<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 2)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.a-11(c) or Section240.a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
a-6(e)(2))
ROCKEFELLER CENTER PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter
and Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party of the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies: 38,260,704
(outstanding shares of Common Stock on December 13, 1995, not including
shares of Common Stock held by Rockefeller Center Properties, Inc. or
any of its subsidiaries as treasury shares or owned by RCPI Holdings
Inc. or any of its subsidiaries)
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
$8.00 per unit
4) Proposed maximum aggregate value of transaction:
$306,085,632
5) Total fee paid: $61,218
Fee of $61,218 paid by wire transfer on December 14, 1995 to the designated
lockbox depositary maintained by the Commission at Mellon Bank.
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO]
February , 1996
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Rockefeller Center Properties, Inc. ("RCPI") to be held on March 25, 1996 in the
Auditorium at The Equitable Center, 787 Seventh Avenue, New York City,
commencing at 9:30 a.m., Eastern Standard Time. Your Board of Directors and RCPI
management hope that you will be able to attend the Special Meeting in person.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger dated as of
November 7, 1995 (as amended, the "Merger Agreement") entered into by RCPI with
Whitehall Street Real Estate Limited Partnership V ("Whitehall"), Rockprop,
L.L.C., David Rockefeller, Exor Group S.A., Troutlet Investments Corporation
(collectively, the "Investors"), RCPI Holdings Inc. ("Holdings") and RCPI Merger
Inc. As more fully described in the attached Proxy Statement, for certain
purposes, Whitehall may be deemed to control, and therefore may be deemed to be
an affiliate of, RCPI. As a result of its investment in RCPI, Whitehall may have
interests that conflict with those of the stockholders of RCPI.
To effect the transactions contemplated by the Merger Agreement, the
Investors have organized Holdings and own all of its outstanding capital stock.
Upon the terms and subject to the conditions of the Merger Agreement, Holdings
will be merged into RCPI (the "Merger") and will cease to exist. RCPI will be
the surviving corporation in the Merger, thus becoming wholly owned by the
Investors and their designees. If the Merger is consummated, each share, par
value $0.01 per share, of common stock of RCPI (a "Share") outstanding
immediately prior to the Merger, except for certain "Excluded Shares" described
in the accompanying Proxy Statement, will be canceled and automatically
converted into the right to receive $8.00 per Share net to the holder in cash
(the "Merger Consideration"), without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, HAS
DETERMINED THAT THE MERGER AGREEMENT IS FAIR TO AND IN THE BEST INTERESTS OF
RCPI AND ITS STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT.
The affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote thereon is required to approve and adopt the Merger Agreement.
YOUR VOTE IS IMPORTANT. Regardless of the number of Shares you own or
whether you plan to attend, it is important that your Shares be represented and
voted at the Special Meeting. You are requested to complete, sign, date and
return the enclosed white proxy card as soon as possible in the enclosed,
postage-paid return envelope. If you attend the Special Meeting, you may revoke
your proxy and vote your Shares in person, even if you have previously returned
a proxy.
PLEASE DO NOT SEND US YOUR STOCK CERTIFICATES AT THIS TIME. If the Merger is
consummated, you will be advised of the procedure for surrendering your
certificates in exchange for the Merger Consideration.
Simultaneously with the execution and delivery of the Merger Agreement, RCPI
entered into a separate agreement with Whitehall and Goldman, Sachs & Co., an
affiliate of Whitehall, pursuant to which the parties have agreed that if RCPI's
stockholders do not approve the Merger Agreement at the Special Meeting, RCPI
will have the right to elect, within 30 days after the date of the Special
Meeting, to make a $200 million publicly registered rights offering at a price
set by the Board of Directors, but not less than $6.00 per Share. The purpose of
the agreement is to provide RCPI with a pre-negotiated potential means to raise
the funds it would require to be able to acquire the Rockefeller Center property
and to service its obligations if the RCPI stockholders do not follow the
unanimous
<PAGE>
recommendation of the Board of Directors that they approve the Merger Agreement.
No decision has been made by the RCPI Board as to whether this option would be
exercised if the RCPI stockholders do not approve the Merger Agreement; such a
decision will be made in the light of the circumstances obtaining at the time of
any such failure to approve the Merger Agreement, including any alternatives
that may then be available to RCPI. Any election by RCPI to proceed with a
rights offering would not require prior approval of the RCPI stockholders. The
terms of the rights offering agreement are fully described in the attached Proxy
Statement and a copy is attached thereto as Annex B.
If you have any questions about the matters discussed in the Proxy
Statement, please call RCPI at (800) 555-6444 or (212) 698-1440. Thank you for
your cooperation and continued support.
Sincerely,
<TABLE>
<S> <C>
Dr. Peter D. Linneman Richard M. Scarlata
CHAIRMAN OF THE BOARD PRESIDENT & CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
[LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of
Rockefeller Center Properties, Inc.
A Special Meeting of Stockholders of Rockefeller Center Properties, Inc.
("RCPI") will be held in the Auditorium at The Equitable Center, 787 Seventh
Avenue, New York City, on March 25, 1996 at 9:30 a.m., Eastern Standard Time,
for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of November 7, 1995 (as amended on
February , 1996 and as it may be further amended from time to time, the
"Merger Agreement") entered into by RCPI with Whitehall Street Real Estate
Limited Partnership V ("Whitehall"), Rockprop, L.L.C., David Rockefeller,
Exor Group S.A., Troutlet Investments Corporation (collectively, the
"Investors"), RCPI Holdings Inc. ("Holdings") and RCPI Merger Inc.
To effect the transactions contemplated by the Merger Agreement, the
Investors have organized Holdings and own all of its outstanding capital
stock. Upon the terms and subject to the conditions of the Merger Agreement,
Holdings will be merged into RCPI (the "Merger") and will cease to exist.
RCPI will be the surviving corporation in the Merger, thus becoming wholly
owned by the Investors and their designees. If the Merger is consummated,
each share, par value $0.01 per share, of common stock of RCPI (a "Share")
outstanding immediately prior to the Merger, except for the Excluded Shares
referred to below, will be canceled and automatically converted into the
right to receive $8.00 per Share net to the holder in cash (the "Merger
Consideration"), without interest. "Excluded Shares" means (i) Shares held
by RCPI or any of its subsidiaries as treasury shares, if any, (ii) Shares
held by Holdings or any of its subsidiaries, if any, and (iii) Shares held
by stockholders who have not voted in favor of the Merger or consented
thereto in writing and who have properly demanded in writing appraisal of
such Shares in accordance with Section 262 of the Delaware General
Corporation Law (the "DGCL").
2. To transact such other business as may properly come before the
Special Meeting, including any and all adjournments and postponements
thereof.
The terms of the Merger Agreement are described in the accompanying Proxy
Statement and a conformed copy of the original Merger Agreement and Amendment
No. 1 thereto is included with the Proxy Statement as Annex A.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, HAS
DETERMINED THAT THE MERGER AGREEMENT IS FAIR TO AND IN THE BEST INTERESTS OF
RCPI AND ITS STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT.
Stockholders who do not wish to accept the Merger Consideration and who
comply with the requirements of Section 262 of the DGCL have the right to seek
an appraisal by the Delaware Court of Chancery of the fair value of their
Shares. For a description of the rights of the stockholders of RCPI pursuant to
Section 262 of the DGCL and a description of the procedures to be followed in
order to obtain such an appraisal, see "Rights of Dissenting Stockholders" in
the accompanying Proxy Statement. A copy of the text of Section 262 of the DGCL
appears as Annex D thereto.
The affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote thereon is required to approve and adopt the Merger Agreement.
The Board of Directors has set the close of business on February 8, 1996 as
the record date for determining stockholders entitled to notice of and to vote
at the Special Meeting or any postponement
<PAGE>
or adjournment thereof. Only stockholders of record at the close of business on
such date are entitled to vote at the Special Meeting or any postponement or
adjournment thereof. A list of the stockholders of record entitled to vote at
the Special Meeting will be available for inspection by any stockholder of RCPI
for any purpose germane to the Special Meeting during normal business hours for
a period of ten business days prior to the date of the Special Meeting at the
offices of RCPI, 1270 Avenue of the Americas, New York, New York 10020.
The Board of Directors hopes that as many stockholders as possible will
personally attend the Special Meeting. If you plan to attend, please advise RCPI
by checking the box provided on the enclosed proxy card and returning it to RCPI
or otherwise providing written notice to the Secretary of RCPI of your intention
to attend. Upon receipt of your proxy with the box checked or other written
notice of your intention to attend, we will send you an admission card.
Simultaneously with the execution and delivery of the Merger Agreement, RCPI
entered into a separate agreement with Whitehall and Goldman, Sachs & Co., an
affiliate of Whitehall, pursuant to which the parties have agreed that if RCPI's
stockholders do not approve the Merger Agreement at the Special Meeting, RCPI
will have the right to elect, within 30 days after the date of the Special
Meeting, to make a $200 million publicly registered rights offering at a price
set by the Board of Directors, but not less than $6.00 per Share. The purpose of
the agreement is to provide RCPI with a pre-negotiated potential means to raise
the funds it would require to be able to acquire the Rockefeller Center property
and to service its obligations if the RCPI stockholders do not follow the
unanimous recommendation of the Board of Directors that they approve the Merger
Agreement. No decision has been made by the Board of Directors as to whether
this option would be exercised if the RCPI stockholders do not approve the
Merger Agreement; such a decision will be made in the light of the circumstances
obtaining at the time of any such failure to approve the Merger Agreement,
including any alternatives that may then be available to RCPI. Any election by
RCPI to proceed with a rights offering would not require prior approval of the
RCPI Stockholders. The terms of the rights offering agreement are fully
described in the attached Proxy Statement and a copy is attached thereto as
Annex B.
YOUR VOTE IS IMPORTANT. REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR
WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT YOUR SHARES
BE REPRESENTED AND VOTED AT THE SPECIAL MEETING. YOU ARE REQUESTED TO COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD AS SOON AS POSSIBLE IN THE
ENCLOSED, POSTAGE-PAID RETURN ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING, YOU
MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE
PREVIOUSLY RETURNED A PROXY.
By Order of the Board of Directors,
STEPHANIE LEGGETT YOUNG
VICE PRESIDENT & SECRETARY
New York, New York
February , 1996
2
<PAGE>
PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 1996
------------------------
ROCKEFELLER CENTER PROPERTIES, INC.
1270 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
------------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 25, 1996
------------------------
This Proxy Statement is being furnished to the stockholders of Rockefeller
Center Properties, Inc., a Delaware corporation ("RCPI"), in connection with the
solicitation of proxies by the Board of Directors of RCPI (the "Board") from
holders of outstanding shares of common stock, par value $.01 per share, of RCPI
(the "Shares"), for use at the Special Meeting of Stockholders of RCPI to be
held in the Auditorium at The Equitable Center, 787 Seventh Avenue, New York
City, at 9:30 a.m., Eastern Standard Time, on March 25, 1996 (including any
postponements or adjournments thereof, the "Special Meeting"). This Proxy
Statement and the enclosed Notice of Special Meeting of Stockholders and form of
proxy are first being sent to stockholders of RCPI on February , 1996.
At the Special Meeting, you will be asked to consider and vote on a proposal
to approve and adopt the Agreement and Plan of Merger dated as of November 7,
1995 (as amended on February , 1996 and as it may be further amended from time
to time, the "Merger Agreement") entered into by RCPI with Whitehall Street Real
Estate Limited Partnership V ("Whitehall"), Rockprop, L.L.C., David Rockefeller,
Exor Group S.A., Troutlet Investments Corporation (collectively, the
"Investors"), RCPI Holdings Inc. ("Holdings") and RCPI Merger Inc. As more fully
described herein, for certain purposes, Whitehall may be deemed to control, and
therefore may be deemed to be an affiliate of, RCPI. None of the Investors owns
any Shares and therefore no Investor will cast any votes at the Special Meeting.
To effect the transactions contemplated by the Merger Agreement, the
Investors have organized Holdings and own all of its outstanding capital stock.
Upon the terms and subject to the conditions of the Merger Agreement, Holdings
will be merged into RCPI (the "Merger") and will cease to exist. RCPI will be
the surviving corporation in the Merger, thus becoming wholly owned by the
Investors and their designees. If the Merger is consummated, each Share
outstanding immediately prior to the Merger, except for the Excluded Shares
referred to herein, will be canceled and automatically converted into the right
to receive $8.00 per Share net to the holder in cash (the "Merger
Consideration"), without interest.
On May 11, 1995, the owners of the Rockefeller Center property filed
voluntary petitions under Chapter 11 of the Bankruptcy Code. Under the
Borrower's Chapter 11 plan of reorganization, RCPI is expected to take title to
the Rockefeller Center property immediately following consummation of the
Merger. See "Special Factors -- Borrower's Chapter 11 Case".
As a result of the Merger, RCPI's stockholders will not have an opportunity
to continue their equity interest in RCPI as an ongoing corporation and,
therefore, will not share in the future earnings and potential growth of RCPI or
the Rockefeller Center property, if any.
The consummation of the Merger is subject to approval by the holders of a
majority of the outstanding Shares and to certain other conditions, all as more
fully described in this Proxy Statement. As further described herein, Whitehall
owns stock appreciation rights and currently exercisable warrants issued by
RCPI. See "The Merger -- The Merger Agreement -- Conditions to the Merger".
The Board has unanimously approved the Merger Agreement, has determined that
the Merger Agreement is fair to and in the best interests of RCPI and its
stockholders and recommends that you vote FOR approval and adoption of the
Merger Agreement.
