitor's control relating thereto
as is reasonably required by the Indemnified Party. No
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such Third Party Claim may be settled by the Indemnitor without the written
consent of the Indemnified Party, which will not be unreasonably withheld or
delayed.
SECTION 7.3. LIMITATIONS ON RECOVERY. With respect to any claim for the
breach of representations and warranties hereunder, no claim may be made by an
Indemnified Party against an Indemnitor for indemnification hereunder with
respect to any individual item of Loss unless the aggregate of all Losses for
which the Indemnified Party is seeking recovery from an Indemnitor under this
Article VII for breaches of representations or warranties plus any Losses for
which such Indemnified Party or any Affiliate thereof is seeking indemnification
under Article VIII of the Stock Purchase Agreement for breaches of
representations or warranties shall exceed Ten Million and No/100 Dollars
($10,000,000.00), except in the event the Indemnified Party is seeking indemnity
as a result of a wilful and intentional breach by the Indemnitor of any of its
material representations or warranties set forth in this Agreement in which such
case the foregoing limitations shall not be applied and the Indemnified Party
shall be entitled to recover its Losses to the full extent thereof. In the
event the Indemnified Party is entitled to seek recovery for breaches of
representations or warranties hereunder, the indemnity shall be for the full
extent of all the Losses to the Indemnified Party resulting from such breach
exceeding and excluding the first Ten Million and No/100 Dollars
($10,000,000.00) under this Agreement and the Stock Purchase Agreement
aggregated. Notwithstanding the foregoing, the aggregate liability for Losses
for breaches of representations and warranties of any Indemnitor (and its
Affiliates) under this Article VII or Article VIII of the Stock Purchase
Agreement shall be limited to an aggregate amount of One Hundred Million and
No/100 Dollars ($100,000,000.00), except in the event the Indemnified Party is
seeking indemnity hereunder as a result of the wilful and intentional breach by
the Indemnitor of any of its material representations or warranties set forth in
this Agreement in which event the foregoing limitation on liability shall not be
applicable and the Indemnified Party shall be entitled to recover its Losses to
the full extent thereof.
Payments made by an Indemnitor hereunder shall be limited to the amount of
Losses that remain after deducting therefrom any insurance proceeds and any
indemnity, contribution or other payment actually received by the Indemnified
Party from any Person with respect thereto.
ARTICLE VIII
TERMINATION
SECTION 8.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent duly authorized by the respective
Boards of Directors of Purchaser and the Seller;
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(b) by Purchaser, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Seller set forth in this
Agreement if such breach is reasonably expected to, or has, a Seller Material
Adverse Effect or a Purchaser Material Adverse Effect, or if any material
representation or warranty of the Seller shall have become untrue in any
material respect such that the conditions set forth in SECTION 6.02(a) would be
incapable of being satisfied on or prior to December 31, 1997;
(c) by the Seller, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Purchaser set forth in this
Agreement if such breach is reasonably expected to, or has, a Purchaser Material
Adverse Effect, or if any material representation or warranty of the Purchaser
shall have become untrue in any material respect such that the conditions set
forth in SECTION 6.01(a) would be incapable of being satisfied on or prior to
December 31, 1997;
(d) by the Purchaser, if any judgment, injunction, order, decree or
action by any Governmental Authority preventing the consummation of the
transactions contemplated hereby or requiring actions as a condition precedent
to the consummation of such transactions which would result in a Purchaser
Material Adverse Effect or Seller Material Adverse Effect shall have become
final and nonappealable;
(e) by the Seller, if any judgment, injunction, order, decree or
action by any Governmental Authority preventing the consummation of the
transactions contemplated hereby or requiring actions as a condition precedent
to the consummation of such transactions which would result in a Purchaser
Material Adverse Effect (or the impairment in any material respect of any of the
Seller's collateral under the Purchase Money Mortgages) shall have become final
and nonappealable;
(f) by either the Purchaser or the Seller, if the Stock Purchase
Agreement is terminated;
(g) by either Seller or the Purchaser if the Purchaser Shareholder
Approvals shall not have been obtained on or before December 31, 1997; or
(h) by the Seller upon any Purchaser Change of Control.
SECTION 8.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Seller or the Purchaser as provided in SECTION 8.01,
this Agreement shall forthwith become void and have no effect (provided,
however, that the provisions of SECTIONs 5.06, 5.08 and this SECTION 8.02,
together with the definitions set forth in SECTION 1.01 which are operative with
respect to such provisions and the operative provisions of Article IX such as
"Notice," "Governing Law" and similar provisions, shall survive such termination
subject to any limitations on or survival described therein), without any
liability or obligation on the part of Purchaser or the Seller except to the
extent that such termination results from a wilful and intentional breach by a
party of any of its material representations,
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warranties, covenants or agreements set forth in this Agreement. In the event
of a wilful, intentional breach by either party of any of its material
representations warranties, covenants or agreements, the non-defaulting party
shall have the right to seek specific performance of this Agreement and shall
have the right to pursue any and all other rights or remedies available at law,
in equity or under this Agreement (including, without limitation, to seek
indemnification under Article VII) without regard to the limitations set forth
in SECTION 7.03.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. EXPENSES. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred. Without limiting the generality of the foregoing, the Seller and
Purchaser acknowledge and agree that the Purchaser has engaged Coopers & Lybrand
L.L.P. (New York), Merrill Lynch & Co., Lazard FrVres & Co. LLC and Triton
Pacific Capital LLC to advise it in connection with the transactions
contemplated hereby and that the Purchaser shall be responsible for the fees and
expenses of such advisors.
SECTION 9.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this SECTION
9.02):
(a) if to the Seller:
Pensioenfonds PGGM
Kroostweg-Noord 149
3704DV Zeist, The Netherlands
Telecopy: 011-31-30-696-3388
Attention: Mr. Jan van der Vlist
Ms. Anneke C. van de Puttelaar
with a copy to:
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Telecopy: (212) 750-9022
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Attention: Robert M. Safron, Esq.
(b) if to the Purchaser:
126 East 56th Street
New York, New York 10022
Telecopy: (212) 605-7199
Attention: Mr. John S. Moody
with a copy to:
King & Spalding
191 Peachtree Street, NE
Atlanta, Georgia 30303
Telecopy: (404) 572-5148
Attention: William B. Fryer, Esq.
SECTION 9.3. WAIVER OF JURY TRIAL. To the extent permitted by applicable
law, the parties hereby irrevocably waive any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement, the ancillary
agreements or the transactions contemplated hereby or thereby.
SECTION 9.4. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.5. SEVERABILITY. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any Law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 9.6. ENTIRE AGREEMENT. This Agreement with the Ancillary
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, between the Seller and the Purchaser with respect to the
subject matter hereof (including, without limitation, the Confidentiality
Agreement between Seller and the Purchaser dated July 15, 1997).
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SECTION 9.7. ASSIGNMENT. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of the Seller and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Seller and the Purchaser). The Seller acknowledges and agrees that in
connection with any liquidation or dissolution of DIHC occurring during the
period which DIHC has any Liability under the Stock Purchase Agreement (by way
of indemnity or otherwise), Seller shall assume all such Liability of DIHC upon
such liquidation or dissolution.
SECTION 9.8. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person under or by reason of this Agreement.
SECTION 9.9. AMENDMENT. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Seller and
the Purchaser.
SECTION 9.10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, applicable to
contracts executed in and to be performed entirely within that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court sitting in the City
of New York.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12. WAIVER. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
SECTION 9.13. NO PURCHASER'S LIEN. The parties acknowledge that in no
event that shall this Agreement constitute an encumbrance upon any of the
Purchased Loans and Purchaser hereby expressly waives any purchaser's lien, if
any, that it may otherwise have upon or against the Purchased Loans by virtue of
this Agreement.
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SECTION 9.14. CLOSING UNDER LOAN PURCHASE AGREEMENT. The parties hereto
acknowledge and agree that the transactions contemplated hereunder are intended
to (and shall) close immediately preceding to the transactions contemplated
under the Stock Purchase Agreement.
SECTION 9.15. LIMITED SURVIVAL. Except as expressly provided in SECTIONs
2.03(d), 5.02(c), 5.03(a), 5.04, 5.05(b) and (c), 5.06, 5.07, 8.02, Articles V
and VII hereof (which provisions together with the definitions set forth in
SECTION 1.01 which are operative with respect thereto and the operative
provisions of this Article IX such as "Notice," "Governing Law," and similar
operative provisions) shall survive the Closing subject to any limitations on
survival described therein), the provisions of this Agreement shall not survive
the Closing and shall be merged into the Ancillary Agreements and the other
documents executed and delivered at the Closing.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
STICHTING PENSIOENFONDS VOOR DE
GEZONDHEID, GEESTELIJKE EN
MAATSCHAPPELIJKE BELANGEN
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
CORNERSTONE PROPERTIES INC.
By:
--------------------------------
Name:
Title:
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SCHEDULES AND EXHIBITS
SCHEDULE 1.01(D) Purchaser Persons for purposes of defining Knowledge
SCHEDULE 1.01(E) Seller Persons for purposes of defining Knowledge
SCHEDULE 1.01(F) Purchaser Subsidiary Corporations
SCHEDULE 1.01(J) Purchaser Properties
SCHEDULE 2.03(C) Order and priority of transfer of Purchased Loans
SCHEDULE 3.02 Required Consents of Governmental Authorities for Seller to
enter into and consummate agreement
SCHEDULE 3.03 Litigation affecting Purchased Loans
SCHEDULE 3.07(A) Purchased Loan Documents
SCHEDULE 3.07(B) Outstanding Principal Balance of each Purchased Loan,
interest rate payable thereon and date through which
interest has been paid
SCHEDULE 4.02 Purchaser's ownership interest in each Purchaser Subsidiary
SCHEDULE 4.03 Convertible Debt and Convertible Purchaser Preferred Shares
SCHEDULE 4.04 Required Consents of Governmental Authorities for Purchaser
or Purchaser Subsidiaries to enter into and consummate
agreement
SCHEDULE 4.05 Liabilities Required by U.S. GAAP to be set forth on
Consolidated Balance Sheet of Purchaser and Purchaser
Subsidiaries
SCHEDULE 4.06 List of any Purchaser Material Adverse Change occurring
since the date of the most recent financial statements
included in the SEC Documents (the "Financial Statement
Date") to the date of the Agreement
SCHEDULE 4.07 List of Actions Against Purchaser or any Purchaser
Subsidiary
SCHEDULE 4.08 Material violations of law relating to any of the Purchaser
Properties.
SCHEDULE 4.09 Purchaser Environmental Reports
SCHEDULE 4.10 List of related party transactions by Purchaser and the
Purchaser Subsidiaries
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SCHEDULE 4.14 Debt Instruments Not Described in Purchaser SEC Documents
and any Defaults Thereunder
SCHEDULE 4.15(A) Any bonus, pension, profit sharing, severance plan adopted
by Purchaser and not disclosed in the SEC Documents since
the Financial Statement Date
SCHEDULE 4.15(B) List of Purchaser Benefit Plans
SCHEDULE 4.15(C) SECTION 401 Benefit Plans not Qualified under the Code or
terminated under the Code
SCHEDULE 4.19 Liability, Casualty, Business Interruption and other
Insurance Policies Insuring the Purchaser Subsidiaries
EXHIBIT 1.01(D) Description of Purchase Money Notes and Mortgages
EXHIBIT 1.01(F) Registration Rights and Voting Agreement
EXHIBIT 2.03(D) Purchase Price Allocations for Purchased Loans
EXHIBIT 5.02(A) Proposed Charter Amendment to Purchaser's Charter
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EXHIBIT D
---------
Schedule 3.07(a) of the Loan Purchase Agreement
(Purchased Loans and Purchased Loan Documents)
SEE ATTACHED
<PAGE>
SCHEDULE 3.07(a)
----------------
PURCHASED LOANS
---------------
1. Mortgage loan from Stichting Pensioenfonds voor de Gezondheid, Geestelijke
en Maatschappelijke Belangen ("PGGM") to One Ninety One Peachtree
Associates ("191") in the principal sum of $145,000,000, evidenced and
secured by:
(i) Promissory Note from 191 to DIHC Finance
Corporation ("DIFCO") in the principal sum of
$145,000,000.00, as endorsed to PGGM.
(ii) Deed to Secure Debt from 191 to DIFCO, dated
February 1, 1988, as amended by First
Amendment, dated February 10, 1988, as
further amended by Second Amendment, dated
April 27, 1988, as assigned by DIFCO to PGGM
pursuant to Assignment of Loan Documents,
dated March 1, 1993.
(iii) Building Loan Agreement, dated February 1,
1988 between DIFCO and 191, as assigned by
DIFCO to PGGM pursuant to Assignment of Loan
Documents, dated March 1, 1993.
(iv) Assignment of Partnership Interest, Security
Agreement and Marshalling Agreement between
191, DIFCO and DIHC Peachtree Associates,
dated February 1, 1988.
2. Mortgage loan from PGGM to Five Hundred Boylston West Venture ("500") in
the principal sum of $153,650,000, evidenced and secured by:
(v) "A" Note from 500 to DIHC Finance Corporation
in the original principal sum of $153,650,000
as assigned to PGGM pursuant to Assignment of
"A" Note and First Mortgage and Security
Agreement.
(vi) First Mortgage and Security Agreement dated
May 29, 1986 from 500 to DIFCO , as assigned
from
<PAGE>
DIFCO to PGGM pursuant to Assignment of "A"
Note and First Mortgaged and Security
Agreement.
(vii) Building Loan Agreement dated May 29, 1986
between DIFCO and 500, as assigned from DIFCO
to PGGM pusuant to Assignment of Building
Loan Agreement.
(viii) First Collateral Assignment of Leases and
Rents from 500 to DIFCO, as assigned from
DIFCO to PGGM pursuant to Assignment of First
Collateral Assignment of Leases and Rents.
(ix) UCC-1 Financing Statements naming 500, as
debtor and DIFCO, as Secured Party, as
assigned by DIFCO to PGGM pursuant to UCC-3.
(x) Guaranty by Dutch Institutional Holding
Company, Inc. of DIFCO's obligations under
the Building Loan Agreement
3. Mortgage Loan from PGGM to Charlotte Office Tower Associates ("Charlotte")
in the principal amount of $33,000,000, evidenced and secured by:
(xi) Modified and Restated "A" Note dated December
21, 1982 from Charlotte to PGGM in the
principal sum of $33,000,000.
(xii) "A" Deed of Trust and Security Agreement made
by Charlotte, dated October 22, 1980, as
modified by "A" Extension, Modification and
Spreader Agreement dated December 21, 1982
4. Mortgage loan from PGGM to Charlotte in the principal sum of $8,196,549.27,
evidenced and secured by:
(xiii) Modified and Restated "B" Note dated December
21, 1982 in the principal sum of
$8,196,549.27 from Charlotte to PGGM.
(xiv) "B" Deed of Trust and Security Agreement
dated October 22, 1980, as modified by "B"
Extension,
<PAGE>
Modification and Spreader Agreement dated
December 21, 1982.
5. Mortgage loan from PGGM to TransCanal Properties, Inc. ("TCP") in the
principal amount of $7,061,864.65, evidenced and secured by:
(xv) Amended and Restated Promissory Note from TCP
to PGGM in the principal sum of
$7,061,864.65.
(xvi) Deed of Trust and Security Agreement dated
February 3, 1988 from TCP to Real Title
Company, Inc., as Trustee for the benefit of
DIFCO, as assigned by DIFCO to PGGM by
Assignment of Note and Deed of Trust dated
March 1, 1988, as modified by Extension and
Modification Agreement dated December 31,
1994.
(xvii) Assignment of Lessor's Interest in Leases
dated as of February 3, 1988 from TCP to
DIFCO, as assigned by Assignment dated as of
March 1, 1988 from DIFCO to PGGM,
6. Mortgage Loan from PGGM to Canal Center Properties, Inc. ("CCP") in the
principal amount of $17,963,440.81, evidenced and secured by:
(xviii) Second Amended and Restated Promissory Note
made December 31, 1994 from CCP to PGGM in
the principal sum of $17,963,440.81.
(xix) Construction Deed of Trust and Security
Agreement dated as of September 15, 1985 from
CCP to Real Title Company, Inc., as Trustee
for DIFCO, as assigned by DIFCO to PGGM by
Assignment of Construction Note and
Construction Deed of Trust dated December 11,
1989, and as amended by Extension and
Modification Agreement dated December 31,
1994 between CCP and PGGM.
(xx) Assignment of Lessor's Interest in Leases
dated as of September 15, 1985 from CCP to
DIFCO, as
<PAGE>
assigned by DIFCO to PGGM pursuant to
Assignment dated as of December 11, 1989.
7. Mortgage Loan from PGGM to DIHC Properties I, Inc. ("DIHC I") in the
principal amount of $33,310,304.78, evidenced and secured by:
(xxi) Amended and Restated Promissory Note made as
of November 1, 1994 from DIHC I to PGGM in
the principal sum of $33,310,304.78.
(xxii) Deed to Secure Debt and Security Agreement
dated December 31, 1988 from DIHC I to PGGM.
8. Mortgage Loan from PGGM to Bryce Mountain, Inc. ("Bryce") in the principal
amount of $9,001,126.41, evidenced and secured by:
(xxiii) Third Amended and Restated Promissory Note
dated December 31, 1994 from Bryce to PGGM in
the principal sum of $9,001,126.41.
(xxiv) Construction Deed of Trust and Security
Agreement dated May 1, 1981 from Bryce to
Carolyn Musselman and Robert M. Musselman,
Trustees for the benefit of DIFCO, as
modified by Deed of Appointment of Substitute
Trustee dated January 27, 1983, as further
amended by Extension and Modification
Agreement dated as of February 13, 1986, as
assigned by DIFCO to PGGM pursuant to
Assignment, dated December 1, 1987, as
further amended by Second Extension and
Modification Agreement, dated December 1,
1987, and as finally amended by Third
Extension and Modification Agreement dated
December 31, 1994.
(xxv) Collateral Assignment of Leases and Rents
dated May 1, 1981 from Bryce to DIFCO, as
assigned by DIFCO to PGGM by Assignment,
dated December 1, 1987.
9. Mortgage Loan from PGGM to Avenue Associates Limited Partnership ("AALP")
in the principal amount of $188,491,750, evidenced and secured by:
<PAGE>
(xxvi) Promissory Note from AALP to DIFCO in the
principal sum of $188,491,750, as assigned by
DIFCO to PGGM pursuant to Assignment of Loan
Documents, dated November 15, 1992.
(xxvii) Deed of Trust and Security Agreement, dated
July 15, 1987 from AALP to Michael J. Shea,
trustee for DIFCO, as amended by Spreader
Agreement to Deed of Trust and Security
Agreement and Assignment of Lessor's Interest
in Leases recorded June 24, 1988, as further
amended by First Amendment to Deed of Trust,
recorded October 18, 1988, as further amended
by Second Amendment to Deed of Trust,
recorded May 23, 1989, as further amended by
Third Amendment to Deed of Trust recorded
November 29, 1989, and as assigned by DIFCO
to PGGM pursuant to Assignment of Loan
Documents, dated November 15, 1992.
(xxviii) Building Loan Agreement, between AALP and
DIFCO, as assigned by DIFCO to PGGM pursuant
to Assignment of Loan Documents, dated
November 15, 1992.
(xxix) Assignment of Lessor's Interest in Leases by
AALP to DIFCO, as assigned by DIFCO to PGGM
pursuant to Assignment of Loan Documents,
dated November 15, 1992.
(xxx) Assignment of Borrower's Interest in
Construction Contracts by AALP to DIFCO, as
assigned by DIFCO to PGGM pursuant to
Assignment of Loan Documents, dated November
15, 1992.
10. Loan from PGGM to DIHC Atlanta, Inc. ("Atlanta") in the principal amount of
$25,000,000, evidenced and secured by:
(xxxi) Promissory Note from Atlanta to DFICO in the
principal sum of $25,000,000, dated March 1,
1993, as endorsed to PGGM.
<PAGE>
(xxxii) Pledge and Security Agreement from Atlanta to
DIFCO dated March 1, 1993, as assigned to
PGGM.
11. Loan from PGGM to DIHC Peachtree, Inc. ("Peachtree") in the principal
amount of $25,000,000, evidenced and secured by:
(xxxiii) Promissory Note from Peachtree to DIFCO dated
March 1, 1993 in the principal sum of
$25,000,000, as endorsed to PGGM.
(xxxiv) Pledge and Security Agreement made as of
March 1, 1993 from Peachtree to DIFCO, as
assigned to PGGM.
12. Loan from PGGM to DIHC Boylston Corp. ("Boylston") in the principal amount
of $18,461,283.03, evidenced and secured by:
(xxxv) Amended and Restated Promissory Note made as
of July 1, 1993 from Boylston to PGGM in the
principal sum of $18,461,283.03.
13. Loan from PGGM to DIHC Berkeley Corp. ("Berkeley") in the principal amount
of $44,000,000, evidenced and secured by:
(xxxvi) Promissory Note from Berkeley to PGGM dated
December 31, 1994 in the principal sum of
$44,000,000.
(xxxvii) Pledge and Security Agreement from Berkeley
to PGGM dated December 31, 1994.
14. Loan from PGGM to DIHC Berkeley Back Bay Corp. in the principal amount of
$45,080,000.
(xxxviii) Promissory Note from DIHC Berkeley Back Bay
Corp. to DIHC Finance Corporation dated as of
August 15, 1997 in the principal sum of
$45,080,000 (to be assigned to PGGM prior to
Closing).
<PAGE>
15. Loan from PGGM to DIHC Boylston Back Bay Corp. in the principal amount of
$27,327,000.
(xxxix) Promissory Note from DIHC Boylston Back Bay
Corp. to DIHC Finance Corporation dated as of
August 15, 1997 in the principal sum of
$27,327,000 (to be assigned to PGGM prior to
Closing).
<PAGE>
EXHIBIT E
---------
STOCK PURCHASE AGREEMENT
SEE ATTACHED
<PAGE>
EXHIBIT E
---------
================================================================================
-----------------------------------
STOCK PURCHASE AGREEMENT
-----------------------------------
Between
DUTCH INSTITUTIONAL HOLDING COMPANY, INC.,
as "SELLER"
and
CORNERSTONE PROPERTIES INC.,
as "PURCHASER"
Dated as of August 18, 1997
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms...........................................1
ARTICLE II PURCHASE AND SALE
SECTION 2.01. Interests......................................................12
SECTION 2.02. Purchase Price; Payment; Order of Transfers; Allocation of
Purchase Price.................................................13
SECTION 2.03. Closing........................................................14
SECTION 2.04. Closing Deliveries by the Seller...............................14
SECTION 2.05. Closing Deliveries by the Purchaser............................14
SECTION 2.06. Certain Adjustments............................................15
SECTION 2.07. Closing Accounting.............................................16
SECTION 2.08. Record Date for Final Dividend of the Purchaser................17
ARTICLE III REPRESENTATIONS AND WARRANTIESOF THE SELLER
SECTION 3.01. Organization and Authority of the Seller.......................18
SECTION 3.02. Capital Structure and Ownership of Seller Subsidiaries..........18
SECTION 3.03. Seller Subsidiaries............................................19
SECTION 3.04. Books and Records..............................................20
SECTION 3.05. Noncontravention; Consents.....................................20
SECTION 3.06. Seller Financial Information; Books and Records................21
SECTION 3.07. No Undisclosed Liabilities.....................................21
SECTION 3.08. Space Leases...................................................21
SECTION 3.09. Litigation.....................................................22
SECTION 3.10. Compliance with Laws...........................................22
SECTION 3.11. Environmental and Other Permits and Licenses; Related Matters..22
SECTION 3.12. Material Contracts.............................................23
SECTION 3.13. Management Agreements..........................................24
SECTION 3.14. Seller Properties..............................................25
SECTION 3.15. Ground Leases..................................................25
SECTION 3.16. Employment Matters.............................................26
SECTION 3.17. Taxes..........................................................26
SECTION 3.18. Insurance......................................................27
SECTION 3.19. Full Disclosure................................................27
SECTION 3.20. Brokers........................................................27
SECTION 3.21. Insolvency.....................................................28
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<PAGE>
ARTICLE IV REPRESENTATIONS AND WARRANTIESOF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser....................28
SECTION 4.02. Purchaser Subsidiaries.........................................28
SECTION 4.03. Capital Structure..............................................29
SECTION 4.04. Authority; Noncontravention; Consents..........................30
SECTION 4.05. SEC Documents; Financial Statements; Undisclosed Liabilities...31
SECTION 4.06. Absence of Certain Changes or Events...........................32
SECTION 4.07. Litigation.....................................................32
SECTION 4.08. Purchaser Properties...........................................32
SECTION 4.09. Environmental and Other Permits and Licenses; Related Matters..33
SECTION 4.10. Related Party Transactions.....................................34
SECTION 4.11. Taxes..........................................................34
SECTION 4.12. Brokers........................................................35
SECTION 4.13. Compliance with Laws...........................................36
SECTION 4.14. Contracts; Debt Instruments....................................36
SECTION 4.15. Absence of Changes in Benefit Plans; ERISA Compliance...........36
SECTION 4.16. Vote Required..................................................38
SECTION 4.17. Space Leases...................................................38
SECTION 4.18. Ground Leases..................................................38
SECTION 4.19. Insurance......................................................38
SECTION 4.20. Insolvency.....................................................39
ARTICLE V ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business by Seller Prior to the Closing;
Competing Transactions....................................39
SECTION 5.02. Conduct of Business by the Purchaser Prior to the Closing......40
SECTION 5.03. Preparation of the Proxy Statement; Shareholders Meeting.......42
SECTION 5.04. Commercially Reasonable Efforts; Notification..................43
SECTION 5.05. Name Changes...................................................45
SECTION 5.06. Intentionally omitted..........................................45
SECTION 5.07. Transfer and Gains Taxes.......................................45
SECTION 5.08. Access to Information..........................................45
SECTION 5.09. Confidentiality................................................46
SECTION 5.10. Section 754 Election...........................................47
SECTION 5.11. Standstill Agreement...........................................47
SECTION 5.12. Performance Under Redemption Agreement.........................47
ARTICLE VI TAX MATTERS
SECTION 6.01. Indemnity......................................................48
SECTION 6.02. Straddle Period Taxes..........................................48
SECTION 6.03. Returns and Payments...........................................49
SECTION 6.04. Refunds........................................................50
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<PAGE>
SECTION 6.05. Contests.......................................................50
SECTION 6.06. Section 338(h)(10) Election...................................51
SECTION 6.07. Time of Payment................................................51
SECTION 6.08. Cooperation and Exchange of Information........................51
SECTION 6.09. Miscellaneous..................................................52
ARTICLE VII CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller........................52
SECTION 7.02. Conditions to Obligations of the Purchaser.....................54
SECTION 7.03. Condition to each Parties Obligation to Effect Transaction.....56
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties.....................57
SECTION 8.02. Indemnification................................................57
SECTION 8.03. Limitations on Recovery........................................59
SECTION 8.04. Tax Matters....................................................60
ARTICLE IX TERMINATION
SECTION 9.01. Termination....................................................60
SECTION 9.02. Effect of Termination..........................................61
ARTICLE X GENERAL PROVISIONS
SECTION 10.01. Expenses......................................................61
SECTION 10.02. Notices.......................................................62
SECTION 10.03. Waiver of Jury Trial..........................................62
SECTION 10.04. Headings......................................................63
SECTION 10.05. Severability..................................................63
SECTION 10.06. No Purchaser's Lien...........................................63
SECTION 10.07. Entire Agreement..............................................63
SECTION 10.08. Assignment....................................................63
SECTION 10.09. No Third Party Beneficiaries..................................63
SECTION 10.10. Amendment.....................................................63
SECTION 10.11. Governing Law.................................................64
SECTION 10.12. Counterparts..................................................64
SECTION 10.13. Waiver........................................................64
SECTION 10.14. Closing under Loan Purchase Agreement.........................64
SECTION 10.15. Limited Survival..............................................64
iii
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of August 18, 1997, between DUTCH
INSTITUTIONAL HOLDING COMPANY, INC. (the "SELLER"), and CORNERSTONE PROPERTIES
INC., a Nevada corporation (the "PURCHASER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller, directly and through its various direct and indirect
subsidiaries, owns interests in and with respect to a portfolio of office
buildings and land located in various locations in the United States; and
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, the "SELLER SUBSIDIARY SHARES" (as herein
defined) upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Seller hereby agree
as follows:
ARTICLE
DEFINITIONS
Section 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"ADA" means the Americans with Disabilities Act of 1990, as amended.
"ADDITIONAL CHARTER PROVISIONS" shall mean the following proposed
additions to the Charter Amendment: (i) "Nothing in these Restated Articles
of Incorporation shall preclude the settlement of any transaction with
respect to the Common Stock of the Corporation entered into through the
facilities of the New York Stock Exchange;" and (ii) "The aggregate number
of shares that the Corporation shall have the authority to issue is Two
Hundred Sixty-Five Million (265,000,000) shares of Capital Stock consisting
of Fifteen Million (15,000,000) shares of Preferred Stock with no par value
per share and Two Hundred Fifty Million (250,000,000) shares of Common
Stock with no par value per share."
<PAGE>
"ADMINISTRATIVE AGREEMENTS" means the administrative, consulting,
management and similar agreements to which a Seller Subsidiary is a party
and which are listed on SCHEDULE 1.01(A).
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AGREEMENT" or "THIS AGREEMENT" means this Stock Purchase Agreement,
dated as of August 18, 1997 between the Seller and the Purchaser (including
the Exhibits and the Schedules hereto) and all amendments hereto made in
accordance with the provisions of Section 10.10.
"ANCILLARY AGREEMENTS" means the Purchase Money Notes, the Purchase
Money Mortgages, the Registration Rights and Voting Agreement and the Loan
Purchase Agreement.
"500 BOYLSTON AND 222 BERKELEY AMENDMENTS" has the meaning specified
in Section 5.04(a).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in New
York, New York or Atlanta, Georgia.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. Sections 9601 ET SEQ., as amended
through the date hereof.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation, and Liability Information System, as updated through the date
hereof.
"CHARTER AMENDMENT" has the meaning specified in Section 5.03(a).
"CHV" has the meaning specified in Section 5.04(a).
"CLOSING" has the meaning specified in Section 2.03.
"CLOSING ACCOUNTING" has the meaning set forth in Section 2.07(b).
2
<PAGE>
"CLOSING DATE" has the meaning specified in Section 2.03.
"CODE" means the Internal Revenue Code of 1986, as amended through the
date hereof.
"CONTINUING CONTRACTS" means the Material Contracts described on
SCHEDULE 1.01(B).
"CONTROL" (including the terms CONTROLLED BY and UNDER COMMON CONTROL
WITH), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee,
personal representative or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee, personal representative or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect
a majority of the board of directors or similar body governing the affairs
of such Person.
"DIRECT SELLER SUBSIDIARIES" means the Seller Subsidiaries which are
directly and wholly-owned by the Seller.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of
ownership.
"ENVIRONMENT" means all surface waters, groundwaters, soil, drinking
water supplies, sediments associated with any water body, subsurface
strata, and ambient air and any workplace at any real property.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims (whether based on
strict liability or otherwise), liens, notices of potential responsibility,
notices of potential liability, notices of non-compliance or violation,
abatement orders, enforcement actions, investigations, proceedings,
settlements, consent decrees, consent orders or consent agreements relating
in any way to any Environmental Law, Environmental Permit or any Hazardous
Material (hereinafter "CLAIMS"), including,
3
<PAGE>
without limitation, (a) any and all Claims by Governmental Authorities or
any Person for enforcement, cost recovery, compensation, penalties, fines,
restitution, injunctive relief, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law or
applicable Environmental Permit and (a) any and all Claims by any Person or
Governmental Authority seeking damages, contribution, indemnification, cost
recovery, cleanup, removal, response, remedial or other actions,
compensation or injunctive relief relating to a Release of a Hazardous
Material or arising from an alleged or actual injury or threat of injury to
health, safety, natural resources (including, without limitation, all flora
and fauna) or the Environment.
"ENVIRONMENTAL CONDITION" means a condition relating to or arising or
resulting from a failure or alleged failure to comply with any applicable
Environmental Law or applicable Environmental Permit or relating to or
arising or resulting from an actual or a threatened Release of a Hazardous
Material.