Simultaneously with the execution and delivery of the Merger Agreement, RCPI
entered into a separate agreement with Whitehall and Goldman, Sachs & Co., an
affiliate of Whitehall, pursuant to which the parties have agreed that if RCPI's
stockholders do not approve the Merger Agreement at the Special Meeting, RCPI
will have the right to elect, within 30 days after the date of the Special
Meeting, to make a $200 million publicly registered rights offering at a price
set by the Board, but not less than $6.00 per Share. The purpose of the
agreement is to provide RCPI with a pre-negotiated potential means to raise the
funds it would require to be able to acquire the Rockefeller Center property and
to service its obligations if the RCPI stockholders do not follow the unanimous
recommendation of the Board that they approve the Merger Agreement. No decision
has been made by the Board as to whether this option would be exercised if the
RCPI stockholders do not approve the Merger Agreement; such a decision will be
made in the light of the circumstances obtaining at the time of any such failure
to approve the Merger Agreement, including any alternatives that may then be
available to RCPI. Any election by RCPI to proceed with a rights offering would
not require prior approval of the RCPI stockholders. The terms of the rights
offering agreement are fully described herein and a copy is attached hereto as
Annex B.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
THE DATE OF THIS PROXY STATEMENT IS FEBRUARY , 1996
------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SUMMARY................................................................................................... 1
The Special Meeting..................................................................................... 1
Required Vote; Quorum; Record Date...................................................................... 1
The Parties............................................................................................. 2
The Merger.............................................................................................. 4
Effective Time of the Merger............................................................................ 4
Exchange of Shares...................................................................................... 4
Background of the Merger................................................................................ 4
Recommendation of the Board; Fairness of the Merger..................................................... 4
Interest of Certain Persons in the Merger............................................................... 5
Opinion of PaineWebber.................................................................................. 5
Certain Effects of the Merger........................................................................... 6
Conditions to the Merger................................................................................ 6
GSMC Loans.............................................................................................. 7
Borrower's Chapter 11 Case.............................................................................. 7
Accounting Treatment.................................................................................... 7
Certain United States Federal Income Tax Consequences of the Merger..................................... 8
Termination; Fees and Expenses.......................................................................... 8
Source and Amount of Funds.............................................................................. 8
Rights of Dissenting Stockholders....................................................................... 8
Rights Offering Agreement............................................................................... 9
Market Prices and Dividends on RCPI Common Stock........................................................ 10
Summary Financial Data of RCPI.......................................................................... 12
Summary Financial Data of the Property.................................................................. 14
INTRODUCTION.............................................................................................. 17
General................................................................................................. 17
The Special Meeting..................................................................................... 17
Voting Rights and Proxy Information..................................................................... 17
Solicitation of Proxies................................................................................. 19
THE PARTIES............................................................................................... 19
RCPI.................................................................................................... 19
Investors............................................................................................... 20
Holdings................................................................................................ 22
SPECIAL FACTORS........................................................................................... 22
Background of the Merger................................................................................ 22
Recommendation of the Board............................................................................. 47
Fairness of the Merger.................................................................................. 47
Interest of Certain Persons in the Merger............................................................... 50
Vote of Directors and Officers of RCPI.................................................................. 51
Opinion of PaineWebber.................................................................................. 51
Douglas Elliman 1994 Appraisal; The Weitzman Group Concurrence Report................................... 56
Purpose and Structure of the Transaction................................................................ 58
Reasons for the Transaction............................................................................. 58
Plans for RCPI After the Merger......................................................................... 58
Certain Effects of the Merger........................................................................... 59
Borrower's Chapter 11 Case.............................................................................. 59
Accounting Treatment.................................................................................... 61
Regulatory Approvals.................................................................................... 61
Certain Litigation...................................................................................... 61
Fees and Expenses....................................................................................... 63
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
THE MERGER................................................................................................ 64
General................................................................................................. 64
The Merger Agreement.................................................................................... 64
Source and Amount of Funds.............................................................................. 70
The Rights Offering Agreement........................................................................... 71
RIGHTS OF DISSENTING STOCKHOLDERS......................................................................... 74
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER....................................... 77
CERTAIN FINANCIAL PROJECTIONS............................................................................. 78
BUSINESS OF RCPI.......................................................................................... 82
MARKET PRICES AND DIVIDENDS ON RCPI COMMON STOCK.......................................................... 83
SELECTED FINANCIAL DATA OF RCPI........................................................................... 84
SELECTED FINANCIAL DATA OF THE PROPERTY................................................................... 86
OWNERSHIP OF COMMON STOCK................................................................................. 89
Security Ownership of Management........................................................................ 89
Security Ownership of Certain Beneficial Owners......................................................... 90
TRANSACTIONS BY CERTAIN PERSONS IN SHARES................................................................. 92
REVOCATION OF PROXIES..................................................................................... 92
INDEPENDENT AUDITORS...................................................................................... 92
STOCKHOLDER PROPOSALS..................................................................................... 92
DOCUMENTS INCORPORATED BY REFERENCE....................................................................... 93
AVAILABLE INFORMATION..................................................................................... 94
ANNEX A -- Agreement and Plan of Merger; Amendment No. 1 to the Agreement and Plan of Merger
ANNEX B -- Rights Offering Agreement
ANNEX C -- Opinion of PaineWebber Incorporated
ANNEX D -- Section 262 of the General Corporation Law of the State of Delaware
SCHEDULE I -- Directors and Executive Officers of RCPI
SCHEDULE II -- Directors and Executive Officers of WH Advisors, Inc.
SCHEDULE III -- General Partners of GS Group
SCHEDULE IV -- Directors and Executive Officers of each Corporate General Partner of
GS Group
</TABLE>
------------------------
THE MATERIAL ASPECTS OF THE MERGER AND THE MERGER AGREEMENT ARE SUMMARIZED IN
THIS PROXY STATEMENT. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ANNEXES AND SCHEDULES
ATTACHED TO THIS PROXY STATEMENT, EACH OF WHICH IS INCORPORATED
HEREIN BY REFERENCE. STOCKHOLDERS ARE URGED TO READ THIS PROXY
STATEMENT AND THE ANNEXES AND SCHEDULES HERETO
CAREFULLY AND IN THEIR ENTIRETY.
ii
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE
DESCRIPTION OF THE MATTERS COVERED IN THIS PROXY STATEMENT AND IS SUBJECT TO AND
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION
CONTAINED ELSEWHERE IN THIS PROXY STATEMENT, INCLUDING THE ANNEXES AND SCHEDULES
HERETO AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. STOCKHOLDERS ARE
URGED TO READ CAREFULLY THE ENTIRE PROXY STATEMENT, INCLUDING THE ANNEXES AND
SCHEDULES.
THE SPECIAL MEETING
DATE, TIME AND PLACE. A Special Meeting of stockholders of Rockefeller
Center Properties, Inc. ("RCPI") will be held on March 25, 1996 at 9:30 a.m.,
Eastern Standard Time, in the Auditorium at The Equitable Center, 787 Seventh
Avenue in New York City (including any adjournments and postponements thereof,
the "Special Meeting").
PURPOSE OF THE SPECIAL MEETING. The purpose of the Special Meeting is to
consider and vote upon a proposal to approve and adopt the Agreement and Plan of
Merger dated as of November 7, 1995 (as amended on February , 1996 and as it
may be further amended from time to time, the "Merger Agreement") among RCPI,
Whitehall Street Real Estate Limited Partnership V ("Whitehall"), Rockprop,
L.L.C. ("Rockprop"), David Rockefeller, Exor Group S.A. ("Exor"), Troutlet
Investments Corporation ("Troutlet" and, together with Whitehall, Rockprop, Mr.
Rockefeller and Exor, the "Investors"), RCPI Holdings Inc. ("Holdings") and RCPI
Merger Inc. RCPI's stockholders will also consider any other business that may
properly come before the Special Meeting. See "Introduction -- The Special
Meeting".
REQUIRED VOTE; QUORUM; RECORD DATE
RCPI's By-laws require the affirmative vote of the holders of at least 62.5%
of the outstanding shares (the "Shares") of common stock, par value $0.01 per
share (the "Common Stock"), of RCPI entitled to vote to approve and adopt the
Merger Agreement, unless the holders of at least 62.5% of the outstanding
warrants (the "Warrants") and stock appreciation rights (the "SARs") of RCPI
consent to the approval and adoption of the Merger Agreement. Whitehall, the
holder of more than 97% of the Warrants and SARs, has consented to the approval
and adoption of the Merger Agreement; accordingly, the affirmative vote of the
holders of a majority of the outstanding Shares entitled to vote thereon is
required to approve and adopt the Merger Agreement. Because Whitehall does not
own any Shares and neither the Warrants nor the SARs carry any right to vote
with the stockholders of RCPI, Whitehall will not cast any votes at the Special
Meeting. As a result, the approval of a majority of unaffiliated stockholders is
required to approve the Merger Agreement. In addition, none of the other
Investors owns any Shares and no Investor will cast any votes at the Special
Meeting. The presence, in person or by proxy, of the holders of a majority of
the Shares entitled to vote at the Special Meeting is necessary to constitute a
quorum for the transaction of business at the Special Meeting. See "Introduction
- -- Voting Rights and Proxy Information".
The close of business on February 8, 1996 (the "Record Date") has been fixed
as the record date for determining holders of Shares entitled to vote at the
Special Meeting. Only holders of Shares on the Record Date will be entitled to
notice of and to vote at the Special Meeting. On the Record Date, RCPI had
38,260,704 Shares outstanding, all of which are entitled to notice of and to
vote at the Special Meeting. At the Record Date, there were 9,867 stockholders
of record. See "Introduction -- Voting Rights and Proxy Information".
A stockholder may revoke his or her proxy at any time prior to its exercise
by attending the Special Meeting and voting in person (although attendance at
the Special Meeting will not in and of itself constitute revocation of a proxy),
by giving notice of revocation of his or her proxy at the Special Meeting or by
delivering a written notice of revocation or a duly executed proxy relating to
the matters to be considered at the Special Meeting and bearing a later date to
the Secretary of RCPI at 1270 Avenue of the Americas, New York, New York 10020.
Unless revoked in the manner set forth above, proxies in the form enclosed will
be voted at the Special Meeting in accordance with the stockholder's
instructions. It is not expected that any matter other than the approval and
adoption of the Merger
1
<PAGE>
Agreement will be brought before the Special Meeting. If, however, any other
matters are properly presented at the Special Meeting, including, among other
things, consideration of a motion to adjourn the Special Meeting to another time
or place, the persons named in the enclosed form of proxy and acting thereunder
will have discretion to vote on such matters in accordance with their best
judgment. Such adjournment may be for the purpose of soliciting additional
proxies. Shares represented by proxies voting against approval and adoption of
the Merger Agreement will be voted against a proposal to adjourn the Special
Meeting for the purpose of soliciting additional proxies.
THE PARTIES
RCPI
RCPI was formed in 1985 to permit public investment in two convertible
participating mortgages on the 12 original landmarked buildings in Rockefeller
Center (the "Property"). RCPI's principal assets are two convertible,
participating mortgage notes, in an aggregate amount of $1.3 billion
(collectively, the "Mortgage Note"), issued by two partnerships, Rockefeller
Center Properties ("RCP") and RCP Associates ("RCPA" and, together with RCP, the
"Borrower"), that together own most of the land and buildings known as
Rockefeller Center in Midtown Manhattan in New York City. Rockefeller Center is
one of the best-known business and entertainment complexes in the world.
Occupying most of three blocks, the Property includes 12 landmarked buildings,
all but one of which were completed between 1932 and 1940, having approximately
6.2 million square feet of rentable office, retail, storage and studio space.
Rockefeller Center contains a wide range of amenities, including the Channel
Gardens landscaped promenade, the lower plaza used as an ice skating rink during
colder weather and at other times for outdoor dining, a six-story 725-car
parking garage and extensive off-street truck delivery areas, an underground
retail and pedestrian concourse connecting all of the buildings and providing
direct access to a subway station, roof gardens and Radio City Music Hall.
Retail space within Rockefeller Center includes approximately 200 shops and 35
restaurants.
On May 11, 1995, RCP and RCPA filed voluntary petitions under Chapter 11 of
the Bankruptcy Code. Under the Borrower's Chapter 11 plan of reorganization,
RCPI or its designee is expected to take title to the Property immediately
following consummation of the Merger. See "Special Factors -- Borrower's Chapter
11 Case".
RCPI was incorporated in Delaware and qualifies and has elected to be
treated as a real estate investment trust (a "REIT") under the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"). See "The Parties --
RCPI".
INVESTORS
The Investors consist of Whitehall, Rockprop, Mr. Rockefeller, Exor and
Troutlet. See "The Parties -- Investors". None of the Investors owns any Shares
and therefore no investor will cast any votes at the Special Meeting. Whitehall
and two other investment funds that may be deemed to be controlled by The
Goldman Sachs Group, L.P. own SARs and Warrants representing a 19.9% fully
diluted equity interest in RCPI. However, neither the Warrants nor the SARs
carry any right to vote with the stockholders of RCPI. In addition, for so long
as the Restated Certificate of Incorporation of RCPI restricts any person from
beneficially owning more than 9.8% of the outstanding Shares, the SARs may not
be converted into Warrants if such a conversion were to violate the 9.8% limit.
See "The Parties -- RCPI".
WHITEHALL. Whitehall is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.P. V, a Delaware limited partnership ("WH Advisors,
L.P."), acts as the sole general partner of Whitehall, and WH Advisors, Inc. V,
a Delaware corporation ("WH Advisors, Inc."), acts as the sole general partner
of WH Advisors, L.P. Neither WH Advisors, L.P. nor WH Advisors, Inc. engages in
any business other than in connection with its role as a general partner. The
Goldman Sachs Group, L.P., a Delaware limited partnership ("GS Group"), is the
direct beneficial owner of all of the capital stock of WH Advisors, Inc. GS
Group is controlled by its general partners as a group, who have delegated to
its Management Committee the power to act on their behalf with respect to the
management of GS Group. GS Group's principal asset is a 99% partnership interest
in Goldman, Sachs & Co., a New York limited partnership ("Goldman Sachs"), an
investment banking firm and member of the New York Stock Exchange (the
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"NYSE") and other national securities exchanges. GS Group and Whitehall may be
deemed to control, and therefore be affiliates of, RCPI for purposes of Rule
13e-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, GS Group and
Whitehall have filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 with
respect to the Merger. See "Available Information".
ROCKPROP. Rockprop is a Delaware limited liability company whose members
are Tishman Speyer Crown Equities, a Delaware general partnership ("TSCE"), TSE
Limited Partnership, an Illinois limited partnership ("TSELP"), and Rockprop
Associates Limited Partnership, a Delaware limited partnership ("Rockprop
L.P."). Rockprop's principal business is to serve as the holding company for the
investment by TSCE, TSELP and Rockprop L.P. in connection with the Merger
Agreement. Jerry I. Speyer is a general partner of Rockprop L.P. and of one of
the general partners of TSCE. Mr. Speyer is also president and sole shareholder
of the general partner of Tishman Speyer Properties, L.P. ("Tishman Speyer"), a
leading property management company.
DAVID ROCKEFELLER. Mr. Rockefeller is an individual who is a resident of
the State of New York and who is the former chairman of The Chase Manhattan
Bank. Mr. Rockefeller was a director of Rockefeller Group, Inc. ("RGI"), and its
predecessors, from November 5, 1951, and Chairman of the Board of Directors of
RGI from March 21, 1982, in each case until October 2, 1995. RGI and a
subsidiary of RGI own the Borrower. Mr. Rockefeller was Chairman of the Board
and Chief Executive Officer of RCPI from July 19, 1985 until June 2, 1992 and a
director of RCPI until April 26, 1993. As permitted by the terms of the Merger
Agreement, Mr. Rockefeller intends, prior to the consummation of the Merger, to
assign his rights and obligations under the Merger Agreement to one of his
controlled affiliates.
EXOR. Exor is a corporation organized under the laws of Luxembourg. The
present principal business activity of Exor is to invest and hold participations
in selected industries through substantial direct or indirect equity
participations in companies that have a leading position in their respective
industries. For purposes of the Exchange Act, Exor is deemed to be controlled by
Istituto Finanziario Industriale S.p.A., a corporation organized under the laws
of Italy ("IFI"). The present principal business activity of IFI is as a holding
company providing financial and organizational assistance to the companies in
which it has a direct or indirect controlling interest. Such companies include
Exor and a wide variety of companies involved in diverse areas of business. For
purposes of the Exchange Act, IFI is deemed to be controlled by Giovanni Agnelli
e C. S.a.a., an Italian limited partnership represented by shares ("GA"). The
present principal business activity of GA is to ensure the cohesion and
continuity of the management of its controlling interest in IFI. For purposes of
the Exchange Act, GA is deemed to be controlled by its General Partners,
Giovanni Agnelli, Umberto Agnelli, Gianluigi Gabetti, Cesare Romiti, Gabriele
Galateri and Carlo Camerana.
TROUTLET. Troutlet is a British Virgin Islands corporation that is the
holding company for the investment in RCPI by Burtonwood Holdings, Ltd., a
British Virgin Islands corporation that is wholly owned by Stavros S. Niarchos.
As permitted by the terms of the Merger Agreement, Troutlet has designated each
of Gribble Investments (Tortola) BVI, Inc., a British Virgin Islands corporation
("Gribble"), and Weevil Investments (Tortola) BVI, Inc., a British Virgin
Islands corporation ("Weevil"), to fund a portion of Troutlet's funding
commitment under the Merger Agreement. All of the stock of Gribble is owned by
Bontebok Investments (Tortola) BVI, Inc., a British Virgin Islands corporation,
all of whose stock is owned by Philip S. Niarchos. All of the stock of Weevil is
owned by Bunting Investments (Tortola) BVI, Inc., a British Virgin Islands
corporation, all of whose stock is owned by Spyros S. Niarchos. Philip S.
Niarchos and Spyros S. Niarchos are adult children of Stavros S. Niarchos. See
"Special Factors -- Background of the Merger" and "The Merger -- Source and
Amount of Funds".
HOLDINGS
Holdings is a Delaware corporation recently organized by the Investors for
the purpose of effecting the Merger (as defined below). It has no material
assets and has not engaged in any activities except in connection with the
Merger. Immediately prior to the consummation of the Merger, Whitehall, Exor,
Gribble, Weevil, Troutlet, the affiliate of Mr. Rockefeller and Rockprop will
respectively
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own 50.0%, 20.5%, 8.0%, 8.0%, 4.5%, 4.5% and 4.5% of the issued and outstanding
shares of capital stock of Holdings. In exchange for their respective interests
in Holdings, each of the Investors will make a capital contribution having a
value proportionate to the interest received. Such capital contributions will
consist of cash and, in the case of Whitehall, its SARs and Warrants, which will
automatically be canceled and retired in the Merger with no consideration being
delivered in exchange therefor. See "The Parties -- Holdings".
THE MERGER
Upon the terms and subject to the conditions of the Merger Agreement,
Holdings will be merged with and into RCPI (the "Merger") and will cease to
exist. RCPI will be the surviving corporation in the Merger (the "Surviving
Corporation"), thus becoming wholly owned by the Investors and their designees.
If the Merger is consummated, each Share outstanding immediately prior to the
Merger, other than the Excluded Shares referred to below, will be canceled and
automatically converted into the right to receive $8.00 per Share net to the
holder in cash (the "Merger Consideration"), without interest. "Excluded Shares"
means (i) Shares held by RCPI or any of its subsidiaries as treasury shares, if
any, (ii) Shares held by Holdings or any of its subsidiaries, if any, and (iii)
Shares that are held by stockholders who have not voted in favor of the Merger
or consented thereto in writing and who have properly demanded in writing
appraisal of such Shares in accordance with Section 262 of the Delaware General
Corporation Law (the "DGCL"). See "The Merger -- The Merger Agreement -- General
Terms of the Merger".
EFFECTIVE TIME OF THE MERGER
As promptly as practicable after the approval of the Merger Agreement and
the satisfaction or waiver of the other conditions to consummation of the
Merger, the parties will file the Merger Agreement or a Certificate of Merger
with the Secretary of State of the State of Delaware. The Merger will become
effective at the time when such filing is made or at such later time as may be
specified in the Certificate of Merger (the "Effective Time").
EXCHANGE OF SHARES
As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to each record holder of a certificate that immediately prior to
the Effective Time represented outstanding Shares, other than Excluded Shares
(the "Certificates"), a form of letter of transmittal and instructions for use
in effecting the surrender of Certificates for payment therefor. STOCKHOLDERS
SHOULD NOT SURRENDER THEIR CERTIFICATES ALONG WITH THEIR PROXY CARDS FOR THE
SPECIAL MEETING. Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal, duly executed, and any other required
documents, and upon acceptance thereof by the Exchange Agent, the holder of such
Certificate will be entitled to receive in exchange therefor cash in an amount
equal to the product of the number of Shares represented by such Certificate
multiplied by $8.00 less any withholding taxes, and such Certificate will then
be canceled. No interest will be required to be paid or accrued on the cash
payable upon the surrender of the Certificate. See "The Merger -- The Merger
Agreement -- Exchange of Shares".
BACKGROUND OF THE MERGER
For a discussion of events leading to the execution of the Merger Agreement,
see "Special Factors -- Background of the Merger".
RECOMMENDATION OF THE BOARD; FAIRNESS OF THE MERGER
On November 7, 1995, the Board of Directors of RCPI (the "Board")
unanimously approved the Merger Agreement, determined that the Merger Agreement
is fair to and in the best interests of RCPI and its stockholders and
recommended that all stockholders of RCPI approve and adopt the Merger
Agreement. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
OF RCPI VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. The Board
determined that in light of the totality of the factors described in detail
under "Special Factors -- Fairness of the Merger", including the premium over
the unaffected market price represented by the $8.00 Merger Consideration, the
substantial risk that the consummation of other proposals might not occur or
might be significantly delayed and the substantial risks to RCPI and its
stockholders if RCPI were to file for bankruptcy protection, the Merger
Agreement is fair to and in the best interests of RCPI and its stockholders. The
Board recognized that
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the completion of the Merger would result in the former stockholders of RCPI no
longer being able to participate in any potential increase in the value of RCPI
or the Property. The Board entered into a separate rights offering agreement to
provide RCPI with a pre-negotiated means for RCPI to raise the funds it would
require to acquire the Property and service its obligations should the RCPI
stockholders not follow the Board's unanimous recommendation to approve the
Merger Agreement.
INTEREST OF CERTAIN PERSONS IN THE MERGER
DIRECTORS AND OFFICERS
In considering the recommendation of the Board with respect to the Merger,
stockholders should be aware that certain members of management and the Board at
the time of approval of the Merger Agreement had certain interests that may
present them with potential conflicts of interest in connection with the Merger.
Upon consummation of the Merger, the Company's executive officers and
directors will receive, in the aggregate, $87,456 ($8.00 for each of 10,932
Shares) in Merger Consideration.
Directors' and officers' indemnification and insurance policies will be in
effect for six years from the Effective Time with respect to matters occurring
before the Effective Time, provided that, in the case of insurance, such
insurance is available on commercially reasonable terms.
RCPI entered into employment agreements with Richard M. Scarlata, President
and Chief Executive Officer, Stephanie Leggett Young, Vice President and
Secretary, and Janet P. King, Vice President and Treasurer, on May 5, 1995 and
with Stevan A. Sandberg, Executive Vice President, on October 2, 1995. These
executive officers of RCPI, none of whom is a director of RCPI, will be entitled
to certain payments and benefits if the Merger is approved by the stockholders
of RCPI.
On November 28, 1995, the Board agreed to pay Dr. Peter D. Linneman,
Chairman of the Board of RCPI, a bonus of $200,000 upon consummation of the
Merger or a similar transaction that results in receipt by RCPI's stockholders
of consideration at least equal in value to the Merger Consideration, in
recognition of the substantial services he performed for RCPI in connection with
the transactions considered by the Board in 1995, including the Merger
Agreement.
Each of the indemnification, insurance, employment, severance and change of
control and bonus arrangements grants rights to the relevant directors and
officers of RCPI that are in addition to the rights they enjoy solely in their
capacity as stockholders. Therefore, such officers and directors have interests
in these arrangements that potentially conflict with those of RCPI and its other
stockholders. See "Special Factors -- Interest of Certain Persons in the
Merger".
AFFILIATES
As a result of their investment in RCPI through the Goldman Sachs Financing
(as defined below), GS Group and Whitehall may have interests that conflict with
those of the stockholders of RCPI. GS Group and Whitehall believe that, by
acquiring the entire equity interest in RCPI (with the other Investors) through
the Merger, they will be better able to protect such investment. In addition,
Whitehall and GS Group seek to acquire RCPI because they believe that they can
more effectively and efficiently manage the Property as a privately held
company. See "Special Factors -- Reasons for the Transaction". Daniel M.
Neidich, a general partner of GS Group, was a director of RCPI from December 29,
1994 until August 8, 1995. Mr. Neidich received directors' fees of $21,500 and
was the beneficiary of directors' and officers' indemnification and insurance
policies during such period.
OPINION OF PAINEWEBBER
On November 7, 1995, PaineWebber Incorporated ("PaineWebber") delivered its
oral opinion to the Board to the effect that, as of such date, the $8.00 per
Share in cash to be received by the holders of Shares pursuant to the Merger
Agreement was fair, from a financial point of view, to RCPI's stockholders.
PaineWebber has subsequently confirmed such opinion by delivery of its written
opinion dated as of the date of this Proxy Statement. See Annex C for the full
text of the written opinion of PaineWebber. PaineWebber's opinion is directed to
the Board and does not constitute a recommendation to any stockholder of RCPI as
to how such stockholder should vote with respect to the Merger. For
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a description of such written opinion, including the procedures followed, the
matters considered and the assumptions made by PaineWebber in arriving at its
opinion, see "Special Factors -- Background of the Merger" and "Special Factors
- -- Opinion of PaineWebber".
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, RCPI's current stockholders will receive $8.00 in
cash for each of the Shares they hold (other than Excluded Shares), which amount
will not be reduced by any expenses or liabilities incurred by RCPI. In
addition, as a result of the Merger, stockholders of RCPI will not have an
opportunity to continue their equity interest in RCPI as an ongoing concern and
therefore will not share in the future earnings and potential growth of RCPI or
the Property, if any. See "Special Factors -- Certain Effects of the Merger".
CONDITIONS TO THE MERGER
The Merger will occur only if the Merger Agreement is approved and adopted
at the Special Meeting by the affirmative vote of the holders of a majority of
the Shares, in accordance with Section 251 of the DGCL. The respective
obligations of Holdings and the Investors, on the one hand, and RCPI, on the
other, to consummate the transactions contemplated by the Merger Agreement are
subject to the satisfaction of certain conditions specified in the Merger
Agreement. In addition, the obligations of Holdings and the Investors to
consummate the transactions contemplated by the Merger Agreement are subject to
the satisfaction of certain conditions, including:
(i) the absence of any material adverse change since December 31, 1994
in the financial condition of RCPI or the financial or physical condition of
the Property, provided that changes in the financial condition of RCPI will
not be considered material to the extent the changes are attributable to (A)
the initiation of certain litigation (including enumerated pending,
threatened or potential litigation, certain other litigation that would not
have a material adverse effect on RCPI, and certain ordinary course
litigation arising after the execution of the Merger Agreement that will not
result in an uninsured material recovery), (B) any acceleration or attempted
acceleration of indebtedness of RCPI (or any attempt to exercise any rights
consequent thereto) as a result of any of the transactions contemplated by
the Merger Agreement or (C) any event or condition the occurrence of which
is reasonably foreseeable based on the disclosures made in RCPI's Annual
Report on Form 10-K for the year ended December 31, 1994 or its quarterly
reports on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995
(other than filing for relief under the Bankruptcy Code by RCPI, unless such
filing is made with the consent of Holdings);
(ii) the absence of any outstanding debt or other liabilities of RCPI or
its subsidiaries other than (A) debt and other liabilities specified on
Schedule B to the Merger Agreement in an aggregate amount up to $835.16
million, together with any accrued but unpaid interest thereon accruing
after December 31, 1995, (B) up to $14.5 million borrowed from Goldman Sachs
Mortgage Company ("GSMC") after December 31, 1995 to pay certain permitted
expenses, (C) certain litigation (including enumerated pending, threatened
or potential litigation, certain other litigation that would not have a
material adverse effect on RCPI and its subsidiaries, and certain ordinary
course litigation arising after the execution of the Merger Agreement that
will not result in an uninsured material recovery), and (D) other DE MINIMIS
liabilities;
(iii) Holdings's reasonable satisfaction with the form and substance of
the Chapter 11 Plan referred to below, which shall provide (A) for the
transfer of the Property (and related real and personal property (including
leasehold interests) owned by the Borrower) to RCPI following the Merger or
its designee and (B) that the maximum amount to be provided or assumed by
RCPI to be used to fund liabilities of the Borrower or its estate shall not
exceed (1) $20 million (exclusive of permitted debtor-in-possession
financing) of liabilities of the types specified in the Merger Agreement and
(2) all unpaid allowed ordinary course administrative operating expense
claims of the types specified in the Chapter 11 Plan, subject to the right
to object to such claims as provided for under the Chapter 11 Plan;
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(iv) the absence of (A) certain violations of law relating to the
Property, (B) structural defects in the Property that would require the
expenditure of more than $25 million to cure, repair or replace, (C) except
for certain permitted liens, defects of title to the Property and (D)
violations by the Borrower under the Mortgage Note (other than defaults in
the payment of principal or interest thereunder) that would have a material
adverse effect on the physical or financial condition of the Property;
(v) the absence of certain environmental conditions relating to the
Property, the compliance with all applicable environmental laws and the
receipt of all required environmental permits and compliance therewith;
(vi) Holdings and each Investor being reasonably satisfied that,
immediately after the Effective Time, the Property (and related real and
personal property (including leasehold interests) owned by the Borrower)
will be conveyed to RCPI following the Merger or its designee pursuant to
the Chapter 11 Plan referred to below; and
(vii) the satisfaction of the conditions to the occurrence of the
effective date of the Chapter 11 Plan.
See "The Merger -- The Merger Agreement -- Conditions to the Merger".
GSMC LOANS
Pursuant to the Merger Agreement, GSMC has agreed to supplement the Loan
Agreement dated as of December 18, 1994 (the "GSMC Loan Agreement") among RCPI,
the lenders party thereto and GSMC, as agent and lender, to permit RCPI to
borrow additional amounts of up to $47.5 million to pay certain permitted
expenses. By January 31, 1996, RCPI had borrowed $39 million of such amounts.
Such loans bear interest at an annual rate of 10% (compounded quarterly), will
mature on December 31, 2000 and have such other terms as are described under
"The Merger -- The Merger Agreement -- GSMC Loans". The interest rate and all
other terms for the amounts lent pursuant to the supplement to the GSMC Loan
Agreement will revert to the same terms provided for under the original GSMC
Loan Agreement if such amounts have not been repaid by the earlier of April 30,
1996 and the termination of the Merger Agreement in certain circumstances.
BORROWER'S CHAPTER 11 CASE
On May 11, 1995 (the "Petition Date"), RCP and RCPA filed voluntary
petitions under Chapter 11 of the Bankruptcy Code (collectively, the "Chapter 11
Case"). On September 12, 1995, in a proceeding held in the Bankruptcy Court, the
Borrower stated that it was willing to work with RCPI toward a reorganization
plan under Chapter 11 (the "Chapter 11 Plan") that would provide for RCPI to
take title to the Property. Thereafter, RCPI began negotiations with the
Borrower to develop the Chapter 11 Plan. Since November 7, 1995, the date on
which the Merger Agreement was executed, the Investors have also been
negotiating directly with the Borrower and RGI, the owner of a 100% interest in
the Borrower.
An amended Chapter 11 Plan and an amended disclosure statement were filed by
the Borrower and RGI on December 12, 1995. The Chapter 11 Plan and disclosure
statement may be amended in the future to take into account the results of
negotiations between the Investors, RCPI, RGI and the Borrower after December
12, 1995 relating to the Chapter 11 Plan and the transfer of ownership of the
Property. In addition, the Bankruptcy Court, after several postponements, has
fixed February , 1996 as the date for a hearing to consider the adequacy of
the disclosure statement. It is anticipated that the Chapter 11 Plan will be
confirmed by the end of March 1996, which will permit consummation of the Merger
Agreement. See "Special Factors -- Borrower's Chapter 11 Case".
ACCOUNTING TREATMENT
The Merger will be accounted for using the purchase method of accounting for
business combinations; accordingly, the purchase price will be allocated to
RCPI's underlying net assets in proportion to their respective fair values.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of cash by the holders of Shares pursuant to the Merger will be
a taxable transaction for federal income tax purposes and generally will also be
a taxable transaction under applicable state, local, foreign or other tax laws.
All stockholders should consult their own tax advisors as to the particular tax
consequences of the Merger to them, including the applicability and effect of
the alternative minimum tax and of any state, local and foreign laws. See
"Certain United States Federal Income Tax Consequences of the Merger".
TERMINATION; FEES AND EXPENSES
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of RCPI, under certain circumstances described in
this Proxy Statement. See "The Merger -- The Merger Agreement -- Termination;
Fees and Expenses".
The Merger Agreement generally provides that RCPI will pay Holdings $6.5
million (including any amounts paid Holdings described in the following
sentence) if the Merger Agreement is terminated due to certain events described
in this Proxy Statement and RCPI consummates an Alternate Transaction (as
defined in the Merger Agreement) within 30 months after the date on which the
Merger Agreement is terminated. In any event, RCPI will pay to Holdings $2.925
million if the Merger Agreement is terminated due to the RCPI stockholders'
failure to approve and adopt the Merger Agreement. See "The Merger -- The Merger
Agreement -- Termination; Fees and Expenses".