"ENVIRONMENTAL LAWS" means any Law, now or hereafter in effect and as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, order or
judgment, relating to the Environment, health, safety, natural resources
(including, without limitation, all flora and fauna) or Hazardous Materials
including, without limitation, the CERCLA; the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 ET SEQ.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 ET SEQ.; the Clean Water Act,
33 U.S.C. Sections 1251 ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. Sections 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Sections 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Sections 300f ET SEQ.; the
Atomic Energy Act, 42 U.S.C. Sections 2011 ET SEQ.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sections 136 ET SEQ.;
the Occupational Safety and Health Act, 29 U.S.C. Sections 651 ET SEQ.;
the Endangered Species Act, 16 U.S.C. Sections 1531 ET SEQ.; the Oil
Pollution Act, 33 U.S.C. Sections 2701 ET SEQ.; the Emergency Planning and
Community Right-To-Know Act, 42 U.S.C. Sections 11001 ET SEQ.; and the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sections 301 ET SEQ.
"ENVIRONMENTAL PERMITS" means all permits, approvals, identification
numbers, licenses, registrations and other authorizations and notices
required under any applicable Environmental Law.
4
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE OF THE PURCHASER" has the meaning ascribed to it in
Section 4.15.
"ESTIMATED CLOSING ACCOUNTING" has the meaning specified in
Section 2.07(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.01(b).
"FINAL PURCHASER DIVIDEND" has the meaning specified in Section 2.08.
"FINANCIAL STATEMENT DATE" has the meaning specified in Section 4.06.
"FINANCIAL STATEMENTS" has the meaning specified in Section
3.06(a)(i).
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or
arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"GROUND LEASES" mean the ground leases under which a Seller Subsidiary
holds an interest as a ground lessee and listed on SCHEDULE 1.01(C).
"HAZARDOUS MATERIALS" means those substances, materials, and items, in
any form, whether solid, liquid, gaseous, semisolid, or any combination
thereof, whether waste materials, raw materials, chemicals, finished
products, byproducts, or any other material or article, which are regulated
by or form the basis of liability under any applicable Environmental Law
including, without limitation: wastes, materials, chemicals, and
substances defined as or included within the definition of "hazardous
wastes," "hazardous substances," "pollutants," "contaminants," "hazardous
materials," "hazardous chemicals," "extremely hazardous substances," "toxic
substances," "toxic pollutants,"
5
<PAGE>
"hazardous pollutants," or words of similar import, under any applicable
Environmental Law; and asbestos in any form, polychlorinated biphenyls
("PCBS"), transformers or other equipment containing PCBs, petroleum
(including, but not limited to, crude oil, petroleum-derived substances,
wastes, or breakdown or decomposition products thereof, or any fraction
thereof), radioactive substances, radon gas, and urea formaldehyde.
"HINES" has the meaning specified in Section 5.04(a).
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness
of such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been or should
be, in accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of such Person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable preferred stock, at
the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) all Indebtedness of others referred to in
clauses (a) through (f) above guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Indebtedness
or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (iii) to supply funds to or in
any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services
6
<PAGE>
are rendered) or (iv) otherwise to assure a creditor against loss, and (i)
all Indebtedness referred to in clauses (a) through (f) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Encumbrance on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"INDEMNIFIED PARTY" has the meaning specified in Section 8.02(b).
"INDEMNITOR" has the meaning specified in Section 8.02(c).
"INTERIM FINANCIAL STATEMENTS" has the meaning specified in
Section 5.04(b).
"IRS" means the Internal Revenue Service of the United States.
"JOINT VENTURES" means those certain Seller Subsidiaries which
constitute limited partnerships or joint ventures and which are not
wholly-owned, directly or indirectly, by the Seller. The Joint Ventures
are listed on SCHEDULE 3.02(B) hereto.
"JOINT VENTURE AGREEMENTS" mean those certain partnership and joint
venture agreements governing the Joint Ventures and to which a Seller
Subsidiary is a party described in SCHEDULE 3.02(B) hereof.
"JOINT VENTURE CONSENTS" has the meaning specified in Section 3.03(d).
"KNOWLEDGE" and correlative terms such as "KNOWLEDGE OF," "KNOWS OF,"
"IS AWARE OF," or "BEST KNOWLEDGE" when used herein with respect to the
Purchaser shall mean the actual knowledge of the Persons named on SCHEDULE
1.01(D) and where used with respect to the Seller shall mean the actual
knowledge of the Persons named on SCHEDULE 1.01(E).
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, requirement or rule of common
law.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those
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arising under any Law (including, without limitation, any Environmental
Law), Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"LOAN PURCHASE AGREEMENT" means the Loan Purchase Agreement of even
date herewith between PGGM, as the "Seller" and the Purchaser, as the
"Purchaser".
"LOSS" has the meaning specified in Section 8.02(b).
"MI" means M.I. West Pennsylvania Limited Partnership, a District of
Columbia limited partnership.
"MSDI" means Market Square Development Investors, a District of
Columbia general partnership.
"MSDI LOAN AGREEMENT" has the meaning specified in Section 5.01.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.12(a).
"MANAGEMENT AGREEMENTS" means all property management agreements,
asset management agreements and leasing agreements listed on SCHEDULE
1.01(G) pursuant to which the Seller or the Seller Subsidiaries have
engaged third party providers of leasing and/or management services with
respect to the Seller Properties.
"NET WORKING CAPITAL" has the meaning specified in Section 2.07(c).
"NET WORKING CAPITAL DEFICIT" has the meaning specified in Section
2.07(c).
"NON-CONFIDENTIAL INFORMATION" has the meaning specified in Section
5.09.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PGGM" means Stichting Pensioenfonds Voor De Gezondheid Geestelijke en
Maatschappelijke Belangen.
"PERMITS" has the meaning specified in Section 3.11(a).
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"PERMITTED ENCUMBRANCES" means the following: liens for taxes,
assessments and governmental charges of Governmental Authorities or levies
not yet due and payable; rights of tenants, as tenants only, under the
Space Leases; with respect to the Seller Properties only, those existing
title matters affecting the Seller Properties listed on SCHEDULE 1.01(H),
and with respect to the Purchaser Properties only, those existing title
matters affecting the Purchaser Properties listed on SCHEDULE 1.01(I);
with respect to the Seller Properties, the Purchased Loans; and survey
exceptions and other easements, rights-of-way, covenants, restrictions and
title exceptions that (i) do not render title to the property encumbered
thereby unmarketable, (ii) do not, individually or in the aggregate, have a
material adverse effect on the value of or the use of the property
encumbered thereby for its present purposes, and (iii) do not interfere
with the ordinary conduct of the property encumbered thereby or detract
from the value or usefulness thereof.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as
any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PROPERTY RESTRICTIONS" has the meaning specified in Section 4.08(b).
"PROXY STATEMENT" has the meaning specified in Section 4.04.
"PURCHASE MONEY MORTGAGES" means the mortgages, deeds to secure debts,
deeds of trust, assignments of leases and rents, stock pledge agreements,
collateral note assignments, collateral mortgage assignments, assignments
of partnership interests, guaranty agreements, UCC-1 financing statements
and other security documents and instruments to be executed by the
Purchaser and Purchaser Subsidiaries and delivered to the Seller or PGGM on
the Closing Date in form acceptable to the Seller (in its sole discretion),
but consistent with the terms and provisions contained in EXHIBIT 1.01(D),
to secure the indebtedness evidenced by the Purchase Money Notes.
"PURCHASE MONEY NOTES" means the four (4) Promissory Notes to be
executed by the Purchaser and delivered to the Seller or PGGM on the
Closing Date in
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form acceptable to the Seller (in its sole discretion), but consistent with
the terms and provisions contained in EXHIBIT 1.01(D), to evidence the
$250,000,000.00 purchase money loans being made by the Seller and PGGM to
the Purchaser to finance, in part, the acquisition of the Seller Subsidiary
Shares hereunder and the "Purchased Loans" under the Loan Purchase
Agreement, on the terms more particularly described therein.
"PURCHASE PRICE" has the meaning specified in Section 2.02.
"PURCHASED LOANS" has the meaning specified in the Loan Purchase
Agreement.
"PURCHASER" has the meaning specified in the recitals to this
Agreement.
"PURCHASER BENEFIT PLANS" has the meaning specified in Section
4.15(a).
"PURCHASER CHANGE OF CONTROL" shall mean any of the following
occurrences:
(a) securities of the Purchaser representing 30% or more of the
combined voting power of the Purchaser's then outstanding voting securities
are acquired pursuant to a tender offer or an exchange offer; or
(b) a merger or consolidation is consummated in which the
Purchaser is a constituent corporation and which results in less than 50%
of the outstanding voting securities of the surviving or resulting entity
being owned by the former stockholders of the Purchaser; or
(c) any person becomes the beneficial owner, directly or
indirectly, of securities of the Purchaser representing 30% or more of the
combined voting power of the Purchaser's then outstanding securities.
PROVIDED that a "Purchaser Change of Control" shall in no event refer to
any of the foregoing if, as a result thereof, control of the Purchaser is
held by a Person who is an Affiliate of the Purchaser as of the date
hereof.
"PURCHASER COMMON SHARES" means the common stock of the Purchaser with
no par value.
"PURCHASER INDEMNIFIED PARTY" has the meaning specified in Section
8.02(a).
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"PURCHASER MATERIAL ADVERSE CHANGE" has the meaning specified in
Section 4.06.
"PURCHASER MATERIAL ADVERSE EFFECT" means any circumstance, change in,
or effect on, the Purchaser Properties (including, without limitation, any
casualty or condemnation affecting any of the Purchaser Properties), the
Purchaser or any Purchaser Subsidiary that, individually or in the
aggregate with any other circumstances, changes in, or effect on, the
Purchaser, any Purchaser Subsidiaries or the Purchaser Properties: (a) is,
or could be, materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent liabilities),
results of operations or the condition (financial or otherwise) of any of
the Purchaser or the Purchaser Subsidiaries or any one or more of the
Purchaser Properties or (b) could materially adversely affect the ability
of the Purchaser to operate any one or more of the Purchaser Properties in
the manner in which they are currently operated by the Purchaser and the
Purchaser Subsidiaries.
"PURCHASER PREFERRED SHARES" means the shares of preferred shares of
stock of the Purchaser.
"PURCHASER PROPERTIES" means the real property described on
SCHEDULE 1.01(J) hereof in which the Purchaser or a Purchaser Subsidiary
owns a direct or indirect fee simple or leasehold interest, together with
the Purchaser's or Purchaser Subsidiaries' rights in and to all buildings
and other structures, facilities or improvements currently or hereafter
located thereon, all fixtures, systems, equipment and items of personal
property attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing.
"PURCHASER SEC DOCUMENTS" has the meaning specified in Section 4.05.
"PURCHASER SHAREHOLDER APPROVAL" has the meaning specified in
Section 4.04.
"PURCHASER SHAREHOLDER MEETING" has the meaning specified in Section
5.03(b).
"PURCHASER SUBSIDIARIES" means the corporations listed on
SCHEDULE 1.01(K) (each of which corporations is individually referred to
herein as a "PURCHASER SUBSIDIARY").
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"PURCHASER'S CHARTER" has the meaning specified in Section 4.01.
"REDEMPTION AGREEMENT" means that certain Redemption Agreement between
MSDI, the Seller and MI dated as of August 15, 1997.
"REFERENCE BALANCE SHEET" has the meaning specified in Section 3.06.
"REGISTRATION RIGHTS AND VOTING AGREEMENT" means the Registration
Rights and Voting Agreement to be executed by the Seller, PGGM and the
Purchaser on the Closing Date substantially in the form of EXHIBIT 1.01(K).
"REGULATIONS" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"REIT" has the meaning specified in Section 4.11(d).
"RELEASE" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and like
actions or events (including, without limitation, the abandonment or
discarding of barrels, containers, drums, tanks, or other closed
receptacles containing any Hazardous Materials) resulting in the placement
of any Hazardous Material on, under, about, or in any medium of the
Environment.
"REMEDIAL ACTION" means all action reasonably necessary or required
under any applicable Environmental Law or applicable Environmental Permit
and all actions required by a Governmental Authority to investigate,
mitigate, clean up, remove, treat, store, dispose of, handle or respond in
any other way to Hazardous Materials in the Environment affecting human
health, affecting the Environment or affecting natural resources; prevent,
control, or otherwise respond to the Release of Hazardous Materials so that
they do not migrate, endanger or threaten to endanger public health,
natural resources or the Environment; perform remedial investigations,
feasibility studies, health assessments, natural resource damage
assessments, corrective actions, closures, and postremedial or postclosure
studies, investigations, operations, maintenance and monitoring at, on,
under, about or in any real property, or at any other location
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affected by Hazardous Materials associated with the real property; or come
into compliance with any applicable Environmental Law or any applicable
Environmental Permit.
"RETURNS" has the meaning specified in Section 3.17.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning specified in the recitals to this Agreement.
"SELLER INDEMNIFIED PARTY" has the meaning specified in Section
8.02(b).
"SELLER MATERIAL ADVERSE EFFECT" means any circumstance, change in, or
effect on, the Seller Properties (including, without limitation, any
casualty or condemnation affecting any of the Seller Properties), the
Seller or any Seller Subsidiary that, individually or in the aggregate with
any other circumstances, changes in, or effect on, the Seller, any Seller
Subsidiaries or the Seller Properties: (a) is, or could be, materially
adverse to the business, operations, assets or liabilities (including,
without limitation, contingent liabilities), results of operations or the
condition (financial or otherwise) of any of the Seller Subsidiaries or any
one or more of the Seller Properties or (b) could materially adversely
affect the ability of the Purchaser to operate any one or more of the
Seller Properties in the manner in which they are currently operated by the
Seller and the Seller Subsidiaries.
"SELLER PROPERTIES" means the real property described on
SCHEDULE 1.01(L) hereof in which the Seller or a Seller Subsidiary owns a
direct or indirect fee simple or leasehold interest, together with the
Seller's or Seller Subsidiaries' rights in and to all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
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"SELLER SUBSIDIARIES" means the corporations and partnerships listed
on SCHEDULE 1.01(M) (each of which corporations or partnerships is
individually referred to as a Seller Subsidiary).
"SELLER SUBSIDIARY COMMON STOCK" has the meaning specified in
Section 3.02(a).
"SELLER SUBSIDIARY SHARES" means the shares of Seller Subsidiary
Common Stock in each of the Direct Seller Subsidiaries.
"SPACE LEASE" has the meaning specified in Section 3.08.
"SURPLUS NET WORKING CAPITAL" has the meaning specified in Section
2.07(c).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any foreign, U.S., state and local government
or taxing authority, including, without limitation: taxes or other charges
on or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth;
taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, mortgage recording, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and
similar charges.
"TENANT COSTS" has the meaning specified in Section 2.06.
"THIRD PARTY CLAIMS" has the meaning specified in Section 8.02(c).
"TRANSFER AND GAINS TAXES" has the meaning specified in Section 5.07.
"UNCONSOLIDATED SELLER FINANCIAL STATEMENTS" has the meaning specified
in Section 3.06(a).
"U.S. GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied consistently
throughout the periods involved.
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"USTs" means underground storage tanks (and associated underground
piping), as such term is defined in the Resource Conservation and Recovery
Act, as amended, and the regulations promulgated thereunder, or any other
applicable Environmental Law.
ARTICLE II
PURCHASE AND SALE
SECTION 2.1. INTERESTS.
(a) On the terms and subject to the conditions of this Agreement, the
Seller shall (or shall cause the appropriate Seller Subsidiary to), on the
Closing Date, sell, assign, transfer, convey and deliver to the Purchaser or the
Purchaser Subsidiary designated by Purchaser, and the Purchaser shall purchase
from the Seller, on the Closing Date, the Seller Subsidiary Shares.
(b) The following assets owned by the Seller and the Seller
Subsidiaries shall not be sold to the Purchaser (the Excluded Assets): (i) all
employees (and all personnel records and files relating to all current and
former employees) employed by any Seller Subsidiary (including, without
limitation, DIHC Management Corporation), (ii) the de Kooning sculpture
currently located in the Seller's offices at 200 Galleria, Atlanta, Georgia and
(iii) the shares of stock of GCHC, Inc. and DIHC Market Square, Inc. owned by
the Seller.
SECTION 2.2. PURCHASE PRICE; PAYMENT; ORDER OF TRANSFERS; ALLOCATION OF
PURCHASE PRICE.
(a) Subject to the provisions of SECTION 2.07, the aggregate purchase
price for the Seller Subsidiary Shares shall be TWO HUNDRED SEVENTY TWO MILLION
ONE HUNDRED SIXTEEN THOUSAND AND NO/100 DOLLARS ($272,116,000) (the Purchase
Price) which shall be payable in the manner described herein.
(b) The Purchase Price shall be payable by the Purchaser as follows:
(i) At the Closing, the Purchaser shall pay to the Seller (or to
PGGM as the Seller shall direct) the amount of THIRTY-FOUR MILLION FOUR
HUNDRED EIGHTY-EIGHT THOUSAND AND NO/100 DOLLARS ($34,488,000.00) (the
"INITIAL CASH PAYMENT") by wire transfer in immediately available funds, to
an account or accounts designated at least two (2) Business Days prior to
the Closing Date by the Seller in a written notice to the Purchaser;
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(ii) At the Closing, the Purchaser shall execute and deliver to the
Seller or the Seller's designee the Purchase Money Notes and Purchase Money
Mortgages evidencing a principal amount of ONE HUNDRED THIRTY MILLION AND
NO/100 DOLLARS ($130,000,000.00); and
(iii)On the Closing Date, Purchaser shall issue to the Seller or PGGM
as the Seller may direct 6,726,750 validly issued, fully paid and
nonassessable Purchaser Common Shares (adjusted as necessary to reflect
fully the effect of any stock split, reverse stock split, or stock dividend
with respect to the Purchaser Common Shares occurring after the date hereof
and prior to the Closing Date) at an agreed value of $16 per share and not
subject to adjustment notwithstanding any changes in the stock price
between the date of this Agreement and the Closing Date.
(c) The Purchaser and the Seller agree and acknowledge that the
transfer of the Seller Subsidiary Shares shall be effected in the order and
priority described on SCHEDULE 2.02(C).
(d) The Purchase Price shall be allocated as of the Closing Date in
accordance with EXHIBIT 2.02(D). For all Tax purposes, the Purchaser and the
Seller agree to report the transactions contemplated in this Agreement in a
manner consistent with the terms of this Agreement, including the allocation
under EXHIBIT 2.02(D), and that neither of the parties will take any position
inconsistent therewith in any Tax Return, in any refund claim, in any
litigation, or otherwise.
(e) The Purchaser and the Seller agree that the Seller shall have the
right to cause the sale of the Seller Property known as the "Dearborn Land" or
the shares of the Seller Subsidiaries which indirectly own the Dearborn Land
prior to the Closing Date. In the event the Dearborn Land is sold on or prior
to the Closing Date, the Purchase Price shall be reduced by $10,000,000 by a
reduction in the principal amount of Promissory Note B of the Purchase Money
Notes by $10,000,000.
(f) In addition to the above Purchase Price, the Seller and the
Purchaser shall consummate the transactions described in Schedule 1.01(f) in the
manner and at the times specified in such Schedule.
SECTION 2.3. CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Seller Subsidiary Shares shall take
place at a closing (the Closing) to be held at the offices of King & Spalding,
1185 Avenue of the Americas, New York, New York at 10:00 A.M. New York City time
on the date which is two (2) Business Days after the date on which
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the conditions set forth herein with respect thereto and the conditions set
forth in the Loan Purchase Agreement with respect to a Closing thereunder shall
be satisfied or duly waived, or at such other place or at such other time or on
such other date as the Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the Closing Date).
SECTION 2.4. CLOSING DELIVERIES BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Seller Subsidiary Shares duly
endorsed in blank, or accompanied by stock powers duly executed in blank, in
form satisfactory to the Purchaser and with all required stock transfer tax
stamps affixed;
(b) an executed counterpart of the Registration Rights and Voting
Agreement by PGGM and the Seller and the other Ancillary Agreements to which the
Seller or any Seller Subsidiary is a party;
(c) a receipt for that portion of the Purchase Price paid at Closing;
and
(d) the opinions, certificates and other documents required to be
delivered pursuant to SECTION 7.02.
SECTION 2.5. CLOSING DELIVERIES BY THE PURCHASER. At the Closing, the
Purchaser shall deliver to the Seller:
(a) the cash portion of Purchase Price described in clause (i) of
SECTION 2.02(b) above;
(b) executed counterparts of the Purchase Money Notes and the
Purchase Money Mortgages;
(c) stock certificates evidencing the Purchaser Common Shares to be
issued to Seller pursuant to clause (iii) of SECTION 2.02(b) above;
(d) an executed counterpart of the Registration Rights and Voting
Agreement by the Purchaser and the other Ancillary Agreements to which the
Purchaser is a party; and
(e) the opinions and other documents required to be delivered
pursuant to SECTION 7.01.
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SECTION 2.6. CERTAIN ADJUSTMENTS.
(a) Pursuant to SECTION 3.16 hereof, the Seller has represented and
warranted to the Purchaser that other than the employees described in
SECTION 2.01(b) which constitute "Excluded Assets," the Seller Subsidiaries have
no employees (all other personnel associated with the Seller Properties being
employees of property managers, employees of other independent contractors of
the Seller, or employees of the Seller). Accordingly, there will be no
adjustments in the Closing Accounting for payroll or benefits of employees of
the Seller Subsidiaries.
(b) At the election of the Purchaser given at least thirty (30) days
prior to the Closing Date, the insurance policies of the Seller Subsidiaries
(other than the Joint Ventures) will be terminated as of Closing (and the Seller
shall pay any cancellation fees resulting from such termination). To the extent
such insurance policies are terminated, there will be no provision for insurance
premiums or prepayments in the Closing Accounting. To the extent such insurance
policies are not terminated, the premiums paid or due and payable thereunder
shall be taken into account in the Closing Accounting.
(c) With respect to rental concessions, tenant improvement work and
leasing commissions excluding rental concessions, tenant improvements and
leasing commissions for expansions or renewals commencing after the Closing and
excluding leasing commissions paid over time (herein "TENANT COSTS"), the Seller
shall be responsible for all Tenant Costs which are committed to or provided for
under any currently existing Space Lease or any Space Lease entered into after
the date hereof but prior to the Closing Date. The Purchaser shall be
responsible for all Tenant Costs committed to or provided for under Space Leases
entered into from and after the Closing Date.
(d) The Seller Subsidiaries as described in items (26) and (27) on
SCHEDULE 1.01(M) hereof have contingent liability for certain condominium claims
under construction warranties. The Purchaser acknowledges that such contingent
liability has been disclosed to the Purchaser for purposes of SECTION 3.07
hereof. The Purchaser and the Seller further agree that as provided in
SECTION 2.07(v) below, an adjustment in the amount of $300,000 (net of $250,000
of restricted cash) shall be made in the Closing Accounting to account, in part,
for such contingent liability.
SECTION 2.7. CLOSING ACCOUNTING.
(a) At least fifteen (15) days prior to Closing, the Seller shall
prepare and deliver to the Purchaser using the methodology applied in the
preparation of the Interim Financial Statements, and prepared in accordance with
U.S. GAAP
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consistently applied, a proposed accounting ("ESTIMATED CLOSING ACCOUNTING")
that shall estimate, in itemized form for the Seller Subsidiaries, the following
items (unless otherwise indicated, as of 12:01 am on the date of Closing):
(i) All cash and receivables held by the Seller Subsidiaries,
including without limitation, the banks accounts of the Seller Subsidiaries
and rentals under Space Leases;
(ii) All amounts prepaid by the Seller Subsidiaries under the
Continuing Contracts, the Management Agreements, prepaid insurance (to the
extent not terminated in accordance with SECTION 2.06(b) above) and the
Ground Leases and any prepaid interest or other amounts in respect of debt
service on the Purchased Loans;
(iii) All refundable deposits made by the Seller Subsidiaries
under the Continuing Contracts, and all refundable deposits made by the
Seller Subsidiaries with any utility company or governmental agency in
connection with the Seller Properties;
(iv) All accounts payable and accrued expenses of the Seller
Subsidiaries, including, without limitation, accounts payable and accrued
expenses under the Space Leases, insurance policies (to the extent not
terminated in accordance with SECTION 2.06(b) above), the Management
Agreements and Continuing Contracts, any Tenant Costs which have not been
funded or paid prior to the Closing Date to the extent Seller is
responsible therefor under SECTION 2.06(c) above, and all other ordinary
and customary accounts payable and accrued expenses, including without
limitation water, sewer, electricity and gas charges, real estate taxes and
assessments, personal property taxes, sales taxes, and property owners'
assessments;
(v) All accrued but unpaid interest and other debt service due
on the Purchased Loans and the amount of $300,000 for the contingent
liability (net of $250,000 of restricted cash) described in SECTION 2.06(d)
above; and
(vi) All amounts received by the Seller Subsidiaries as rentals
under Space Leases or under the Administrative Agreements to the extent
payable by such tenants on account of Rentals accruing for periods, or
services to be provided, on and after the date of Closing, and all security
deposits held by the Seller Subsidiaries under any Space Lease.
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(b) Following receipt of the Estimated Closing Accounting by the
Purchaser, the Purchaser shall review the Estimated Closing Accounting and shall
have the right to approve the same, such approval not to be unreasonably
withheld. On the day immediately preceding Closing, the Seller's and
Purchaser's accountants, Coopers & Lybrand L.L.P., in consultation with the
Seller and the Purchaser, shall update the approved Estimated Closing Accounting
("CLOSING ACCOUNTING") based upon actual operations of the Seller Subsidiaries
as of such date.
(c) To the extent that the sum of the assets described in clauses (i)
through (iii) of the Closing Accounting minus the sum of the liabilities
described in clauses (iv) through (vi) of the Closing Accounting ("NET WORKING
CAPITAL") is a positive number (such positive number is referred to in this
SECTION 2.07 (c) as Surplus Net Working Capital), the cash portion of the
Purchase Price shall be adjusted upward to reimburse the Seller for the Surplus
Net Working Capital by increasing the Purchase Price by the amount of the
Surplus Net Working Capital. To the extent that the Net Working Capital is a
negative number, (such negative number is referred to in this SECTION 2.07(c) as
Net Working Capital Deficit), the cash portion of the Purchase Price shall be
adjusted downward to reimburse the Purchaser for the Net Working Capital Deficit
by the amount of the Net Working Capital Deficit. The calculations described in
this SECTION 2.07 shall be performed by the Seller's and the Purchaser's
accountants, Coopers & Lybrand L.L.P., as part of the Closing Accounting. In
the event that the Seller and the Purchaser are unable to agree on the Estimated
Closing Accounting or the Closing Accounting, the issue shall be submitted to
such accountants for final resolution, and the Seller and the Purchaser shall be
bound by such resolution, absent manifest error.
(d) In the event such accountants are unable to finally resolve any
issue relating to the Estimated Closing Accounting or the Closing Accounting
prior to the Closing Date, the matter shall be resolved following the Closing in
the post-closing audit to be conducted by such accountants pursuant to clause
(e) of this SECTION 2.07.
(e) Within one hundred and twenty (120) days after the Closing, the
Seller and the Purchaser shall cause Coopers & Lybrand L.L.P. (Atlanta) to
conduct an audit of the Closing Accounting and, to the extent it is determined
that either party has retained or received amounts in excess of the amounts to
which it is entitled under this SECTION 2.07, such party shall remit such excess
to the other party within thirty (30) days of such determination.
SECTION 2.8. RECORD DATE FOR FINAL DIVIDEND OF THE PURCHASER. The
Purchaser shall declare a dividend (the "FINAL PURCHASER DIVIDEND") to holders
of the Purchaser Common Shares,
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the record date for which shall be the close of business on the last business
day prior to the Closing Date in an amount equal to the Purchaser's most recent
quarterly dividend of $.30 per share, multiplied by the number of days elapsed
since the last dividend record date through and including the Closing Date and
divided by 90.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
hereby represents and warrants to the Purchaser as follows:
SECTION 3.1. ORGANIZATION AND AUTHORITY OF THE SELLER. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Seller is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its businesses makes such licensing or
qualification necessary other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, would not have a
Seller Material Adverse Effect. The execution and delivery by the Seller of
this Agreement and the Ancillary Agreements to which it is a party, the
performance by the Seller of its obligations hereunder and thereunder and the
consummation by the Seller of the transactions contemplated hereby and thereby
have been duly authorized by all requisite action on the part of the Seller and
its shareholders. This Agreement has been, and upon their execution the
Ancillary Agreements to which the Seller is a party will be, duly executed and
delivered by the Seller, and (assuming due authorization, execution and delivery
by the Purchaser) this Agreement constitutes, and upon their execution the
Ancillary Agreements to which the Seller is a party will constitute, legal,
valid and binding obligations of the Seller enforceable against the Seller in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights and
equitable principles.
SECTION 3.2. CAPITAL STRUCTURE AND OWNERSHIP OF SELLER SUBSIDIARIES.
(a) The authorized capital stock of each Seller Subsidiary that is a
corporation consists of the number of shares of common stock each indicated on
SCHEDULE 3.02, ("SELLER
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SUBSIDIARY COMMON STOCK"). As of the date hereof, all issued and outstanding
shares of Seller Subsidiary Common Stock are validly issued, fully paid and
nonassessable. None of the issued and outstanding shares of Seller Subsidiary
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
any such Seller Subsidiaries or obligating any such Seller Subsidiary or the
Seller to issue or sell any shares of capital stock of, or other interest in,
any such Seller Subsidiary. There are no outstanding contractual obligations of
any such Seller Subsidiary to repurchase, redeem or otherwise acquire any shares
of such Seller Subsidiary's 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 (other than as set forth in the Joint Venture Agreements, the MSDI
Loan Agreement or the Redemption Agreement). The Seller Subsidiary Common Stock
described on SCHEDULE 3.02 constitutes all the issued and outstanding capital
stock of each Seller Subsidiary which is a corporation and are owned of record
and beneficially by the Seller, free and clear of all Encumbrances. There are
no voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Seller Subsidiary Common Stock.
(b) SCHEDULE 3.02(B) sets forth (i) the name of each Seller
Subsidiary which is a limited partnership, general partnership, joint venture or
limited liability company, (ii) the name of each partner, joint venturer, member
or other Person (including, without limitation, Seller Subsidiaries) having a
direct ownership interest in such Seller Subsidiaries, and (iii) the percentage
ownership interest of each such Person.
SECTION 3.3. SELLER SUBSIDIARIES.
(a) SCHEDULE 3.03(A) sets forth for each Seller Subsidiary its name,
type of entity, the jurisdiction and date of its incorporation or organization,
its authorized capital stock, partnership capital or equivalent, the number and
type of its issued and outstanding shares of capital stock, partnership
interests or similar ownership interests and the current ownership of such
shares, partnership interests or similar ownership interests.
(b) Each Seller Subsidiary that is a corporation: (i) is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Seller Subsidiary and to carry on its business as it has been and is
currently conducted by such Seller Subsidiary and (iii) is duly licensed or
qualified to do business and is in good standing in each jurisdiction in
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which the properties owned or leased by it or the operation of its business
makes such licensing or qualification necessary or desirable other than in such
jurisdictions where the failure to be so qualified or licensed, individually or
in the aggregate, would not have a Seller Material Adverse Effect. Each Seller
Subsidiary that is not a corporation: (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) has all
necessary power and authority to own, operate or lease the properties and assets
owned, operated or leased by such Seller Subsidiary and to carry on its business
as it has been and is currently conducted by such Seller Subsidiary, and (iii)
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary other than in such
jurisdictions where the failure to be so qualified or licensed, individually or
in the aggregate, would not have a Seller Material Adverse Effect.
(c) True and complete copies of the charter, by-laws and partnership
agreement (or similar organizational documents), as amended to the date of this
Agreement, of each Seller Subsidiary (excluding the Joint Ventures) have been
delivered or made available to the Purchaser. To the Knowledge of the Seller,
true and complete copies of the partnership agreements of the Joint Ventures
have been delivered or made available to the Purchaser.
(d) Except as set forth in SCHEDULE 3.03(A), no Seller Subsidiary
owns, directly or indirectly, any capital stock or other ownership interest in
any Person. Neither the Seller nor any Seller Subsidiary is in default under
any of the Joint Venture Agreements (PROVIDED, HOWEVER, that the Seller makes no
representation or warranty regarding any consent which may be required from the
third-party partners in the Joint Ventures (the "JOINT VENTURE CONSENTS").
SECTION 3.4. BOOKS AND RECORDS. To the Seller's Knowledge, the minute
books of the Seller and the Seller Subsidiaries that constitute corporations
contain accurate records of all meetings and accurately reflect all other
material actions taken by the shareholders, Boards of Directors and all
committees of the Boards of Directors of the Seller and the Seller
Subsidiaries. To the Seller's Knowledge, complete and accurate copies of all
such minute books and of the stock register of the Seller and each such
Seller Subsidiary have been made available or provided by the Seller to the
Purchaser.