If the Merger Agreement is terminated for any reason (other than as a result
of a material breach of any representation, warranty, covenant or agreement on
the part of Holdings, GSMC or any Investor), RCPI will reimburse Holdings for
expenses of up to $2.5 million incurred by Holdings and the Investors in
connection with the preparation, execution and performance of the Merger
Agreement and the transactions contemplated thereby, including fees and expenses
of counsel. See "The Merger -- The Merger Agreement -- Termination; Fees and
Expenses".
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Holdings to acquire the Shares
pursuant to the Merger is estimated to be $306.09 million. Of such amount,
Whitehall, Rockprop, Mr. Rockefeller, Exor and Troutlet have committed to fund
$134.03 million, $15.64 million, $15.64 million, $70.39 million and $70.39
million, respectively. As permitted by the Merger Agreement, Mr. Rockefeller
intends, prior to the consummation of the Merger, to assign his rights and
obligations under the Merger Agreement to one of his controlled affiliates.
Additionally, as permitted by the Merger Agreement, Troutlet has designated each
of Gribble and Weevil to contribute $27.37 million of the $70.39 million that
Troutlet has committed to contribute. The funds to be used by Whitehall to meet
its funding commitments are expected to come from capital contributions from the
partners in Whitehall. The funds to be used by Rockprop to meet its funding
commitments are expected to come from capital contributions or loans from the
members of Rockprop. The funds to be used by the affiliate of Mr. Rockefeller to
meet its funding commitments are expected to come from capital contributions of
its equity holders. The funds to be used by Troutlet to meet its funding
commitments are expected to come from capital contributions by its stockholders
and from Gribble and Weevil. The funds to be used by Gribble and Weevil are
expected to come from capital contributions by their respective stockholders.
The funds to be used by Exor to meet its funding commitments are expected to
come from currently available working capital of Exor. While the Investors have
not yet received the capital contributions to be raised from their respective
equity holders, each of the Investors has represented in the Merger Agreement
that, as of November 7, 1995 it had, and as of the Effective Time it will have,
funds available to satisfy its funding commitments. In addition, the Investors'
obligations under the Merger Agreement are not subject to the Investors'
obtaining financing.
RIGHTS OF DISSENTING STOCKHOLDERS
STOCKHOLDERS ARE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER
UNDER SECTION 262 OF THE DGCL. IN ORDER TO EXERCISE APPRAISAL RIGHTS PURSUANT TO
SECTION 262 OF THE DGCL, STOCKHOLDERS MUST COMPLY WITH ALL THE
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PROCEDURAL REQUIREMENTS OF SUCH SECTION. FAILURE TO SATISFY ANY OF THE
REQUIREMENTS UNDER SECTION 262 OF THE DGCL MAY RESULT IN TERMINATION OR WAIVER
OF SUCH RIGHTS. STOCKHOLDERS INTENDING TO EXERCISE SUCH RIGHTS ARE ADVISED TO
ACT IMMEDIATELY.
Under Section 262 of the DGCL, absent an agreement between RCPI and its
stockholders as to "fair value", such "fair value" will be determined in
judicial proceedings, the result of which cannot be predicted. Section 262 of
the DGCL is set forth in full in Annex D hereto. See "Rights of Dissenting
Stockholders".
A stockholder who signs and returns a proxy without expressly directing by
checking the applicable boxes on the reverse side of the proxy card enclosed
herewith that his or her Shares be voted against the adoption and approval of
the Merger Agreement or that an abstention be registered with respect to his or
her Shares in connection with the adoption and approval of the Merger Agreement
will have thereby effectively waived his or her appraisal rights because, in the
absence of express contrary instructions, such Shares will be voted in favor of
adoption and approval of the Merger Agreement.
RIGHTS OFFERING AGREEMENT
At the time of the execution of the Merger Agreement, RCPI entered into an
agreement (the "Rights Offering Agreement") with Goldman Sachs and Whitehall
setting forth the agreement of the parties with respect to the matters discussed
below.
The Rights Offering Agreement provides that, in the event the stockholders
of RCPI fail to approve the Merger Agreement at the Special Meeting, RCPI will
have the right, within 30 days after the Special Meeting, to conduct a $200
million publicly registered rights offering (the "Rights Offering") at a price
set by the Board, but in no event less than $6.00 per Share. The rights offered
in the Rights Offering would be freely transferable and participants in the
Rights Offering would be offered the right to oversubscribe. In addition, the
parties have agreed that appropriate measures would be taken to ensure, to the
extent practicable, compliance with the provision in RCPI's Restated Certificate
of Incorporation that voids any transfer of shares of Common Stock (and other
securities convertible into such shares) to any person if such transfer would
cause such person to beneficially own more than 9.8% of the outstanding shares
of Common Stock (the "Limit"). Any election by RCPI to proceed with the Rights
Offering would not require prior approval of the RCPI stockholders. The Rights
Offering Agreement also provides that Goldman Sachs would have the opportunity,
but not the obligation, to underwrite and lead manage the Rights Offering on
customary terms and that PaineWebber would have the opportunity, but not the
obligation, to co-underwrite up to 50% of the Rights Offering on the same terms
(proportionate to its participation). The Rights Offering Agreement also
provides that, in conjunction with the Rights Offering, the Board would be
reconstituted (without a stockholder vote) to include two of the current
directors, one director designated by Goldman Sachs pursuant to a December 1994
agreement with RCPI, Mr. Speyer and an independent director selected by
Whitehall from a list of three potential directors nominated by the current
directors.
The Rights Offering Agreement also provides that, if the Rights Offering
were consummated, the holders of the Warrants and the SARs would be entitled to
additional Warrants and SARs in order to maintain their 19.9% fully diluted
equity ownership position in RCPI and Whitehall would receive additional
three-year rights to purchase Common Stock, exercisable at the rights offering
price plus $1.00 for two years and at the rights offering price plus $1.50 for
the third year. Assuming the Rights Offering were fully subscribed, the rights
offering price were $6.00 per Share and no additional shares of Common Stock (or
rights to purchase Common Stock) were issued by RCPI, the holders of the
Warrants, SARs and additional rights would be entitled, upon full exercise
thereof, to 24.9% of the equity of RCPI. However, as a result of the Limit, the
Whitehall Group would not be able to hold Warrants, additional rights and Shares
equalling more than 9.8% of the outstanding Shares at any time; therefore, any
other equity-related holdings by the Whitehall Group would have to be in the
form of SARs (whose conversion into Warrants is subject to compliance with the
Limit) or some other
9
<PAGE>
form of security that would give the Whitehall Group the economic equivalent of
a Share but would not give the Whitehall Group the right generally to vote. In
the Rights Offering Agreement, the parties have also agreed that the proceeds of
the Rights Offering would be used to redeem the floating rate notes due 2000
issued to GSMC under the GSMC Loan Agreement; in addition, if the Rights
Offering was consummated and all of the Shares offered were subscribed for, the
covenants governing the 14% Debentures due 2007 issued to Whitehall would be
amended to allow RCPI to, among other things, issue an additional amount of
senior debt and unsecured debt, relax the limitation on incurring debt to
acquire assets, eliminate the limitations on transactions with affiliates,
permit RCPI to enter into a credit lease financing arrangement relating to a
lease from, or guaranteed by, General Electric Company, and eliminate the
restrictions on RCPI incurring operating lease obligations. The parties have
also agreed that, in connection with the Rights Offering, certain changes would
be made in the terms of the Warrants and SARs, including the elimination of the
existing requirement for consent of the holders thereof to issuances of Common
Stock for cash or property at a price less than the "fair market value of the
Common Stock". Pursuant to the Rights Offering Agreement, the parties have
agreed that Tishman Speyer would become the property manager if the Rights
Offering is fully subscribed. See "The Merger -- The Rights Offering Agreement
- -- Debt Restructuring" and "The Merger -- The Rights Offering Agreement --
Changes in the Warrants and SARs".
The purpose of the Rights Offering Agreement is to provide RCPI with a
potential pre-negotiated means to raise the funds it would require to be able to
acquire the Property and service its obligations in the event the RCPI
stockholders do not follow the unanimous recommendation of the Board that they
approve the Merger Agreement. The Board recognized that consummation of any
transaction that might be considered if the Merger Agreement were not approved
by RCPI's stockholders might require either the Whitehall Group's consent,
potentially protracted litigation or the commencement of a Chapter 11 case by
RCPI. No decision has been made by the Board as to whether this option will be
exercised if the RCPI stockholders do not approve the Merger Agreement; such a
decision would be made in the light of the circumstances obtaining at the time
of any failure to approve the Merger Agreement, including any alternatives that
may then be available to RCPI. The Board believes that, if RCPI's stockholders
do not approve the Merger Agreement, RCPI could be subject to substantial
uncertainties. RCPI expects that, in absence of additional financing, its cash
resources will be largely exhausted by the end of April 1996. There can be no
assurance as to the availability to RCPI of any alternatives to proceeding with
the Rights Offering and there can be no assurance that, if the Board elects to
proceed with the Rights Offering, Goldman Sachs or PaineWebber will agree to
underwrite the Rights Offering or that the Rights Offering can be successfully
concluded. RCPI stockholder approval of the Merger Agreement is, in any event, a
condition to the effectiveness of the proposed Chapter 11 Plan and, accordingly,
in the event of a rejection of the Merger Agreement, a new Chapter 11 Plan will
have to be negotiated. While the Rights Offering is designed to produce proceeds
to RCPI of $200 million (before expenses), most of these proceeds would be used
to retire the Floating Rate Notes. Thus, the Board believes that, even if the
Rights Offering were successful, RCPI would require additional funds in order to
demonstrate in the Chapter 11 Case that RCPI could successfully operate the
Property. While the Whitehall Group agreed in the Rights Offering Agreement to
make certain changes in the terms of the 14% Debentures to facilitate additional
borrowings by RCPI, there can be no assurance that RCPI could obtain the
required additional financing on terms satisfactory to it, if at all.
MARKET PRICES AND DIVIDENDS ON RCPI COMMON STOCK
The Common Stock is listed on the NYSE under the symbol "RCP". As of the
close of business on February 8, 1996, there were 38,260,704 Shares outstanding,
held of record by 9,867 holders. The
10
<PAGE>
following table sets forth the high and low per-share sales prices of Common
Stock as reported on the NYSE Composite Tape for the periods indicated and the
cash dividends per Share declared by RCPI for each of such periods.
<TABLE>
<CAPTION>
SALES PRICES
-------------------- DIVIDENDS
HIGH LOW DECLARED
--------- --------- -----------
<S> <C> <C> <C>
1993:
1st Quarter.......................................................................... $ 10 1/8 $ 6 7/8 $ .25
2nd Quarter.......................................................................... 8 3/4 6 3/4 .25
3rd Quarter.......................................................................... 7 1/2 6 7/8 .25
4th Quarter.......................................................................... 7 1/4 6 1/2 .25
1994:
1st Quarter.......................................................................... 8 3/8 5 1/2 .175
2nd Quarter.......................................................................... 5 7/8 5 1/8 .175
3rd Quarter.......................................................................... 6 5 1/8 .15
4th Quarter.......................................................................... 5 3/4 3 3/4 .15
1995:
1st Quarter.......................................................................... 6 7/8 5 .15
2nd Quarter.......................................................................... 6 5/8 4 1/8 .00
3rd Quarter.......................................................................... 8 1/8 4 5/8 .00
4th Quarter.......................................................................... 8 3/8 7 1/8 .00
1996:
1st Quarter (through February 9, 1996)............................................... 7 7/8 7 1/2 .00
</TABLE>
On August 1, 1995, the last trading day prior to the publication of a
newspaper article stating that The Walt Disney Company and an unnamed investment
partner were bidding against several other companies for the Property, the
closing sale price per Share on the NYSE Composite Tape was $5 1/4. On November
6, 1995, the last trading day prior to the date the execution of the Merger
Agreement was announced, the closing sale price per Share on the NYSE Composite
Tape was $7 1/2. On February 9, 1996, the last trading day prior to the printing
of this Proxy Statement for which quotations were available, the closing price
per Share on the NYSE Composite Tape was $ . STOCKHOLDERS ARE URGED TO OBTAIN
A CURRENT MARKET QUOTATION FOR THEIR SHARES.
In order to maintain its qualification as a REIT under the Internal Revenue
Code, RCPI is obligated to distribute to its stockholders at least 95% of its
annual taxable income. Historically, RCPI has distributed to its stockholders
substantially all of its annual cash flow in excess of interest and operating
expenses, reserves and investments. On June 6, 1995, RCPI announced that it
would suspend its quarterly dividend of $.15 per Share for the quarter ended
June 30, 1995, primarily because of the interruption in payments on the Mortgage
Note and uncertainties resulting from the Borrower's Chapter 11 Case. RCPI has
not paid any dividend since the first quarter of 1995 and does not anticipate
that it will pay any dividends on the Common Stock during the next year and, in
any event, until the later of the termination of the Merger Agreement and the
completion of the Borrower's bankruptcy case. In addition, the Merger Agreement
prohibits RCPI from paying dividends on the Common Stock unless and to the
extent required to meet qualification rules for a REIT under the Internal
Revenue Code. See "Market Prices and Dividends on RCPI Common Stock".
11
<PAGE>
SUMMARY FINANCIAL DATA OF RCPI
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------
1990 1991 1992 1993 1994 1994
---------- ---------- ---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Revenues (1)............................ $ 123,513 $ 123,182 $ 122,414 $ 113,560 $ 109,285 $ 81,949
---------- ---------- ---------- ---------- ---------- -------------
Interest expense........................ 82,024 80,784 80,799 78,343 77,501 61,301
General and administrative.............. 2,990 3,349 4,299 3,728 4,170 3,611
Amortization of deferred debt issuance
and letter of intent costs (2)......... 800 760 705 705 705 529
Cost of evaluating alternative
financings............................. -- -- -- -- 1,942 --
Stock appreciation rights liability
(3).................................... -- -- -- -- -- --
Effects of the execution and delivery of
the Merger Agreement (2)............... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- -------------
85,814 84,893 85,803 82,776 84,318 65,441
Income (loss) before non-recurring
income and extraordinary item.......... 37,699 38,289 36,611 30,784 24,967 16,508
---------- ---------- ---------- ---------- ---------- -------------
Non-recurring income (gain on sales of
portfolio securities).................. -- -- -- 8,593 31 31
---------- ---------- ---------- ---------- ---------- -------------
Extraordinary (loss) gain on debt
extinguishment......................... (360) 38 2,537 (3,451) (9,855) --
---------- ---------- ---------- ---------- ---------- -------------
Net income (loss)....................... $ 37,339 $ 38,327 $ 39,148 $ 35,926 $ 15,143 $ 16,539
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Income (loss) per share before
extraordinary item..................... $ 1.01 $ 1.02 $ 0.97 $ 1.05 $ 0.66 $ 0.43
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Net income (loss) per share............. $ 1.00 $ 1.02 $ 1.04 $ 0.96 $ 0.40 $ 0.43
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets (1)(2)..................... $1,460,617 $1,450,103 $1,432,210 $1,317,509 $1,319,995 $1,324,343
Total debt.............................. 859,462 876,959 879,284 756,936 760,394 740,194
Total liabilities....................... 880,831 904,009 910,360 792,344 802,528 801,769
Total stockholders' equity.............. 579,786 546,094 521,850 525,165 517,467 522,574
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges
(4).................................... 1.46X 1.47X 1.45X 1.50X 1.32X 1.27X
Net cash provided by (used in) operating
activities............................. $ 56,356 $ 57,909 $ 62,735 $ 58,231 $ 57,198 $ 38,359
Net cash provided by investing
activities............................. 23,162 17,200 23,560 126,668 14,331 14,331
Dividends paid.......................... 70,894 72,019 63,392 37,697 24,869 19,130(5)
Dividends paid per share................ 1.89 1.92 1.69 1.00 0.65 .50(5)
Portion of dividends representing a
return of capital (6).................. 46.7% 46.8% 38.2% 7.4% 39.4%
Book value per share.................... $ 15.46 $ 14.56 $ 13.91 $ 13.73 $ 13.52 $ 13.65
Repurchase of convertible debentures
(7).................................... 23,845 10,000 30,410 -- -- --
<CAPTION>
1995
-------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues (1)............................ $ 21,342
-------------
Interest expense........................ 64,275
General and administrative.............. 6,112
Amortization of deferred debt issuance
and letter of intent costs (2)......... 8,116
Cost of evaluating alternative
financings............................. --
Stock appreciation rights liability
(3).................................... 10,050
Effects of the execution and delivery of
the Merger Agreement (2)............... 99,163
-------------
187,716
Income (loss) before non-recurring
income and extraordinary item.......... (166,374)
-------------
Non-recurring income (gain on sales of
portfolio securities).................. --
-------------
Extraordinary (loss) gain on debt
extinguishment......................... --
-------------
Net income (loss)....................... $ (166,374)
-------------
-------------
Income (loss) per share before
extraordinary item..................... $ (4.35)
-------------
-------------
Net income (loss) per share............. $ (4.35)
-------------
-------------
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets (1)(2)..................... $ 1,206,347
Total debt.............................. 761,820
Total liabilities....................... 860,993
Total stockholders' equity.............. 345,354
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges
(4).................................... --
Net cash provided by (used in) operating
activities............................. $ (2,387)
Net cash provided by investing
activities............................. 50,000
Dividends paid.......................... 5,739
Dividends paid per share................ .15
Portion of dividends representing a
return of capital (6)..................