SECTION 3.5. NONCONTRAVENTION; CONSENTS. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Agreements to
which it is a party do not and will not conflict with, or result in any
violation of, or
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default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Encumbrance
upon any of the properties or assets of the Seller or any Seller Subsidiary
under (i) the charter and bylaws, as amended, of the Seller or the comparable
charter or organizational documents or partnership or similar agreement (as the
case may be) of any Seller Subsidiary (PROVIDED, HOWEVER, that the Seller makes
no representation or warranty regarding the necessity of any Joint Venture
Consents), (ii) any loan or credit agreement, note, bond, mortgage, indenture,
reciprocal easement agreement, lease or other agreement, instrument, permit,
concession, contract, franchise or license applicable to the Seller or any
Seller Subsidiary or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any Laws applicable to the Seller or any Seller Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Encumbrances that
either individually or in the aggregate would not (x) have a Seller Material
Adverse Effect or (y) prevent the consummation of the transactions contemplated
by this Agreement. To the Knowledge of the Seller, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to the Seller or any
Seller Subsidiary in connection with the execution and delivery of this
Agreement by the Seller or the consummation by the Seller of the transactions
contemplated by this Agreement, except for such filings as may be required in
connection with the payment of any Transfer and Gains Taxes, filings required
under the Exchange Act, and such other consents, approvals, orders,
authorizations, registrations, declarations and filings as are set forth in
SCHEDULE 3.05, or which, if not obtained or made, would not prevent or delay in
any material respect the consummation of any of the transactions contemplated by
this Agreement or otherwise prevent the Seller from performing its obligations
under this Agreement or the Ancillary Agreements in any material respect or
have, individually or in the aggregate, a Seller Material Adverse Effect.
SECTION 3.06. SELLER FINANCIAL INFORMATION; BOOKS AND RECORDS. (a) True
and complete copies of the audited consolidated balance sheet of the Seller and
the Seller Subsidiaries for each of the three fiscal years ended as of
December 31, 1994, December 31, 1995 and December 31, 1996, and the related
audited consolidated statements of income, retained earnings, stockholders'
equity and changes in financial position of the Seller, together with all
related notes and schedules thereto, accompanied by the reports thereon of the
Seller's accountants, BDO Seidman for the audits for the 1994 and 1995 fiscal
years, and Coopers & Lybrand L.L.P. for the 1996 fiscal
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year (collectively referred to herein as the Financial Statements; the audited
consolidated balance sheet for the fiscal year ended as of December 31, 1996
included in the Financial Statements, herein the Reference Balance Sheet) have
been delivered by the Seller to the Purchaser. The Financial Statements were
prepared in accordance with the books of account and other financial records of
the Seller and the Seller Subsidiaries, present fairly the consolidated
financial condition and results of operations of the Seller and the consolidated
Seller Subsidiaries, taken as a whole, as of the dates thereof or for the
periods covered thereby, and have been prepared in accordance with U.S. GAAP
applied on a basis consistent with the past practices of the Seller and the
Seller Subsidiaries and throughout the periods involved. The audited financial
statements as of December 31, 1996 of the unconsolidated Joint Ventures
previously delivered to the Purchaser (the "UNCONSOLIDATED SELLER FINANCIAL
STATEMENTS") (i) were prepared in accordance with the books of account and other
financial records of the unconsolidated Seller Subsidiaries, (ii) present fairly
the financial condition and results of operations of the unconsolidated Seller
Subsidiaries as of the dates thereof or for the periods covered thereby, and
(iii) have been prepared in accordance with U.S. GAAP on the basis consistent
with the past practices of the unconsolidated Seller Subsidiaries and throughout
the periods involved.
SECTION 3.7. NO UNDISCLOSED LIABILITIES. To the Knowledge of the Seller,
there are no Liabilities of any Seller Subsidiary, other than Liabilities (i)
reflected or reserved against on the Reference Balance Sheet or the
Unconsolidated Seller Financial Statements, (ii) under the Permitted
Encumbrances, the Space Leases, the Continuing Contracts, the Administrative
Agreements, the Ground Leases and the contracts described on SCHEDULE 3.07 which
(other than Liabilities in respect of contingent liabilities or liabilities not
otherwise required by U.S. GAAP to be reflected or reserved against on a balance
sheet) are reflected on or reserved against on the Reference Balance Sheet,
(iii) for payables being accounted for in the Closing Accounting under
SECTION 2.07 hereof or described in SECTION 2.06 (iv) in respect of fixtures,
equipment or services purchased or leased in the ordinary course of business
since the date of the Reference Balance Sheet and (v) described in or referred
to in this Agreement, including the Exhibits and the Schedules.
SECTION 3.8. SPACE LEASES. To the Knowledge of Seller, each lease,
tenancy or occupancy agreement, and operating agreement with tenants and
operators currently occupying space in the Seller Properties (herein, the "SPACE
LEASES") constitutes the legal, valid, binding, and enforceable obligation of
the landlord and tenant thereunder, is in full force and effect and the term of
the same and the obligation to pay rent thereunder
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has commenced and the tenant thereunder is in full possession and actual
occupancy thereof, and all tenant improvements required under the provisions
thereof are completed. To the Knowledge of the Seller, neither the Seller nor
any Seller Subsidiary has received any notice of cancellation or termination
under any Space Lease. To the Knowledge of the Seller, neither Seller nor any
Seller Subsidiary, nor to the Knowledge of Seller, any other party is in breach
or default in any material respect under any Space Lease. Except as set forth
on SCHEDULE 3.08, to the Knowledge of Seller, no tenant is currently asserting
any claim, defense, offset or lien against the Seller any Seller Subsidiary or
against any Seller Properties.
SECTION 3.9. LITIGATION. To the Knowledge of the Seller, except as set
forth in SCHEDULE 3.09 (which, with respect to each Action disclosed therein,
sets forth the parties, nature of the proceeding, date and method commenced,
amount of damages or other relief sought and, if applicable, paid or granted),
there are no Actions by or against the Seller or any Seller Subsidiary, or
affecting any of the Seller Properties, pending before any Governmental
Authority (or, to the Knowledge of the Seller, threatened to be brought by or
before any Governmental Authority) which could reasonably be expected to have a
Seller Material Adverse Effect. To the Knowledge of the Seller, none of the
matters disclosed in SCHEDULE 3.09 has had or could reasonably be expected to
have a Seller Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation of
the transactions contemplated hereby or thereby. To the Knowledge of the
Seller, except as set forth in SCHEDULE 3.09, none of the Seller, the Seller
Subsidiaries nor any of their respective assets or properties, including,
without limitation, the Seller Properties, is subject to any Governmental Order
(nor, to the Knowledge of the Seller, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has had or could
reasonably be expected to have a Seller Material Adverse Effect.
SECTION 3.10. COMPLIANCE WITH LAWS. To the Knowledge of the Seller, the
Seller and the Seller Subsidiaries have each conducted and continue to conduct
their respective businesses and operations in accordance with all Laws and
Governmental Orders applicable to the Seller or any Seller Subsidiary or any of
their properties or assets, including, without limitation, the Seller Properties
and neither the Seller nor any Seller Subsidiary is in violation of any such Law
or Governmental Order which has had or could reasonably be expected to have a
Seller Material Adverse Effect. Notwithstanding the foregoing, the Seller makes
no representation or warranty regarding the compliance of the Seller Properties
with ADA requirements.
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SECTION 3.11. ENVIRONMENTAL AND OTHER PERMITS AND LICENSES; RELATED
MATTERS. To the Knowledge of the Seller, except as disclosed in the reports
referenced in SCHEDULE 3.11, the Seller and the Seller Subsidiaries currently
hold all of the environmental, health and safety and other permits, licenses,
authorizations, identification numbers, certificates, registrations,
notifications, exceptions and approvals of Governmental Authorities
(collectively, "PERMITS"), including, without limitation, Environmental Permits,
required, necessary or proper for the current use, occupancy and operation of
the Seller Properties, and all such Permits and Environmental Permits are in
full force and effect; there is no existing practice, action or activity of the
Seller or any Seller Subsidiary and no existing condition of or condition
associated with the properties or assets of the Seller or any Seller Subsidiary,
including, without limitation, the Seller Properties, which would give rise to
any civil or criminal Liability under, or violate or prevent compliance with,
any applicable Environmental Law, applicable Permits or applicable Environmental
Permits or other applicable law; neither the Seller nor any Seller Subsidiary
has received any notice from any Governmental Authority proposing to or actually
revoking, canceling, rescinding, materially modifying or refusing to renew any
Permit or Environmental Permit or providing written notice of violations under
any applicable Environmental Law or applicable Environmental Permit; the Seller
and each Seller Subsidiary is in all respects in compliance with the Permits,
all applicable Environmental Laws and the requirements of all Environmental
Permits; Hazardous Materials have not been generated, used, treated, handled or
stored on, or transported to or from, any Seller Property (other than such
activities that have been conducted in strict accordance with all applicable
Environmental Laws and Environmental Permits consistent with the nature of the
applicable Seller Property and that would not have a Seller Material Adverse
Effect); Hazardous Materials (regardless of the source) have not been Released
on any Seller Property or otherwise contaminated any Seller Property and
Hazardous Materials have not been Released on or contaminated any property
adjoining any Seller Property (except in either instance, Releases or
contamination involving only de minimis amounts of Hazardous Materials, the
Release of which or contamination by would not violate any applicable
Environmental Law, violate any Environmental Permit, trigger any reporting
obligation, or trigger any obligation to investigate, remediate, cleanup or
otherwise respond to such Hazardous Material); the Seller and the Seller
Subsidiaries have disposed of all wastes, including those consisting of or
containing Hazardous Materials, in compliance in all material respects with all
applicable Environmental Laws and Environmental Permits; there are no past,
pending or threatened Environmental Claims against the Seller, any Seller
Subsidiary or any Seller Property; (a) no Seller Property nor any property
adjoining any Seller Property is
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listed or proposed for listing on the National Priorities List under CERCLA or
on the CERCLIS or any analogous state list of sites requiring investigation or
cleanup of Hazardous Materials; (a) neither the Seller nor any Seller Subsidiary
has used or arranged for the use of any location for the treatment, storage,
disposal, Release or other handling of any Hazardous Materials or transported or
arranged for the transportation of any Hazardous Materials to any location that
is listed or proposed for listing on the National Priorities List under CERCLA
or on the CERCLIS or any analogous state list or which is the subject of any
Environmental Claim; there are not now and never have been any USTs located on
any Seller Property or on any property adjoining any Seller Property; and there
is not now any asbestos in, on, or about any Seller Property.
SECTION 3.12. MATERIAL CONTRACTS.
(a) To the Knowledge of the Seller, SCHEDULE 3.12(A) lists all of the
following written contracts and agreements of the Seller Subsidiaries or to
which any Seller Subsidiary or a Seller Property is bound (such contracts and
agreements, together with all contracts and agreements concerning the management
or operation of any Seller Properties (excluding the Management Contracts)
listed or otherwise disclosed in SCHEDULE 3.12(A) to which the Seller or any
Seller Subsidiary is a party or to which any Seller Subsidiary or Seller
Property is bound set forth in SCHEDULE 3.12(A), being Material Contracts):
(i) each contract, agreement and other arrangement of any
nature which involves an unperformed commitment or for the provision
of services to any Seller Subsidiary or otherwise related to the
Seller Properties under the terms of which any Seller Subsidiary:
(A) is likely to pay or otherwise give consideration of more than
$100,000 in the aggregate during the calendar year ended December 31,
1997, (B) is likely to pay or otherwise give consideration of more
than $100,000 in the aggregate over the remaining term of such
contract, or (C) cannot be canceled by such Seller Subsidiary without
penalty or further payment and without more than 30 days' notice;
(ii) all property management contracts, asset management
contracts and similar contracts (or arrangements) which are not
cancelable without penalty or further payment and without more than 30
days' notice;
(iii) all contracts and agreements relating to Indebtedness
of each Seller Subsidiary;
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(iv) all contracts and agreements with any Governmental
Authority;
(v) all contracts and agreements between or among any
Seller Subsidiary and any Affiliate of the Seller;
(vi) all partnership, joint venture or similar agreements or
arrangements (including, without limitation, the Joint Venture
Agreements described in SCHEDULE 3.02(B) hereof); and
(vii) any power of attorney or agency agreement or
arrangement with any Person pursuant to which such Person is granted
the authority to act for and on behalf of any Seller Subsidiary.
(b) To the Seller's Knowledge, each Continuing Contract and
Administrative Agreement is valid and binding on the respective parties thereto
and is in full force and effect. To the Knowledge of the Seller, neither the
Seller nor any Seller Subsidiary is in breach of, or default under, any
Continuing Contract and no other party to any Continuing Contract or is in
breach thereof or default thereunder.
(c) There is no contract, agreement or other arrangement granting any
Person any preferential right to purchase any of the properties or assets of
the Seller or any Seller Subsidiary, including, without limitation, the Seller
Properties, except as set forth in the Joint Venture Agreements.
SECTION 3.13. MANAGEMENT AGREEMENTS. To the Seller's Knowledge, no party
to a Management Agreement has asserted rights of set off or counterclaim against
the Seller or any Seller Subsidiary under such Management Agreement, and neither
the Seller nor any Seller Subsidiary is in default thereunder in any material
respect nor is the Seller aware of any facts or circumstances which, with the
notice or passage of time, or both, would constitute a material default by the
Seller or any Seller Subsidiary under any Management Agreement. To the Seller's
Knowledge, no property manager is in default in any material respect under any
Management Agreement nor is the Seller aware of any facts or circumstances
which, with notice or passage of time, or both, would constitute a material
default by a property manager under any Management Agreement.
SECTION 3.14. SELLER PROPERTIES.
(a) To the Seller's Knowledge, a Seller Subsidiary owns fee simple
title (or where indicated, a leasehold estate) to each of the Seller Properties
in each case free of all Encumbrances except for Permitted Encumbrances. To the
Seller's Knowledge, except as described in SCHEDULE 3.14, there is no material
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violations of any Law (including, without limitation, any building, planning or
zoning Law) relating to any of the Seller Properties.
(b) To the Knowledge of the Seller, no improvements on the Seller
Properties and none of the current uses and conditions thereof violate in any
material respect any applicable deed restrictions or other applicable Laws,
covenants, restrictions, agreements, existing site plan approvals, zoning or
subdivision regulations or urban redevelopment plans as modified by any duly
issued variances (collectively, Property Restrictions), and no material permits,
licenses or certificates pertaining to the ownership or operation of all
improvements on the Seller Properties, other than those which are available to
the Seller Properties, are required by any Governmental Authority having
jurisdiction over the Seller Properties. Neither the Seller nor any of the
Seller's Subsidiaries have Knowledge of, (i) any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Seller
Properties or (ii) any Property Restriction will be violated in any material
respect by the continued maintenance, operation or use of any of the buildings
or other improvements on any of the Seller Properties for their current use.
(c) The Seller has completed or will complete on or prior to the
Closing Date all capital improvement work (including replacements of capital
items) with respect to the Seller Properties contemplated in the operating and
capital improvement budgets for each of the Seller Properties for the period
ending on the Closing Date, true and correct copies of which have been provided
or made available to the Purchaser.
SECTION 3.15. GROUND LEASES. To the Knowledge of the Seller, each Ground
Lease is valid and in full force and effect and the copy of each Ground Lease
provided to the Purchaser is true, correct and complete and constitutes the
entire agreement between the ground lessor and ground lessee thereunder and
there have been no amendments thereto (either orally or in writing). To the
Knowledge of the Seller, there is no material default by either the ground
lessor or ground lessee under any Ground Lease and no conditions exists that,
with the passage of time or the giving of notice or both, would constitute a
material default thereunder and no notice of termination has been given by
either a ground lessor or a ground lessee under any Ground Lease. To the
Knowledge of the Seller, the applicable Seller Subsidiaries' interest in each
Ground Lease is free of all Encumbrances except for the Permitted Encumbrances.
SECTION 3.16. EMPLOYMENT MATTERS. Except as set forth in SECTION 2.01(b),
the Seller Subsidiaries have no employees (all personnel associated with the
Seller Properties being (i) employees of property managers, (ii) employees of
other
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independent contractors of the Seller or a Seller Subsidiary, or (iii) employees
of the Seller) and none of the Seller Subsidiaries have ever employed any
employees or been a party to any employee contract. Notwithstanding the
foregoing, the Seller has disclosed to the Purchaser that a Seller Subsidiary,
DIHC Management Corporation has had and currently has employees.
SECTION 3.17. TAXES.
(a) Except as disclosed in SCHEDULE 3.17(A), with respect to the
Seller and the Seller Subsidiaries (other than the Joint Ventures), and, with
respect to the Joint Ventures, to the Knowledge of the Seller, all returns and
reports in respect of Taxes ("Returns") required to be filed with respect to the
Seller and each Seller Subsidiary have been timely filed (taking into account
any valid extensions of time for filing); all Taxes required to be shown on
such Returns or otherwise due have been timely paid; all such Returns are true,
correct and complete in all material respects; no adjustment relating to such
Returns has been proposed formally or informally by any Tax authority and, to
the Knowledge of the Seller, no basis exists for any such adjustment; there are
no pending or, to the Knowledge of the Seller, threatened actions or proceedings
for the assessment or collection of Taxes against the Seller or any Seller
Subsidiary or (insofar as either relates to the activities or income of the
Seller or any Seller Subsidiary or could result in liability of any Seller
Subsidiary on the basis of joint and/or several liability) any corporation that
was includible in the filing of a return with the Seller on a consolidated or
combined basis; and (vi) there are no Tax liens on any assets of the Seller or
any Seller Subsidiary.
(b) To the Knowledge of the Seller, there are no outstanding waivers
or agreements extending the statute of limitations for any period with respect
to any Tax to which the Seller or any Seller Subsidiary may be subject; there
are no requests for information currently outstanding that could affect the
Taxes of the Seller or any Seller Subsidiary; there are no proposed
reassessments of any property owned by the Seller or any Seller Subsidiary or
other proposals that could materially increase the amount of any Tax to which
the Seller or any Seller Subsidiary would be subject; and no power of attorney
that is currently in force has been granted with respect to any matter relating
to Taxes that could affect any Seller Subsidiary.
(c) Each of the Seller and the Seller Subsidiaries (other than the
Joint Ventures), and to the Knowledge of the Seller, each Joint Venture, has
withheld and paid all material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
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(d) SCHEDULE 3.17(D) lists all income, franchise and similar Tax
Returns (federal, state, local and foreign) filed with respect to each Seller
Subsidiary (other than the Joint Ventures) and, to the Knowledge of the Seller,
with respect to each Joint Venture, for taxable periods ended on or after
December 31, 1993, indicates the most recent income, franchise or similar Tax
Return for each relevant jurisdiction for which an audit has been completed or
the statute of limitations has lapsed and indicates all Tax Returns that
currently are the subject of audit; and the Seller has delivered or made
available to the Purchaser correct and complete copies of all federal, state and
foreign income, franchise and similar Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any Seller
Subsidiary (other than the Joint Ventures), and, to the Knowledge of the Seller,
by any Joint Venture since December 31, 1993.
(e) The Seller and each Seller Subsidiary is not a "foreign person"
within the meaning of SECTION 1445(f)(3) of the Code and will furnish to the
Purchaser, if requested by the Purchaser, an affidavit and form satisfactory to
the Purchaser confirming the same.
(f) Seller and each Seller Subsidiary that is a corporation are
members of an "affiliated group" under SECTION 1504(a) of the Code and currently
file a consolidated U.S. federal income tax return.
(g) To the extent the representations and warranties made in this
SECTION 3.17 relate to the Seller Subsidiaries that were Joint Ventures during
the period at issue, such representations and warranties are limited to the
Knowledge of the Seller.
SECTION 3.18. INSURANCE. SCHEDULE 3.18 lists all casualty, liability,
business interruption and other insurance policies insuring the Seller
Subsidiaries. All such insurance policies are in full force and effect. To the
Knowledge of the Seller, all material assets, properties and risks of the Seller
and each Seller Subsidiary are covered by valid and, except for policies that
have expired under their terms in the ordinary course, currently effective
insurance policies or binders of insurance (including, without limitation,
general liability insurance, property insurance and workers' compensation
insurance) issued in favor of the Seller or a Seller Subsidiary, as the case may
be, in each case with responsible insurance companies, in such types and amounts
and covering such risks as are consistent with customary practices and standards
of companies engaged in businesses and operations similar to those of the Seller
or such Seller Subsidiary.
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SECTION 3.19. FULL DISCLOSURE. The Seller is not aware of any facts
pertaining to the Seller or any Seller Subsidiary which would, or would be
reasonably likely to have a Seller Material Adverse Effect which have not been
disclosed in this Agreement, the Schedules or Exhibits hereto or the Financial
Statements or otherwise disclosed to the Purchaser by the Seller in writing.
SECTION 3.20. BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Seller.
SECTION 3.21. INSOLVENCY. There has not been filed by nor has the Seller
or any Seller Subsidiary received notice of a petition in bankruptcy or any
other insolvency proceeding, or for the reorganization or appointment of a
receiver or trustee, nor has the Seller or any Seller Subsidiary made an
assignment for the benefit of creditors, nor filed a petition for arrangement,
nor entered into any arrangement of creditors, nor admitted in writing its
inability to pay debts as they become due.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
hereby represents and warrants to the Seller as follows:
SECTION 4.1. ORGANIZATION AND AUTHORITY OF THE PURCHASER. The Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the requisite power and authority to carry
on its business as now being conducted. The Purchaser is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a Seller Material Adverse Effect. The Purchaser has
delivered to the Seller complete and correct copies of its Restated Articles of
Incorporation (the "PURCHASER'S CHARTER") and Bylaws, as amended to the date of
this Agreement.
SECTION 4.2. PURCHASER SUBSIDIARIES. SCHEDULE 4.02 to this Agreement sets
forth each Purchaser Subsidiary and the ownership interest therein of the
Purchaser. Except as set forth on SCHEDULE 4.02, all the outstanding shares of
capital stock
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of each Purchaser Subsidiary that is a corporation have been validly issued and
are fully paid and nonassessable, are owned by the Purchaser or by another
Purchaser Subsidiary free and clear of all Encumbrances and all equity
interests in each Purchaser Subsidiary that is a partnership, joint venture,
limited liability company or trust are owned by the Purchaser, by another
Purchaser Subsidiary, or by the Purchaser and another Purchaser Subsidiary, or
by two or more Purchaser Subsidiaries free and clear of all Encumbrances.
Except for the capital stock of or other equity or ownership interests in the
Purchaser Subsidiaries, and except as set forth on SCHEDULE 4.02, the Purchaser
does not own, directly or indirectly, any capital stock or other ownership
interest in any Person. Each Purchaser Subsidiary that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted, and each Purchaser Subsidiary that is a
partnership, limited liability company or trust is duly organized and validly
existing under the laws of its jurisdiction of organization and has the
requisite power and authority to carry on its business as now being conducted.
Each Purchaser Subsidiary is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect. True, complete and correct copies of the articles of
incorporation, bylaws, organization documents and partnership and joint venture
agreements of each Purchaser Subsidiary, as amended to the date of this
Agreement, have been previously delivered or made available to Purchaser.
SECTION 4.3. CAPITAL STRUCTURE. The authorized capital stock of the
Purchaser consists of 100,000,000 shares of Purchaser Common Shares and
15,000,000 shares of Purchaser Preferred Shares. On the date hereof 48,856,742
shares of Purchaser Common Shares are issued and outstanding, 3,030,303 shares
of Purchaser Preferred Shares are issued and outstanding, 51,143,258 shares of
Purchaser Common Shares are authorized but not issued, no shares of Purchaser
Common Shares are reserved for issuance under the Purchaser's employee benefit
or incentive plans pursuant to awards granted by the Purchaser (the "PURCHASER
EMPLOYEE STOCK PLANS"), 1,757,500 shares of Purchaser Common Shares are
issuable upon the exercise of outstanding options (the "PURCHASER OPTIONS") to
purchase Purchaser Common Shares, no shares of Purchaser Preferred Shares are
issuable upon the exercise of outstanding options, no Purchaser Common Shares
are reserved for issuance for the Purchaser's Dividend Reinvestment Share
Purchase Plan, and no Purchaser Common Shares are reserved for issuance
pursuant to the Purchaser's Employee Share Purchase Plan. On the date of this
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Agreement, except as set forth above in this SECTION 4.03, no shares of stock or
other voting securities of the Purchaser were issued, reserved for issuance or
outstanding. The Purchaser has no outstanding stock appreciation rights
relating to the shares of the Purchaser. All outstanding shares of common stock
and preferred stock of the Purchaser are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as set
forth on SCHEDULE 4.03, there are no bonds, debentures, notes or other
indebtedness of the Purchaser having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Purchaser may vote. Except as set forth in this SECTION
4.03, or as set forth in SCHEDULE 4.03, as of the date of this Agreement there
are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Purchaser or
any Purchaser Subsidiary is a party or by which such entity is bound, obligating
the Purchaser or any Purchaser Subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock, voting
securities or securities convertible into voting securities or other ownership
interests of the Purchaser or any Purchaser Subsidiary or obligating the
Purchaser or any Purchaser Subsidiary to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking (other than to the Purchaser or a Purchaser Subsidiary). Except
as set forth on SCHEDULE 4.03, there are no outstanding contractual obligations
of the Purchaser or any Purchaser Subsidiary to repurchase, redeem or otherwise
acquire any beneficial shares of interest of the Purchaser or any capital stock,
voting securities or other ownership interests in any Purchaser Subsidiary or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any Person (other than a Purchaser Subsidiary).
SECTION 4.4. AUTHORITY; NONCONTRAVENTION; CONSENTS. The Purchaser has the
requisite power and authority to enter into this Agreement and, subject to (i)
the approval of the issuance (the "SHARE ISSUANCE") of Purchaser Common Shares
under this Agreement by an affirmative vote of the holders of a majority of the
Purchaser Common Shares present at a duly convened meeting of the stockholders
of the Company in accordance with the requirements of the New York Stock
Exchange and (ii) the approval of the Charter Amendment by an affirmative vote
of the holders of a majority of the issued and outstanding Purchaser Common
Shares and an affirmative vote of the holders of a majority of the issued and
outstanding shares of Purchaser Preferred Shares in accordance with the
requirements of Nevada law and the Purchaser's articles of incorporation (the
approval of the Share Issuance and the approval of the Charter Amendment
together referred to as the "PURCHASER SHAREHOLDER APPROVALS"). The execution
and delivery of this Agreement by the Purchaser and the
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consummation by the Purchaser of the transactions contemplated by this Agreement
and the Ancillary Agreements to which the Purchaser is a party have been duly
authorized by all necessary action on the part of the Purchaser, subject to the
Purchaser Shareholder Approvals. This Agreement has been duly executed and
delivered by the Purchaser and constitutes, and upon their execution by the
Purchaser and the Purchaser Subsidiaries the Ancillary Agreements will
constitute, the legal, valid and binding obligation of the Purchaser and the
Purchaser Subsidiaries, enforceable against the Purchaser and the Purchaser
Subsidiaries in accordance with their respective terms, subject to applicable
bankruptcy, insolvency or similar laws affecting the enforcement to creditors'
rights and equitable principles. The execution and delivery by the Purchaser of
this Agreement and the Ancillary Agreements to which it is a party does not, and
the consummation by the Purchaser of the transactions contemplated by this
Agreement and the Ancillary Agreements to which it is a party and compliance by
the Purchaser with the provisions of this Agreement and the Ancillary Agreements
to which it is a party will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a benefit or alteration of rights or obligations under, or result
in the creation of any Encumbrance upon any of the properties or assets of the
Purchaser or any Purchaser Subsidiary under the Charter and Bylaws, as amended,
of the Purchaser or the comparable charter or organizational documents or
partnership or similar agreement (as the case may be) of any Purchaser
Subsidiary, any loan or credit agreement, note, bond, mortgage, indenture,
reciprocal easement agreement, lease or other agreement, instrument, permit,
concession, contract, franchise or license applicable to the Purchaser or any
Purchaser Subsidiary or their respective properties or assets or subject to the
governmental filings and other matters referred to in the following sentence,
any Laws applicable to the Purchaser or any Purchaser Subsidiary, or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Encumbrances that
either individually or in the aggregate would not (x) have a Purchaser Material
Adverse Effect or (y) materially delay or prevent the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.
Without limiting the foregoing, the Purchaser has taken all action necessary to
ensure that the issuance of the Purchaser Common Shares to Seller pursuant
hereto shall not be deemed a violation of SECTION 8.01(a) of the Purchaser's
Charter. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required by or with
respect to the Purchaser or any Purchaser Subsidiary in connection with the
execution and delivery of this Agreement by the Purchaser or the consummation by
the Purchaser of the transactions contemplated by
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this Agreement and the Ancillary Agreements, except for the filing with the SEC
of (x) a proxy statement relating to the approval by the Purchaser's
shareholders of the transactions contemplated by this Agreement and the
Ancillary Agreements (as amended or supplemented from time to time, the "PROXY
STATEMENT") and (y) such reports under SECTION 13(a) of the Exchange Act, as may
be required in connection with this Agreement and the transactions contemplated
by this Agreement, such filings as maybe required in connection with the
payment of any Transfer and Gains Taxes, the filing of the Charter Amendment
with the Nevada Secretary of State, and such other consents, approvals, orders,
authorizations, registrations, declarations and filings as are set forth in
SCHEDULE 4.04, or which, if not obtained or made, would not prevent or delay in
any material respect the consummation of any of the transactions contemplated by
this Agreement or otherwise prevent the Purchaser from performing its
obligations under this Agreement in any material respect or have, individually
or in the aggregate, a Purchaser Material Adverse Effect.
SECTION 4.5. SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
The Purchaser has timely filed all required reports, schedules, forms,
statements and other documents required to be filed with the SEC (the "PURCHASER
SEC DOCUMENTS"). All of the Purchaser SEC Documents, as of their respective
filing dates, complied, or will comply, as the case may be, in all material
respects with all applicable requirements of the Securities Act, and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
applicable to such Purchaser SEC Documents. No SEC "stop order" has been issued
or is effective with respect to the Purchaser. None of the Purchaser SEC
Documents (including, without limitation, the Proxy Statement) at the time of
filing or effectiveness contained, or will contain, as the case may be, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been amended, modified or
superseded by later Purchaser SEC Documents (including, without limitation, the
Proxy Statement). The consolidated financial statements of the Purchaser
included in the Purchaser SEC Documents (including, without limitation, the
Proxy Statement) complied, or will comply, as the case may be, as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with U.S. GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q promulgated under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented, or will present, as the case may be, in
accordance with the applicable requirements of U.S. GAAP,
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the consolidated financial position of the Purchaser and the Purchaser
Subsidiaries as of the dates thereof and the consolidated results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments). Except as set
forth in the Purchaser SEC Documents filed with the SEC prior to the date hereof
or in SCHEDULE 4.05, neither the Purchaser nor any Purchaser Subsidiary has any
Liabilities required by U.S. GAAP to be set forth on a consolidated balance
sheet of the Purchaser and the Purchaser Subsidiaries or, to the Knowledge of
the Purchaser, or in the notes thereto and which, individually or in the
aggregate, would have a Purchaser Material Adverse Effect.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Purchaser SEC Documents filed with the SEC prior to the date hereof or in
SCHEDULE 4.06, since the date of the most recent financial statements included
in the Purchaser SEC Documents (the Financial Statement Date) and to the date of
this Agreement, the Purchaser and the Purchaser Subsidiaries have conducted
their business only in the ordinary course and there has not been any change
that would have a Purchaser Material Adverse Effect (a Purchaser Material
Adverse Change), nor has there been any occurrence or circumstance that with the
passage of time would reasonably be expected to result in a Purchaser Material
Adverse Change, except for regular quarterly dividends not in excess of $.30
per share of Purchaser Common Shares and regular annual dividends not in excess
of $1.155 per share of Purchaser Preferred Shares with customary record and
payment dates, any split, combination or reclassification of any of the
Purchaser's capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for, or
giving the right to acquire by exchange or exercise, shares of its capital stock
or any issuance of an ownership interest in, any Purchaser Subsidiary, any
damage, destruction or loss to the Purchaser's and the Purchaser Subsidiaries'
property, not covered by insurance, that has or would have a Purchaser Material
Adverse Effect or any change in accounting methods, principles or practices by
the Purchaser or any Purchaser Subsidiary, except insofar as required by a
change in U.S. GAAP.