Book value per share.................... $ 9.03
Repurchase of convertible debentures
(7).................................... --
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
12
<PAGE>
- ------------------------
(1) On May 11, 1995, the Borrower filed for protection under Chapter 11 of the
Bankruptcy Code. RCPI's only significant source of income is interest
received on the Mortgage Note from the Borrower.
Due to the significant uncertainties created by the Borrower's Chapter 11
Case, RCPI has limited recognition of income on the Mortgage Note for the
nine months ended September 30, 1995 to the cash actually received from the
Borrower during this period. In the second quarter of 1995, RCPI drew down
$50 million under letters of credit supporting the Borrower's obligations
under the Mortgage Note and reduced the carrying value of the Mortgage Note
to $1,250,000,000.
(2) RCPI has reflected at September 30, 1995 a valuation reserve, totaling
$74,000,000, to reduce the carrying value of its Mortgage Note to reflect
the economics of the transactions contemplated by the Merger Agreement. In
addition, RCPI has recorded certain deal expenses and transaction costs
aggregating $25,200,000, as well as recognizing as expense certain deferred
debt issuance and letter of intent costs totaling $4,400,000.
(3) Due to the increase in the market price of RCPI's stock during the nine
months ended September 30, 1995, RCPI was required to increase its liability
for the SARs issued in December 1994 and record a current noncash charge to
earnings of $10,050,000 in the first nine months of 1995.
(4) For the nine months ended September 30, 1995, earnings were inadequate to
cover fixed charges by $166,374,000 due to RCPI's net loss for this period.
The loss was due primarily to the Borrower's failure to pay interest on the
Mortgage Note after commencement of the Borrower's Chapter 11 Case (see (1)
above).
(5) Amount includes dividends of $5,739,000 declared during the third quarter of
1994 but paid during the fourth quarter of 1994. Due to the significant
uncertainties created by the Borrower's Chapter 11 Case, the Board has not
declared a dividend since the first quarter of 1995. Moreover, since
November 7, 1995, the Merger Agreement has prohibited the payment of
dividends on the Common Stock unless and to the extent required to meet
qualification rules for a REIT under the Internal Revenue Code.
(6) The portion of dividends representing a return of capital has not been
calculated for interim periods.
(7) As of September 30, 1995, the aggregate face value of the Current Coupon
Convertible Debentures and Zero Coupon Convertible Debentures repurchased
since 1987 was $487,895,000.
13
<PAGE>
SUMMARY FINANCIAL DATA OF THE PROPERTY
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
SEPTEMBER
YEARS ENDED DECEMBER 31, 30,
---------------------------------------------------------- ----------
1990 1991 1992 1993 1994 1994
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
GROSS REVENUE:
Fixed and percentage rents.................... $ 150,328 $ 152,289 $ 150,197 $ 148,960 $ 156,314 $ 114,207
Operating and real estate tax escalation...... 51,926 57,224 57,029 55,643 42,201 36,724
Consideration revenues........................ 3,630 984 3,295 3,227 3,443 3,157
Sales and service revenues.................... 19,932 19,700 18,479 18,767 18,893 14,625
---------- ---------- ---------- ---------- ---------- ----------
225,816 230,197 229,000 226,597 220,851 168,713
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Real estate taxes............................. 37,922 42,725 44,481 44,336 40,884 30,953
Real estate tax refund........................ -- -- -- -- -- --
Utilities..................................... 15,288 16,092 16,360 16,553 16,386 12,842
Maintenance and engineering................... 28,907 30,037 30,509 33,657 32,062 24,112
Other operating expenses...................... 40,677 40,927 40,792 40,639 39,839 30,070
Depreciation and amortization................. 14,008 17,137 19,834 21,821 25,761 17,615
Management fee................................ 2,267 2,402 2,491 2,579 2,636 1,971
General and administrative.................... 4,715 4,285 6,231 5,871 4,322 3,228
---------- ---------- ---------- ---------- ---------- ----------
143,784 153,605 160,698 165,456 161,890 120,791
---------- ---------- ---------- ---------- ---------- ----------
Earnings before interest and reorganization
items........................................ 82,032 76,592 68,302 61,141 58,961 47,922
Interest expense, net (1)..................... 113,835 114,481 114,040 114,599 117,328 87,327
Earnings (loss) before reorganization items... (31,803) (37,889) (45,738) (53,458) (58,367) (39,405)
---------- ---------- ---------- ---------- ---------- ----------
REORGANIZATION ITEMS:
Professional fees and expenses................ -- -- -- -- -- --
Interest income............................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income............................. $ (31,803) $ (37,889) $ (45,738) $ (53,458) $ (58,367) $ (39,405)
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.................................. $ 702,808 $ 737,527 $ 747,220 $ 774,030 $ 878,320 $ 840,620
Liabilities not subject to compromise (1)..... 1,390,597 1,463,205 1,518,636 1,598,904 1,761,561 1,704,899
Liabilities subject to compromise (1)......... -- -- -- -- -- --
Partners' capital deficiency.................. (687,789) (725,678) (771,416) (824,874) (883,241) (864,279)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges (2)........ .72X .67X .60X .53X .50X .55X
Net cash provided by (used in) operating
activities................................... $ 9,167 $ (8,486) $ (18,316) $ (17,723) $ (41,672) $ (17,581)
Net cash used by investing activities......... (48,719) (47,214) (31,275) (43,675) (63,160) (31,273)
Net cash provided by financing activities..... 39,552 55,701 49,591 61,395 104,831 48,853
<CAPTION>
1995 (1)
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
GROSS REVENUE:
Fixed and percentage rents.................... $ 132,073
Operating and real estate tax escalation...... 11,509
Consideration revenues........................ 948
Sales and service revenues.................... 12,997
-----------
157,527
-----------
OPERATING EXPENSES:
Real estate taxes............................. 25,703
Real estate tax refund........................ (7,388)
Utilities..................................... 13,207
Maintenance and engineering................... 23,096
Other operating expenses...................... 29,212
Depreciation and amortization................. 20,559
Management fee................................ 2,036
General and administrative.................... 3,708
-----------
110,133
-----------
Earnings before interest and reorganization
items........................................ 47,394
Interest expense, net (1)..................... 45,038
Earnings (loss) before reorganization items... 2,356
-----------
REORGANIZATION ITEMS:
Professional fees and expenses................ 547
Interest income............................... (274)
-----------
Net (loss) income............................. $ 2,083
-----------
-----------
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.................................. $ 969,135
Liabilities not subject to compromise (1)..... 9,132
Liabilities subject to compromise (1)......... 1,841,161
Partners' capital deficiency.................. (881,158)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges (2)........ --
Net cash provided by (used in) operating
activities................................... $ 13,698
Net cash used by investing activities......... (49,591)
Net cash provided by financing activities..... 55,664
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
14
<PAGE>
- ------------------------
(1) On May 11, 1995, the partnerships that comprise the Borrower filed for
protection under Chapter 11 of the Bankruptcy Code and discontinued accrual
and payment of interest on the Mortgage Note. The separate Chapter 11 cases
of RCP and RCPA have been assigned case numbers 95 B 42089 and 95 B 42088
(PBA), respectively, have been consolidated for procedural purposes and are
being jointly administered pursuant to an order of the Bankruptcy Court. A
statutory unsecured creditors' committee has been appointed for RCP. In the
second quarter of 1995, RCPI drew down $50 million under letters of credit
supporting the Borrower's obligations under the Mortgage Note. These
payments were accounted for by the Borrower as reductions in the principal
amount of the Mortgage Note.
Subsequent to the Petition Date, the Borrower has continued in possession of
its properties and is operating and managing its business as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy
Code. The Borrower has sought and obtained orders from the Bankruptcy Court
intended to continue to allow the Borrower to maintain operations and obtain
new business and otherwise minimize the disruption caused by the Chapter 11
Case, including orders: (i) authorizing the Borrower to pay certain
prepetition liabilities, wages and other employee obligations and (ii)
approving the use of cash collateral.
On September 12, 1995, the Borrower reported to the Bankruptcy Court that it
intended to transfer the Property to the mortgage holder, RCPI. The date of
transfer is uncertain at this time.
On October 30, 1995, the Bankruptcy Court approved an $80 million
Debtor-in-Possession Revolving Credit Agreement (the "Facility"), which may
be used to fund tenant improvements, leasing commissions, required capital
expenditures and other permitted working capital needs of the Borrower. The
Facility is secured by a first mortgage on the Property, which is senior to
the mortgages securing the Mortgage Note. The Facility matures on the
earlier of December 31, 1996 and the substantial consummation of a plan of
reorganization for the Borrower.
For financial reporting purposes, the Borrower has applied the provisions of
the American Institute of Certified Public Accountants' Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"), in preparing the unaudited combined financial
statements as of and for the period from May 11, 1995 through September 30,
1995. In accordance with SOP 90-7, those liabilities and obligations whose
disposition is dependent upon the outcome of the Chapter 11 Case have been
segregated and classified as "Liabilities Subject to Compromise" in the
unaudited combined balance sheet at September 30, 1995.
In the opinion of the Borrower, the unaudited combined financial statements
for the current reporting period include all operating adjustments, which
comprise the normal accruals (exclusive of certain effects of bankruptcy)
required to reflect the operations of the Borrower in the ordinary course,
necessary for a fair presentation of the results for the period.
The Bankruptcy Court set September 13, 1995 as the last day for filing
proofs of claim for pre-petition claims. With certain exceptions, creditors
have been barred from filing pre-petition claims subsequent to that date.
The Borrower has received claims involving aggregate amounts substantially
in excess of those recorded at the Petition Date. The Borrower is
reconciling these claims to its records and does not expect that the
resolution of these matters will result in liabilities materially in excess
of those recorded at May 11, 1995.
The financial statements, from which the summary data were derived, have
been prepared on a going concern basis and reflect the combined historical
cost basis of the Borrower in its assets and liabilities. The transfer of
the Property to RCPI is subject to the approval of the Bankruptcy Court. The
transfer of the Property and related release of the Mortgage Note and
cancelation of indebtedness of the Borrower to RCPI and to RGI and its
affiliates, if consummated, will result in substantial noncash gains to the
Borrower. Further, upon consummation of these transactions, either the
Borrower will cease its business activities or control of the Borrower will
vest with
15
<PAGE>
parties other than RGI. The Borrower's financial statements do not include
any adjustments that would be required to reflect the transfer of the
Property to RCPI, the release or cancelation of indebtedness, the wind-down
of the affairs of the Borrower or any change in control that may occur with
respect to the Borrower. In the event that a Chapter 11 Plan is not
consummated and, as a result, the Property is foreclosed upon, other
adjustments would be required. All such adjustments could be material.
Certain items in the 1994 combined financial statements have been
reclassified in the 1995 combined financial statements in accordance with
SOP 90-7.
(2) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income plus fixed charges. Fixed charges consist of
interest expense and amortization of debt issuance cost and mortgage
recording tax cost. Except for the nine months ended September 30, 1995,
earnings were inadequate to cover fixed charges by $31,803,000, $37,889,000,
$45,738,000, $53,458,000, $58,367,000 and $39,405,000 for the years ended
December 31, 1990, 1991, 1992, 1993 and 1994 and for the nine months ended
September 30, 1994, respectively. The inadequacy of coverage is due to high
interest expense and operating losses generated by the Property. Due to the
Borrower's Chapter 11 Case, the Borrower ceased on May 11, 1995 accruing and
paying interest on the Mortgage Note, and thus its ratio of earnings to
fixed charges for the nine months ended September 30, 1995 is not
meaningful.
16
<PAGE>
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the holders of outstanding shares
(the "Shares"), par value $0.01 per share, of common stock (the "Common Stock")
of Rockefeller Center Properties, Inc., a Delaware corporation ("RCPI"), in
connection with the solicitation of proxies by the Board of Directors of RCPI
(the "Board") from the holders of Shares for use at a Special Meeting to be held
on March 25, 1996 at 9:30 a.m., Eastern Standard Time, in the Auditorium at The
Equitable Center, 787 Seventh Avenue in New York City (including any
adjournments or postponements thereof, the "Special Meeting").
THE SPECIAL MEETING
At the Special Meeting, holders of Shares will be asked to consider and vote
upon a proposal to approve and adopt the Agreement and Plan of Merger dated as
of November 7, 1995 (as amended on February , 1996 and as it may be further
amended from time to time, the "Merger Agreement") among RCPI, Whitehall Street
Real Estate Limited Partnership V ("Whitehall"), Rockprop, L.L.C. ("Rockprop"),
David Rockefeller, Exor Group S.A. ("Exor"), Troutlet Investments Corporation
("Troutlet" and, together with Whitehall, Rockprop, Mr. Rockefeller and Exor,
the "Investors"), RCPI Holdings Inc. ("Holdings") and RCPI Merger Inc. RCPI's
stockholders will also consider any other business that may properly come before
the Special Meeting.
To effect the transactions contemplated by the Merger Agreement, the
Investors have organized Holdings and own all of its outstanding capital stock.
Upon the terms and subject to the conditions of the Merger Agreement, Holdings
will be merged with and into RCPI (the "Merger") and will cease to exist. RCPI
will be the surviving corporation in the Merger (the "Surviving Corporation"),
thus becoming wholly owned by the Investors and their designees. If the Merger
is consummated, each Share outstanding immediately prior to the Merger, other
than the Excluded Shares referred to below, will be canceled and automatically
converted into the right to receive $8.00 per Share net to the holder in cash
(the "Merger Consideration"), without interest. "Excluded Shares" means (i)
Shares held by RCPI or any of its subsidiaries as treasury shares, if any, (ii)
Shares held by Holdings or any of its subsidiaries, if any, and (iii) Shares
held by stockholders who have not voted in favor of the Merger or consented
thereto in writing and who have properly demanded in writing appraisal of such
Shares in accordance with Section 262 of the Delaware General Corporation Law
(the "DGCL").
The complete text of the Merger Agreement is attached to this Proxy
Statement as Annex A and is incorporated herein by reference. For a description
of the terms of the Merger Agreement, see "The Merger -- The Merger Agreement".
THE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND DETERMINED THAT
THE MERGER AGREEMENT IS FAIR TO AND IN THE BEST INTERESTS OF RCPI AND ITS
STOCKHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF RCPI VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
REQUESTS EACH STOCKHOLDER TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED WHITE
PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED, POSTAGE-PAID RETURN ENVELOPE.