SECTION 4.7. LITIGATION. To the Knowledge of the Purchaser, except as set
forth in SCHEDULE 4.07 (which, with respect to each Action disclosed therein,
sets forth the parties, nature of the proceeding, date and method commenced,
amount of damages or other relief sought and, if applicable, paid or granted),
there are no Actions by or against the Purchaser or any Purchaser Subsidiary,
pending before any Governmental Authority (or, to the Knowledge of the
Purchaser, threatened to be brought by or before any Governmental Authority)
which has had or could reasonably be expected to have a Purchaser Material
Adverse Effect. To the Knowledge of the Purchaser, none of the matters
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disclosed in SCHEDULE 4.07 has had or could reasonably be expected to have a
Purchaser Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation of
the transactions contemplated hereby or thereby. To the Knowledge of the
Purchaser, except as set forth in SCHEDULE 4.07, none of the Purchaser, the
Purchaser Subsidiaries nor any of their respective assets or properties, is
subject to any Governmental Order, including any stop order by the SEC (nor, to
the Knowledge of the Purchaser, are there any such Governmental Orders
threatened to be imposed by any Governmental Authority) which has had or could
reasonably be expected to have a Purchaser Material Adverse Effect.
SECTION 4.8. PURCHASER PROPERTIES.
(a) To the Purchaser's Knowledge, Purchaser Subsidiary own fee simple
title (or where indicated, a leasehold estate) to each of the Purchaser
Properties in each case free of all Encumbrances except for Permitted
Encumbrances. Except as described in SCHEDULE 4.08, to the Purchaser's
Knowledge, there is no material violations of any Law (including, without
limitation, any building, planning or zoning Law) relating to any of the
Purchaser Properties.
(b) To the Knowledge of the Purchaser, no improvements on the
Purchaser Properties and none of the current uses and conditions thereof violate
in any material respect any Property Restrictions, and no material permits,
licenses or certificates pertaining to the ownership or operation of all
improvements on the Purchaser Properties, other than those which are available
to the Purchaser Properties, are required by any Governmental Authority having
jurisdiction over the Purchaser Properties. Neither the Purchaser nor any of
the Purchaser's Subsidiaries have Knowledge of (i) any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Purchaser
Properties or (ii) any Property Restriction will be violated in any material
respect by the continued maintenance, operation or use of any of the buildings
or other improvements on any of the Purchaser Properties for their current use.
SECTION 4.9. ENVIRONMENTAL AND OTHER PERMITS AND LICENSES; RELATED
MATTERS. To the Knowledge of the Purchaser, except as disclosed in the reports
referenced in SCHEDULE 4.09, the Purchaser and the Purchaser Subsidiaries
currently hold all of the Permits, including, without limitation, Environmental
Permits, required, necessary or proper for the current use, occupancy and
operation of each Purchaser Property, and all such Permits and Environmental
Permits are in full force and effect; there is no existing practice, action or
activity of the Purchaser or any Purchaser Subsidiary and no existing condition
of or condition associated with the Purchaser Properties which
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would give rise to any civil or criminal Liability under, or violate or prevent
compliance with, any applicable Environmental Law, applicable Permits or
applicable Environmental Permits or other applicable law; neither the Purchaser
nor any Purchaser Subsidiary has received any notice from any Governmental
Authority proposing to or actually revoking, canceling, rescinding, materially
modifying or refusing to renew any Permit or Environmental Permit or providing
written notice of violations under any applicable Environmental Law or
applicable Environmental Permit; the Purchaser, and each Purchaser Subsidiary
is in all respects in compliance with the Permits, all applicable Environmental
Laws and the requirements of all Environmental Permits; Hazardous Materials
have not been generated, used, treated, handled or stored on, or transported to
or from, any Purchaser Property (other than such activities that have been
conducted in strict accordance with all applicable Environmental Laws and
Environmental Permits consistent with the nature of the applicable Purchaser
Property and that would not have a Purchaser Material Adverse Effect);
Hazardous Materials (regardless of the source) have not been Released on any
Purchaser Property or otherwise contaminated any Purchaser Property and
Hazardous Materials have not been Released on or contaminated any property
adjoining any Purchaser Property (except in either instance, Releases or
contamination involving only de minimis amounts of Hazardous Materials, the
Release of which or contamination by would not violate any applicable
Environmental Law, violate any Environmental Permit, trigger any reporting
obligation, or trigger any obligation to investigate, remediate, cleanup or
otherwise respond to such Hazardous Material); the Purchaser and the Purchaser
Subsidiaries have disposed of all wastes, including those consisting of or
containing Hazardous Materials, in compliance in all material respects with all
applicable Environmental Laws and Environmental Permits; there are no past,
pending or threatened Environmental Claims against the Purchaser, any Purchaser
Subsidiary or any Purchaser Property; no Purchaser Property or any property
adjoining any Purchaser Property is listed or proposed for listing on the
National Priorities List under CERCLA or on the CERCLIS or any analogous state
list of sites requiring investigation or cleanup of Hazardous Materials; and
neither the Purchaser nor any Purchaser Subsidiary has used or arranged for the
use of any location for the treatment, storage, disposal, Release or other
handling of any Hazardous Materials or transported or arranged for the
transportation of any Hazardous Materials to any location that is listed or
proposed for listing on the National Priorities List under CERCLA or on the
CERCLIS or any analogous state list or which is the subject of any Environmental
Claim; there are not now and never have been any USTs located on any Purchaser
Property or on any property adjoining any Purchaser Property; and there is not
now any asbestos in, on, or about any Purchaser Property.
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SECTION 4.10. RELATED PARTY TRANSACTIONS. Set forth in SCHEDULE 4.10, or
in the Purchaser SEC Documents including the Purchaser's definitive proxy
statements for the Annual Meetings of the Purchaser's shareholders held on June
2, 1997, June 20, 1996 and June 19, 1995, or in the Proxy Statement, is a list
of all arrangements, agreements and contracts entered into by the Purchaser or
any of the Purchaser Subsidiaries with any Person who is an executive officer,
director or Affiliate of the Purchaser or any of the Purchaser Subsidiaries, or
any entity of which any of the foregoing is an Affiliate which would be required
to be disclosed under Item 404 of Regulation S-K promulgated under the
Securities Act and the Exchange Act or acquired Purchaser Common Shares in a
private placement. Such documents, copies of all of which have been previously
delivered or made available to Seller, are listed in SCHEDULE 4.10, in the
Purchaser SEC Documents, in the Purchaser's definitive proxy statements for the
Annual Meetings of the Purchaser's shareholders held on June 2, 1997, June 20,
1996 and June 19, 1995, or in the Proxy Statement.
SECTION 4.11. TAXES.
(a) All returns and reports in respect of Taxes required to be filed
with respect to the Purchaser and each Purchaser Subsidiary have been timely
filed (taking into account any valid extensions of time for filing); all Taxes
required to be shown on such returns and reports or otherwise due have been
timely paid; all such returns and reports are true, correct and complete in all
material respects; no adjustment relating to such returns has been proposed
formally or informally by any Tax authority and, to the Knowledge of the
Purchaser, no basis exists for any such adjustment; there are no pending or, to
the Knowledge of the Purchaser, threatened actions or proceedings for the
assessment or collection of Taxes against the Purchaser or any Purchaser
Subsidiary or (insofar as either relates to the activities or income of the
Purchaser or any Purchaser Subsidiary or could result in liability of any
Purchaser Subsidiary on the basis of joint and/or several liability) any
corporation that was includible in the filing of a return with the Purchaser on
a consolidated or combined basis; no consent under SECTION 341(f) of the Code
has been filed with respect to the Purchaser or any Purchaser Subsidiary; and
there are no Tax liens on any assets of the Purchaser or any Purchaser
Subsidiary.
(b) There are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the
Purchaser or any Purchaser Subsidiary may be subject; there are no requests for
information currently outstanding that could affect the Taxes of the Purchaser
or any Purchaser Subsidiary; there are no proposed reassessments of any
property owned by the Purchaser or any Purchaser
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Subsidiary or other proposals that could materially increase the amount of any
Tax to which the Purchaser or any Purchaser Subsidiary would be subject; and no
power of attorney that is currently in force has been granted with respect to
any matter relating to Taxes that could affect any Purchaser Subsidiary.
(c) Each of the Purchaser and the Purchaser Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(d) None of the Purchaser and the Purchaser Subsidiaries is a party
to any Tax allocation or sharing agreement. None of the Purchaser and the
Purchaser Subsidiaries (i) has been a member of an "affiliated group" (as
defined in SECTION 1504(a)(1) of the Code) filing a consolidated federal income
Tax return (other than a group the common parent of which was the Purchaser) or
(ii) has any Liability for the Taxes of any Person (other than any of the
Purchaser and the Purchaser Subsidiaries) under SECTION 1.1502-6 of the Treasury
Regulations (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.
(e) The Purchaser for the period commencing with the taxable year
ending December 31, 1988 to the present has been organized and operated in
conformity with the requirements for qualification as a real estate investment
trust (a "REIT") (within the meaning of SECTION 856 of the Code) under the Code
and has been subject to taxation as a REIT and has satisfied all requirements to
qualify as a REIT for such periods, has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for the tax year ending
December 31, 1997, and has not taken or omitted to take any action which would
reasonably be expected to result in a challenge to its status as a REIT, and to
the Purchaser's Knowledge, no such challenge is pending or threatened. Each
Purchaser Subsidiary which is a partnership, joint venture or limited liability
company has been during and since its formation and continues to be treated for
federal income tax purposes as a partnership and not as a corporation or an
association taxable as a corporation. Each Purchaser Subsidiary which is a
corporation for federal income tax purposes is a "qualified REIT subsidiary," as
defined in SECTION 856(i) of the Code. The Purchaser did not incur in its 1996
tax year any liability for taxes under SECTION 857(b), 860(c) or 4981 of the
Code.
SECTION 4.12. BROKERS. No broker, investment banker, financial advisor or
other Person, other than Merrill Lynch & Co., Lazard FrVres & Co. LLC, and
Triton Pacific Capital LLC, the fees and expenses of which have previously been
disclosed to Seller and will be paid by the Purchaser, is entitled to any
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broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser or any Purchaser Subsidiary.
SECTION 4.13. COMPLIANCE WITH LAWS. To the Knowledge of the Purchaser,
the Purchaser and the Purchaser Subsidiaries have each conducted and continue to
conduct their respective businesses and operations in accordance with all Laws
and Governmental Orders applicable to the Purchaser or any Purchaser Subsidiary
or any of their properties or assets and neither the Purchaser nor any Purchaser
Subsidiary is in violation of any such Law or Governmental Order which has had
or could have a Purchaser Material Adverse Effect. Notwithstanding the
foregoing, the Purchaser makes no representation or warranty regarding the
compliance of the Purchaser Properties with ADA requirements.
SECTION 4.14. CONTRACTS; DEBT INSTRUMENTS.
(a) To the Knowledge of the Purchaser, neither the Purchaser nor any
Purchaser Subsidiary is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under) any material loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except as set forth in SCHEDULE 4.14 and except for violations
or defaults that would not, individually or in the aggregate, result in a
Purchaser Material Adverse Effect.
(b) Except for any of the following expressly identified in the
Purchaser SEC Documents, SCHEDULE 4.14 sets forth a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the Purchaser or any of the
Purchaser Subsidiaries, other than indebtedness payable to the Purchaser or a
Purchaser Subsidiary or to any third-party partner or joint venturer in any
Purchaser Subsidiary, in an aggregate principal amount in excess of $500,000 per
item is outstanding or may be incurred.
SECTION 4.15. ABSENCE OF CHANGES IN BENEFIT PLANS; ERISA COMPLIANCE.
(a) Except as disclosed in the Purchaser SEC Documents or in SCHEDULE
4.15(A) and except as permitted by SECTION 5.02 (for the purpose of this
sentence, as if SECTION 5.02 had been in effect since December 31, 1996), since
the Financial Statement Date, there has not been any adoption or amendment by
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the Purchaser, any Purchaser Subsidiary or any Person affiliated with the
Purchaser under SECTION 414(b), (c), (m) or (o) of the Code (each, an ERISA
Affiliate of the Purchaser) of any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding, or oral or in writing) providing
benefits to any current or former employee, officer or director of the
Purchaser, any Purchaser Subsidiary, or any ERISA Affiliate of the Purchaser
(collectively, Purchaser Benefit Plans). No Purchaser Benefit Plan is subject
to Title IV of ERISA or to SECTION 412 of the Code or SECTION 302 of ERISA.
(b) Each Purchaser Benefit Plan is listed in SCHEDULE 4.15(B),
including, with respect to terminated Purchaser Benefit Plans, the date of
termination. True and correct copies of each of the following have been made
available to the Seller: (i) the most recent annual report (Form 5500) relating
to each such Purchaser Benefit Plan filed with the IRS, (ii) each such Purchaser
Benefit Plan, (iii) the trust agreement, if any, relating to each such Purchaser
Benefit Plan, (iv) the most recent summary plan description for each such
Purchaser Benefit Plan for which a summary plan description is required by
ERISA, and (v) the most recent determination letter, if any, issued by the IRS
with respect to any such Purchaser Benefit Plan qualified under SECTION 401 of
the Code.
(c) Except as set forth in SCHEDULE 4.15(C), as to any such Purchaser
Benefit Plan intended to be qualified under SECTION 401 of the Code, such
Purchaser Benefit Plan satisfies in form the requirements of such SECTION and
there has been no termination or partial termination of such Purchaser Benefit
Plan within the meaning of SECTION 411(d)(3) of the Code. As to any such
terminated Purchaser Benefit Plan intended to have been qualified under SECTION
401 of the Code, such terminated Purchaser Benefit Plan received a favorable
determination letter from the IRS with respect to its termination.
(d) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of the Purchaser, threatened against,
or with respect to, any of such Purchaser Benefit Plans or their assets that
could reasonably be expected to have a Purchaser Material Adverse Effect. To
the Knowledge of the Purchaser, there is no matter pending before the IRS, the
Department of Labor or the PBGC with respect to any of such Purchaser Benefit
Plans. All contributions required to be made to such Purchaser Benefit Plans
pursuant to their terms and provisions have been timely made. Except as set
forth in SCHEDULE 4.15(A), neither the Purchaser nor any Purchaser Subsidiary is
a party to or is bound by any
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severance agreement, program or policy. True and correct copies of all
employment agreements with officers of the Purchaser and Purchaser Subsidiaries,
and all vacation, overtime and other compensation policies of the Purchaser and
Purchaser Subsidiaries relating to their employees have been made available to
the Purchaser.
(e) Except as described in the Purchaser SEC Documents or as would
not have a Purchaser Material Adverse Effect, (i) all Purchaser Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in SECTION
3(3) of ERISA, are in compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) other than claims for benefits in the
normal course, neither the Purchaser, any Purchaser Subsidiary nor any ERISA
Affiliate of the Purchaser has any liabilities or obligations with respect to
any such Purchaser Benefit Plan, whether accrued, contingent or otherwise, nor
to the Knowledge of the Purchaser are any such liabilities or obligations
expected to be incurred. The execution of, and performance of the transactions
contemplated in, this Agreement will not constitute an event under any Purchaser
Benefit Plan, policy, arrangement or agreement or any trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee or director of the
Purchaser, any Purchaser Subsidiary, or any ERISA Affiliate of the Purchaser.
SECTION 4.16. VOTE REQUIRED. The Purchaser Shareholder Approvals are the
only votes of the holders of any class or series of the Purchaser's shares
necessary (under applicable Law or otherwise) to approve the Share Issuance and
the Charter Amendment.
SECTION 4.17. SPACE LEASES. To the Knowledge of Purchaser, each lease,
tenancy or occupancy agreement and operating agreement with tenants and
operators currently occupying space in the Purchaser Properties (herein, the
"PURCHASER SPACE LEASES") constitutes the legal, valid, binding, and
enforceable obligation of the landlord and tenant thereunder, is in full
force and effect and the term of the same and the obligation to pay rent
thereunder has commenced and the tenant thereunder is in full possession and
actual occupancy thereof, and all tenant improvements required under the
provisions thereof are completed. To the Knowledge of the Purchaser, neither
the Purchaser nor any Purchaser Subsidiary has any Knowledge of the
cancellation or termination of any Purchaser Space Lease. To the Knowledge
of the Purchaser, neither Purchaser nor any Purchaser Subsidiary, nor to the
Knowledge of Purchaser, any other party is in breach or default in any
material respect under any Purchaser Space Lease. To the Knowledge of
Purchaser, no tenant is currently asserting any material claim, defense,
offset or lien
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against Purchaser, any Purchaser Subsidiary or against any Purchaser Properties.
SECTION 4.18. GROUND LEASES. To the Knowledge of the Purchaser, each
ground lease affecting a Purchaser Property is valid and in full force and
effect and the copy of each such ground lease provided to the Seller is true,
correct and complete and constitutes the entire agreement between the ground
lessor and ground lessee thereunder and there have been no amendments thereto
(either orally or in writing). To the Knowledge of the Purchaser, there is no
material default by either the ground lessor or ground lessee under any such
ground lease and no conditions exists that, with the passage of time or the
giving of notice or both, would constitute a material default thereunder and no
notice of termination has been given by either a ground lessor or a ground
lessee under any such ground lease. To the Knowledge of the Purchaser, the
applicable Purchaser Subsidiaries' interest in each such ground lease is free of
all Encumbrances except for the Permitted Encumbrances.
SECTION 4.19. INSURANCE. SCHEDULE 4.19 lists all casualty, liability,
business interruption and other insurance policies insuring the Purchaser
Subsidiaries. All such insurance policies are in full force and effect. To the
Knowledge of the Purchaser, all material assets, properties and risks of the
Purchaser and each Purchaser Subsidiary are covered by valid and, except for
policies that have expired under their terms in the ordinary course, currently
effective insurance policies or binders of insurance (including, without
limitation, general liability insurance, property insurance and workers'
compensation insurance) issued in favor of the Purchaser or a Purchaser
Subsidiary, as the case may be, in each case with responsible insurance
companies, in such types and amounts and covering such risks as are consistent
with customary practices and standards of companies engaged in businesses and
operations similar to those of the Purchaser or such Purchaser Subsidiary.
SECTION 4.20. INSOLVENCY. There has not been filed by nor has the
Purchaser or any Purchaser Subsidiary received notice of a petition in
bankruptcy or any other insolvency proceeding, or for the reorganization or
appointment of a receiver or trustee, nor has the Purchaser or any Purchaser
Subsidiary made an assignment for the benefit of creditors, nor filed a petition
for arrangement, nor entered into any arrangement of creditors, nor admitted in
writing its inability to pay debts as they become due.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. CONDUCT OF BUSINESS BY SELLER PRIOR TO THE CLOSING; COMPETING
TRANSACTIONS. The Seller covenants and agrees that, between the date hereof
and the Closing or earlier termination of this Agreement, Seller shall cause the
Seller Properties to be operated in the ordinary and usual course of business
and consistent with the Seller's and the Seller Subsidiaries' prior practice,
shall not, directly or indirectly through any officer, trust manager, employee,
agent, investment banker, financial advisor, attorney, accountant, broker or
other representative, initiate, solicit or effect the sale or listing for sale
of any of the Seller Properties (other than the Seller Property listed on
SCHEDULE 5.01 [Dearborn Land]) or any of its direct or indirect interests in the
Seller Subsidiaries (including, without limitation, the Seller Subsidiary
Shares), shall use its commercially reasonable efforts to preserve the goodwill
and advantageous relationships of the Seller and the Seller Subsidiaries with
tenants, customers, suppliers, independent contractors and other Persons
material to the operation of the Seller Properties, shall perform its, and cause
the Seller Subsidiaries to perform their, material obligations under the Space
Leases and other Material Contracts affecting the Seller Properties and shall
not wilfully or knowingly take or permit any action or omission which would
cause any of its representations or warranties contained herein to become
inaccurate in any material respect or any of the covenants made by it to be
breached in any material respect, (b) the Seller will not cause or permit any
default to occur by the Seller or any Seller Subsidiary under any Indebtedness
of any of the Seller Subsidiaries or secured by the Seller Properties or cause
or permit any increase in the outstanding aggregate principal balance thereof
(other than by the Seller Subsidiary known as DIHC Finance Corporation as
expressly contemplated in that certain Promissory Note and Loan Agreement dated
August 15, 1997 (the "MSDI LOAN AGREEMENT"), having MSDI, as "Maker" and DIHC
Finance Corporation, as "Payee" in a principal amount of up to $41,900,000) or
incur any Indebtedness or make any loans, advances or capital contributions in
or to any other Person, (c) except as provided in SECTION 2.06(b), the Seller
shall continue to maintain all insurance policies referred to in SECTION 3.18 in
full force and effect, (d) the Seller shall not, and shall not permit the Seller
Subsidiaries to, effect any change in its capital structure or initiate, solicit
or effect any merger, consolidation, share exchange, business combination, or
similar transaction with any other Person or sell, or grant any option or right
in respect of, any shares of common stock, any other voting securities of any
Seller Subsidiary or any securities convertible into or any rights, warrants or
options to acquire, any such shares, voting securities or convertible securities
(except to the Seller or a Seller Subsidiary); except that, with the prior
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written consent of the Purchaser, which consent shall not be unreasonably
withheld, Seller may undertake internal restructuring transactions with respect
to the Seller Subsidiaries, (e) the Seller shall not, and shall not permit any
Seller Subsidiary to, amend the articles or certificate of incorporation,
charter, bylaws, partnership agreement or other comparable charter or
organizational documents of the Seller or any Seller Subsidiary except to the
extent necessary to carry out internal restructuring transactions referred to in
(d) that are consented to by the Purchaser, (f) the Seller will not cause or
permit any default to occur by the Seller or any Seller Subsidiary under any of
the Administrative Agreements and the Seller shall, and shall cause the Seller
Subsidiaries to, perform their obligations under the Administrative Agreements
and shall not, and shall not permit any Seller Subsidiary to modify, amend or
terminate of any of the Administrative Agreements, and (g) without the prior
written consent of the Purchaser (which shall not be unreasonably withheld) the
Seller shall not, and shall not permit any Seller Subsidiary to, (i) enter into
any Material Contract or grant concessions regarding any Material Contract that
constitutes a Continuing Contract after the Closing, or (ii) as to any Space
Lease in excess of 10,000 square feet of usable space, or for a term in excess
of five (5) years, enter into any such Space Lease or modify, amend, renew or
terminate (except in connection with a tenant default) any such Space Lease.
The Seller and the Purchaser acknowledge and agree that, with respect to the
Seller Subsidiaries that constitute Joint Ventures, the Seller does not own
(directly or indirectly) all of the equity interests of the Joint Ventures and
thus does not unilaterally control all actions and decisions of the Joint
Ventures. Accordingly, the Seller and the Purchaser agree that, with respect to
the Seller Subsidiaries that constitute Joint Ventures, the Seller shall be
deemed to have complied with the foregoing covenants in the event the Seller or
applicable Seller Subsidiary performs such covenants consistent with its rights
under, and subject to any limitations on its authority under, the Joint Venture
Agreements.
SECTION 5.2. CONDUCT OF BUSINESS BY THE PURCHASER PRIOR TO THE CLOSING.
During the period from the date of this Agreement through the Closing or earlier
termination of this Agreement, the Purchaser shall, and shall cause the
Purchaser Subsidiaries each to, carry on their respective businesses in the
ordinary and usual course of business and consistent with the Purchaser's and
the Purchaser Subsidiaries' prior practice and shall use its reasonable best
efforts to preserve intact the goodwill and advantageous relationships of the
Purchaser and the Purchaser Subsidiaries with tenants, customers, suppliers,
independent contractors and other Persons material to the operation of the
Purchaser Properties and shall not wilfully or knowingly take or permit any
action or omission which would cause any of its representations or warranties
contained herein to
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become inaccurate in any respect or any of the covenants made by it to be
breached in any material respect. Without limiting the generality of the
foregoing, the following additional restrictions shall apply: during the period
from the date of this Agreement until the earlier of the termination of this
Agreement or Closing, the Purchaser shall not and shall cause the Purchaser
Subsidiaries not to (and not to authorize or commit or agree to) without the
prior written consent of the Seller (which such consent shall not be
unreasonably withheld or delayed):
(a) except for (i) its regular quarterly dividends not in excess of
$.30 per share of issued and outstanding Purchaser Common Shares or (ii) its
regular annual dividends not in excess of $1.155 per share of issued and
outstanding Purchaser Preferred Shares with customary record and payment dates,
declare, set aside or pay any dividends on, or make any other distributions in
respect of any of the Purchaser Common Shares or Purchaser Preferred Shares;
(b) except for the Purchaser's Dividend Reinvestment Share Purchase
Plan and the exercise of share options or issuance of shares pursuant to stock
rights, options, restricted share or performance share awards or warrants
outstanding on the date of this Agreement, issue, deliver or sell, or grant any
option or other right in respect of, any shares of common stock, any other
voting securities of the Purchaser or any Purchaser Subsidiary or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (except to the Purchaser or
a Purchaser Subsidiary), except the foregoing shall not prohibit the issuance of
shares of Common Stock of the Purchaser in connection with the conversion of any
currently outstanding convertible preferred stock or convertible notes or in
connection with the granting of any employee stock options or restricted shares
to any employee of Purchaser in an amount not to exceed $10,000,000;
(c) except as otherwise contemplated by this Agreement, amend the
articles or certificate of incorporation, charter, bylaws, partnership agreement
or other comparable charter or organizational documents of the Purchaser or any
Purchaser Subsidiary;
(d) in the case of the Purchaser or any other Purchaser Subsidiary,
merge or consolidate with any Person;
(e) in any transaction or series of related transactions involving
capital, securities or other assets or Indebtedness of the Purchaser, a
Purchaser Subsidiary, or any combination thereof in excess of $10,000,000:
acquire by merging or consolidating with, or by purchasing all or a substantial
portion of the equity securities or all or
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substantially all of the assets of, or by any other manner, any business or any
corporation, partnership, limited liability company, joint venture, association,
real estate investment trust, business trust or other business organization or
division thereof or interest therein; subject to any Encumbrance, sell, lease
or otherwise dispose of any of the Purchaser Properties or any material assets
or assign or encumber the right to receive income, dividends, distributions and
the like; or incur any Indebtedness, issue or refinance any Indebtedness or
make any loans, advances or capital contributions to, or investments in, any
other Person; excluding (y) the Purchaser's proposed $200 million line of credit
with Bankers Trust Company and The Chase Manhattan Bank and (z) financial
transactions undertaken by Purchaser or Purchaser's Subsidiaries in accordance
with their respective ordinary cash management practices such as investments or
deposits in commercial paper, obligations of the United States of America or its
agencies or instrumentalities, certificates of deposit, time deposits,
repurchase agreements and similar financial arrangements;
(f) adopt any new employee benefit plan, incentive plan, severance
plan, stock option or similar plan, grant new stock appreciation rights or amend
any existing plan or rights, except such changes as are required by Law or which
are not more favorable to participants than provisions presently in effect; and
(g) enter into or amend or otherwise modify any agreement or
arrangement with Persons that are Affiliates or, as of the date hereof, are
executive officers, trust managers or directors of the Purchaser or any
Purchaser Subsidiary.
SECTION 5.3. PREPARATION OF THE PROXY STATEMENT; SHAREHOLDERS MEETING.
(a) As soon as practicable following the date of this Agreement but
not later than August 29, 1997, the Purchaser shall finalize and file with the
SEC a preliminary Proxy Statement in form and substance satisfactory to
Purchaser. The Purchaser shall use its reasonable best efforts to respond to
any comments of the SEC and the Purchaser will use its reasonable best efforts
to cause the Proxy Statement to be mailed to the Purchaser's shareholders as
promptly as practicable. The Purchaser will notify the Seller of any comments
from the SEC and of any request by the SEC for amendments or supplements to the
Proxy Statement or for additional information. The Proxy Statement shall comply
in all material respects with all applicable requirements of Law. The Seller
shall furnish all information concerning the Seller and the Seller Subsidiaries
as the Purchaser may reasonably request in connection with such actions and the
preparation of the Proxy Statement. The Proxy Statement shall include a
proposal to amend the Purchaser's Charter in the form of the
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Charter amendment attached hereto as EXHIBIT 5.03(A) (the "CHARTER AMENDMENT")
and the recommendations of the Board of Directors of Purchaser in favor of the
Share Issuance and the Charter Amendment. The Seller hereby approves the form
of Charter Amendment attached hereto as EXHIBIT 5.03(A) and consents to the
Additional Charter Provisions and agrees that the Additional Charter Provisions
shall be included in the Charter Amendments, provided, however that the
Purchaser and the Seller agree that the approval of the Additional Charter
Provisions by the shareholders of the Purchaser shall not be a condition
precedent hereunder to the parties obligation to effect the Closing.
(b) The Purchaser will submit the Share Issuance and the Charter
Amendment to a vote of the Purchaser's shareholders at a special meeting (the
"PURCHASER SHAREHOLDERS MEETING") for the purpose of obtaining the Purchaser
Shareholder Approvals.
(c) The information supplied by the Seller for inclusion in the Proxy
Statement shall not, (i) at the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the stockholders of the
Purchaser, (ii) at the time of the Purchaser Shareholders Meeting, and (iii) the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. The Purchaser shall provide Seller a
reasonable opportunity to review the preliminary Proxy Statement, including the
information supplied by Seller for inclusion therein under the terms of this
SECTION 5.03, prior to the filing of such Proxy Statement with the SEC. If at
any time prior to the Closing Date any event or circumstances relating to the
Seller or any of the Seller Subsidiaries, or their respective officers or
directors, should be discovered by the Seller which should be set forth in an
amendment or a supplement to the Proxy Statement, the Seller shall promptly
inform the Purchaser. The Seller shall have no liability for the accuracy or
inaccuracy of any information set forth in the Proxy Statement or otherwise in
connection with the Proxy Statement except in respect of any breach by the
Seller of the covenants set forth in this clause (c).
SECTION 5.4. COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Subject to the terms and conditions herein provided, the
Purchaser and Seller shall: use all commercially reasonable efforts to
cooperate with one another in determining which filings are required to be made
prior to the Closing with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions and any
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third parties in connection with the execution and delivery of this Agreement,
and the consummation of the transactions contemplated by such Agreement and
(ii) timely making all such filings and timely seeking all such consents,
approvals, permits and authorizations, (b) use all commercially reasonable
efforts to obtain in writing any consents required from third parties to
effectuate the transactions contemplated by this Agreement, such consents to be
in reasonably satisfactory form to the Seller and Purchaser; and (c) use all
commercially reasonable efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions contemplated by this
Agreement. In furtherance of the foregoing, the Seller and the Purchaser
acknowledge that they have each reviewed and approved documentation to be
entered into effective as of the Closing Date between the Purchaser (or the
applicable Seller Subsidiary or Purchaser Subsidiary) and Hines Interests
Limited Partnership (Hines) which evidences the agreement with Hines regarding
the respective rights, duties and obligations from and after the Closing Date of
Hines and the Seller Subsidiary or Subsidiaries which are the partners with
Hines in the partnerships which are the fee simple owners of the Seller
Properties described on Schedule 1.01(l) hereof in items (6) and (7)
[500 Boylston and 222 Berkeley], such documentation being in the form of the
documents attached hereto as EXHIBIT 5.04(C)(I) (the "500 BOYLSTON AND 222
BERKELEY AMENDMENTS") (the form and substance of which the parties have
approved) and that each of the Purchaser and the Seller shall use their best
efforts to obtain Hines' agreement to enter into the 500 Boylston and 222
Berkeley Amendments (or documents in a form substantially similar thereto) to be
effective as of the Closing Date. In addition, the Seller and the Purchaser
acknowledge that they have proposed to C-H Associates, Ltd. ("CHV"), a partner
in One Ninety-One Peachtree Associates, the Joint Venture which owns the Seller
Property known as One Ninety-One Peachtree, certain revisions to the Joint
Venture Agreement governing the Joint Venture known as One Ninety-One Peachtree
Associates. The substance of the proposed amendments are described in the
letter to CHV dated August 1, 1997, attached hereto as EXHIBIT 5.04(C)(II) which
terms have been approved by the parties. The Purchaser and Seller agree that
they will reasonably approve amendments to the Joint Venture Agreement of One
Ninety-One Peachtree Associates to reflect the terms set forth in the attached
letter and that they shall each use their best efforts to obtain the agreement
of CHV to enter into such an amendment to be effective as of the Closing Date.
If, at any time after the Closing, any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of the Purchaser and Seller shall take all such necessary action.
(b) Prior to the Closing, the Seller and the Purchaser shall deliver
to the other information supplementing or amending
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the representations, warranties, Schedules and other disclosures provided in
Articles III and IV of this Agreement to set forth the information relating to
any event or circumstance arising after date of this Agreement, or, with respect
to matters that are limited to the Knowledge of either party, information that
becomes a matter within the Knowledge of such party following the date of this
Agreement, in order to make such representations and warranties, Schedules or
other disclosures complete and accurate as of the date of such supplement or
amendment. Each representation or warranty contained herein and the statements
contained in Articles III and IV (including the Schedules hereto and the other
disclosures) shall be deemed to have been amended by any such supplement or
amendment. All references herein to any such representation, warranty or
statement (including the Schedules hereto and other disclosures) provided
hereby, to the extent such supplement or amendment refers specifically to such
representation, warranty or statement, shall be deemed to refer to the same as
so amended or supplemented. Without limiting the foregoing, the Seller
covenants and agrees that within thirty (30) days of this Agreement, the Seller
shall provide to the Purchaser an unaudited consolidated balance sheet of the
Seller and the Seller Subsidiaries as of June 30, 1997, and the related
consolidated statements of income, retained earnings, stockholders' equity and
changes in financial position of the Seller, together with all related notes and
schedules thereto, reviewed by Coopers & Lybrand, L.L.P. (the Interim Financial
Statements). The Interim Financial Statements will consist only of normal
recurring accruals necessary to summarize fairly the unaudited results of
operations for the six month period. The Interim Financial Statement shall be
deemed to constitute a supplement to the Seller's representations and warranties
under SECTION 3.07 hereto and shall give rise to a termination right on the part
of the Purchaser under SECTION 7.01(a) hereof to the extent such Interim
Financial Statements disclose any Seller Material Adverse Effect since the date
of this Agreement (as determined by reference to the Reference Balance Sheet and
the Seller's representations under SECTIONs 3.06 and 3.07 hereof.) Any other
amendments or supplements given to either party pursuant to this SECTION 5.04(b)
may be a basis for the termination of this Agreement as provided for in
SECTIONs 9.01(b) and 9.02(c); provided the terminating party exercises its right
to terminate this Agreement under SECTION 9.01(b) or 9.02(c), as applicable,
with twenty (20) days after receipt of the amending or supplementary information
giving rise to such termination right.
SECTION 5.5. NAME CHANGES. The Purchaser covenants and agrees that
following the Closing Date, the Purchaser shall (i) promptly take all
appropriate action to effect the change of the corporate names of each of the
Seller Subsidiaries in which the acronym "DIHC" appears to omit such acronym,
it being acknowledged and agreed that the Purchaser is acquiring no right,
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title or interest in and to the name "Dutch Institutional Holding Company, Inc."
or "DIHC" other than a license to use the same until such name changes are
effected, and (ii) not use such names without the prior consent of the Seller.
SECTION 5.6. INTENTIONALLY OMITTED.
SECTION 5.7. TRANSFER AND GAINS TAXES. Seller and the Purchaser shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, mortgage recording, intangible, value
added, stock transfer and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes which become payable in connection with the
transactions contemplated hereby, excluding state and federal income taxes
(together with any related interests, penalties or additions to tax, Transfer
and Gains Taxes). The Purchaser shall be required to pay all Transfer and Gains
Taxes (including, without limitation, all Transfer and Gains Taxes due and
payable in connection with the execution, delivery and/or filing or recording of
the Purchase Money Notes and the Purchase Money Mortgages) incurred in
connection with the acquisition of the Seller Subsidiaries hereunder.
Notwithstanding the foregoing, the Seller and the Purchaser agree that any
Transfer and Gains Tax due and payable in connection with the transfer by the
Seller of its interests in the Seller Property described as item 10 on SCHEDULE
1.01(L) hereof [Market Square, Washington D.C.] shall be shared equally between
the Seller and the Purchaser (the Seller's share thereof to be paid by an
adjustment to the cash portion of the Purchase Price payable at Closing and the
Purchaser's portion to be paid in cash or by check at Closing).
SECTION 5.8. ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable notice,
each party and their respective Affiliates and their respective officers,
directors, employees, agents, accountants and counsel shall: (i) afford the
officers, employees and authorized agents, accountants, counsel, financing
sources and representatives of the other party reasonable access, during normal
business hours, to the properties, offices, other facilities, books and records
of such party and its Affiliates and to those officers, directors, employees,
agents, accountants and counsel of such party and its Affiliates who have any
knowledge relating to such party, its Affiliates or its properties and (ii)
furnish to the officers, employees and authorized agents, accountants, counsel,
financing sources and representatives of the other party such additional
financial and operating data and other information regarding it and its
Affiliates properties as the other party may from time to time reasonably
request.
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(b) In order to facilitate the resolution of any claims made against
or incurred by the Seller prior to the Closing, for a period of seven years
after the Closing, the Purchaser shall (i) retain the books and records of the
Seller and the Seller Subsidiaries which are transferred to the Purchaser
pursuant to this Agreement relating to periods prior to the Closing in a manner
reasonably consistent with the prior practices of the Seller and the Seller
Subsidiaries and (ii) upon reasonable notice, afford the officers, employees and
authorized agents and representatives of the Seller reasonable access (including
the right to make, at the Seller's expense, photocopies), during normal business
hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser after the Closing or for any other
reasonable purpose, for a period of seven years following the Closing, the
Seller shall (i) retain all books and records of the Seller, and the Seller
Subsidiaries which are not transferred to the Purchaser pursuant to this
Agreement and which relate to the Seller, the Seller Subsidiaries, or the Seller
Properties for periods prior to the Closing and which shall not otherwise have
been delivered to the Purchaser (including, without limitation, employee files
relating to the employees of the Seller Subsidiaries which are not being
acquired by the Purchaser) and (ii) upon reasonable notice, afford the officers,
employees and authorized agents and representatives of the Purchaser, reasonable
access (including the right to make photocopies at the expense of the
Purchaser), during normal business hours, to such books and records.
SECTION 5.9. CONFIDENTIALITY. Each of the Purchaser and Seller covenant
that they shall not, without the prior written consent of the other, divulge,
furnish or make accessible any information or documents provided to the other in
connection with their due diligence review of the other party's operations and
assets (other than "Non-confidential Information" as hereinafter defined) to any
other Person (other than as required by law, including applicable securities law
or stock exchange regulations, and other than to their respective employees,
accountants, attorneys, consultants, investment bankers, financial advisors,
creditors, outside partners or co-venturers in, and property managers of, any of
the parties' properties and other agents who will be bound by the terms of this
SECTION 5.09). The term "NON-CONFIDENTIAL INFORMATION" shall mean information
generally available to the public, previously known or in the possession of the
other party or which becomes available prior to any disclosure or use thereof
from some other source not restricted as to disclosure. Purchaser and Seller
agree that if this Agreement is terminated, each shall return to the other all
documents previously delivered to it in connection with the transactions
contemplated by this Agreement and shall
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destroy all copies of such documents made by it and (to the extent not
prohibited by law or contrary to customary internal corporate policy) all
memoranda, notes and other written material and work-product related thereto.
Each of the Purchaser and Seller shall promptly notify the other of any request
or demand by any court, governmental agency or other person asserting a demand
or request for confidential information supplied to such party so that the other
party may seek an appropriate protective order. In the absence of such
protective order or receipt of a waiver hereunder, if Purchaser or Seller (or
any of their respective representatives) are, in the reasonable opinion of such
party's counsel, compelled to disclose confidential information or else stand
liable for contempt or suffer other censure or significant penalty, the
Purchaser or Seller may disclose that portion of the requested information which
such party's counsel advises it that it is compelled to disclose. If such party
proposes to make disclosure based upon the opinion of its counsel as aforesaid,
such party will (to the extent reasonably possible and permitted) advise and
consult with the other party prior to such disclosure concerning the information
it proposes to disclose.
SECTION 5.10. SECTION 754 ELECTION. With respect to any partnership in
which a Seller Subsidiary has a direct or indirect interest that has not made an
election under SECTION 754 of the Code (a "SECTION 754 ELECTION"), Purchaser and
Seller shall use their best efforts to cause such partnership to file a SECTION
754 Election with the partnership's federal income Tax Return for the taxable
year of the partnership that ends on or includes the Closing Date.
SECTION 5.11. STANDSTILL AGREEMENT. In the event the Closing does not
occur, the Purchaser and the Seller agree that, for a period of 24 months after
the date of this Agreement, unless specifically invited in writing by the other
party's Board of Directors, neither the Purchaser nor the Seller (nor any of
their respective Affiliates), will in any manner, directly or indirectly, (a)
effect or seek, offer or propose (whether publicly or otherwise) to effect, or
cause or participate in, (i) the acquisition of the other party's securities (or
beneficial ownership thereof) or assets, (ii) any tender or exchange offer,
merger or other business combination involving the other party, (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the other party or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC) or consents to
vote any of the other party's voting securities; (b) form, join or in any way
participate in a "group" (as defined under the Exchange Act) or otherwise act,
alone or in concern with others, to seek to control or influence the other
party's management, Board of Directors or policies; or (c) enter into any
discussion or arrangement with any third party with respect to
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any of the foregoing; PROVIDED, HOWEVER, that the restrictions set forth in this
paragraph shall not apply to professional asset managers or investment advisers
retained by the Purchaser or the Seller or their respective Affiliates who are
authorized to exercise discretion with respect to all or a portion of the assets
which they manage for the Purchaser or the Seller or their respective
Affiliates. Notwithstanding the foregoing, in the event either of the Purchaser
or the Seller willfully and intentionally breach any of their respective
obligations under this Agreement with the result that a Closing hereunder does
not occur, the non-defaulting party shall not be bound by the covenants in this
SECTION 5.11.
SECTION 5.12. PERFORMANCE UNDER REDEMPTION AGREEMENT. As described on
SCHEDULE 1.01(F), upon the making by the Purchaser (or its designated Purchaser
Subsidiary) on or following the Closing Date of a capital contribution to MSDI
in the amount of $2,083,000, MSDI shall redeem M.I.'s interest in MSDI pursuant
to the Redemption Agreement and the Purchaser's percentage interest in MSDI
shall be increased to equal the former percentage of interest of M.I. The
Purchaser covenants to make such capital contribution as and when requested by
the Seller upon no less than ten days prior written notice and within the
permissible time periods for a "CLOSING" under the Redemption Agreement and the
Seller covenants and agrees that, upon the making by the Purchaser of such
capital contribution to MSDI, it shall perform its obligations under the
Redemption Agreement as provided therein in a timely manner and shall cause the
redemption of M.I.'s interest in MSDI and the resultant increase in the interest
of the Purchaser (or its designated Purchaser Subsidiary) in MSDI. The
Purchaser agrees to indemnify the Seller and its Affiliates as of the Closing
for all obligations and liabilities of the Seller under SECTION 10 of the
Redemption Agreement in respect of Capital Calls to MSDI and agrees to fund all
capital calls required to be made on behalf of M.I. pursuant to SECTION 10 of
the Redemption Agreement. In the event the Closing under the Redemption
Agreement does not close for any reason other than failure of the Purchaser to
make the capital contribution to MSDI required hereunder to fund the redemption
of M.I.'s interest in MSDI, the Seller shall reimburse the Purchaser for all
such Capital Calls funded by the Purchaser and any other payments made by the
Purchaser pursuant to the indemnity under SECTION 10 of the Redemption
Agreement.
ARTICLE VI
TAX MATTERS
SECTION 6.1. INDEMNITY. In addition to any indemnities covered by Article
VIII, the Seller agrees to indemnify and hold harmless the Purchaser and the
Purchaser Subsidiary against the following taxes and, except as otherwise
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provided in SECTION 6.05, against any loss, damage, liability or expense,
including reasonable fees for attorneys and other outside consultants, incurred
in contesting or otherwise in connection with any such taxes: (i) federal or
state income or franchise taxes (including interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed on the Seller,
Seller Subsidiary (other than a Joint Venture), or any member of any affiliated
group with which any of the Seller or the Seller Subsidiaries file, have filed
or should have filed a Tax Return on a consolidated or combined basis with
respect to taxable periods ending on or before the Closing Date, including, but
not limited to, federal or state income or franchise taxes (including interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed under SECTION 1.1502-6 of the Regulations (or any similar provision of
state or local law or under the laws of the District of Columbia); (ii) with
respect to taxable periods beginning before the Closing Date and ending after
the Closing Date, federal or state income or franchise taxes (including
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed on the Seller or any Seller Subsidiary which are
allocable, pursuant to SECTION 6.02, to the portion of such period ending on the
Closing Date; and (iii) in any adverse consequence to the Purchaser or any
Purchaser Subsidiary any adverse consequence to the Purchaser or any Purchaser
Subsidiary arising out of any failure of Seller to pay any federal or state
income or franchise taxes (including interest, penalties, additions to tax and
additional amounts imposed with respect thereto) attributable to the making of
the SECTION 338(h)(10) Election. The Purchaser shall indemnify the Seller for
any liability of Seller for Taxes and associated expenses imposed on Seller
Subsidiaries for taxable periods ending after the Closing Date and not allocated
to the Seller pursuant to the first sentence hereof, and also shall indemnify
Seller for any Transfer and Gains Taxes allocated to the Purchaser under SECTION
5.07.
SECTION 6.2. STRADDLE PERIOD TAXES. In the case of federal or state
income or franchise taxes that are payable with respect to a taxable period that
begins before the Closing Date and ends after the Closing Date, the portion of
any such tax that is allocable to the portion of the period ending on the
Closing Date shall be:
(i) in the case of taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any
sale or other transfer or assignment of property (real or personal,
tangible or intangible), deemed equal to the amount which would be
payable if the taxable year ended with the Closing Date; and
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(ii) in the case of taxes imposed on a periodic basis with
respect to the assets of the Seller or any Seller Subsidiary, any
Seller Properties or otherwise measured by the level of any item,
deemed to be the amount of such taxes for the entire period (or, in
the case of such taxes determined on an arrears basis, the amount of
such taxes for the immediately preceding period) multiplied by a
fraction the numerator of which is the number of calendar days in the
period ending on the Closing Date and the denominator of which is the
number of calendar days in the entire period.
(iii) The parties recognize that SECTION 2.07(a)(iv) addresses
the provision for certain taxes and that SECTION 5.07 allocates responsibility
for Transfer and Gains Taxes. The parties intend that no multiple payment or
recovery shall be made or obtained with respect to such taxes under SECTION
2.07(a)(iv) or SECTION 5.07 and this Article VI.
SECTION 6.3. RETURNS AND PAYMENTS.
(a) From the date of this Agreement through and after the Closing
Date, the Seller shall prepare and file or otherwise furnish in proper form to
the appropriate Governmental Authority (or cause to be prepared and filed or so
furnished) in a timely manner all (i) consolidated federal income Tax Returns
for the affiliated group of which the Seller is common parent, and (ii) the
separate and combined state income Tax Returns of the Seller. The Seller
Subsidiaries shall be included in such consolidated federal income Tax Return
through the close of business on the Closing Date. The results of operations of
the Seller Subsidiaries shall be included, to the extent consistent with past
practice, in such combined state income Tax Returns through the close of
business on the Closing Date.
(b) The Seller shall prepare and file or otherwise furnish in proper
form to the appropriate Governmental Authority (or cause to be prepared and
filed or so furnished) in a timely manner all other state or local Tax Returns
of each Seller Subsidiary that is not a Joint Venture for taxable periods ending
on or before the Closing Date.
(c) Purchaser shall prepare and file or otherwise furnish in proper
form to the appropriate Governmental Authority (or cause to be prepared and
filed or so furnished) in a timely manner all separate or combined state or
local Tax Returns or each Seller Subsidiary for any taxable periods ending after
the Closing Date.
(d) With respect to any Tax Return required to be filed by the
Purchaser or the Seller with respect to the Seller Subsidiaries and as to which
an amount of Tax is allocable to the
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other party under SECTION 6.02, the filing party shall provide the other party
and its authorized representatives with a copy of such completed Tax Return and
a statement certifying the amount of Tax shown on such Tax Return that is
allocable to such other party pursuant to SECTION 6.02, together with
appropriate supporting information and schedules at least 20 Business Days prior
to the due date (including any extension thereof) for the filing of such Tax
Return, and such other party and its authorized representatives shall have the
right to review and comment on such Tax Return and statement prior the filing of
such Tax Return.
(e) The Seller shall pay or cause to be paid when due and payable all
Taxes (other than Taxes addressed under SECTION 2.07(a)(iv) and Transfer and
Gains Taxes allocated to the Purchaser under SECTION 5.07) with respect to the
Seller and the Seller Subsidiaries for any taxable period ending on the Closing
Date.
SECTION 6.4. REFUNDS. Any Tax refund or credit (including any interest
with respect thereto) relating to the Seller, any Seller Subsidiary, or the
Seller Properties for any taxable period ending on or prior to the Closing Date
shall be the property of the Seller, and if received by the Purchaser (or any
Affiliate of Purchaser) shall be paid promptly to the Seller within fifteen (15)
Business Days of the earlier of receipt or entitlement thereto (and if received
by Seller, retained by it). The Purchaser shall, if so requested by the Seller,
cause the relevant entity to file for any refunds or equivalent amounts to which
the Seller is entitled under this SECTION 6.04.
SECTION 6.5. CONTESTS.
(a) After the Closing Date, each party shall promptly notify the
other party in writing of any written notice from a Governmental Authority,
including any written notice of a proposed assessment or claim in an audit or
administrative or judicial proceeding involving a matter to which the other
party may have an indemnification obligation to the first party pursuant to this
Agreement. Such notice shall contain factual information describing the
assessment, claim, or other matter in reasonable detail and shall include copies
of any notice or other document received from such Governmental Authority. If
the first party fails to give the other party prompt notice as required by this
SECTION 6.05, then (i) if the other party is precluded by the failure to give
prompt notice from contesting the proposed Tax liability in the appropriate
judicial forums, then such party shall not have any obligation to indemnify the
first party for any such Tax liability, and (ii) if the other party is not so
precluded from contesting, but such failure to give prompt notice results in a
detriment to the other party, then any amount the other party is otherwise
required to pay pursuant to this Article
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VI with respect to such Tax liability shall be reduced by the amount of such
detriment.
(b) Seller and its duly appointed representatives shall have the sole
right to supervise or otherwise coordinate any examination process and to
negotiate, resolve, settle or contest any asserted Tax deficiencies or assert
and prosecute any claim for refund for taxable periods ending on or prior to the
Closing Date. Costs of such contests shall be borne solely by Seller.
Purchaser and its duly appointed representatives shall, at Purchaser's expense,
have the right to supervise or otherwise coordinate any examination process and
to negotiate, resolve, settle, or contest any asserted Tax deficiencies or
assert and prosecute any claim for refund for taxable periods of the Seller
Subsidiaries that begin on or after the Closing Date.
(c) With respect to issues relating to a potential adjustment for
Taxes addressed under SECTION 6.02 and the last sentence of SECTION 5.07, (i)
each party may participate in the audit or proceeding, and (ii) the audit or
proceeding shall be controlled by that party which would bear the burden of the
greater portion of the sum of the adjustment and any corresponding adjustments
that may reasonably be anticipated for future Tax periods. The principle set
forth in the preceding sentence shall govern also for purposes of deciding any
issue that must be decided jointly (in particular, choice of judicial forum) in
situations in which separate issues are otherwise controlled under this Article
VI by the Purchaser and the Seller.
(d) The Purchaser and the Seller agree (and Purchaser agrees to cause
Seller Subsidiaries) to cooperate in the defense against or compromise of any
claim in any audit or proceeding.
SECTION 6.6. SECTION 338(H)(10) ELECTION. The Seller will join with the
Purchaser in making an election under SECTION 338(h)(10) of the Code (and any
corresponding elections under state or local tax law or under the laws of the
District of Columbia) (collectively, a "SECTION 338(H)(10) ELECTION") with
respect to the purchase and sale of the Seller Subsidiaries (which includes the
deemed purchase and sale of any Subsidiary of a Seller Subsidiary) hereunder.
The Purchaser shall be responsible for the preparation of the Form 8023-A and
any other forms or schedules required to effect the SECTION 338(h)(10) Election
and shall file such election not later than the fifteenth (15th) day of the
ninth (9th) month beginning after the month in which the Closing Date occurs.
The Seller will pay any Tax attributable to the making of the SECTION 338(h)(10)
election. The Purchase Price allocated to each Seller Subsidiary under
SECTION 2.02(d), as adjusted for the assumed liabilities of such Seller
Subsidiary (including any Subsidiaries thereof) and other relevant items shall
be allocated in the manner mutually
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agreed to by Purchaser and Seller, which allocation shall be agreed to in
writing within 60 days after the Closing Date.
SECTION 6.7. TIME OF PAYMENT. Except with respect to payments pursuant to
SECTION 6.04, any payment by one party to the other party pursuant to this
Article VI in respect of Taxes shall be made within three Business Days
following an agreement between the Seller and the Purchaser that an indemnity
amount is payable, an assessment of a Tax by a Governmental Authority, or a
"determination" as defined in SECTION 1313(a) of the Code. If liability under
this Article VI is in respect of costs or expenses other than Taxes, payment by
a party of any amounts due under this Article VI shall be made within five
Business Days after the date when such party has been notified by the other
party that the first party has a liability for a determinable amount under this
Article VI and is provided with calculations or other materials supporting such
liability.
SECTION 6.8. COOPERATION AND EXCHANGE OF INFORMATION. Upon the terms set
forth in SECTIONs 5.04 and 5.08, the Seller and the Purchaser will (and
Purchaser will cause the Seller Subsidiaries to) provide the other with such
cooperation and information as they reasonably may request in filing any Tax
Return, amended return or claim for refund, determining a liability for Taxes or
a right to a refund of Taxes, or participating in or conducting any audit or
other proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of relevant Tax Returns or portions thereof, together
with accompanying schedules, related work papers and documents relating to
rulings or other determinations by Governmental Authorities. The Seller and
Purchaser shall (and Purchaser shall cause the Seller Subsidiaries to) make its
respective employees (if any) available on a basis mutually convenient to
provide explanations of any documents or information provided hereunder. Each
of the Seller and the Purchaser shall (and Purchaser shall cause the Seller
Subsidiaries to) retain all Tax Returns, schedules and work papers, records and
other documents in its possession relating to Tax matters of the Seller and the
Seller Subsidiaries for each taxable period first ending after the Closing Date
and for all prior taxable periods until the later of (i) the expiration of the
statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax
periods or (ii) six years following the due date (without extension) for such
Tax Returns. Before Purchaser or the Seller Subsidiaries shall dispose of any
of such books and records, at least ninety (90) calendar days' prior written
notice to such effect shall be given by Purchaser to the Seller, and the Seller
shall be given an opportunity, at its cost and expense, to remove and retain all
or any part of such books and records as the Seller may select. Any
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information obtained under this SECTION 6.08 shall be kept confidential in
accordance with SECTION 5.09 except as may be otherwise necessary in connection
with the filing of Tax Returns or claims for refund or in conducting an audit or
other proceeding.
SECTION 6.9. MISCELLANEOUS.
(a) The Seller and the Purchaser agree to treat all payments made by
either to or for the benefit of the other under this Article VI, under other
indemnity provisions of this Agreement and for any misrepresentations or breach
of warranties or covenants as adjustments to the cash portion of the Purchase
Price for Tax purposes and that such treatment shall govern for purposes hereof
except to the extent that the laws of a particular jurisdiction provide
otherwise, in which case such payments shall be made in an amount sufficient to
indemnify the relevant party on an after-Tax basis.
(b) Notwithstanding any provision in this Agreement to the contrary,
the obligations of the Seller to indemnify and hold harmless the Purchaser
pursuant to this Article VI, and the representations and warranties contained in
SECTION 3.17, shall terminate at the close of business on the 120th day
following the expiration of the applicable statute of limitations with respect
to the Tax liabilities in question (giving effect to any waiver, mitigation or
extension thereof).
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions unless waived by the Seller:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Purchaser contained in this Agreement shall have been true
and correct when made and shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the Closing
Date, other than such representations and warranties as are made as of another
date, the covenants and agreements contained in this Agreement to be complied
with by the Purchaser on or before the Closing shall have been complied with in
all material respects, and the Seller shall have received a certificate from the
Purchaser to such effect signed by the chief executive officer or chief
financial officer of the Purchaser. This condition shall be deemed satisfied
unless breaches of the Purchaser's representations, warranties and covenants in
this Agreement are,
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in the aggregate, reasonably expected to have or have had a Purchaser Material
Adverse Effect or adversely affect any of the Seller's collateral under the
Purchase Money Mortgages in any material respect;
(b) NO PROCEEDING OR LITIGATION. No Action shall have been commenced
by or before any Governmental Authority against either the Seller or the
Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the reasonable, good faith
determination of the Seller, is likely to render it impossible or unlawful to
consummate such transactions; PROVIDED, HOWEVER, that the provisions of this
SECTION 7.01(b) shall not apply if the Seller has directly or indirectly
solicited or encouraged any such Action;
(c) RESOLUTIONS. The Seller shall have received a true and complete
copy, certified by the Secretary or an Assistant Secretary of the Purchaser, of
the resolutions duly and validly adopted by the Board of Directors of the
Purchaser evidencing its authorization of the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby;
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall not have been any change, circumstance or event in the business or
prospects of the Purchaser which has had or would reasonably be expected to have
a Purchaser Material Adverse Effect or adversely affect any of the Seller's
collateral under the Purchase Money Mortgages in any material respect and Seller
shall have received a certificate of the chief executive officer or chief
financial officer of the Purchaser certifying to such effect;
(e) OPINIONS RELATING TO REIT. Seller shall have received an opinion
of counsel to the Purchaser, dated as of the Closing Date, reasonably
satisfactory to Seller that, commencing with its taxable year ending December
31, 1993, the Purchaser was organized and is operated in conformity with the
requirements for qualification as a REIT under the Code;
(f) CONSENTS. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained, other than such consents and waivers from
third parties, which, if not obtained, would not result individually or in the
aggregate, in a Seller Material Adverse Effect or a Purchaser Material Adverse
Effect;
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(g) CLOSING UNDER LOAN PURCHASE AGREEMENT. All conditions precedent
to a closing under the Loan Purchase Agreement shall have been satisfied and a
closing thereunder shall occur immediately preceding the Closing hereunder;
(h) OTHER LEGAL OPINIONS. The Seller shall have received opinions of
counsel to the Purchaser, dated as of Closing Date, regarding the
enforceability, non-contravention, conflicts with law (and, where applicable,
the due authorization, execution and delivery) of the Registration Rights and
Voting Agreement, the Proxy Statement, the Charter Amendment and the other
Ancillary Agreements to which the Purchaser or any Purchaser Subsidiary is a
party, the due authorization and issuance of the Purchaser Common Shares being
issued to Seller and PGGM on the Closing Date, and such other matters as the
Seller shall reasonably require;
(i) CERTIFIED RENT ROLL. A rent roll with respect to each of the
Purchaser Properties (prepared by the Purchaser or the property manager of each
of the Purchaser Properties) certified as to Knowledge of the Purchaser to be
true and correct in all material respects by the chief executive officer or
chief financial officer of the Purchaser including a description of all
Purchaser Space Leases in effect as of the Closing Date, the rentals payable by
each tenant thereunder (including, without limitations, reimbursements for
common area expenses), the original and current balance of each security deposit
delivered under each Purchaser Space Lease, and all delinquencies and defaults
under each Purchaser Space Lease;
(j) ORGANIZATIONAL DOCUMENTS. The Seller shall have received a copy
of (i) the Certificate of Incorporation, as amended, of the Purchaser certified
by the secretary of state of the jurisdiction in which such entity is
incorporated or organized, as of a date not earlier than fifteen Business Days
prior to the Closing Date and accompanied by a certificate of the Secretary or
Assistant Secretary of the Purchaser, dated as of the Closing Date, stating that
no amendments have been made to such Certificate of Incorporation since such
date except as contemplated by this Agreement, and (ii) the By-laws of the
Purchaser, certified by the Secretary or Assistant Secretary of the Purchaser;
and
(k) GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Seller shall
have received a good standing certificate for the Purchaser from the secretary
of state of the jurisdiction in which such entity is incorporated or organized
and from the secretary of state in each other jurisdiction in which the
properties owned or leased by the Purchaser, or the operation of its business in
such jurisdiction, requires the Purchaser to qualify to do business as a foreign
entity, in each case dated as
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of a date not earlier than fifteen Business Days prior to the Closing Date.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations
of the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions unless waived by the Purchaser:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Seller contained in this Agreement shall have been true
and correct when made and shall be true and correct in all material respects as
of the Closing with the same force and effect as if made as of the Closing,
other than such representations and warranties as are made as of another date,
the covenants and agreements contained in this Agreement to be complied with by
the Seller on or before the Closing shall have been complied with in all
material respects, and the Purchaser shall have received a certificate of the
Seller to such effect signed by the chief executive officer or the chief
financial officer of the Seller. This condition shall be deemed satisfied
unless breaches of the Seller's representations, warranties and covenants in
this Agreement are, in the aggregate, reasonably expected to have or have had a
Seller Material Adverse Effect;
(b) NO PROCEEDING OR LITIGATION. No Action shall have been commenced
or threatened by or before any Governmental Authority against either the Seller
or the Purchaser, seeking to restrain or materially and adversely alter the
transactions contemplated hereby which the Purchaser believes, in its sole and
absolute discretion, is likely to render it impossible or unlawful to consummate
the transactions contemplated by this Agreement or which could have a Seller
Material Adverse Effect; PROVIDED, HOWEVER, that the provisions of this
SECTION 7.02(b) shall not apply if the Purchaser has solicited or encouraged any
such Action;
(c) RESOLUTIONS OF SELLER. The Purchaser shall have received a true
and complete copy, certified by the Secretary or an Assistant Secretary of the
Seller, of the resolutions duly and validly adopted by the Board of Directors of
the Seller evidencing its authorization of the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby;
(d) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall not have been any change, circumstance or event in the Seller
Properties or the business or prospects of the Seller or the Seller Subsidiaries
which has had or would reasonably be expected to have a Seller Material Adverse
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Effect and the Purchaser shall have received a certificate of the chief
executive officer or chief financial officer of the Seller certifying to such
effect;
(e) CONSENTS. All consents and waivers (including, without
limitation, waivers of rights of first refusal) from third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement shall have been obtained, other than such consents and waivers from
third parties, which, if not obtained, would not result individually or in the
aggregate in a Seller Material Adverse Effect or a Purchaser Material Adverse
Effect;
(f) RESIGNATIONS. The Purchaser shall have received the
resignations, effective as of the Closing, of all directors and officers of each
Seller Subsidiary;
(g) ORGANIZATIONAL DOCUMENTS. The Purchaser shall have received a
copy of (i) the Certificates of Incorporation, as amended, of each Seller
Subsidiary which is a corporation, and of the Certificate of Limited Partnership
for each Seller Subsidiary which is a limited partnership, certified by the
secretary of state of the jurisdiction in which such entity is incorporated or
organized, as of a date not earlier than fifteen Business Days prior to the
Closing Date and accompanied by a certificate of the Secretary or Assistant
Secretary of such entity (or a general partner thereof in the case of a general
or limited partnership), dated as of the Closing Date, stating that no
amendments have been made to such Certificates of Incorporation or Certificate
of Limited Partnership since such date, and (ii) the By-laws or partnership
agreement of each Seller Subsidiary, certified by the Secretary or Assistant
Secretary of such entity or its general partner, as the case may be;
(h) MINUTE BOOKS. The Purchaser shall have received a true and
complete copy of the minute books and stock register of each Seller Subsidiary
which is a corporation, certified by its Secretary or Assistant Secretary as of
the Closing;
(i) GOOD STANDING; QUALIFICATION TO DO BUSINESS. The Purchaser shall
have received good standing certificates for each Seller Subsidiary from the
secretary of state of the jurisdiction in which such entity is incorporated or
organized and from the secretary of state in each other jurisdiction in which
the properties owned or leased by Seller Subsidiary, or the operation of its
business in such jurisdiction, requires Seller Subsidiary to qualify to do
business as a foreign entity, in each case dated as of a date not earlier than
fifteen Business Days prior to the Closing Date;
(j) CERTIFIED RENT ROLL. A rent roll with respect to each of the
Seller Properties (prepared by the Seller or the
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property manager of each of the Seller Properties) certified as to knowledge of
the Seller to be true and correct in all material respects by the chief
executive officer or chief financial officer of the Seller including a
description of all Space Leases in effect as of the Closing Date, the rentals
payable by each tenant thereunder (including, without limitations,
reimbursements for common area expenses), the original and current balance of
each security deposit delivered under each Space Lease, and all delinquencies
and defaults under each Space Lease;
(k) LEGAL OPINIONS. The Purchaser shall have received legal opinions
of counsel to the Seller, dated as of the Closing Date, regarding the
enforceability (and, where applicable, the due authorization, execution and
delivery) of the Registration Rights and Voting Agreement and the other
Ancillary Agreements to which the Seller is a party and such other matters as
the Purchaser shall reasonably require; and
(l) CLOSING UNDER LOAN PURCHASE AGREEMENT. All conditions precedent
to a closing under the Loan Purchase Agreement shall have been satisfied and a
closing thereunder shall occur immediately preceding the Closing hereunder.