VOTING RIGHTS AND PROXY INFORMATION
The close of business on February 8, 1996 (the "Record Date") has been fixed
as the record date for determining holders of Shares entitled to vote at the
Special Meeting. Only holders of Shares on the Record Date will be entitled to
notice of and to vote at the Special Meeting. On the Record Date, RCPI had
38,260,704 Shares outstanding, all of which are entitled to notice of and to
vote at the Special Meeting. At the Record Date, there were 9,867 stockholders
of record. At the Special Meeting, each holder of record on the Record Date is
entitled to cast one vote per Share held.
RCPI's By-laws require the affirmative vote of the holders of at least 62.5%
of the outstanding Shares entitled to vote to approve and adopt the Merger
Agreement, unless the holders of at least 62.5% of the Warrants and SARs
referred to below consent to the approval and adoption of the Merger Agreement.
Whitehall, the holder of more than 97% of the Warrants and SARs, has consented
to
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approval and adoption of the Merger Agreement; accordingly, the affirmative vote
of the holders of a majority of the outstanding Shares entitled to vote thereon
is required to approve and adopt the Merger Agreement. Because Whitehall does
not own any Shares and neither the Warrants nor the SARs carry any right to vote
with the stockholders of RCPI, Whitehall will not cast any votes at the Special
Meeting. As a result, the approval of a majority of unaffiliated stockholders is
required to approve the Merger Agreement. In addition, none of the other
Investors owns any Shares and no Investor will cast any votes at the Special
Meeting. The presence in person or by proxy of the holders of record of a
majority of the outstanding Shares is necessary to constitute a quorum at the
Special Meeting.
To RCPI's knowledge after reasonable inquiry, each of RCPI's executive
officers and directors, holding in the aggregate 10,932 Shares (approximately
0.03% of the outstanding Shares), currently intends to vote all Shares held of
record or beneficially owned by such person for approval and adoption of the
Merger Agreement. See "Ownership of Common Stock". Except for the recommendation
of the Board contained in this Proxy Statement, to RCPI's knowledge after
reasonable inquiry, no executive officer or director of RCPI has made a
recommendation to stockholders of RCPI in support of or in opposition to the
approval and adoption of the Merger Agreement.
Each proxy duly executed and returned by a stockholder, and not properly
revoked,will be voted in accordance with the instructions contained therein. IF
A STOCKHOLDER RETURNS A DULY EXECUTED PROXY WITHOUT SPECIFYING VOTING
INSTRUCTIONS, SUCH STOCKHOLDER'S SHARES WILL BE VOTED FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. Each stockholder has the power to revoke a
proxy at any time before its exercise. A stockholder may revoke his or her proxy
at any time prior to its exercise by attending the Special Meeting and voting in
person (although attendance at the Special Meeting will not in and of itself
constitute revocation of a proxy), by giving notice of revocation of his or her
proxy at the Special Meeting or by delivering a written notice of revocation or
a duly executed proxy relating to the matters to be considered at the Special
Meeting and bearing a later date to the Secretary of RCPI at 1270 Avenue of the
Americas, New York, New York 10020. Unless revoked in the manner set forth
above, proxies in the form enclosed will be voted at the Special Meeting in
accordance with the stockholder's instructions.
Shares represented by a properly completed, signed, dated and returned proxy
will be treated as present at the meeting for purposes of determining a quorum,
without regard to whether the proxy is marked as casting a vote or abstaining.
Under the rules of the New York Stock Exchange (the "NYSE"), the proposal to
approve and adopt the Merger Agreement is considered a "non-discretionary item"
as to which brokerage firms may not vote in their discretion on behalf of their
customers if such customers have not furnished voting instructions. Accordingly,
if a brokerage firm customer does not furnish such voting instructions, it will
have the practical effect of a vote against approval and adoption of the Merger
Agreement. The enclosed proxy card permits the holder of Shares to specify that
such Shares be voted "FOR" or "AGAINST", or to "ABSTAIN" from voting with
respect to, the approval and adoption of the Merger Agreement. All Shares that
are represented at the Special Meeting by properly executed proxies returned
prior to or at the Special Meeting, and not properly revoked, will be voted at
the Special Meeting in accordance with the instructions indicated on such
proxies or, if no instructions are so indicated, FOR approval and adoption of
the Merger Agreement. ANY PROPERLY EXECUTED PROXY MARKED "ABSTAIN" OR ANY
ABSTENTION FROM THE SPECIAL MEETING WILL HAVE THE PRACTICAL EFFECT OF A VOTE
AGAINST APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
IF THE MERGER AGREEMENT IS APPROVED AND ADOPTED, DETAILED INSTRUCTIONS WITH
REGARD TO THE SURRENDER OF CERTIFICATES, TOGETHER WITH A LETTER OF TRANSMITTAL,
WILL BE FORWARDED TO FORMER STOCKHOLDERS OF RCPI BY THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), THE EXCHANGE AGENT, PROMPTLY FOLLOWING THE EFFECTIVE
TIME OF THE MERGER, WHICH IS EXPECTED TO OCCUR PROMPTLY FOLLOWING THE DATE OF
THE SPECIAL MEETING. STOCKHOLDERS SHOULD NOT SUBMIT THEIR CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED THESE MATERIALS. PAYMENT OF THE MERGER
CONSIDERATION
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WILL BE MADE TO THE FORMER STOCKHOLDERS OF RCPI ENTITLED THERETO AS PROMPTLY AS
PRACTICABLE FOLLOWING RECEIPT BY THE EXCHANGE AGENT OF THEIR CERTIFICATES AND
OTHER REQUIRED DOCUMENTS.
It is not expected that any matter other than the approval and adoption of
the Merger Agreement will be brought before the Special Meeting. If, however,
any other matters are properly presented at the Special Meeting, including,
among other things, consideration of a motion to adjourn the Special Meeting to
another time or place, the persons named in the enclosed form of proxy and
acting thereunder will have discretion to vote on such matters in accordance
with their best judgment. Such adjournment may be for the purpose of soliciting
additional proxies. Shares represented by proxies voting against approval and
adoption of the Merger Agreement will be voted against a proposal to adjourn the
Special Meeting for the purpose of soliciting additional proxies.
RCPI will, in advance of the Special Meeting, appoint one or more inspectors
to act at the Special Meeting who will ascertain the number of Shares
outstanding, the number of Shares represented at the meeting and the validity of
proxies and ballots. Such inspectors will also count all votes and ballots and
certify their determinations with respect thereto. The time of the opening and
the closing of the polls for each matter to be voted on will be announced at the
Special Meeting.
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Board. All expenses of
this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be borne by RCPI. In addition to solicitation by mail, proxies
may be solicited by directors, officers and employees of RCPI in person or by
telephone, facsimile or other means of communication. Such directors, officers
and employees will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. In addition, RCPI
has retained D.F. King & Co. to assist in soliciting proxies at an estimated fee
of $10,000, plus out-of-pocket expenses. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward proxy
solicitation materials to beneficial owners of Shares held of record by such
brokerage firms, custodians, nominees and fiduciaries and RCPI may reimburse
such brokerage firms, custodians, nominees and fiduciaries for reasonable
expenses incurred in connection therewith.
THE PARTIES
RCPI
RCPI was formed in 1985 to permit public investment in two convertible
participating mortgages on the 12 original landmarked buildings in Rockefeller
Center (the "Property"). RCPI's principal assets are two convertible,
participating mortgage notes, in an aggregate amount of $1.3 billion
(collectively, the "Mortgage Note"), issued by two partnerships, Rockefeller
Center Properties ("RCP") and RCP Associates ("RCPA" and, together with RCP, the
"Borrower") that together own most of the land and buildings known as
Rockefeller Center in Midtown Manhattan in New York City. Rockefeller Center is
one of the best-known business and entertainment complexes in the world.
Occupying most of three blocks, the Property includes 12 landmarked buildings,
all but one of which were completed between 1932 and 1940, having approximately
6.2 million square feet of rentable office, retail, storage and studio space.
Rockefeller Center contains a wide range of amenities, including the Channel
Gardens landscaped promenade, the lower plaza used as an ice skating rink during
colder weather and at other times for outdoor dining, a six-story 725-car
parking garage and extensive off-street truck delivery areas, an underground
retail and pedestrian concourse connecting all of the buildings and providing
direct access to a subway station, roof gardens and Radio City Music Hall.
Retail space within Rockefeller Center includes approximately 200 shops and 35
restaurants.
On May 11, 1995, RCP and RCPA filed voluntary petititons under Chapter 11 of
the Bankruptcy Code. Under the Borrower's Chapter 11 plan of reorganization,
RCPI or its designee is expected to take title to the Property immediately
following consummation of the Merger. See "Special Factors -- Borrower's Chapter
11 Case".
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RCPI was incorporated in Delaware and qualifies and has elected to be
treated as a real estate investment trust (a "REIT") under the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"). To ensure compliance
with Internal Revenue Code requirements for qualification as a REIT, the
Restated Certificate of Incorporation of RCPI (the "RCPI Charter") contains a
provision that voids any transfer of shares of Common Stock (and other
securities convertible into such shares) to any person if such transfer would
cause such person to beneficially own more than 9.8% of the outstanding shares
of Common Stock (the "Limit"). In addition, the RCPI Charter does not permit
RCPI to issue stock other than Common Stock. The vote of the holders of 80% of
the outstanding shares of Common Stock is required to amend or repeal these
provisions of the RCPI Charter.
RCPI's executive offices are located at 1270 Avenue of the Americas, New
York, New York 10020 and its telephone numbers are (212) 698-1440 and (800)
555-6444. The name, residence or business address, present principal occupation
or employment, the name, principal business and address of any corporation or
other organization in which such employment is conducted and the citizenship of
each director and executive officer of RCPI is set forth in Schedule I hereto
and is incorporated herein by reference.
INVESTORS
The Investors consist of Whitehall, Rockprop, Mr. Rockefeller, Exor and
Troutlet. None of the Investors owns any Shares and therefore no Investor will
cast any votes at the Special Meeting. Whitehall and two other investment funds
controlled by The Goldman Sachs Group, L.P. own SARs and Warrants representing a
19.9% fully diluted equity interest in RCPI. However, neither the Warrants nor
the SARs carry any right to vote with the stockholders of RCPI. The SARs may not
be converted into Warrants if such a conversion were to violate the Limit.
WHITEHALL. Whitehall is a Delaware limited partnership that engages in the
business of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.P. V, a Delaware limited partnership ("WH Advisors,
L.P."), acts as the sole general partner of Whitehall, and WH Advisors, Inc. V,
a Delaware corporation ("WH Advisors, Inc."), acts as the sole general partner
of WH Advisors, L.P. Neither WH Advisors, L.P. nor WH Advisors, Inc. engages in
any business other than in connection with its role as a general partner. The
Goldman Sachs Group, L.P., a Delaware limited partnership ("GS Group"), is the
direct beneficial owner of all of the capital stock of WH Advisors, Inc. GS
Group is controlled by its general partners as a group, who have delegated to
its Management Committee the power to act on their behalf with respect to the
management of GS Group. GS Group's principal asset is a 99% partnership interest
in Goldman, Sachs & Co., a New York limited partnership ("Goldman Sachs"), an
investment banking firm and member of the NYSE and other national securities
exchanges. GS Group and Whitehall may be deemed to control, and therefore be
affiliates of, RCPI for purposes of Rule 13e-3 promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Accordingly, GS Group and Whitehall have
filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 with respect to the
Merger. See "Available Information". As a result of their investment in RCPI
through the Goldman Sachs Financing (as defined below), GS Group and Whitehall
may have interests that conflict with those of the stockholders of RCPI. GS
Group and Whitehall believe that, by acquiring the entire equity interest in
RCPI (with the other Investors) through the Merger, they will be better able to
protect such investment. In addition, Whitehall and GS Group seek to acquire
RCPI because they believe that they can more effectively and efficiently manage
the Property as a privately held company. See "Special Factors -- Reasons for
the Transaction."
The business offices of Whitehall, WH Advisors, L.P., WH Advisors, Inc. and
GS Group are located at 85 Broad Street, New York, New York 10004. The name,
residence or business address, present principal occupation or employment; and
the name, principal business and address of any corporation or other
organization in which such employment is conducted and the citizenship of (i)
each director and executive officer of WH Advisors, Inc. is set forth in
Schedule II hereto and is incorporated herein by reference, (ii) each general
partner of GS Group that is a natural person is set forth in Schedule III
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hereto and is incorporated herein by reference and (iii) each director and
executive officer of each corporate general partner of GS Group is set forth in
Schedule IV hereto and is incorporated herein by reference. The members of the
Management Committee of GS Group are those persons listed in Schedule III who
have an asterisk next to their names.
ROCKPROP. Rockprop is a Delaware limited liability company whose members
are Tishman Speyer Crown Equities, a Delaware general partnership ("TSCE"), TSE
Limited Partnership, an Illinois limited partnership ("TSELP"), and Rockprop
Associates Limited Partnership, a Delaware limited partnership ("Rockprop
L.P."). Rockprop's principal business is to serve as the holding company for the
investment by TSCE, TSELP and Rockprop L.P. in connection with the Merger
Agreement. Jerry I. Speyer is a general partner of Rockprop L.P. and of one of
the general partners of TSCE. Mr. Speyer is also president and sole shareholder
of the general partner of Tishman Speyer Properties, L.P. ("Tishman Speyer"), a
leading property management company. Rockprop's business address is 520 Madison
Avenue, New York, New York 10022.
DAVID ROCKEFELLER. Mr. Rockefeller is an individual who is a resident of
the State of New York and who is the former chairman of The Chase Manhattan
Bank. Mr. Rockefeller was a director of Rockefeller Group, Inc. ("RGI"), and its
predecessors, from November 5, 1951, and Chairman of the Board of Directors of
RGI from March 21, 1982, in each case until October 2, 1995. RGI and a
subsidiary of RGI own the Borrower. Mr. Rockefeller was Chairman of the Board
and Chief Executive Officer of RCPI from July 19, 1985 until June 2, 1992 and a
director of RCPI until April 26, 1993. Mr. Rockefeller's business address is
Room 5600, 30 Rockefeller Plaza, New York, New York 10112. As permitted by the
Merger Agreement, Mr. Rockefeller intends, prior to the consummation of the
Merger, to assign his rights and obligations under the Merger Agreement to one
of his controlled affiliates.
EXOR. Exor is a corporation organized under the laws of Luxembourg. The
present principal business activity of Exor is to invest and hold participations
in selected industries through substantial direct or indirect equity
participations in companies that have a leading position in their respective
industries. For purposes of the Exchange Act, Exor is deemed to be controlled by
Istituto Finanziario Industriale S.p.A., a corporation organized under the laws
of Italy ("IFI"). The present principal business activity of IFI is as a holding
company providing financial and organizational assistance to the companies in
which it has a direct or indirect controlling interest. Such companies include
Exor and a wide variety of companies involved in diverse areas of business. The
address of IFI's principal business and principal office is Corso Matteotti 26,
10121 Torino, Italy. For purposes of the Exchange Act, IFI is deemed to be
controlled by Giovanni Agnelli e C. S.a.a., an Italian limited partnership
represented by shares ("GA"). The present principal business activity of GA is
to ensure the cohesion and continuity of the management of its controlling
interest in IFI. The address of GA's principal business and principal office is
Via del Carmine 2, 10122 Torino, Italy. For purposes of the Exchange Act, GA is
deemed to be controlled by its General Partners, Giovanni Agnelli, Umberto
Agnelli, Gianluigi Gabetti, Cesare Romiti, Gabriele Galateri and Carlo Camerana.
Exor's business address is 2 Boulevard Royal, Luxembourg.
TROUTLET. Troutlet is a British Virgin Islands corporation that is the
holding company for the investment in RCPI by Burtonwood Holdings, Ltd., a
British Virgin Islands corporation that is wholly owned by Stavros S. Niarchos.