SECTION 7.3. CONDITION TO EACH PARTIES OBLIGATION TO EFFECT TRANSACTION.
The respective obligation of each party to consummate the transactions
contemplated under this Agreement is subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) PURCHASER SHAREHOLDER APPROVALS. The Purchaser Shareholder
Approvals shall have been obtained.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect.
(c) RELATED TRANSACTIONS. The Registration Rights and Voting
Agreement substantially in the form attached hereto as Exhibit 1.01(k) shall
have been duly executed and delivered by the parties thereto and shall remain in
full force and effect.
(d) CHARTER AMENDMENT. The Charter Amendment shall have been duly
filed with the Secretary of State of the State of Nevada.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller and the Purchaser contained in this
Agreement and the Ancillary Agreements, shall survive the Closing until
March 31, 1999; PROVIDED, HOWEVER, that the representations and warranties of
the Seller dealing with Tax matters shall survive as provided in SECTION
6.08(b). Neither the period of survival nor the liability of either party
hereto with respect to such party's representations and warranties shall be
reduced by any investigation made at any time by or on behalf of the party
seeking indemnification. If written notice of a claim has been given prior to
the expiration of the applicable representations and warranties by the party
seeking indemnification to the other party, then the relevant representations
and warranties shall survive as to such claim until the claim has been finally
resolved.
SECTION 8.2. INDEMNIFICATION.
(a) The Purchaser and its Affiliates (including, without limitation,
the Seller Subsidiaries from and after the Closing Date), officers, directors,
employees, agents, successors and assigns (each a Purchaser Indemnified Party)
shall be indemnified and held harmless by the Seller for any and all Loss
arising out of or resulting from the breach of any representation or warranty
made by the Seller contained in this Agreement or the Ancillary Agreements or
the breach of any covenant or agreement by the Seller contained in this
Agreement or the Ancillary Agreements.
(b) The Seller and its Affiliates (excluding the Seller Subsidiaries
after the Closing Date), officers, directors, employees, agents, successors and
assigns (each a "SELLER INDEMNIFIED PARTY"; a Purchaser Indemnified Party or a
Seller Indemnified Party sometimes herein referred to as an "INDEMNIFIED PARTY")
shall be indemnified and held harmless by the Purchaser for any and all losses
arising out of or resulting from the breach of any representation or warranty
made by the Purchaser contained in this Agreement or the Ancillary Agreements or
the breach of any covenant or agreement by the Purchaser contained in this
Agreement or the Ancillary Agreements.
As used herein the term "LOSS" or "LOSSES" means any Liabilities, losses,
damages, claims, costs and expenses, interests, awards, judgments and penalties
(including, without limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by any Indemnified Party (including, without
limitation, any Action brought or otherwise initiated by any Indemnified Party
but excluding amounts accounted for in the
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Closing Accounting). In the event of any Loss incurred by the Seller or any
Affiliate thereof, for purposes of determining the amount the Seller is entitled
to recover hereunder on account of such Loss (but not for purposes of
determining the threshold amount of Losses or the cap on liability under SECTION
8.03), the Seller's Loss shall be "grossed up" to an amount equal to the
quotient of (i) the amount of such Loss DIVIDED BY (ii) a fraction the numerator
of which is the aggregate number of issued and outstanding shares of Purchaser
Common Shares and Purchaser Preferred Shares owned by Persons other than the
Seller and PGGM as of the date on which any payment is made by the Purchaser on
account of such Loss and the denominator of which is the aggregate amount of
issued and outstanding Purchaser Common Shares and Purchaser Preferred Shares as
of such date.
To the extent that the Purchaser's or the Seller's undertakings set forth
in this SECTION 8.02 may be unenforceable, the Purchaser or the Seller which is
liable for the undertaking shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
all Losses incurred by the other party.
(c) An Indemnified Party shall give the party from which it is
seeking indemnification hereunder (the "INDEMNITOR") notice of any matter which
an Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, within 30 days of such determination,
stating the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises. The obligations and
Liabilities of the Indemnitor under this Article VIII with respect to Losses
arising from claims of any third party which are subject to the indemnification
provided for in this Article VIII (Third Party Claims) shall be governed by and
contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnitor notice of such Third Party Claim within 30 days
of the receipt by the Indemnified Party of such notice; PROVIDED, HOWEVER, that
the failure to provide such notice shall not release the Indemnitor from any of
its obligations under this Article VIII except to the extent the Indemnitor is
materially prejudiced by such failure and shall not relieve the Indemnitor from
any other obligation or liability that it may have to any Indemnified Party
otherwise than under this Article VIII. If the Indemnitor acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then the Indemnitor shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within five days of the receipt of such notice
from the
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Indemnified Party; PROVIDED, HOWEVER, that if there exists or is reasonably
likely to exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the Indemnified Party for the same counsel to represent
both the Indemnified Party and the Indemnitor, then the Indemnified Party shall
be entitled to retain its own counsel, in each jurisdiction for which the
Indemnified Party determines counsel is required, at the expense of the
Indemnitor. In the event the Indemnitor exercises the right to undertake any
such defense against any such Third Party Claim as provided above, the
Indemnified Party shall cooperate with the Indemnitor in such defense and make
available to the Indemnitor, at the Indemnitor's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnitor. Similarly, in the event the Indemnified
Party is, directly or indirectly, conducting the defense against any such Third
Party Claim, the Indemnitor shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party, at the Indemnitor's
expense, all such witnesses, records, materials and information in the
Indemnitor's possession or under the Indemnitor's control relating thereto as is
reasonably required by the Indemnified Party. No such Third Party Claim may be
settled by the Indemnitor without the written consent of the Indemnified Party,
which will not be unreasonably withheld or delayed.
SECTION 8.3. LIMITATIONS ON RECOVERY. With respect to any claim for the
breach of representations and warranties hereunder, no claim may be made by an
Indemnified Party against an Indemnitor for indemnification hereunder with
respect to any individual item of Loss unless the aggregate of all Losses for
which the Indemnified Party is seeking recovery from an Indemnitee under this
Article VIII for breaches of representations or warranties plus any Losses for
which such Indemnified Party or any Affiliate thereof is seeking indemnity under
Article VII of the Loan Purchase Agreement for breaches of representations or
warranties shall exceed Ten Million and No/100 Dollars ($10,000,000.00), except
in the event the Indemnified Party is seeking indemnity as a result of a wilful
and intentional breach by the Indemnitor of any of its material representations
or warranties set forth in this Agreement in which such case the foregoing
limitations shall not be applied and the Indemnified Party shall be entitled to
recover its Losses to the full extent thereof. In the event the Indemnified
Party is entitled to seek recovery for breaches of representations or warranties
hereunder, the indemnity shall be for the full extent of all the Losses to the
Indemnified Party resulting from such breach exceeding and excluding the first
$10,000,000.00 under this Agreement and the Loan Purchase Agreement aggregated.
Notwithstanding the foregoing, the aggregate liability for Losses for breaches
of representations and warranties of any Indemnitor
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(and its Affiliates) under this Article VIII and Article VII of the Loan
Purchase Agreement shall be limited to an aggregate amount of One Hundred
Million and No/100 Dollars ($100,000,000.00), except in the event the
Indemnified Party is seeking indemnity hereunder as a result of the wilful and
intentional breach by the Indemnitor of any of its material representations or
warranties set forth in this Agreement in which event the foregoing limitation
on liability shall not be applicable and the Indemnified Party shall be entitled
to recover its Losses to the full extent thereof.
Payments made by an Indemnitor hereunder shall be limited to the amount of
Losses that remain after deducting therefrom any insurance proceeds and any
indemnity, contribution or other payment actually received by the Indemnified
Party from any Person with respect thereto.
SECTION 8.4. TAX MATTERS. Anything in this Article VIII to the contrary
notwithstanding, the rights and obligations of the parties with respect to any
indemnification for Tax matters covered by Article VI shall be governed solely
by Article VI.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent duly authorized by the respective
Boards of Directors of Purchaser and the Seller;
(b) by Purchaser, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Seller set forth in this
Agreement if such breach is reasonably expected to, or has, a Seller Material
Adverse Effect or a Purchaser Material Adverse Effect, or if any material
representation or warranty of the Seller shall have become untrue in any
material respect such that the conditions set forth in SECTION 7.02(a) would be
incapable of being satisfied on or prior to December 31, 1997;
(c) by the Seller, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Purchaser set forth in this
Agreement if such breach is reasonably expected to, or has, a Purchaser Material
Adverse Effect, or if any material representation or warranty of the Purchaser
shall have become untrue in any material respect such that the conditions set
forth in SECTION 7.01(a) would be incapable of being satisfied on or prior to
December 31, 1997;
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(d) by the Purchaser, if any judgment, injunction, order, decree or
action by any Governmental Authority preventing the consummation of the
transactions contemplated hereby or requiring actions as a condition precedent
to the consummation of such transactions which would result in a Purchaser
Material Adverse Effect or Seller Material Adverse Effect shall have become
final and nonappealable;
(e) by the Seller, if any judgment, injunction, order, decree or
action by any Governmental Authority preventing the consummation of the
transactions contemplated hereby or requiring actions as a condition precedent
to the consummation of such transactions which would result in a Purchaser
Material Adverse Effect (or the impairment in any material respect of any of the
Seller's collateral under the Purchase Money Mortgages) shall have become final
and nonappealable;
(f) by either the Purchaser or the Seller, if the Loan Purchase
Agreement is terminated;
(g) by either Seller or the Purchaser if Purchaser Shareholder
Approvals shall not have been obtained on or before December 31, 1997; OR
(h) by the Seller upon any Purchaser Change of Control.
SECTION 9.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Seller or the Purchaser as provided in SECTION 9.01,
this Agreement shall forthwith become void and have no effect (provided,
however, that the provisions of SECTIONs 5.09, 5.11 and 10.01, together with the
definitions set forth in SECTION 1.01 which are operative with respect to such
provisions and the operative provisions of Article X such as "Notice,"
"Governing Law" and similar provisions, shall survive such termination subject
to any limitations on or survival described therein), without any liability or
obligation on the part of Purchaser or the Seller except to the extent that such
termination results from a wilful and intentional breach by a party of any of
its material representations, warranties, covenants or agreements set forth in
this Agreement. In the event of a wilful, intentional breach by either party of
any of its material representations warranties, covenants or agreements, the
non-defaulting party shall have the right to seek specific performance of this
Agreement and shall have the right to pursue any and all other rights or
remedies available at law, in equity or under this Agreement (including, without
limitation, to seek indemnification under Article VIII) without regard to the
limitations set forth in SECTION 8.03.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. EXPENSES. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred. Without limiting the generality of the foregoing, the Seller and
Purchaser acknowledge and agree that the Seller has engaged Coopers & Lybrand
L.L.P. (Atlanta), Greenstreet Advisors, Inc., Landauer Associates and Arthur
Andersen LLP to advise it in connection with the transactions contemplated
hereby and that the Seller shall be responsible for the fees and expenses of
such advisors, and the Purchaser has engaged Coopers & Lybrand L.L.P. (New
York), Merrill Lynch & Co., Lazard FrVres & Co. LLC and Triton Pacific Capital
LLC to advise it in connection with the transactions contemplated hereby and
that the Purchaser shall be responsible for the fees and expenses of such
advisors.
SECTION 10.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this
SECTION 10.02):
(a) if to the Seller:
200 Galleria Parkway, NW
Suite 2000
Atlanta, Georgia 30339
Telecopy: (770) 951-9349
Attention: Mr. Robert T. Sorrentino
Mr. Michael F. Perkins
with a copy to:
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Telecopy: (212) 750-9022
Attention: Robert M. Safron, Esq.
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(b) if to the Purchaser:
126 East 56th Street
New York, New York 10022
Telecopy: (212) 605-7199
Attention: Mr. John S. Moody
with a copy to:
King & Spalding
191 Peachtree Street, NE
Atlanta, Georgia 30303
Telecopy: (404) 572-5148
Attention: William B. Fryer, Esq.
SECTION 10.3. WAIVER OF JURY TRIAL. To the extent permitted by applicable
law, the parties hereby irrevocably waive any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement, the ancillary
agreements or the transactions contemplated hereby or thereby.
SECTION 10.4. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 10.5. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 10.6. NO PURCHASER'S LIEN. The parties acknowledge that in no
event that shall this Agreement constitute an encumbrance upon any of Seller's
Properties or the Seller's Subsidiaries' interests and Purchaser hereby
expressly waives any purchaser's lien, if any, that it may otherwise have upon
or against Seller's Properties or the Seller' Subsidiaries' interests by virtue
of this Agreement.
SECTION 10.7. ENTIRE AGREEMENT. This Agreement with the Ancillary
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and
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supersedes all prior agreements and undertakings, both written and oral, between
the Seller and the Purchaser with respect to the subject matter hereof
(including, without limitation, the Confidentiality Agreement between DIHC
Management Corporation and the Purchaser dated July 15, 1997).
SECTION 10.8. ASSIGNMENT. This Agreement may not be assigned by operation
of Law or otherwise without the express written consent of the Seller and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Seller and the Purchaser). The Seller acknowledges and agrees that in
connection with any liquidation or dissolution of the Seller occurring during
the period which Seller has any Liability hereunder (by way of indemnity or
otherwise), PGGM shall assume all such Liability of the Seller prior to or upon
such liquidation or dissolution as provided in the Loan Purchase Agreement.
SECTION 10.9. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person under or by reason of this Agreement.
SECTION 10.10. AMENDMENT. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Seller and
the Purchaser.
SECTION 10.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, applicable to
contracts executed in and to be performed entirely within that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court sitting in the City
of New York.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.13. WAIVER. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
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waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
SECTION 10.14. CLOSING UNDER LOAN PURCHASE AGREEMENT. The parties hereto
acknowledge and agree that the transactions contemplated hereunder are intended
to (and shall) close immediately subsequent to the transactions contemplated
under the Loan Purchase Agreement.
SECTION 10.15. LIMITED SURVIVAL. Except as expressly provided in
SECTIONs 2.02(c), 2.02(d), 2.02(f), 2.06, 2.07, 5.03(c), 5.04(a), 5.05, 5.06,
5.07, 5.08(b) and (c), 5.09, 5.10, 5.11, 9.02, Articles VI, VIII and X hereof
(which provisions together with the definitions set forth in SECTION 1.01 which
are operative with respect thereto and the operative provisions of this
Article 10 such as "Notice," "Governing Law," and similar operative provisions)
shall survive the Closing subject to any limitations on survival described
therein), the provisions of this Agreement shall not survive the Closing and
shall be merged into the Ancillary Agreements and the other documents executed
and delivered at the Closing.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
DUTCH INSTITUTIONAL HOLDING COMPANY, INC.
By:________________________________
Name: Robert T. Sorrentino
Title: Vice President
CORNERSTONE PROPERTIES INC.
By:________________________________
Name:
Title:
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SCHEDULES AND EXHIBITS
SCHEDULE 1.01(A) "Administrative Agreements"
SCHEDULE 1.01(B) "Continuing Contracts"
SCHEDULE 1.01(C) Ground Leases
SCHEDULE 1.01(D) Purchaser Persons for purposes of defining Knowledge
SCHEDULE 1.01(E) Seller Persons for purposes of defining Knowledge
SCHEDULE 1.01(F)
SCHEDULE 1.01(G) Management Agreements
SCHEDULE 1.01(H) Seller Properties Permitted Title Exceptions
SCHEDULE 1.01(I) Permitted Title Exceptions - "Purchaser Properties"
SCHEDULE 1.01(J) Purchaser Properties
SCHEDULE 1.01(K) Purchaser Subsidiaries
SCHEDULE 1.01(L) Seller Properties
SCHEDULE 1.01(M) Seller Subsidiaries
SCHEDULE 2.02(C) Order and Priority of Transfer of Assets
SCHEDULE 3.02 Seller Subsidiary Common Stock
SCHEDULE 3.02(B) Joint Ventures and Partnerships
SCHEDULE 3.03(A) Seller Subsidiary Corporate Information
SCHEDULE 3.05 Registrations, consents, declarations or approvals required
for consummation of transaction (which might cause delay in
consummation of transaction)
SCHEDULE 3.07 Contract Liabilities
SCHEDULE 3.08 Claims or Potential Claims Under Space Leases
SCHEDULE 3.09 List of any Actions against Seller or Seller Subs
SCHEDULE 3.11 Seller Environmental Reports
<PAGE>
S-2
SCHEDULE 3.12(A) Material Contracts (excluding Management Contracts) to which
Seller is bound
SCHEDULE 3.14 Material violations of any Law relating to the Seller
Properties; any existing fact or condition which would
currently result in the termination of utility service or
access to the Seller Property
SCHEDULE 3.17(A) Tax Liability
SCHEDULE 3.17(D) Tax Returns
SCHEDULE 3.18 List of all insurance policies insuring the Seller
Subsidiaries (casualty, liability, business interruption,
etc.)
SCHEDULE 4.02 Purchaser Subsidiaries and Ownership of Purchaser
SCHEDULE 4.03 Convertible Debt and Convertible Preferred Shares
SCHEDULE 4.04 Required Consents of Governmental Authorities for Purchaser
or Purchaser Subsidiaries to enter into and consummate
agreement
SCHEDULE 4.05 Liabilities Required by U.S. GAAP to be set forth on
Consolidated Balance Sheet of Purchaser and Purchaser
Subsidiaries
SCHEDULE 4.06 List of any Purchaser Material Adverse Change occurring
since the date of the most recent financial statements
included in the SEC Documents (the "Financial Statement
Date") to the date of the Agreement
SCHEDULE 4.07 List of any Actions by or against the Purchaser or any
Purchaser Subsidiary (must include name of parties, nature
of the proceeding, date and method commenced, amount of
damages or other relief sought and amount paid, if
applicable)
SCHEDULE 4.08 Material Violations of law relating to any of the Purchaser
Properties
SCHEDULE 4.09 Purchaser Environmental Reports
SCHEDULE 4.10 List of Related Party Transactions by Purchaser and the
Purchaser Subsidiaries
SCHEDULE 4.14 Defaults under Purchaser Debt Instruments and Debt
Instruments Not Described in Purchaser SEC Documents
SCHEDULE 4.15(A) Any bonus, pension, profit sharing, severance plan, adopted
by Purchaser and not disclosed in the SEC Documents since
the Financial Statement Date
<PAGE>
S-3
SCHEDULE 4.15(B) List of Purchaser Benefit Plans
SCHEDULE 4.15(C) SECTION 401 Benefit Plans not qualified under the Code or
terminated under the Code
SCHEDULE 4.19 List of all insurance policies insuring the Purchaser
Subsidiaries.
SCHEDULE 5.01 Seller Property which may be the subject of another Sale.
EXHIBIT 1.01(D) Description of Purchase Money Notes and Purchase Money
Mortgages
EXHIBIT 1.01(K) Form of Registration Rights and Voting Agreement to be
executed by Purchaser, PGGM and Seller
EXHIBIT 2.02(D) Purchase Price Allocation
EXHIBIT 5.03(A) Form of Purchaser's Charter amendment to be included in
Proxy Statement
EXHIBIT 5.04(A)(C)(I) Form of documents to be entered into between Seller and
Hines which evidences the agreement between Seller and
Hines regarding their respective rights, duties,
obligations, etc., from and after the Closing Date with
respect to 222 Berkeley and 500 Boylston West
EXHIBIT 5.04(A)(C)(II) August 1, 1997 CHV Letter
<PAGE>
EXHIBIT F
---------
Schedules 3.02 and 3.03(a) of the Stock Purchase Agreement
(Seller Subsidiary Shares)
SEE ATTACHED
<PAGE>
Schedule 3.02
Seller Subsidiary Corporate Information
SEE SCHEDULE 3.03(A)
<PAGE>
1. NAME: Canal Center Properties, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: May 6, 1982
AUTHORIZED CAPITAL: 7,500 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
2. NAME: Transcanal Properties, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: May 17, 1984
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
3. NAME: Bryce Mountain, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: December 12, 1980
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
4. NAME: Charlotte Plaza Properties, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: December 30, 1986
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
5. NAME: Balsam Mountain, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: September 11, 1980
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
6. NAME: DIHC Properties I, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: June 28, 1985
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: DIHC of Georgia, Inc.
<PAGE>
7. NAME: DIHC Peachtree, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: November 4, 1987
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: DIHC of Georgia, Inc.
8. NAME: DIHC Atlanta, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: November 4, 1987
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: DIHC of Georgia, Inc.
9. NAME: DIHC Boylston Corp.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: January 30, 1986
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
10. NAME: DIHC Berkeley Corp.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: March 28, 1989
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
11. NAME: DIHC of Georgia, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: February 19, 1987
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 4,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
12. NAME: DIHC Management Corporation
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: July 23, 1980
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: DIHC of Georgia, Inc.
<PAGE>
13. NAME: DIHC Finance Corporation
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: September 11, 1980
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: DIHC of Georgia, Inc.
14. NAME: DIHC Dearborn Properties, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: June 20, 1988
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
15. NAME: DIHC Marble Place Properties, Inc.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: June 20, 1988
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
16. NAME: DIHC Boylston Back Bay Corp.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: July 9, 1997
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
17. NAME: DIHC Berkeley Back Bay Corp.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: July 9, 1997
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
18. NAME: DIHC Market Square II Corp.
STATE OF INCORPORATION: Georgia
DATE OF INCORPORATION: July 9, 1997
AUTHORIZED CAPITAL: 100,000 shares Common Stock, $1.00 par value
ISSUED AND OUTSTANDING: 1,000 shares Common Stock
SOLE SHAREHOLDER: Dutch Institutional Holding Company, Inc.
<PAGE>
EXHIBIT G
---------
Schedules 1.01(l) of the Stock Purchase Agreement
(DIHC Properties)
SEE ATTACHED
<PAGE>
EXHIBIT G
---------
Schedule 1.01(l)
----------------
Seller Properties
1. One Ninety One Peachtree Office Tower, Atlanta, Georgia
2. 200 Galleria Parkway, Atlanta, Georgia.
3. 11 Canal Center Plaza, Alexandria, Virginia
4. 99 Canal Center Plaza, Alexandria, Virginia
5. TransPotomac Plaza, Building 5, Alexandria, Virginia
6. 500 Boylston Street, Boston, Massachusetts
7. 222 Berkeley Street, Boston, Massachusetts
8. Charlotte Plaza, Charlotte, North Carolina
9. Dearborn Land, Chicago, Illinois
10. Market Square, Washington, D.C.
<PAGE>
EXHIBIT H
---------
Exhibit 1.01(k) to the Stock Purchase Agreement
(Form of Registration Rights and Voting Agreement)
SEE ATTACHED
<PAGE>
EXHIBIT H
---------
REGISTRATION RIGHTS AND VOTING AGREEMENT
THIS REGISTRATION RIGHTS AND VOTING AGREEMENT (this "Agreement"), is made
and entered into as of this ___ day of _________, 1997, by and between
CORNERSTONE PROPERTIES INC., a Nevada corporation (the "Company"), DUTCH
INSTITUTIONAL HOLDING COMPANY, INC., a Delaware corporation ("DIHC"), and
STICHTING PENSIOENFONDS VOOR DE GEZONDHEID, GEESTELIJKE EN MAATSCHAPPELIJKE
BELANGEN, a stichting formed according to the laws of The Netherlands ("PGGM").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement
(the "Purchase Agreement"), dated as of August __, 1997, between the Company and
DIHC, and the Loan Purchase Agreement (the "Loan Agreement") dated as of
August __, 1997, between the Company and PGGM, the Company is acquiring certain
shares of capital stock, partnership interests and loans from DIHC and PGGM and
issuing shares of its Common Stock (as defined below) to DIHC and PGGM; and
WHEREAS, the Company, DIHC and PGGM desire to provide (i) for compliance
with the Securities Act of 1933, as amended (the "Securities Act"), with respect
to the issuance of shares of its Common Stock and (ii) for the registration
under the Securities Act of certain shares upon the terms and conditions set
forth below; and
WHEREAS, the Company, DIHC and PGGM desire to provide (i) for the
nomination and election of certain persons to serve on the Board of Directors of
the Company, (ii) for certain restrictions regarding the transfer of shares of
Common Stock and (iii) for certain covenants regarding the operation of the
Company's business, upon the consummation of the transactions provided for by
the Purchase Agreement and the Loan Agreement.
NOW, THEREFORE, the parties agree as follows:
1. CERTAIN OTHER DEFINITIONS. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement. The
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
<PAGE>
a. "AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person.
b. "BUSINESS COMBINATION" means any one of the following transactions:
(1) Any merger or consolidation of the Company or any subsidiary
thereof with any other Person (other than the Company);
(2) Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition by the Company (in one transaction or a series of
transactions) to or with any Person of all or a substantial
portion of the assets of the Company and its subsidiaries taken
as a whole;
(3) The adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of any Holder
or its Affiliates that together own 25% or more of the issued and
outstanding Common Stock; or
(4) Any reclassification of securities (including any reverse stock
split), recapitalization of the Company, or any merger or
consolidation of the Company with any subsidiary thereof or any
other transaction to which the Company is a party which has the
effect, directly or indirectly, of increasing the Holder Interest
of such Holder or its Affiliates that together own 25% or more of
the issued and outstanding Common Stock (whether or not with or
into or otherwise involving such Holder or any of its
Affiliates).
c. "CLOSING DATE" has the meaning specified in Section 2.04 of the Purchase
Agreement.
d. "COMMISSION" shall mean the United States Securities and Exchange
Commission and any successor federal agency having similar powers.
e. "COMMON STOCK" shall mean the common stock without par value of the
Company.
<PAGE>
f. "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee,
personal representative or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee, personal representative or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect
a majority of the board of directors or similar body governing the affairs
of such Person.
g. "CURRENT MARKET PRICE" of each share of Common Stock shall mean (i) the
average of the closing prices of the Common Stock for the five New York
Stock Exchange trading days immediately preceding the day in question as
reported by THE WALL STREET JOURNAL under the New York Stock Exchange
Composite Transactions quotation system (or under any successor quotation
system) or, if the Common Stock is no longer traded on the New York Stock
Exchange under the quotation system under which such closing prices are
reported or, if THE WALL STREET JOURNAL no longer reports such closing
prices, such closing prices as reported by a newspaper or trade journal
selected by the Company or (ii) if no such closing prices are available on
such dates, the fair market value as determined in good faith by the Board
of Directors of the Company.
h. "DEMAND OFFERING" shall mean a offering required to be effected pursuant to
Section 3.3 hereof.
i. "DEMAND PROSPECTUS" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, including any supplement relating to the
terms of the offering of any portion of the Demand Offering Securities
covered by the Demand Prospectus, and in each case including all material
incorporated by reference therein.
j. "DEMAND OFFERING SECURITIES" shall mean the Shares held by DIHC and PGGM or
any subsequent Holder to whom this Agreement has, or rights to cause the
Company to register Shares in accordance with Section 3 have, been assigned
pursuant to Section 9, excluding (i) Shares that have been disposed of
under the Shelf Registration Statement or any other
<PAGE>
effective registration statement, (ii) Shares sold or otherwise transferred
pursuant to Rule 144 under the Securities Act, and (iii) those Shares held
by any single Holder if such Holder holds less than 1% of the issued and
outstanding shares of Common Stock and all of such Shares are eligible for
sale pursuant to Rule 144 under the Securities Act and all of such Holder's
Shares could be sold by such Holder in a single transaction under Rule 144
under the Securities Act.
k. "DEMAND OFFERING EXPENSES" shall mean any and all expenses incurred by the
Company in connection with Demand Offerings, including, without limitation:
(i) all Commission, stock exchange and National Association of Securities
Dealers, Inc. ("NASD") registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with qualification of any of the Demand Offering Securities
under any state securities or blue sky laws and the preparation of a blue
sky memorandum) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Demand Prospectus, certificates
and other documents relating to the performance of and compliance with this
Agreement, (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Demand Offering Securities on any U.S.
securities exchange or exchanges, and (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance. Demand
Offering Expenses shall specifically exclude Selling Expenses and the fees
and expenses of counsel representing the Holders, all of which shall be
borne by the Holders in all cases.
l. "DEMAND OFFERING REQUEST" shall have the meaning set forth in
Section 3.3(a) hereof.
m. "DIHC" shall have the meaning set forth in the Preamble.
n. "ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction of any
kind, including, without limitation, any restriction
<PAGE>
on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership.
o. "EQUITY SECURITY" means any (i) Common Stock, (ii) securities of the
Company convertible into or exchangeable for Common Stock, and
(iii) options, rights, warrants and similar securities issued by the
Company to acquire Common Stock.
p. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
q. "HOLDER" shall mean DIHC and PGGM (and their respective transferees of
Shares as permitted by this Agreement to whom this Agreement has, or rights
to cause the Company to register Shares in accordance with Section 3 have,
been assigned pursuant to Section 9).
r. "HOLDER INTEREST" means, with respect to any Holder, the percentage of
issued and outstanding Common Stock represented by the shares of Common
Stock owned by such Holder and its Affiliates; provided, however, that
shares of Common Stock indirectly owned through an intermediary (i) of
which such Holder owns less than 1% of the issued and outstanding common
shares, or (ii) in connection with which Holder has no right to direct the
vote of shares of the Company shall not be included in the Holder Interest
of such Holder.
s. "INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been or should
be, in accordance with U.S. GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of such Person or any warrants, rights or options to acquire
<PAGE>
such capital stock, valued, in the case of redeemable preferred stock, at
the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) the greater of (i) the principal amount
and (ii) the redemption value of any perpetual preferred stock issued by
such Person, (i) all Indebtedness of others referred to in clauses
(a) through (f) above guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance
or supply funds for the payment or purchase of such Indebtedness, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such Indebtedness
against loss, (iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (j) all
Indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Encumbrance on property (including,
without limitation, accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness.
t. "INCUMBENT DIRECTORS" shall mean (i) all of the individuals constituting
the board of directors of the Company at the Closing Date (ii) all
individuals hereafter designated as nominees to the board of directors by
the New York State Teachers' Retirement System pursuant to a letter
agreement dated November 22, 1996, (iii) all individuals hereafter
designated as nominees to the board of directors by Hexalon Real Estate,
Inc. pursuant to a letter agreement dated November 7, 1996, and (iv) one
individual hereafter designated by Deutsche Bank AG as a nominee to the
board of directors.
u. "Initial Percentage" means the percentage of issued and outstanding Common
Stock represented immediately after the Closing by the Shares.
v. "LEVERAGE RATIO" shall mean the ratio of the Company's Indebtedness to the
Company's Total Market Capitalization.
w. "MAXIMUM NUMBER" shall having the meaning set forth in Section 3.3(e)
hereof.
x. "PERMITTED TRANSFEREE" means any (i) mutual fund company, pension fund,
insurance company, investment company, any state, city, or county, or any
agency or instrumentality of a state, city, or county, or any state
university or state college, and any retirement system for the benefit of
employees of any of the foregoing, any religious or educational
organization or other passive institutional investor or (ii) any non-U.S.
Person (as defined in Section 9.02 of the Charter Amendment) that is not
controlled by U.S. Persons (as defined in the Charter Amendment).
y. "PERSON" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
z. "PGGM" shall have the meaning set forth in the Preamble.
aa. "PIGGYBACK REGISTRATION" shall have the meaning set forth in Section 3.6(a)
hereof.
ab. "PIGGYBACK REGISTRATION REQUEST" shall have the meaning set forth in
Section 3.6(a) hereof.
ac. "PUBLIC OFFERING" means a public offering of Common Stock pursuant an
effective registration statement under the Securities Act.
ad. The terms "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
ae. "SECURITIES ACT" means the Securities Act of 1933, as amended.
af. "SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions and transfer taxes applicable to the sale of Shelf Registrable
Securities or Demand Offering Securities and disbursements of underwriters.