Troutlet's business address is Villa Bijou, 19, Avenue de la Costa, Monte Carlo,
MC98000, Monaco. As permitted by the Merger Agreement, Troutlet has designated
each of Gribble Investments (Tortola) BVI, Inc., a British Virgin Islands
corporation ("Gribble"), and Weevil Investments (Tortola) BVI, Inc., a British
Virgin Islands corporation ("Weevil"), to fund a portion of Troutlet's funding
commitment under the Merger Agreement. All of the stock of Gribble is owned by
Bontebok Investments (Tortola) BVI, Inc., a British Virgin Islands corporation,
all of whose stock is owned by Philip S. Niarchos. All of the stock of Weevil is
owned by Bunting Investments (Tortola) BVI, Inc., a British Virgin Islands
corporation, all of whose stock is owned by Spyros S. Niarchos. Philip S.
Niarchos and Spyros S. Niarchos are adult children of Stavros S. Niarchos. See
"Special Factors -- Background of the Merger" and "The Merger -- Source and
Amount of Funds".
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HOLDINGS
Holdings is a Delaware corporation recently organized by the Investors for
the purpose of effecting the Merger. It has no material assets and has not
engaged in any activities except in connection with the Merger. Immediately
prior to the consummation of the Merger, Whitehall, Exor, Gribble, Weevil,
Troutlet, the affiliate of Mr. Rockefeller and Rockprop will respectively own
50.0%, 20.5%, 8.0%, 8.0%, 4.5%, 4.5% and 4.5% of the issued and outstanding
shares of capital stock of Holdings. In exchange for their respective interests
in Holdings, each of the Investors will make a captial contribution having a
value proportionate to the interest received. Such capital contributions will
consist of cash and, in the case of Whitehall, its SARs and Warrants, which will
automatically be canceled and retired in the Merger with no consideration being
delivered in exchange therefor. Holdings's executive offices are located at 85
Broad Street, New York, New York 10004 and its telephone number is (212)
902-1085.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
RCPI was formed in 1985 to permit public investment in the Property.
Substantially all of RCPI's assets are represented by the Mortgage Note issued
on September 15, 1985 by the two partnerships that constitute the Borrower and
that together own the Property. The partners of the Borrower are RGI and
entities directly or indirectly owned by RGI. Mitsubishi Estate Company, Ltd.
("Mitsubishi Estate") owns an 80% interest in RGI and Rockefeller family
interests (the "Rockefeller Interests") own the remainder.
The Mortgage Note is in the aggregate principal amount of $1.3 billion,
matures on December 31, 2007 and provides for base interest at increasing stated
annual rates and additional interest ("Additional Interest") through December
31, 2000 and for floating interest rates thereafter. There are no scheduled
payments of principal under the Loan Agreement under which the Mortgage Note was
issued (as amended, the "RGI Loan Agreement") prior to maturity in 2007. The
Mortgage Note provides for the payment of Additional Interest to RCPI for each
year through 2000 in which the Gross Revenues (as defined in the Mortgage Note)
of the Property exceed $312.5 million. No Additional Interest has been earned by
RCPI.
The Mortgage Note is secured by two mortgages on the Property in the
aggregate amount of $1.3 billion: a $1.255 billion mortgage and a $45 million
leasehold mortgage. The RGI Loan Agreement does not require the recording of the
$1.255 billion mortgage; however, it permits RCPI to record the $1.255 billion
mortgage at the Borrower's expense if certain events occur, including if, in
RCPI's judgment, a material adverse change occurs in the Property or in the
Borrower's financial or other condition or prospects. In addition, the RGI Loan
Agreement requires the Borrower, subject to certain conditions, to maintain in
effect one or more letters of credit (the "RGI Letters of Credit") during the
term of the Mortgage Note in varying amounts to secure certain of the Borrower's
obligations under the Mortgage Note. Beginning April 1, 1995, the amount of the
RGI Letters of Credit was $50 million.
The Mortgage Note is convertible at RCPI's option on December 31, 2000 or,
if an event of default under the RGI Loan Agreement has occurred and is
continuing, any earlier date specified by RCPI into a 71.5% general partnership
interest in the partnership that would then own the Property. The amount of
RCPI's equity interest is subject to reduction in the event of certain
prepayments on the Mortgage Note.
Simultaneously with its initial public offering in 1985, pursuant to the
Indenture dated as of September 15, 1985 between RCPI and Manufacturers Hanover
Trust Company (as amended, the "Convertible Debenture Indenture"), RCPI issued
Current Coupon Convertible Debentures due 2000 in an aggregate principal amount
of $335 million (the "Current Coupon Convertible Debentures") and Zero Coupon
Convertible Debentures due 2000 in an aggregate face amount of $952.3 million
(the
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"Zero Coupon Convertible Debentures" and, together with the Current Coupon
Convertible Debentures, the "Convertible Debentures") that are convertible into
shares of Common Stock on December 31, 2000 or on an earlier date upon the
occurrence of an Event of Default thereunder or if such Convertible Debentures
were called for redemption. Any Convertible Debentures that remain outstanding
on December 31, 2000 will be exchanged for seven-year nonconvertible floating
rate notes of RCPI. The Current Coupon Convertible Debentures would be
convertible on December 31, 2000 at $11.82 per Share, the Zero Coupon
Convertible Debentures would be convertible on that date at $21.79 per Share;
the Convertible Debentures would be convertible at higher prices per Share if
converted at an earlier date, subject in each case to the anti-dilution
provisions therein. Since the Convertible Debentures are substantially out of
the money, the possible conversion of these securities has been excluded in all
calculations of RCPI's fully diluted equity in this Proxy Statement, including
in calculating the amount of equity to which the Whitehall Group may be entitled
upon the happening of certain events.
In 1987, RCPI commenced a program to repurchase its Convertible Debentures
in order to reduce the potential dilution to the stockholders of RCPI from the
conversion of Convertible Debentures and to reduce its interest expense on the
Current Coupon Convertible Debentures, which bore interest at 8% per annum
through 1994 and at 13% per annum thereafter. RCPI initially funded these
repurchases through floating rate short-term unsecured bank loans. RCPI had
short-term borrowings totalling $136.5 million, $357.8 million and $364.0
million from commercial banks at December 31, 1987, 1988 and 1989, respectively.
The bank borrowings bore interest at rates that approximated 9.02%, 9.45% and
8.92% at December 31, 1987, 1988 and 1989, respectively. By year-end 1992,
Current Coupon Convertible Debentures and Zero Coupon Convertible Debentures
with face values of $121.8 million and $366.1 million, respectively, had been
repurchased at an aggregate price of $217.3 million.
In 1987, RCPI also began acquiring a portfolio of investment securities,
which was initially funded by the proceeds of the short-term unsecured bank
loans described in the preceding paragraph. RCPI acquired the portfolio
primarily to provide it with cash income to help RCPI make the required interest
payments on the short-term loans. At December 31, 1992, RCPI's portfolio of
investment securities had a book value of $137.2 million.
In 1990, in order to lengthen the maturity of its short-term debt, RCPI
initiated a commercial paper program and fully repaid its outstanding short-term
bank loans of $364.0 million with the proceeds from the issuance of commercial
paper. The commercial paper program was originally supported by two letters of
credit, each in the amount of $200 million, one of which was scheduled to expire
in May 1993 (the "May 1993 letter of credit") and the other in June 1995 (the
"June 1995 letter of credit"). At December 31, 1992, RCPI had $378.3 million of
commercial paper outstanding.
In connection with its incurrence of short-term bank loans, and acquisition
of portfolio securities, RCPI entered into interest rate swap agreements in 1987
and 1988 with financial institutions that were intended either to fix a portion
of RCPI's interest rate risk on floating rate debt ("Liability Swaps") or to fix
the yield on its floating rate portfolio securities ("Asset Swaps" and, together
with the Liability Swaps, the "Swaps"). The Liability Swaps were intended to
protect RCPI against the risks of increases in the interest rates payable by
RCPI on its floating rate debt and the Asset Swaps were intended to protect RCPI
against the risks of decreases in the returns received by RCPI on its floating
rate portfolio securities. At December 31, 1992, RCPI had in effect swap
arrangements in the notional principal amounts of $305 million in Liability
Swaps and $40 million in Asset Swaps. Under the Liability Swaps, RCPI paid a
fixed rate of interest semiannually (weighted average interest rate of 9.71% at
December 31, 1992) and received a variable rate of interest semiannually equal
to 180-day LIBOR (weighted average interest rate of 3.55% at December 31, 1992).
Under the Asset Swaps, RCPI received a fixed rate of interest semiannually
(weighted average interest rate of 9.47% at December 31, 1992) and paid a
variable rate of interest quarterly equal to 90-day LIBOR (weighted average
interest rate of 3.67% at December 31, 1992). In 1992, RCPI paid out $14.6
million under the Liability
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Swaps and it received $2.1 million under the Asset Swaps. The net settlement
value of the Swaps outstanding at December 31, 1992, based on information
supplied by the counterparties to the Swap contracts, was a net liability for
RCPI of approximately $46 million.
Beginning in the late 1980s, the Midtown Manhattan real estate rental market
deteriorated significantly. The decline in the real estate market led to
downward pressure on rents, thereby reducing current cash flows, and adversely
impacted the prospects for re-leasing at increased rental rates the substantial
amounts of space at the Property that were subject to leases scheduled to expire
in 1994. These shortfalls would have to be covered by loans and/or equity
contributions by the parents of the Borrower to the Borrower in order to enable
the Borrower both to service its debt to RCPI and make necessary capital
expenditures. The parents of the Borrower, however, were under no legal
obligation to do so. These developments also caused the appraised value of the
Property to decline from $1.8 billion at December 31, 1989 to $1.2 billion by
December 31, 1992. These developments in turn adversely affected RCPI's ability
to obtain financing, including renewals or refinancings of the letter of credit
support for its commercial paper program.
Beginning in 1991 with the help of its then financial advisors, Lehman
Brothers, RCPI sought to renew or refinance the May 1993 letter of credit at the
existing $200 million level. However, these efforts were unsuccessful and, in
March 1993, RCPI entered into an agreement with the banks that were members of
the lending syndicate for the May 1993 letter of credit to extend the facility
until December 1994, subject to a reduction in the amount of the facility to
$100 million in May 1993 and to periodic reductions thereafter. In order to fund
the retirement of the commercial paper backed by the May 1993 letter of credit,
RCPI liquidated its portfolio of investment securities in 1993 and 1994. RCPI
used the proceeds of the liquidation and cash flow from operations to reduce its
outstanding commercial paper to less than $200 million by December 1994. By
December 31, 1994, RCPI had retired all of its commercial paper using the
proceeds of the Goldman Sachs Financing (as defined below).
On June 2, 1992, Mr. Rockefeller resigned as Chairman of the Board and Chief
Executive Officer of RCPI and stated that he was doing so in view of his desire,
at his then age of 77, to scale back the level of his corporate activities.
Claude M. Ballard, Jr., a limited partner of Goldman Sachs who had been a
director of RCPI since 1987, replaced Mr. Rockefeller as Chairman of the Board.
Edward P. Fontaine, who had been President of RCPI since 1991, assumed the
additional duties of Chief Executive Officer. On April 26, 1993, Mr. Rockefeller
resigned as a director of RCPI. The Board then consisted of five members: Mr.
Ballard, Benjamin D. Holloway, Peter D. Linneman, Peter G. Peterson, and Richard
A. Voell, none of whom had any other relationship with either RGI or RCPI,
except Mr. Voell who was president and chief executive officer of RGI.
Although Mr. Rockefeller did not state his reasons for retiring as a
director at that time, in April 1993 RCPI's Board had decided to sever RCPI's
organizational relationships with the Borrower to reduce the possibility that
RCPI's dealings with the Borrower could be perceived to be on other than an
arms-length basis. (Mr. Rockefeller remained Chairman of the Board of RGI after
his resignation from RCPI's Board.) This decision of the Board was implemented
in June 1993 when RCPI assumed responsibility for the salaries and benefits of
its officers and required its officers to terminate all employment relationships
with RGI and its affiliates. In addition, at that time RCPI terminated all
contractual relationships between RCPI and RGI and its affiliates (other than
the RGI Loan Agreement and certain agreements related thereto and RCPI's lease
of office premises).
While liquidation of RCPI's portfolio of investment securities permitted it
to repay sufficient commercial paper to ultimately retire the May 1993 letter of
credit, RCPI concluded in 1993 that, despite a decrease in its quarterly
dividend to stockholders and other cash conservation efforts, it was likely to
continue to have approximately $200 million of commercial paper outstanding when
the June 1995 letter of credit expired. For this reason and in view of its net
Swap liabilities, which had increased to approximately $64 million by September
30, 1993, RCPI undertook a study of its overall capital structure and retained
Kidder, Peabody & Co. Incorporated ("Kidder Peabody") to assist in the study
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as its financial advisor in February 1994. In connection with the combination of
certain businesses of Kidder Peabody and PaineWebber Incorporated
("PaineWebber"), PaineWebber succeeded Kidder Peabody in this engagement
pursuant to an agreement dated December 9, 1994.
During 1993 and 1994, RCPI, with the assistance of Kidder Peabody,
investigated various financing alternatives to address the repayment of the $200
million of outstanding commercial paper supported by the June 1995 letter of
credit and the reduction of RCPI's exposure on the Swaps. The various financing
alternatives considered by the Board are discussed below. During this time
period, RCPI and Kidder Peabody held discussions with Dai-ichi Kangyo Bank
("DKB"), the bank that issued the June 1995 letter of credit, regarding the
extension of the letter of credit, with RGI and its principal stockholder,
Mitsubishi Estate, and with other potential financing sources with respect to
RCPI's public and private refinancing options.
During the first half of 1994, RCPI and Kidder Peabody held numerous
meetings with DKB. Although various proposals were discussed, DKB ultimately
informed RCPI that it would not extend the June 1995 letter of credit in the
absence of a guarantee by RGI. RCPI and Kidder Peabody thereafter discussed with
RGI and J.P. Morgan Securities Inc. ("J.P. Morgan"), financial advisor to
Mitsubishi Estate, the possible terms of such a guarantee. In August 1994, J.P.
Morgan advised RCPI that RGI would not guarantee the June 1995 letter of credit
unless RCPI agreed to (i) a reduction in the principal amount of the Mortgage
Note by $250 million, (ii) a reduction in the interest rate by 75 basis points
and (iii) elimination of the conversion feature in the Mortgage Note.
As an alternative to these changes in the terms of the Mortgage Note, on
August 26, 1994, J.P. Morgan, on behalf of Mitsubishi Estate, orally proposed a
cash merger between RCPI and RGI, pursuant to which RCPI's stockholders would
receive $4.86 per Share if RCPI did not exercise its right to record the
unrecorded mortgage on the Property or $3.86 per Share if RCPI did record this
mortgage, subject to further reduction in the event such recordation adversely
affected the value of the Property.
At a meeting on August 30, 1994, the Board rejected the terms on which
Mitsubishi Estate would authorize RGI's guarantee of the June 1995 letter of
credit principally because the Board felt that the concessions demanded by
Mitsubishi Estate in exchange for such a guarantee were far too onerous to be
acceptable. In addition, agreement to such concessions would have required RCPI
to seek and obtain consents from the holders of the Convertible Debentures, a
process which, since the Convertible Debentures are held in bearer form, would
have been extremely cumbersome and highly uncertain. At this meeting, the Board
also rejected the proposed cash merger as not being worthy of serious
consideration because the price offered was, in the opinion of the Board,
grossly inadequate and no formal written offer had been submitted. Finally, at
this meeting, the Board determined that the continuing increases in the cash
shortfalls at the Property and the unwillingness at that time of the
stockholders of RGI to commit to cover future cash shortfalls constituted a
material adverse change in the "business, operations, assets or financial
condition of the [Borrower] or the prospects thereof, taken as a whole" within
the meaning of the provision of the RGI Loan Agreement, entitling RCPI to record
the unrecorded $1.255 billion mortgage at the Borrower's expense if RCPI
determined that such a material adverse change had occurred. Accordingly, the
Board directed that the unrecorded mortgage on the Property be recorded at the
Borrower's expense.