<PAGE>
ag. "SHARES" shall mean (a) the shares of Common Stock issued pursuant to the
Purchase Agreement and the Loan Agreement and (b) shares of Common Stock or
any other securities which are hereafter issued with respect to the shares
referred to in Section 1.33(a) by way of conversion, exchange,
reclassification, dividend or distribution, whether or not such securities
have been offered and sold to the public.
ah. "SHELF PROSPECTUS" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, including any supplement relating to the
terms of the offering of any portion of the Shelf Registrable Securities
covered by the Shelf Registration Statement, and in each case including all
material incorporated by reference therein.
ai. "SHELF REGISTRATION" shall mean the registration required to be effected
pursuant to Section 3.1 hereof.
aj. "SHELF REGISTRABLE SECURITIES" shall mean the Shares held by DIHC and PGGM
or any subsequent Holder to whom this Agreement has, or rights to cause the
Company to register Shares in accordance with Section 3 have, been assigned
pursuant to Section 9, excluding (i) Shares that have been disposed of
under the Shelf Registration Statement or any other effective registration
statement, (ii) Shares sold or otherwise transferred pursuant to Rule 144
under the Securities Act, and (iii) those Shares held by any single Holder
if such Holder holds less than 1% of the issued and outstanding shares of
Common Stock and all of such Shares are eligible for sale pursuant to Rule
144 under the Securities Act and all of such Holder's Shares could be sold
by such Holder in a single transaction under Rule 144 under the Securities
Act.
ak. "SHELF REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, stock exchange and NASD registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or "blue sky" laws (including reasonable
fees and disbursements of counsel in connection with qualification of any
of the Shelf Registrable Securities under any state securities or blue sky
laws and the preparation of a blue sky memorandum) and compliance with the
rules of the NASD, (iii) all expenses of any Persons in
<PAGE>
preparing or assisting in preparing, word processing, printing and
distributing the Shelf Registration Statement, any Shelf Prospectus,
certificates and other documents relating to the performance of and
compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Shelf Registrable
Securities on any securities exchange or exchanges, and (v) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance. Shelf Registration Expenses shall specifically exclude Selling
Expenses and the fees and disbursements of counsel representing the
Holders, all of which shall be borne by the Holders in all cases.
al. "SHELF REGISTRATION NOTICE" shall have the meaning set forth in
Section 3.2(b) hereof.
am. "SHELF REGISTRATION STATEMENT" shall mean a registration statement of the
Company (and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities
Act) that covers all of the Shelf Registrable Securities to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
or any similar rule that may be adopted by the Commission, and all
amendments (including post-effective amendments) to such registration
statement, and all exhibits thereto and materials incorporated by reference
therein.
an. "STANDSTILL PERIOD" means, with respect to any Holder, a period of time
commencing on the Closing Date and terminating on _______, 2000 (the date
three years after the Closing Date).
ao. "TOTAL MARKET CAPITALIZATION" shall mean the sum of (i) the Company's total
Indebtedness, plus (ii) the product of (x) the number of issued and
outstanding shares of Common Stock, plus the number of shares of Common
Stock issuable upon conversion of issued and outstanding preferred stock
(other than convertible preferred stock subject to redemption at the option
of the holder) times (y) the Current Market Price.
ap. "U.S. GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout
the periods involved.
2. RESTRICTIONS ON TRANSFER.
a. REPRESENTATIONS AND WARRANTIES OF PGGM. (a) PGGM and DIHC hereby
represent, acknowledge, covenant and agree as follows: (i) the Shares
are being acquired for PGGM's and DIHC's own account for investment
and not with a view to any distribution or public offering within the
meaning of the Securities Act or any state securities law; (ii) the
Shares have not been registered under the Securities Act or any state
securities law; (iii) PGGM and DIHC is each an "accredited investor"
within the meaning of Rule 501 promulgated by the Commission pursuant
to the Securities Act; (iv) PGGM and DIHC have been furnished with all
information that PGGM or DIHC has requested for purposes of evaluating
the Company and each has had an opportunity to ask questions of and
receive answers from the Company regarding its business, assets,
results of operations, and financial condition; and (v) PGGM and DIHC
will not sell or otherwise transfer any of the Shares except upon the
terms and conditions specified herein.
b. LEGENDS. Except as provided in Section 2.4, each certificate
representing the Shares issued to PGGM and DIHC or transferred to a
subsequent Holder pursuant to Section 2.3 shall include, in addition
to the legends relating to provisions of the Company's articles of
incorporation, legends in substantially the following form, PROVIDED
that the first such legend shall not be required if such transfer is
being made in connection with a sale that is (i) pursuant to a Public
Offering or (ii) exempt from registration pursuant to Rule 144 under
the Securities Act or if the opinion of counsel referred to in
Section 2.3 is to the further effect that such legend is not required
in order to ensure compliance with the Securities Act; PROVIDED
FURTHER, that the second such legend shall not be required if
Sections 7.6 and 8 hereof do not apply to such subsequent Holder:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACT AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN THE REGISTRATION RIGHTS AND VOTING AGREEMENT DATED AS OF _________, 1997,
AMONG THE ISSUER AND THE OTHER PARTY(IES) NAMED THEREIN, A COMPLETE AND CORRECT
COPY OF
<PAGE>
WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL
BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
c. NOTICE OF TRANSFER. Prior to any proposed assignment, transfer or
sale of any Shares, the Holder of such Shares shall give written
notice to the Company of Holder's intention to effect such assignment,
transfer or sale, which notice shall set forth the date of such
proposed assignment, transfer or sale. Holder shall also furnish to
the Company a written agreement by the transferee that it is taking
and holding the same subject to the terms and conditions specified in
this Agreement and, except in transfers pursuant to a Public Offering
or under Rule 144 or Regulation S under the Securities Act, a written
opinion of Holder's counsel, in form reasonably satisfactory to the
Company, to the effect that the proposed transfer may be effected
without registration under the Securities Act.
d. TERMINATION OF RESTRICTIONs. The restrictions set forth in this
Section 2 shall terminate and cease to be effective with respect to
any of the Shares (i) upon the sale of any such Shares which has been
registered under the Securities Act or is made pursuant to Rule 144
under the Securities Act or (ii) upon receipt by the Company of an
opinion of counsel, which counsel and which opinion are reasonably
satisfactory to the Company, to the effect that compliance with such
restrictions is not necessary in order to comply with the Securities
Act with respect to the sale of the Shares. The restrictions with
respect to a Holder set forth in Sections 7.6 and 8 hereof shall
terminate upon the end of the Standstill Period. Whenever such
restrictions shall so terminate, the Holder of such Shares shall be
entitled to receive from the Company, without expense (other than
transfer taxes, if any), certificates for such Shares not bearing the
respective legends set forth in Section 2.2.
3. REGISTRATION UNDER SECURITIES ACT.
a. SHELF REGISTRATION.
i. Within 20 days after the Closing Date and upon the request of
PGGM, the Company will use its commercially reasonable efforts to
cause to be filed the Shelf Registration Statement providing for
the sale by the Holders of all of the Shelf Registrable
Securities in
<PAGE>
accordance with the terms hereof and will use its commercially
reasonable efforts to cause such Shelf Registration Statement to
be declared effective by the Commission as soon as practicable
thereafter. The Company agrees to use its commercially
reasonable efforts to keep the Shelf Registration Statement with
respect to the Shelf Registrable Securities continuously
effective so long as Holder holds Shelf Registrable Securities.
Subject to Section 3.2(b) and Section 3.2(i), the Company further
agrees to amend the Shelf Registration Statement if and as
required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or any rules and
regulations thereunder; PROVIDED, HOWEVER, that the Company shall
not be deemed to have used its commercially reasonable efforts to
keep the Shelf Registration Statement effective during the
applicable period if it voluntarily takes any action that would
result in the Holders not being able to sell Shelf Registrable
Securities covered thereby during that period, unless such action
is required under applicable law or the Company has filed a
post-effective amendment to the Shelf Registration Statement and
the Commission has not declared it effective or except as
otherwise permitted by the last six sentences of Section 3.2(b).
The Holders will provide information reasonably requested by the
Company in connection with the Shelf Registration Statement as
promptly as practicable after receipt of such request. The "Plan
of Distribution" section of the Shelf Registration Statement
shall permit negotiated purchases, secondary distributions, block
trades, ordinary brokerage transactions or a combination of such
methods of sale, PROVIDED, HOWEVER, that the Company's
obligations under Sections 3.1 and 3.2 hereof shall not include
participation in underwritten offerings or other organized
distributions of securities, which obligations are limited to
registrations under Section 3.3 and 3.6 hereof.
ii. EXPENSES. The Company shall pay all Shelf Registration Expenses
in connection with the registration pursuant to Section 3.1(a).
The Holders shall pay all Selling Expenses and the fees and
disbursements of counsel representing the Holders, relating to
the sale or disposition of such Shelf
<PAGE>
Registrable Securities pursuant to the Shelf Registration
Statement.
b. SHELF REGISTRATION PROCEDURES. In connection with the obligations of
the Company with respect to the Shelf Registration Statement
contemplated by Section 3.1 hereof, the Company shall:
i. prepare and file with the Commission, within the time period
set forth in Section 3.1(a) hereof, the Shelf Registration
Statement, which Shelf Registration Statement shall comply
as to form in all material respects with the requirements of
the applicable form and include all financial statements
required by the Commission to be filed therewith;
ii. subject to the last six sentences of this Section 3.2(b) and
Section 3.2(i) hereof, (i) prepare and file with the
Commission such amendments to such Shelf Registration
Statement as may be necessary to keep such Shelf
Registration Statement effective throughout the applicable
period; (ii) cause the Shelf Prospectus to be amended or
supplemented as required and to be filed as required by
Rule 424 or any similar rule that may be adopted under the
Securities Act; and (iii) respond as promptly as practicable
to any comments received from the Commission with respect to
the Shelf Registration Statement or any amendment thereto.
Notwithstanding anything to the contrary contained herein,
the Company shall not be required to take any of the actions
described in clauses (i), (ii) or (iii) in this
Section 3.2(b), Section 3.2(d) or Section 3.2(i) with
respect to the Shelf Registrable Securities (x) to the
extent that (i) in the reasonable opinion of the Company
(A) securities laws applicable to such sale would require
the Company to disclose material non-public information
("Non-Public Information") and (B) the disclosure of such
Non-Public Information would materially adversely affect the
Company; (ii) such sale would occur during the measurement
period for determining the amount of Common Stock, or the
amount of any other consideration the amount of which will
be based on the price of the Common Stock, in connection
with the acquisition of a business or assets by the Company
(a "Measurement Period"); or (iii) the Company is
contemplating an underwritten Public Offering of its
<PAGE>
securities and in the reasonable opinion of the underwriters
such sale would interfere materially with such Public
Offering by the Company (a "Financing Period"); and the
Company delivers written notice to the Holders to the effect
that the Holders may not make offers or sales under the
Shelf Registration Statement for a period not to exceed
45 days from the date of such notice; PROVIDED, HOWEVER,
that the Company may deliver only four such notices under
this Section 3.2(b) and Section 3.4(a) within any
twelve-month period, PROVIDED, FURTHEr, that the Company may
deliver only two such notices under this Section 3.2(b) and
Section 3.4(a) within the twelve-month period immediately
following the expiration of the six-month period referred to
in Section 3.3(f)(i) hereof and (y) unless and until the
Company has received a written notice (a "Shelf Registration
Notice") from any Holder that such Holder intends to make
offers or sales under the Shelf Registration Statement as
specified in such Shelf Registration Notice; PROVIDED,
HOWEVER, that the Company shall have ten business days to
prepare and file any such amendment or supplement after
receipt of the Shelf Registration Notice. The Measurement
Period and Financing Period are collectively referred to
herein as the "Restricted Period." In the event the sale by
the Holders of Shelf Registrable Securities is deferred
because of the existence of Non-Public Information, the
Company will notify the Holders promptly upon such
Non-Public Information being included by the Company in a
filing with the Commission, being otherwise disclosed to the
public (other than through the actions of any Holder), or
ceasing to be material to the Company, and upon such notice
being given by the Company, the Holders shall again be
entitled to sell Shelf Registrable Securities as provided
herein. In the event the sale by the Holders of Shelf
Registrable Securities is deferred because it is proposed to
be made during a Restricted Period, the Company shall
specify, in notifying the Holders of the deferral of its
sale, when the Restricted Period will end, at which time the
Holders shall again be entitled to sell Shelf Registrable
Securities as provided herein. If the Restricted Period is
thereafter changed, the Company will promptly notify the
Holders of such change and upon the end of the Restricted
Period as so changed, the Holders will again be entitled to
sell Shelf Registrable Securities as provided herein. If an
agreement
<PAGE>
to which such Restricted Period relates is terminated prior
to the end of the Restricted Period, the deferral period
hereunder shall end immediately and the Company shall
promptly notify the Holders of the end of the deferral
period;
iii. promptly furnish the Holders after a Holder has delivered a
Shelf Registration Notice to the Company, without charge, as
many copies of each Shelf Prospectus and any amendment or
supplement thereto in order to facilitate the public sale or
other disposition of the Shelf Registrable Securities; the
Company consents to the use of the Shelf Prospectus and any
amendment or supplement thereto by the Holders of Shelf
Registrable Securities in connection with the offering and
sale of the Shelf Registrable Securities covered by the
Shelf Prospectus or amendment or supplement thereto;
iv. use its commercially reasonable efforts to register or
qualify the Shelf Registrable Securities by the time the
Shelf Registration Statement is declared effective by the
Commission under all applicable state securities or blue sky
laws of such jurisdictions in the United States and its
territories and possessions as the Holders shall reasonably
request in writing, keep each such registration or
qualification effective during the period such Shelf
Registration Statement is required to be kept effective or
during the period offers or sales are being made by the
Holders after a Holder has delivered a Shelf Registration
Notice to the Company, whichever is shorter; PROVIDED,
HOWEVER, that in connection therewith, the Company shall not
be required to (i) qualify as a foreign corporation to do
business or to register as a broker or dealer in any such
jurisdiction where it would not otherwise be required to
qualify or register but for this Section 3.2(d),
(ii) subject itself to taxation in any such jurisdiction, or
(iii) file a general consent to service of process in any
such jurisdiction;
v. notify the Holders promptly and, if requested by a Holder,
confirm in writing, (i) when the Shelf Registration
Statement and any post-effective amendments thereto have
become effective, (ii) when any amendment or supplement to
the Shelf Prospectus has been filed with the
<PAGE>
Commission, (iii) of the issuance by the Commission or any
state securities authority of any stop order suspending the
effectiveness of the Shelf Registration Statement or any
part thereof or the initiation of any proceedings for that
purpose, (iv) if the Company receives any notification with
respect to the suspension of the qualification of the Shelf
Registrable Securities for offer or sale in any jurisdiction
or the initiation of any proceeding for such purpose, and
(v) of the happening of any event during the period the
Shelf Registration Statement is effective as a result of
which (A) such Shelf Registration Statement contains any
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 or (B) the Shelf
Prospectus as then amended or supplemented contains any
untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
vi. use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the Shelf
Registration Statement or any part thereof as promptly as
possible;
vii. promptly furnish to the Holders after a Holder has delivered
a Shelf Registration Notice to the Company, without charge,
at least one conformed copy of the Shelf Registration
Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits
thereto, unless requested);
viii. cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Shelf
Registrable Securities to be sold and not bearing any
Securities Act legend; and enable certificates for such
Shelf Registrable Securities to be issued for such numbers
of shares as the Holders may reasonably request at least two
business days prior to any sale of Shelf Registrable
Securities;
ix. subject to the last six sentences of Section 3.2(b) hereof,
upon the occurrence of any event contemplated by clause (v)
of Section 3.2(e) hereof, use its reasonable best efforts
<PAGE>
promptly to prepare and file an amendment or a supplement to
the Shelf Prospectus or any document incorporated therein by
reference or prepare, file and obtain effectiveness of a
post-effective amendment to the Shelf Registration
Statement, or file any other required document, in any such
case to the extent necessary so that, as thereafter
delivered to the purchasers of the Shelf Registrable
Securities, such Shelf Prospectus as then amended or
supplemented will not contain any untrue statement of a
material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading;
x. make available for inspection by the Holders after a Holder
has provided a Shelf Registration Notice to the Company and
any counsel, accountants or other representatives retained
by the Holders all financial and other records, material
corporate documents and properties of the Company and cause
the officers, directors and employees of the Company to
supply all such material records, documents or information
reasonably requested by the Holders, counsel, accountants or
representatives in connection with the Shelf Registration
Statement; PROVIDED, HOWEVER, that such records, documents
or information which the Company determines in good faith to
be confidential and notifies the Holders, counsel,
accountants or representatives in writing that such records,
documents or information are confidential shall not be
disclosed by the Holders, counsel, accountants or
representatives unless (i) such disclosure is ordered
pursuant to a subpoena or other order from a court of
competent jurisdiction, or (ii) such records, documents or
information become generally available to the public other
than through a breach of this Agreement;
xi. a reasonable time prior to the filing of the Shelf
Registration Statement or any amendment thereto, or any
Shelf Prospectus or any amendment or supplement thereto,
provide copies of such document (not including any documents
incorporated by reference therein unless requested) to the
Holders; and
<PAGE>
xii. use its reasonable best efforts to cause all Shelf
Registrable Securities to be listed on the New York Stock
Exchange at the time the Shelf Registration Statement is
declared effective.
The Company may require the Holders to furnish to the Company in writing such
information regarding the proposed distribution by the Holders as the Company
may from time to time reasonably request in writing.
In connection with and as a condition to the Company's obligations with respect
to the Shelf Registration Statement pursuant to Section 3.1 hereof and this
Section 3.2, the Holders covenant and agree that (i) they will not offer or sell
any Shelf Registrable Securities under the Shelf Registration Statement until a
Holder has provided a Shelf Registration Notice pursuant to Section 3.2(b) and
have received copies of the Shelf Prospectus as then amended or supplemented as
contemplated by Section 3.2(c) and notice from the Company that the Shelf
Registration Statement and any post-effective amendments thereto have become
effective as contemplated by Section 3.2(e); (ii) upon receipt of any notice
from the Company contemplated by Section 3.2(b) or Section 3.2(e) (in respect of
the occurrence of an event contemplated therein), the Holders shall not offer or
sell any Shelf Registrable Securities pursuant to the Shelf Registration
Statement until the Holders receive copies of the supplemented or amended Shelf
Prospectus contemplated by Section 3.2(i) hereof and receive notice that any
post-effective amendment has become effective, and, if so directed by the
Company, the Holders will deliver to the Company (at the expense of the Company)
all copies in its possession, other than permanent file copies then in the
Holders' possession, of the Shelf Prospectus as amended or supplemented at the
time of receipt of such notice; (iii) upon the expiration of 60 days after the
first date on which offers or sales can be made pursuant to clause (i) above,
the Holders will not offer or sell any Shelf Registrable Securities under the
Shelf Registration Statement until they have again complied with the provisions
of clause (i) above; (iv) each Holder and any of such Holder's partners,
officers, directors or Affiliates, if any, will comply with the provisions of
Regulation M under the Exchange Act as applicable to them in connection with
sales of Shelf Registrable Securities pursuant to the Shelf Registration
Statement; (v) each Holder and any of such Holder's partners, officers,
directors or Affiliates, if any, will comply with the prospectus delivery
requirements of the Securities Act as applicable to them in connection with
sales of Shelf Registrable Securities pursuant to the Shelf Registration
Statement; and (vi) each Holder and any of such Holder's partners, officers,
directors or Affiliates, if any, will enter into such written agreements as the
Company shall reasonably request to ensure compliance with clauses (iv) and (v)
above.
<PAGE>
c. DEMAND OFFERINGS.
i. REQUESTS FOR DEMAND OFFERING. PGGM, DIHC or a Holder or Holders
owning a majority of the Demand Offering Securities (the "Demand
Initiating Holder") may request the offering under the Securities
Act of all or any portion of the Demand Offering Securities held
by such Holders for sale in the manner specified in such request,
including an underwritten offering. Upon receipt of such request,
the Company will promptly, but in any event within 20 days, give
written notice of such requested registration to all Holders of
Demand Offering Securities, and thereupon, in accordance with
Section 3.4 hereof, the Company will use its reasonable best
efforts to effect the registration and sale of:
(1) the Demand Offering Securities which the Company has been so
requested to register by such Demand Initiating Holder;
(2) all other Demand Offering Securities which the Company has
been requested to register by the other Holders thereof by
written request delivered to the Company within 15 days
after the giving of such written notice by the Company, and
(3) all shares of Common Stock which the Company may elect to
register for its own account or for the account of others in
connection with the offering of Demand Offering Securities
pursuant to this Section 3.3.
Each initial request for a offering pursuant to this Section 3.3 shall specify
the number of Demand Offering Securities requested to be sold by the Demand
Initiating Holder, the method of disposition to be employed and the Current
Market Price of the Common Stock as of the date of such request. Any request
for an offering pursuant to this Section 3.3(a) shall be referred to herein as a
"Demand Offering Request" and all registrations requested pursuant to this
Section 3.3 are referred to herein as "Demand Offerings."
ii. NUMBER OF DEMAND OFFERINGS. The Company shall not be required
under this Section 3.3 (i) to effect more than one Demand
Offering in any twelve-month period or (ii) to effect more than
eight Demand Offerings in the aggregate.
<PAGE>
Notwithstanding anything to the contrary contained herein, if
such method of disposition is a firm commitment underwritten
public offering, a registration shall count as a Demand Offering
only when all such Demand Offering Securities shall have been
sold pursuant thereto; PROVIDED, HOWEVER, that if a Demand
Prospectus filed by the Company pursuant to a Demand Offering
Request shall be abandoned or withdrawn at the behest of the
Demand Initiating Holder, then, unless the Holders shall,
promptly upon receipt of a request by the Company therefor
supported by an invoice setting forth the expenses in reasonable
detail, reimburse the Company for the Demand Offering Expenses in
respect of such prospectus attributable to the Holders, the
Company shall be deemed to have effected a Demand Offering.
iii. MINIMUM OFFERING AMOUNT. The Company shall not be required to
comply with this Section 3.3 unless the aggregate Current Market
Price of all Demand Offering Securities covered by the Demand
Offering Request and the Demand Offering Securities described in
Section 3.3(a)(ii) shall be $75 million or more (unless and to
the extent the Demand Initiating Holder shall hold less than $75
million of Demand Offering Securities, in which case such minimum
offering amount shall be equal to the amount of Demand Offering
Securities so held).
iv. SELECTION OF UNDERWRITERS. If the method of disposition
specified by PGGM shall be an underwritten public offering, the
Company may designate the managing underwriter of such offering,
subject to the approval of the Demand Initiating Holder which
approval shall not be unreasonably withheld.
v. PRIORITY ON DEMAND OFFERINGS. The Company shall be entitled to
include in any offering referred to in this Section 3.3, for sale
in accordance with the method of disposition specified by the
Demand Initiating Holder shares of Common Stock to be sold by the
Company for its own account or by other shareholders of the
Company for their account. Nonetheless, whether or not the
Company desires to include any such additional shares in a Demand
Offering, if the managing underwriters advise the Company in
writing that in their opinion the number of securities
<PAGE>
requested to be included in such offering exceeds the maximum
number which can be included in such offering without adversely
affecting the marketability of the offering (the "Maximum
Number"), then the Company will limit the number of shares
included in such offering to the Maximum Number, and the shares
offered shall be selected in the following order of priority:
(i) first, Demand Offering Securities covered by the Demand
Offering Request and the Demand Offering Securities described in
Section 3.3(a)(ii), subject to the proviso set forth in
clause (iii) below, (ii) second, securities the Company proposes
to sell and (iii) third, securities requested to be included in
such registration pursuant to (A) the Stockholders' Agreement,
dated as of November 22, 1996, by and among the Company and the
New York State Teachers' Retirement System and (B) the
Stockholders' Agreement, dated as of November 7, 1996, by and
between the Company and Hexalon Real Estate, Inc., pro rata among
the holders thereof on the basis of the number of shares
requested to be included in such registration; provided that the
securities requested to be included pursuant to clauses (A) and
(B) shall not be reduced to less than one-third of the total
number of shares in such offering, and (iv) fourth, other
securities requested to be included in such registration.
vi. EXCEPTION. Anything in this Section 3.3 to the contrary
notwithstanding, the Company shall not be required to file a
Demand Prospectus in connection with a Demand Offering (i) within
six months after the closing date of a Demand Offering or the
effective date of any registration statement (other than pursuant
to Section 3.1 or a registration statement on Form S-8 with
respect to an employee benefit plan or a registration statement
on Form S-4 relating to securities to be issued in a merger or in
exchange for securities or assets of another Person) of the
Company or (ii) if counsel for the Company, reasonably acceptable
to the Demand Initiating Holder shall deliver an opinion to the
Holders to the effect that, pursuant to Rule 144 under the
Securities Act or otherwise, the Holders can publicly offer and
sell the Demand Offering Securities as to which sale has been
requested without registration under the Securities Act.
<PAGE>
d. DEMAND OFFERING PROCEDURES. If and whenever the Company is required
by the provisions of Section 3.3 hereof to use its reasonable best
efforts to effect the sale of any of the Demand Offering Securities
under the Securities Act, the Company shall use its reasonable best
efforts to effect the registration and sale of the Demand Offering
Securities in accordance with the intended method of disposition
thereof and will, as expeditiously as possible:
i. within 45 days after receiving a request for a Demand Offering,
prepare and file with the Commission a Demand Prospectus as a
supplement to the Shelf Registration Statement with respect to
such Demand Offering Securities. Notwithstanding anything to the
contrary contained herein, the filing of such Demand Prospectus
may be delayed for a period not to exceed 45 days if (i) any of
the events specified in clause (x) of Section 3.2(b) hereof shall
have occurred, or (ii) the Company is engaged in any program for
the repurchase of Common Stock or other securities of the Company
and the Company provides written notice to the Demand Initiating
Holder; PROVIDED, HOWEVER, that the Company may deliver only four
notices under this Section 3.4(a) and 3.2(b) hereof within any
twelve-month period; PROVIDED, FURTHER, that the Company may
deliver only two such notices under this Section 3.4(a) and
Section 3.2(b) within the twelve-month period immediately
following the expiration of the six-month period referred to in
Section 3.3(f)(i) hereof.
ii. prior to the filing described in paragraph (a) above, furnish to
the Holders copies of the Demand Prospectus and any amendments or
supplements thereto, which documents shall be subject to the
approval of the Holders only with respect to any statement in the
Demand Prospectus which relates to the Holders;
ii. notify the Holders promptly and, if requested by the Holders,
confirm in writing, (i) when the Demand Prospectus has been filed
with the Commission, (ii) when any amendment or supplement to the
Demand Prospectus has been filed with the Commission, (iii) of
the issuance by the Commission or any state securities authority
of any stop order suspending the effectiveness of the Shelf
Registration Statement or any part thereof or the initiation
<PAGE>
of any proceedings for that purpose, (iv) if the Company receives
any notification with respect to the suspension of the
qualification of the Demand Offering Securities for offer or sale
in any jurisdiction or the initiation of any proceeding for such
purpose, and (v) of the happening of any event during the period
of the offering pursuant to the Demand Prospectus as a result of
which (A) such Shelf Registration Statement contains any 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 or (B) the Demand Prospectus as then
amended or supplemented contains any untrue statement of a
material fact or omits to state any material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
iv. make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration
Statement or any part thereof as promptly as possible;
v. furnish to the Holders after delivery of a Demand Offering
Request to the Company, without charge, at least one conformed
copy of the Shelf Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
vi. prepare and file with the Commission such amendments and
supplements to such Shelf Registration Statement and the Demand
Prospectus used in connection therewith as may be necessary and
comply with the provisions of the Securities Act with respect to
the disposition of all Demand Offering Securities covered by such
Demand Prospectus in accordance with the Holders' intended method
of disposition set forth in such Demand Prospectus for such
period;
vii. furnish to the Holders and to each underwriter such number of
copies of the Shelf Registration Statement and the Demand
Prospectus included therein (including each preliminary
prospectus) and such other documents, as such persons may
reasonably request in order to facilitate
<PAGE>
the public sale or other disposition of the Demand Offering
Securities covered by such Demand Prospectus;
viii. use its reasonable best efforts to register or qualify the
Demand Offering Securities covered by such Demand Prospectus
under the securities or blue sky laws of such jurisdictions
as the Holders or, in the case of an underwritten public
offering, the managing underwriter, shall reasonably
request;
ix. provide a transfer agent and registrar, which may be a
single entity, for all Demand Offering Securities;
x. use its reasonable best efforts to cause all Demand Offering
Securities to be listed on the New York Stock Exchange;
xii. furnish on the date that Demand Offering Securities are
delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such
registration, addressed to the underwriters, stating that
the Shelf Registration Statement has become effective under
the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under
the Securities Act, (B) the Shelf Registration Statement,
the related Demand Prospectus, and each amendment or
supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission
thereunder and that such counsel does not believe that any
such Shelf Registration Statement, Demand Prospectus,
amendment or supplement contains a misstatement of a
material fact or an omission to state a material fact
required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they were made, not misleading (except that such
counsel need express no opinion as to financial statements
or financial or statistical data contained therein) and
(C) to such other effects as may reasonably be requested by
counsel for the underwriters or by the Holders or their
counsel, and (ii) a
<PAGE>
"cold comfort" letter dated such date from the independent
public accountants retained by the Company, addressed to the
underwriters, stating that they are independent public
accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial
statements of the Company included in the Shelf Registration
Statement or the Demand Prospectus, or any amendment or
supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover
such other financial matters (including information as to
the period ending no more than five business days prior to
the date of such letter) with respect to the registration in
respect of which such letter is being given as such
underwriters may reasonably request; and
xii. make available for inspection by the Holders after the
Demand Initiating Holder has provided a Demand Offering
Request to the Company and any counsel, accountants or other
representatives retained by the Holders all financial and
other material records, pertinent corporate documents and
properties of the Company and cause the officers, directors
and employees of the Company to supply all such material
records, documents or information reasonably requested by
the Holders, counsel, accountants or representatives in
connection with the Demand Prospectus; PROVIDED, HOWEVER,
that such records, documents or information which the
Company determines in good faith to be confidential and
notifies the Holders, counsel, accountants or
representatives in writing that such records, documents or
information are confidential shall not be disclosed by
Holders, counsel, accountants or representatives unless
(i) such disclosure is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or
(ii) such records, documents or information become generally
available to the public other than through a breach of this
Agreement.
For purposes of paragraphs (a) and (f) of this Section 3.4, the period of
distribution of Demand Offering Securities in a firm commitment underwritten
public offering shall be deemed to be that period during which the underwriters
in such offering require in an underwriting agreement in the form customarily
used by such underwriters for comparable transactions that the Company keep a
registration statement effective to permit each underwriter to complete the
distribution of all securities purchased by it,
<PAGE>
and the period of distribution of Demand Offering Securities in any other
registration shall be deemed to extend until the earlier of the sale of all
Demand Offering Securities covered thereby or nine months after the effective
date thereof.
In connection with each registration hereunder, each Holder will furnish to the
Company in writing such information with respect to itself and the proposed
distribution by itself as shall be reasonably necessary in order to assure
compliance with federal and applicable state securities laws. Reasonable
compliance with the obligation to furnish such information shall be a condition
to the rights afforded such Holder hereunder. In addition, each Holder and any
of its partners, officers, directors or Affiliates, if any, (i) will comply with
the provisions of Regulation M as applicable to them in connection with sales of
Demand Offering Securities pursuant to the Demand Prospectus; (ii) will comply
with the prospectus delivery requirements of the Securities Act as applicable to
them in connection with sales of Demand Offering Securities pursuant to the
Demand Prospectus; and (iii) will enter into such written agreements as the
Company shall reasonably request to ensure compliance therewith.
In connection with each registration pursuant to Section 3.3 hereof covering an
underwritten public offering, the Company agrees to enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are customary in the securities
business for such an arrangement between major underwriters and companies of the
Company's size and investment stature; PROVIDED that such agreement shall not
contain any such provision applicable to the Company which is inconsistent with
the provisions hereof; PROVIDED, FURTHER that the time and place of the closing
under said agreement shall be as mutually agreed upon between the Company and
such managing underwriter.
e. DEMAND OFFERING EXPENSES. In connection with any Demand Offering, the
Company shall pay all Demand Offering Expenses and the Holders shall
pay all Selling Expenses applicable to the shares sold by the Holders.
f. PIGGYBACK REGISTRATIONS.
i. RIGHT TO PIGGYBACK. In the event that a Holder is not permitted
to effect sales under the Shelf Registration Statement under
Section 3.2(b)(x)(iii) hereof or the Holders are not permitted to
effect Demand Offering due to Section 3.4(a)(i), Holders shall
become entitled to the rights of this Section 3.6. The Company
will promptly (but in any event within 30 days) give written
notice to the Holders of its intention to effect such
registration and a description of any underwriting agreement to
be entered into with respect thereto and will include in such
<PAGE>
registration all Shelf Registrable Securities or Demand Offering
Securities with respect to which the Company has received written
requests for inclusion within 15 days after the receipt of the
Company's notice (a "Piggyback Registration Request"); PROVIDED,
HOWEVER, that the Company shall not be required to include Shelf
Registrable Securities or Demand Offering Securities in the
securities to be registered pursuant to a registration statement
on any form which limits the amount of securities which may be
registered by the issuer and/or selling security holders if, and
to the extent that, such inclusion would make the use of such
form unavailable. In the event that any Piggyback Registration
shall be, in whole or in part, an underwritten public offering of
Common Stock, the Holders shall agree that such Demand Offering
Securities or Shelf Registrable Securities are to be included in
the underwriting on the same terms and conditions as the shares
of Common Stock otherwise being sold through underwriters under
such registration.
ii. PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that
in their opinion the number of shares requested to be included in
such registration exceeds the Maximum Number, the Company will
limit the number of shares included in such registration to the
Maximum Number, and the shares registered shall be selected in
the following order of priority: (i) first, securities the
Company proposes to sell, subject to the proviso set forth in
clause (ii) below, (ii) second, (A) Shelf Registrable Securities
or Demand Offering Securities covered by Piggyback Registration
Requests, and (B) securities requested to be included in such
registration pursuant to (x) the Stockholders' Agreement, dated
as of November 22, 1996, by and among the Company and the New
York State Teachers' Retirement System and (y) the Stockholders'
Agreement, dated as of November 7, 1996, by and between the
Company and Hexalon Real Estate, Inc., pro rata among the holders
thereof on the basis of the number of shares requested to be
included in such registration; provided that the securities
requested to be included pursuant to clauses (x) and (y) shall
not be reduced to less than one-third of the total number of
<PAGE>
shares in such offering and (iii) third, other securities
requested to be included in such registration.
iii. PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise
the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds
the Maximum Number, the Company will include in such registration
the shares requested to be included therein by the holders
requesting such registration and the Shelf Registrable Securities
and Demand Offering Securities covered by Piggyback Registration
Requests and any other securities requested to be included in
such registration, pro rata among the holders thereof on the
basis of the number of shares requested to be included in such
registration; provided, however, that if the holders requesting
registration are doing so pursuant to demand registration rights
of such holders, such holders' shares shall take priority over
any Shelf Registrable Securities and Demand Offering Securities
and any other securities requested to be included, which shall be
included on a pro rata basis, subject to the proviso set forth in
Section 3.6(b)(ii)(B).
g. INDEMNIFICATION.
i. INDEMNIFICATION BY THE COMPANY. To the extent permitted by law,
the Company shall indemnify and hold harmless the seller of any
Shares covered by any registration statement filed pursuant to
Section 3, its directors, trustees and officers, each other
person who participates as an underwriter in the offering or sale
of such securities and each other person, if any, who controls
such seller or any such underwriter within the meaning of the
Securities Act against any losses, claims, damages, liabilities
or expenses, joint or several, to which such seller or any such
director, trustee or officer or participating or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses
(or related actions or proceedings) arise out of or are based
upon (x) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which
such securities
<PAGE>
were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained in
such registration statement, or any amendment or supplement to
such registration statement, or any document incorporated by
reference in such registration statement, or (y) any 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 the Company will reimburse such seller, and each
such director, trustee, officer, participating person and
controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, liability, action or proceeding, provided
that the Company shall not be liable in any such case (1) to the
extent that any such loss, claim, damage, liability or expense
(or action or proceeding in respect thereof) arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company
through an instrument duly executed by such seller or any such
director, trustee, officer, participating person or controlling
person specifically stating that it is for use in the preparation
of such registration statement or (2) to the extent any amount
paid in settlement of any such loss, claim, damage, liability or
action of such settlement is effected without the written consent
of the Company (which consent shall not be unreasonably
withheld). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
seller or any such director, trustee, officer, participating
person or controlling person and shall survive the transfer of
such securities by such seller. The Company shall agree to make
provision for contribution relating to such indemnity as shall be
reasonably requested by any seller of Shares or the underwriters.
ii. INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Shares in any registration statement
filed pursuant to Section 3, that the Company shall have received
an undertaking satisfactory to it from
<PAGE>
each prospective seller of such securities, severally and not
jointly, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in Section 3.6(a)) the Company,
each director of the Company, each officer of the Company who
shall sign such registration statement and each other person, if
any, who controls the Company within the meaning of the
Securities Act, with respect to any untrue statement in or
omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus included in
such registration statement, or any amendment or supplement to
such registration statement, of a material fact if such statement
or omission was made in reliance upon and in conformity with
written information furnished to the Company through an
instrument duly executed by such seller specifically stating that
it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or
controlling person and shall survive the transfer of such
securities by such seller.
iii. INDEMNIFICATION PROCEDURE. Promptly after receipt by any party
entitled to indemnification pursuant to Section 3.7(a) or 3.7(b)
of this Agreement (an "Indemnified Party") of notice by a third
party of any complaint or the commencement of any action or
proceeding with respect to which indemnification is being sought
hereunder, such Indemnified Party shall notify the party
obligated to provide such indemnification (the "Indemnifying
Party") of such complaint or of the commencement of such action
or proceeding; PROVIDED, HOWEVER, that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party
from liability for such claim arising otherwise than under this
Agreement, and such failure to so notify the Indemnifying Party
shall relieve the Indemnifying Party from liability which the
Indemnifying Party may have hereunder with respect to such claim
if, but only if, and only to the extent that, such failure to
notify the Indemnifying Party results in the forfeiture by the
Indemnifying Party of material rights and defenses otherwise
available to the Indemnifying Party with respect
<PAGE>
to such claim. The Indemnifying Party shall have the right, upon
written notice to the Indemnified Party, to assume the defense of
such action or proceeding, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment
of the fees and disbursements of such counsel. In the event,
however, that the Indemnifying Party declines or fails to assume
the defense of the action or proceeding or to employ counsel
reasonably satisfactory to the Indemnified Party, in either case
in a timely manner, then such Indemnified Party may employ
counsel to represent or defend it in any such action or
proceeding and the Indemnifying Party shall pay the reasonable
fees and disbursements of such counsel as incurred; PROVIDED,
HOWEVER, that the Indemnifying Party shall not be required to pay
the fees and disbursements of more than one counsel for all
Indemnified Parties in any jurisdiction in any single action or
proceeding. In any action or proceeding with respect to which
indemnification is being sought hereunder, the Indemnified Party
or the Indemnifying Party, whichever is not assuming the defense
of such action, shall have the right to participate in such
litigation and to retain its own counsel at such party's own
expense. The Indemnifying Party or the Indemnified Party, as the
case may be, shall at all times use reasonable best efforts to
keep the Indemnifying Party or the Indemnified Party, as the case
may be, reasonably apprised of the status of the defense of any
action, the defense of which it is maintaining and to cooperate
in good faith with the Indemnifying Party or the Indemnified
Party, as the case may be, with respect to the defense of any
such action.
No Indemnified Party may settle or compromise any claim or consent to the entry
of any judgment with respect to which indemnification is being sought hereunder
without the prior written consent of the Indemnifying Party, unless such
settlement, compromise or consent includes an unconditional release of the
Indemnifying Party from all liability arising out of such claim. An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless such
settlement, compromise or consent includes an unconditional release of the
Indemnified Party from all liability arising out of such claim and does not
contain any equitable order, judgment or term which in any manner affects,
restrains or interferes with the business of the Indemnified Party or any of the
Indemnified Party's affiliates.
<PAGE>
In the event an Indemnified Party shall claim a right to payment pursuant to
this Agreement, such Indemnified Party shall send written notice of such claim
to the appropriate Indemnifying Party. Such notice shall specify the basis for
such claim. As promptly as possible after the Indemnified Party has given such
notice, such Indemnified Party and the appropriate Indemnifying Party shall
establish the merits and amount of such claim (by mutual agreement or otherwise)
and, within five business days of the final determination of the merits and
amount of such claim, the Indemnifying Party shall deliver to the Indemnified
Party immediately available funds in an amount equal to such claim as determined
hereunder.
If for any reason the indemnification provided for in this Section 3.7 is
unavailable to an Indemnified Party or is insufficient to hold it harmless as
contemplated by this Section 3.7, then the Indemnifying Party shall contribute
to the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the Indemnified Party and the Indemnifying Party, as well as
any other relevant equitable considerations; provided that in no event shall the
liability of any Holder for such contribution and indemnification exceed, in the
aggregate, the dollar amount of the proceeds received by such Holder upon the
sale of Shares giving rise to such indemnification and contribution obligations.
The obligations of the parties under this Section 3.7 shall be in addition to
any liability which any party may otherwise have to any other party.
h. LIMITATIONS ON REGISTRATION RIGHTS OF OTHERS. The Company
represents and warrants that, except pursuant to this Agreement
and pursuant to rights granted pursuant to the agreements set
forth on Exhibit A hereto, it has not granted to any Person the
right to request or require the Company to register any
securities issued by the Company.
4. RULE 144. The Company shall comply with the requirements of Rule 144
under the Securities Act, as such Rule may be amended from time to
time (or any similar rule or regulation hereafter adopted by the
Commission), regarding the availability of current public information
to the extent required to enable any Holder of Shares to sell Shares
without registration under the Securities Act pursuant to Rule 144 (or
any similar rule or regulation). Upon the request of any Holder of
Shares, the Company will deliver to such Holder a written statement as
to whether it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall
<PAGE>
have obtained the written consent to such amendment, action or
omission to act, of the Holder or Holders of a majority of the Shares
(and, in the case of any amendment, action or omission to act which
adversely affects any specific Holder of Shares or a specific group of
Holders of Shares, the written consent of each such Holder or Holders
of a majority of the Shares held by such group). Each Holder of any
Shares at the time shall be bound by any consent authorized by this
Section 5.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Shares are held
by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election, be treated as the Holder of such Shares
for purposes of any request or other action by any Holder or Holders
of Shares pursuant to this Agreement or any determination of any
number or percentage of shares of Shares held by any Holder or Holders
of Shares contemplated by this Agreement. If the beneficial owner of
any Shares so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such
Shares.
7. COVENANTS OF THE PARTIES.
a. BOARD OF DIRECTORS.
i. So long as PGGM and DIHC and their respective Affiliates own
in the aggregate 5% or more of the issued and outstanding
shares of Common Stock, subject to the rights of the
stockholders of the Company and the requirements of Nevada
law, the Company shall take all action necessary to nominate
for election to the board of directors of the Company (the
"Board") at any annual or special meeting of stockholders at
which directors are being elected (or in connection with a
written consent in lieu of a meeting pursuant to which
directors are proposed to be elected) such persons as are
necessary to ensure that after such meeting (assuming all
nominees are elected) two members of the Board are "PGGM
Directors" (as hereinafter defined). For purposes of this
Agreement, a "PGGM Director" shall be an individual
nominated by PGGM.
ii. From the date hereof until the earlier to occur of (i) the
date as of which PGGM and DIHC and their respective
Affiliates own in the aggregate less than 25% of the issued
and outstanding shares of Common Stock or (ii) ________,
<PAGE>
2002 (the date five years after the Closing Date), subject
to the rights of the stockholders of the Company and the
requirements of the Nevada law:
(1) the Company shall take all action necessary to ensure
that one PGGM Director is appointed to the board
affairs committee of the Board (the "Committee").
(2) All nominees for election as directors of the Company
by the Board (other than Incumbent Directors and PGGM
Directors nominated pursuant to Section 7.1(a)) shall
be persons not affiliated with PGGM or DIHC or any of
their respective Affiliates and shall be made with the
approval of a majority of the members of the Committee,
which majority includes the approval (which will not be
unreasonably withheld) of the PGGM Director serving on
the Committee;
(3) PGGM and DIHC shall vote (or provide written consent
with respect to) all shares of Common Stock over which
it exercises voting authority in favor of the persons
nominated as PGGM Directors pursuant to Section 7.1(a)
and all nominees nominated in accordance with
Section 7.1(b)(ii) and all Incumbent Directors
nominated for election as directors of the Company by
the Board;
(4) In the event of any vacancy on the Board, whether
caused by a director's resignation, removal, death or
otherwise, the Company shall take all action necessary
to ensure that the successor to the director whose
absence from the Board caused such vacancy shall be a
PGGM Director if the director who caused such vacancy
was a PGGM Director; and
(5) The Company shall not increase the number of directors
constituting the full Board without the prior written
consent of PGGM.
iii. So long as PGGM and DIHC and their respective Affiliates own
in the aggregate 2.5% or more of the issued and
<PAGE>
outstanding shares of Common Stock, the Company shall not
without the prior written consent of PGGM modify the policy
of the Company with respect to its interest in One Norwest
Center, Denver, Colorado, adopted at a meeting of the Board
on August 13, 1997.
b. LEVERAGE RATIO. So long as PGGM and DIHC and their respective
Affiliates own in the aggregate 2.5% or more of the issued and
outstanding shares of Common Stock, the Company shall at all
times maintain a Leverage Ratio not in excess of 0.45 to 1;
PROVIDED, HOWEVER, that notwithstanding the foregoing, (i) the
Company may at any time incur Indebtedness in an amount which
does not exceed the principal amount of outstanding Indebtedness
of the Company extended, refinanced, renewed or replaced with the
proceeds thereof, plus any costs associated with the extension
refinancing, renewal or replacement, even if such incurrence
causes the Leverage Ratio to exceed 0.45 to 1, (ii) the Company
may incur Indebtedness if, as of the date on which the Company
enters into a binding commitment with respect to such
Indebtedness, the Leverage Ratio including such Indebtedness did
not exceed 0.45 to 1 and (iii) with respect to lines of credit,
the Company may incur Indebtedness under such line, if, as of the
date the Company enters into the line of credit, the Leverage
Ratio including the entire amount of Indebtedness available under
such line did not exceed 0.45 to 1.
c. ISSUANCES OF COMMON STOCK. From the date hereof until ________,
1998 (the date six months after the Closing Date), the Company
shall not issue or sell any shares of Common Stock or other
Equity Securities, except at a price per share of Common Stock
equal to or greater than $16.00 (appropriately adjusted for stock
dividends, stock splits and the like), except in connection with
(i) the conversion of securities or Indebtedness of the Company
into Common Stock by Deutsche Bank AG, (ii) the conversion of
promissory notes of the Company held by Hines Colorado Limited,
(iii) the Company's stock option or management incentive
compensation plans, (iv) the Company's dividend reinvestment
plan, and (v) stock splits or stock dividends.
d. DOMESTIC REIT STATUS. So long as PGGM and DIHC and their
respective Affiliates own in the aggregate 2.5% or more of the
issued and outstanding shares of Common Stock, the Company shall
not issue any Equity Securities in connection with any Public
<PAGE>
Offering or other sale to any Non-U.S. Person (as defined in
Section 9.02 of the Charter Amendment), other than in connection
with stock splits or stock dividends or under the Company's
dividend reinvestment plan or stock option or management
incentive compensation plans; provided, however, that the
Company, in connection with any Public Offering of Equity
Securities, may issue and sell up to 15% of the securities issued
in such offering to Non-U.S. Persons.
e. HOLDBACK AGREEMENTS. Each Holder agrees, if so requested prior
to December 31, 1998, by the managing underwriter in any Public
Offering by the Company, not to effect any sale or distribution
of Common Stock (other than as part of such Public Offering)
within such periods prior to and after the effective date of such
registration statement as the managing underwriter may request
and as may be required of executive officers and directors of the
Company after the effective date of such registration statement;
provided that no Holder shall be required to enter into more than
one such agreement. After December 31, 1998, each Holder will
consider entering into such agreements if so requested.
f. RESTRICTIONS ON TRANSFER. During the Standstill Period, any
Holder and its Affiliates owning 25% or more of the issued and
outstanding shares of Common Stock, shall not assign, transfer or
sell any Shares to any Person or such Person's Affiliates (other
than a Permitted Transferee that agrees in writing to be bound by
the provisions of this Agreement) in any single transaction or
series of related transactions if, after such transaction or
transactions, such Person and such Person's Affiliates would own
more than 10% of the then issued and outstanding shares of Common
Stock (other than transfers of Shares from DIHC to PGGM on or
prior to ____________, 1998 (the date three months after the
Closing Date)).
g. OWNERSHIP LIMIT. The Company has taken all action necessary to
ensure that issuance of the Shares to DIHC, DIHC Market Square,
Inc. and PGGM pursuant to the Purchase Agreement and the Loan
Agreement shall not be deemed a violation of Article 8 of the
Company's articles of incorporation. Whenever PGGM or DIHC (or
DIHC Market Square, Inc.) proposes to transfer any Shares to any
Person, in accordance with the provisions of Section 8.03 of the
articles of incorporation of the Company, the Board shall
determine whether the proposed transfer would jeopardize the
Company's status as a real estate investment trust
<PAGE>
(a "REIT") under Section 856 of the Internal Revenue Code of
1986, as amended. If the Board determines that it would not so
jeopardize the Company's REIT status, or if it receives an
opinion of counsel, which counsel and opinion are reasonably
satisfactory to the Board, to the effect that such proposed
transfer will not jeopardize the Company's status as a REIT, the
Board shall determine that such transferee will not be treated as
a "Person" within the meaning of Section 8.03(b) of the Company's
articles of incorporation and therefore the ownership of Shares
by such transferee will be exempt from the restrictions imposed
by Article 8 of the Company's articles of incorporation. If the
Board determines that the proposed transfer would jeopardize the
Company's REIT status, the Company shall provide a written
explanation to DIHC and PGGM of the basis for its determination
and shall provide reasonable access to information regarding the
Company's shareholders to DIHC and PGGM.
h. TRANSFERS TO PGGM. The Company shall take all action necessary
to ensure that any transfer of Shares from DIHC or DIHC Market
Square, Inc. to PGGM shall not be deemed a violation of Article 8
or Section 9.01 of the Company's articles of incorporation.
i. SHARE REPURCHASES. So long as DIHC and PGGM and their respective
Affiliates own in the aggregate 25% or more of the issued and
outstanding shares of Common Stock, in the event the Company
proposes to repurchase any shares of Common Stock from any holder
thereof owning together with its Affiliates 5% or more of the
issued and outstanding shares of Common Stock, DIHC and PGGM
shall have the right to require the Company to repurchase a
number of shares of Common Stock held by DIHC and PGGM equal to
the product of (i) the total number of shares proposed to be
repurchased and (ii) a fraction, the numerator of which is
(A) the number of Shares owned by DIHC and PGGM and their
respective Affiliates and the denominator of which is (B) the sum
of the number of shares of Common Stock owned by such holder plus
the number of Shares owned by DIHC and PGGM and their respective
Affiliates.
8. STANDSTILL. During the Standstill Period, any Holder that together
with its Affiliates owns 25% or more of the issued and outstanding
shares of Common Stock shall not:
i. directly or indirectly, purchase or otherwise acquire, or
propose or offer to purchase or otherwise acquire, any
Equity Securities whether by tender offer, market purchase,
privately negotiated purchase, Business Combination or
otherwise, if, immediately after such purchase or
acquisition, the Holder Interest of such Holder would equal
or exceed the Initial Percentage;
ii. directly or indirectly propose to the Company or any Person
a Business Combination;
iii. make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" to vote (as such terms are
used in the rules promulgated by the Commission under
Section 14(a) of the Exchange Act) or seek to advise,
encourage or influence any person or entity with respect to
the voting of any shares of capital stock of the Company,
initiate, propose or otherwise solicit stockholders of the
Company for the approval of one or more stockholder
proposals or induce or attempt to induce any other Person to
initiate any stockholder proposal; or
iv. deposit any Equity Securities into a voting trust or subject
any Equity Securities to any arrangement or agreement with
respect to the voting of such securities or form, join or in
any way participate in a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to any
Equity Securities, other than as expressly set forth in
Section 7 hereof.
Nothing in this Section 8 shall limit the ability of PGGM Directors to function
in their capacities as members of the Board. The provisions of this Section 8
may be waived by the Company only upon the approval of a majority of the Board,
excluding all PGGM Directors and shall not be applicable to actions approved by
the majority of the Board, excluding all PGGM Directors in circumstances in
which the PGGM Directors are "interested directors" under Section 78.140 of the
Nevada General Corporation Law.
9. ASSIGNMENT. This Agreement shall not be assignable by the parties
hereto, except (i) by PGGM, DIHC or any Holder pursuant to a transfer
of Shares permitted hereunder to a Permitted Transferee that agrees in
writing to be bound by the terms hereof (including, without
limitation, Section 7.6 and 8, if applicable) and (ii) the rights to
cause the Company to register Shares pursuant to Section 3 may be
assigned by
<PAGE>
PGGM, DIHC or any Holder, but only together with all obligations of
Holders under Section 3 and Section 7.5, to a transferee of Shares
representing at least 1% of the issued and outstanding shares of
Common Stock, provided that, within a reasonable time after such
transfer, the Company is furnished with written notice of the name and
address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned. Notwithstanding
any transfer of Shares in connection with an assignment permitted by
this Section 9, the transferor shall comply with the obligations set
forth in Section 2 hereof.
10. MISCELLANEOUS. This Agreement constitutes the sole understanding of
the parties hereto with respect to the subject matter hereof;
provided, however, that this provision is not intended to abrogate any
other written agreement between or among the parties executed with or
after this Agreement or any written agreement pertaining to another
subject matter. No amendment of this Agreement shall be binding
unless made in writing and duly executed by the parties hereto. This
Agreement shall be construed in accordance with and governed by the
laws of the State of New York without regard to conflict of laws
principles thereof. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority or by any board of
arbitrators by reason of such party or its counsel having or being
deemed to have structured or drafted such provision. Unless otherwise
expressly provided herein, all references in this Agreement to
Section(s) shall refer to the Section(s) of this Agreement. The
headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute
one instrument.
11. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by courier service, by cable, by
telecopy, by telegram, by telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 11):
<PAGE>
i. if to PGGM:Pensioenfonds PGGM
Kroostweg-Noord 149
3704 DV Zeist
The Netherlands
P. O. Box 117
3700 AC Zeist
The Netherlands
Telecopy: 011 (31.30) 696-3388
Attention: Mr. Jan van der Vlist
Ms. Anneke C. van de Puttelaar
with a copy to:Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Telecopy: (212) 750-9022
Attention:Robert M. Safron, Esq.
ii. if to DIHC:200 Galleria Parkway, NW
Suite 2000
Atlanta, Georgia 30339
Telecopy: (770) 951-9349
Attention: Mr. Robert T. Sorrentino
Mr. Michael F. Perkins
with a copy to:Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Telecopy: (212) 750-9022
Attention:Robert M. Safron, Esq.
iii. if to the Company:126 East 56th Street
New York, New York 10022
Telecopy: (212) 605-7199
Attention:Mr. John S. Moody
with a copy to:King & Spalding
191 Peachtree Street, NE
Atlanta, Georgia 30303
Telecopy: (404) 572-5148
Attention:William B. Fryer, Esq.
iv. If to any other Holder to the address set forth in the
notice referred to in Section 9 hereof.
<PAGE>
12. REMEDY. In the event that the Company materially breaches its
obligations to PGGM under Sections 7.1 and 7.2 hereof and such breach
continues for a period of 30 days after PGGM gives the Company written
notice of such breach, the obligations of PGGM under Sections 7.5, 7.6
and 8 shall thereafter be suspended for such period of time as such
breach continues; provided, however, that upon any such breach being
cured by the Company or waived by PGGM, PGGM shall again be obligated
to comply with the provisions of Sections 7.5, 7.6 and 8.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date first above written.
CORNERSTONE PROPERTIES INC.
By:____________________________
Name:__________________________
Title:_________________________
DUTCH INSTITUTIONAL HOLDING
COMPANY, INC.
By:____________________________
Name:__________________________
Title:_________________________
STICHTING PENSIOENFONDS VOOR DE GEZONDHEID,
GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN
By:____________________________
Name:__________________________
Title:_________________________
By:____________________________
Name:__________________________
Title:_________________________
[Signature Page to Registration Rights and Voting Agreement]
EXHIBIT A
TO REGISTRATION RIGHTS AND VOTING AGREEMENT
-------------------------------------------
Stockholders' Agreement dated November 22, 1996, between the Company and New
York State Teachers' Retirement System.
Stockholders' Agreement dated November 7, 1996, between the Company and Hexalon
Real Estate, Inc.
Convertible Promissory Note dated January 1, 1996 issued by the Company to Hines
Colorado Limited.
Letter Agreement dated July 10, 1995 between the Company and Deutsche Bank AG.
<PAGE>
EXHIBIT I
---------
Charter Amendment
SEE ATTACHED
<PAGE>
[Add the following new Article 9]
ARTICLE 9
RESTRICTIONS ON TRANSFER -- DOMESTICALLY CONTROLLED REIT STATUS
Section 9.01 All shares of stock of the Corporation shall be subject to
the following restrictions on transfer which are intended to limit the ownership
of the Corporation's shares by Non-U.S. Persons and thereby assist the
Corporation in becoming, and thereafter remaining as, a "domestically controlled
REIT" within the meaning of Section 897(h)(4)(B) of the Code:
(a) Shares of a class of stock of the Corporation shall not be transferred
by any U.S. Person to any person if such transfer would cause a Non-U.S. Person
to Beneficially Own (taking into account any other shares of such class
Beneficially Owned by such Non-U.S. Person) more than the Non-U.S. Ownership
Limit with respect to such class of stock, and the intended transferee of such
shares shall acquire no rights in such shares.
(b) To the extent any purported transfer of shares by any U.S. Person
would cause a Non-U.S. Person to Beneficially Own shares of a class of stock of
the Corporation in excess of the Non-U.S. Ownership Limit, those shares of the
Corporation as to which the Non-U.S. Person has most recently acquired
Beneficial Ownership shall constitute "Excess Shares" under this Article 9.
Excess Shares shall have the following characteristics:
(1) The holder of Excess Shares shall be deemed to have transferred
those shares to the Corporation as trustee (the "Trustee") for the benefit
of such person to whom such holder shall later transfer such shares
provided that such shares shall not be Excess Shares in the hands of such
person;
(2) An interest in the trust holding such Excess Shares shall be
freely transferable by the holder thereof at a price not in excess of the
price paid by such holder for the Excess Shares;
(3) Holders of Excess Shares shall not be entitled to exercise any
voting rights with respect to such Excess Shares;
(4) Excess Shares shall not be deemed to be outstanding for the
purpose of determining a quorum at the annual meeting or any special
meeting of stockholders;
(5) Any dividends or other distributions with respect to Excess
Shares which would have been payable in respect of shares of the
Corporation had they not constituted "Excess Shares" shall be accumulated
by the Trustee and deposited in a savings account in a New York bank (which
may be the Corporation's dividend disbursing agent) for the
<PAGE>
benefit of, and be payable to, the holder or holders of such shares of the
Corporation at such time as such Excess Shares shall cease to be Excess
Shares; and
(6) Excess Shares shall be deemed to have been offered for sale to
the Corporation or its designee at their fair market value for a period of
ninety (90) days from the date of (i) the transfer of stock which made the
shares Excess Shares if the Corporation has actual knowledge that such
transfer creates Excess Shares as of the date of transfer or (ii) if such
transfer is not actually known to the Corporation, the determination by the
Board of Directors in good faith by resolution duly adopted that a transfer
creating Excess Shares has taken place. Fair market value shall be
determined as of the date of (i) or (ii) above, as appropriate, and shall
be the closing price on the New York Stock Exchange or any other national
stock exchange in the United States; but if the shares are not listed on
the New York Stock Exchange or any other national stock exchange in the
United States, then the closing price on the Frankfurt, Luxembourg, or
Dusseldorf stock exchanges; but if the shares are not listed on the
Frankfurt, Luxembourg, or Dusseldorf stock exchanges, then the bid price in
the over-the-counter market; but if the shares are not traded in the
over-the-counter market, then the price determined in good faith by the
Board of Directors.
(c) The following transfers by any U.S. Person (or by any person through
whom such U.S. Person has Beneficial Ownership of the shares) shall be exempt
from the limitation imposed by this Section 9.01(a): (i) any transfer pursuant
to the death of such U.S. Person or distribution pursuant to the terms of a
decedent's will, trust or similar instrument, (ii) any transfer pursuant to a
merger or sale of substantially all of the assets of the U.S. person, if such
U.S. person is an entity; provided, however, that the exception in this clause
(ii) shall not apply to any such transfer if the shares of the Corporation
conveyed represent twenty percent or more of the aggregate value of all assets
conveyed by the U.S. Person in such merger or sale, (iii) any transfer to a
trustee or receiver in a bankruptcy or similar proceeding, and (iv) any
involuntary transfer that occurs by operation of law.
(d) If the Board of Directors shall at any time determine in good faith,
by resolution duly adopted, that a transfer has taken place in violation of
Section 9.01(a), the Board of Directors may, but shall not be obligated to, take
such action as it deems advisable to prevent or refuse to give effect to such
transfer, including, but not limited to, refusing to give effect to such
transfer on the books of the Corporation or instituting proceedings to enjoin
such transfer.
(e) Any Non-U.S. Person to whom a transfer of shares is made in violation
of Section 9.01(a) is obliged immediately to give or cause to be given written
notice thereof to the Corporation and such other information as the Corporation
may reasonably require of such Non-U.S. Person relating to such person's status
as a Non-U.S. Person and the shares Beneficially Owned or purported to be
Beneficially Owned by such Non-U.S. Person.
(f) All certificates evidencing ownership of shares of the Corporation
shall bear a conspicuous legend describing the restrictions set forth in this
Article.
<PAGE>
Section 9.02 For purposes of this Article 9,
(a) "Non-U.S. Person" shall mean (i) a nonresident alien individual (as
defined in Section 7701(b) of the Code), (ii) a foreign corporation, foreign
partnership, foreign trust, foreign estate, foreign government, and any other
organization or entity which is not organized under the laws of the United
States or a State, and (iii) any other person or entity treated as a "foreign
person" under Section 1.897-9T(c) of the Treasury Regulations under the Code (or
any corresponding provision of successor regulations).
(b) "U.S. Person" shall mean any person other than a Non-U.S. Person.
(c) "Non-U.S. Ownership Limit" shall mean, as to any class of stock of the
Corporation, three percent (3%) of the outstanding shares of such class. The
number of outstanding shares of a class of stock shall be determined as of the
time of the transfer in question.
(d) A Non-U.S. Person shall be considered to "Beneficially Own," be the
"Beneficial Owner," or have "Beneficial Ownership" of shares if such Non-U.S.
Person is (i) the holder of record of such shares (other than a broker, nominee,
transfer agent, depository or similar intermediary) or (ii) the person required
to include dividends with respect to such shares in income for U.S. federal
income tax purposes under Section 1.857-8 of the Treasury Regulations.
Section 9.03 Nothing contained in this Article shall be construed as
imposing any affirmative obligation on the Corporation or its Board of Directors
to ensure that the Corporation becomes a domestically controlled REIT or that it
maintains such status once attained, other than the obligation to enforce the
transfer restrictions imposed by this Article 9 in good faith.
Section 9.04 If any provision of this Article or any application of such
provision is determined to be invalid by any federal or state court having
jurisdiction over the issues, the validity of the remaining provisions shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
Section 9.05 The Corporation shall, within 30 days after December 31 of
each year, request each record owner holding more than 3% of the outstanding
shares of any class of its stock on December 31 of such year to state whether
such holder is a Non-U.S. Person and to identify any other Non-U.S. Persons that
Beneficially Own such shares.
Section 9.06 The Board may, in its sole but good faith discretion, except
any purported transfer of shares from the limitations contained in this Article
9 if the Board determines that such transfer will not materially affect the
Corporation's ability to become a domestically controlled REIT or to continue
such status once attained, and is otherwise in the best interest of the
Corporation and its shareholders.
<PAGE>
EXHIBIT J
---------
JOINT FILING AGREEMENT BETWEEN
STICHTING PENSIOENFONDS VOOR DE GEZONDHEID
GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN
-AND-
DUTCH INSTITUTIONAL HOLDING COMPANY, INC.
AGREEMENT, dated as of August 26, 1997 by and between Stichting
Pensioenfonds Voor De Gezondheid Geestelijke en Maatschappelijke Belangen
("PGGM") and Dutch Institutional Holding Company, Inc. ("DIHC").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in accordance with Rule 13d-1(f) under the Securities and Exchange
Act of 1934 (the "ACT"), only one Statement and any amendments thereto need be
filed whenever two or more persons are required to file such a Statement or any
amendments thereto pursuant to Section 13(d) of the Act with respect to the same
securities, provided that said persons agree in writing that such Statement or
any amendments thereto is filed on behalf of them.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
PGGM and DIHC do hereby agree, in accordance with Rule 13d-1(f) under the
Act, to file a Schedule 13D and any subsequent amendments thereto relating to
their beneficial ownership of the Common Stock of Cornerstone Properties, Inc.,
and do hereby further agree that said Schedule 13D and all said subsequent
amendments shall be filed on behalf of each of them.
STICHTING PENSIOENFONDS VOOR DE GEZONDHEID
GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN
By:/s/ Edwin A. Brassem
-----------------------------
Edwin A. Brassem
DUTCH INSTITUTIONAL HOLDING COMPANY, INC.
By:/s/ Robert T. Sorrentino
-----------------------------
Robert T. Sorrentino