On September 6, 1994, RCPI recorded the unrecorded $1.255 billion mortgage
securing the Mortgage Note and the Borrower paid the applicable mortgage
recording tax of $34.5 million.
During the spring and summer of 1994, RCPI and Kidder Peabody also had
discussions with a number of potential financing sources, including Bear,
Stearns & Co. Inc. ("Bear Stearns"), Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), a group of investors in which Gotham Partners L.P.
("Gotham") was a participant, and Goldman Sachs. From these discussions, RCPI
ultimately received proposals from Bear Stearns and DLJ and from the Gotham
group.
After having had contacts in late 1993, in 1994 RCPI and Kidder Peabody
received a proposal from Bear Stearns and DLJ, which involved a proposed $235
million public offering of investment
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grade securitized debt to be issued by a newly organized wholly owned subsidiary
of RCPI ("Deucalion"). Under this structure, RCPI would sell a 49.5%
participation in the Mortgage Note to Deucalion, which would publicly issue
unsecured notes and pay the net proceeds of the issuance to RCPI. Although the
terms of these notes were never finalized, the parties contemplated that
Deucalion would issue the notes in four series, all of which would mature in
2008, subject to extension in certain events; that Deucalion would be required
to make quarterly sinking fund payments between 1995 and 2000; and that three of
these series would bear interest at fixed rates and one series would bear
interest at a rate based on LIBOR.
In October 1994, the Gotham group proposed to purchase 3,620,342 newly
issued Shares at 90% of a specified ten trading day average price (but not less
than $5.00 per Share or greater than $5.50 per Share), for a total ownership
interest of 9.8% in RCPI. The Gotham proposal, as it evolved, also contemplated
making available to RCPI $380 million in senior debt and $50 million in
subordinated debt.
In October 1994, a representative of Whitehall, an affiliate of Goldman
Sachs, contacted RCPI to inquire whether RCPI was interested in receiving a
proposal concerning a recapitalization transaction. On October 30, 1994, Goldman
Sachs, on behalf of itself, Whitehall and Goldman Sachs Mortgage Company, an
affiliate of Goldman Sachs ("GSMC" and, together with Goldman Sachs and
Whitehall, the "Whitehall Group"), submitted a proposal to RCPI under which they
would invest $225 million in RCPI by the end of 1994. The Whitehall Group
proposed that the $225 million investment would be made in the form of a $150
million floating rate loan at an interest rate of LIBOR plus 350 basis points
maturing in six years and in the form of $75 million debentures at an interest
rate of 14% per annum maturing at the end of 2007. The proposal also
contemplated that the Whitehall Group would receive fees of 2.5% and 3% of the
principal amount of the floating rate loan and the debentures, respectively, and
would receive 13,600,000 warrants to purchase shares of Common Stock (equivalent
to a 26.2% fully diluted equity interest in RCPI). Between October 31, 1994 and
November 17, 1994, representatives of Goldman Sachs and Whitehall met with
RCPI's management and representatives of Kidder Peabody to discuss the terms of
the Whitehall Group proposal. The discussions centered on the number of warrants
(and stock appreciation rights) to be issued in connection with the transaction,
the fees to be received by the Whitehall Group, the interest rate on the
floating rate loan, the prepayment premium for the debentures, the anti-dilution
protection afforded the warrants (and stock appreciation rights), other
covenants to be included in the debt instruments, the Whitehall Group's right to
Board representation and its right to have a voice in non-routine matters
brought to a stockholders' vote. Because of his affiliation with Goldman Sachs,
Mr. Ballard recused himself prior to any meetings of the Board relating to the
Whitehall Group proposal and thus played no role in the consideration of the
October 1994 Whitehall Group proposal or any other proposal after the October
1994 Whitehall Group proposal had been made; accordingly, only the remaining
members of the Board, Mr. Holloway, Dr. Linneman, Mr. Murdoch and Mr. Peterson,
all of whom were disinterested with respect to any Whitehall Group proposal,
considered the October 1994 Whitehall Group proposal or any competing proposal.
Mr. Ballard did not represent, or negotiate on behalf of, the Whitehall Group in
connection with the Whitehall Group proposal or any subsequent proposal made by,
or transaction entered into with, the Whitehall Group, including the Merger
Agreement and the Rights Offering Agreement.
On November 14, 1994, RCPI filed with the Commission its Quarterly Report on
Form 10-Q for the third quarter of 1994. The Form 10-Q disclosed that in October
1994 the Borrower had reissued its financial statements for the year ended
December 31, 1993 and that the Borrower's auditors had issued a going concern
qualification to the Borrower's financial statements. The issuance of a going
concern qualification to the Borrower's financial statements did not constitute
a default under the Mortgage Note.
In the morning on November 17, 1994, the Board met to consider the Bear
Stearns/DLJ, Gotham and Whitehall Group proposals. At the meeting, presentations
were made by representatives of Goldman Sachs, Bear Stearns and Gotham.
Representatives of Goldman Sachs stressed that the Whitehall Group was prepared
to do its transaction as a "bought deal" (one sold directly to the Whitehall
Group as principal rather than as an underwriter, with a minimum of conditions
that could be
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closed within a short period of time) and that they believed they would have the
necessary internal approvals for the transaction within four days.
Representatives of Bear Stearns acknowledged that it would not be possible to
close the Deucalion financing prior to year-end in view of the fact that a
registration statement had not yet been filed with the Commission and that it
would not, in any event, be possible to close the financing if prior to closing
the Borrower defaulted on the Mortgage Note or if holders of the Convertible
Debentures initiated a lawsuit challenging the financing on the grounds that it
violated the negative pledge covenant in the Convertible Debenture Indenture. In
the Convertible Debenture Indenture, RCPI had agreed not to create any lien or
encumbrance on any of its assets to secure indebtedness of RCPI or any
subsidiary thereof without equally and ratably securing the Convertible
Debentures. Securing the Convertible Debentures would have been inconsistent
with the proposed terms of the Deucalion financing. The representatives of Bear
Stearns also stated that, while they were prepared to consider a "bought deal"
of Deucalion securities, they were not in a position to commit either Bear
Stearns or DLJ to such a transaction at that time. Representatives of the Gotham
group acknowledged that they had not obtained, and could not guarantee that they
would be able to obtain, a commitment for senior debt financing as a result of
the disclosures regarding the going concern qualification to the Borrower's
financial statements contained in the Form 10-Q filed by RCPI in November 1994.
After these presentations, the Board reviewed these proposals with RCPI's
financial and legal advisors. The Board noted that there was a substantial
litigation risk that the Bear Stearns/ DLJ transaction would not close because
the holders of the Convertible Debentures might bring a lawsuit alleging that
the financing violated the negative pledge covenant in the Convertible Debenture
Indenture. The Board also noted the substantial uncertainties surrounding the
Gotham group proposal, especially the absence of a committed financing source.
The Board also considered the indications it had received from the stockholders
of RGI in August 1994 that they were unwilling to commit to cover future cash
shortfalls at the Borrower or to provide assistance to RCPI in extending the DKB
letter of credit unless RCPI agreed to significant concessions under the
Mortgage Note, the fact that the amounts available under the RGI Letters of
Credit would decline on January 1, 1995 from $200 million to $70 million and to
$50 million on April 1, 1995 and the fact that the letter of credit support for
RCPI's commercial paper would expire on June 30, 1995, as well as the
substantial time it had taken RCPI to reach an agreement to retire the May 1993
letter of credit. Since the RGI Letter of Credit provided additional security
for the Borrower's obligations under the Mortgage Note, the Board believed that
the decline in the level of these Letters of Credit would adversely affect its
ability to obtain financing from third parties. The Board thought it essential,
in view of these factors, that RCPI's ability to retire this commercial paper be
assured by the end of 1994. Since no registration statement had been filed
relating to the Bear Stearns/DLJ transaction, the Board believed that it would
not have been possible to complete the transaction until the beginning of 1995
at the earliest. The impact of the delay and the litigation discussed above
relating to the Bear Stearns/DLJ transaction led the Board to conclude that the
Whitehall Group proposal was more favorable.
On this basis, while the Board believed that the Whitehall Group proposal
was more expensive than the other proposals, the Board determined that the
significantly higher level of certainty that it could be consummated made the
Whitehall Group proposal more attractive than the other proposals. On January
23, 1995, Bear Stearns and DLJ commenced an action against RCPI alleging that
RCPI breached the engagement letter the parties had entered into with respect to
the proposed Deucalion transaction. See "Special Factors -- Certain Litigation".
Later on November 17, 1994, RCPI entered into a letter of intent with
Goldman Sachs and Whitehall, which reflected the Whitehall Group's proposal and,
among other things, prohibited RCPI from negotiating with other parties while
the Whitehall Group transaction was pending, except that the Board could
consider an unsolicited offer to purchase all of RCPI's securities at a
significant premium over the then market value thereof.
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Between November 17, 1994 and December 18, 1994, the Whitehall Group and its
legal advisors had frequent discussions and meetings with RCPI and its legal and
financial advisors to negotiate the definitive terms and documentation of the
recapitalization proposal contained in the November letter of intent.
On December 9, 1994, RCPI received a letter from RGI proposing a cash merger
transaction in which RGI would acquire 100% of the outstanding shares of RCPI
for $5.40 per Share in cash, subject to adjustment to reflect the payment of any
dividend by RCPI prior to closing. The fact that the proposal was subject to (i)
approval by the stockholders of RGI, which was privately held, (ii) the
termination of the Goldman Sachs proposal at an acceptable cost, (iii) the
unilateral cessation by RCPI of discussions with Goldman Sachs and (iv) the
prohibition of RCPI's disclosure of the discussions to any third party, led the
Board to conclude that the proposal was not worthy of serious consideration and
thus it rejected the offer, despite the higher price contained therein when
compared to Mitsubishi Estate's proposal on August 26, 1994.
On December 16, 1994, RGI submitted a second letter to RCPI stating that
RGI's shareholders had authorized a revision of the December 9, 1994 offer to
increase the proposed price to $6.00 per Share. The letter also stated that the
new price would not be adjusted downward to reflect RCPI's December dividend and
that, if required by RCPI's agreement with Goldman Sachs, RCPI could share its
terms with Goldman Sachs. The terms and conditions of the December 9, 1994 offer
otherwise remained the same. Despite the higher price, the Board determined that
the revised proposal was not worthy of serious consideration. Additionally,
PaineWebber, which had succeeded Kidder Peabody as RCPI's financial advisor on
December 9, 1994, expressed the view that the amended offer was also inadequate
from a financial standpoint.
In connection with its opinion, PaineWebber reviewed the terms of the
amended RGI offer on the basis of the discounted equity value methodology
described below under "Opinion of PaineWebber". For the purpose of such
analysis, PaineWebber used the Douglas Elliman 1994 appraisal methodology and
underlying Property cash flow projections through 2007 provided by RCPI
management as described below under "Certain Financial Projections". PaineWebber
derived a terminal value for the Property at 2007 of $2.1 billion based on the
projections. PaineWebber also considered a scenario in which the Property would
have an assumed value of $1.3 billion at 2007 for the purpose of illustrating
the impace of holding the Mortgage Note to its stated maturity at 2007. At the
assumed $1.3 billion terminal value, it was assumed that it would not be
economical for RCPI to convert the Mortgage Note at 2000 into a 71.5% equity
interest in the Property and RCPI would accordingly hold the Mortgage Note until
stated maturity in 2007. At the derived $2.1 billion terminal value, it was
assumed that it would be economical for RCPI to convert the Mortgage Note at
2000 and RCPI would hold its 71.5% equity interest in the Property until 2007.
In each case, the terminal values and projected dividends were then discounted
back to the present using discount rates of between 9.5% and 12.0%. PaineWebber
also assumed for the purpose of this analysis that RCPI's $193 million of
outstanding commercial paper would be refinanced at an interest rate of 11.0%
and that the Mortgage Note interest rate would be reset in accordance with its
terms at 2000 (if not converted into equity at the date) at a rate of 6.62%
(based on LIBOR assumed at 5.62% plus 100 basis points). Based on this analysis,
PaineWebber derived a range of possible equity values of $7.16 to $10.55 per
fully diluted share of Common Stock. PaineWebber also conducted a comparative
transaction analysis, which resulted in a range of possible equity values for
RCPI of $5.94 to $15.37, and a comparative company analysis, which resulted in a
range of possible equity values for RCPI of $5.15 to $12.56. However,
PaineWebber did not consider the comparative transaction analysis and the
comparative company analysis to be as meaningful as the discounted equity value
analysis. PaineWebber also noted that under the terms of RGI's proposal the
proposed purchase price would be reduced by any dividends paid to RCPI
shareholders after the December dividend. The analysis is filed as an exhibit to
the Schedule 13E-3 filed with the Commission in connection with the Merger. For
a description of the qualification and selection of PaineWebber, and a
description of certain relationships between PaineWebber and the Company, see
"Opinion of PaineWebber".
On December 18, 1994, RCPI entered into the Loan Agreement dated as of
December 18, 1994 (the "GSMC Loan Agreement") between RCPI and GSMC, as agent
and lender; the Debenture Purchase Agreement dated as of December 18, 1994 (the
"Debenture Purchase Agreement") between RCPI and Whitehall; the Warrant
Agreement dated as of December 18, 1994 (as amended, the "Warrant Agreement")
between RCPI and Chemical Bank, as Warrant Agent; the SAR Agreement
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dated as of December 18, 1994 (as amended, the "SAR Agreement") between RCPI and
Chemical Bank, as SAR Agent; and a letter agreement dated December 18, 1994 (the
"Board Letter" and, together with the GSMC Loan Agreement, the Debenture
Purchase Agreement, the Warrant Agreement and the SAR Agreement, the "Goldman
Sachs Financing") between RCPI and Whitehall with respect to certain corporate
governance issues.
On December 18, 1994, RCPI issued to Whitehall 4,155,927 warrants (the
"Warrants") to acquire an equal number of newly issued shares of Common Stock at
$5.00 per Share pursuant to the Warrant Agreement and 5,349,541 stock
appreciation rights (the "SARs") pursuant to the SAR Agreement. The SARs are
convertible into 14% Debentures or, if the provisions of the RCPI Charter
relating to the Limit are amended so that Whitehall may hold additional
Warrants, the SARs will be automatically converted into an equal number of
Warrants. The closing price of the Common Stock on November 17, 1994, prior to
the announcement of the execution of the letter of intent with respect to the
Warrants and the SARs, was $4.00 per Share. The Warrants and the SARs, together,
represented the equivalent of a 19.9% fully diluted equity interest in RCPI. In
view of the Limit, the Board decided to provide Whitehall with Warrants that
only amounted to a 9.8% fully diluted equity interest in RCPI and to provide
Whitehall with the balance of a 19.9% fully diluted equity interest in the form
of SARs whose conversion into Warrants is precluded if such a conversion were to
violate the Limit. Accordingly, as a result of the Limit, the Whitehall Group
could not exercise voting power in excess of 9.8% unless the stockholders of
RCPI voted to change or eliminate the Limit. At RCPI's Annual Meeting of
Stockholders held on June 8, 1995, the Board recommended that the stockholders
of RCPI approve an amendment to the RCPI Charter whereby the Board, in its
discretion, would be able to exempt the transfer and ownership of shares of
Common Stock from the Limit.
Pursuant to the Board Letter, RCPI agreed to grant to Goldman Sachs the
right to designate one member of RCPI's Board of Directors to reflect
Whitehall's 19.9% fully diluted equity interest in RCPI represented by the
Warrants and SARs (all of which are owned by Whitehall and its affiliates), and
RCPI agreed to amend its By-laws so that, unless approved by the holders of not
less than 62.5% of the Warrants and SARs, matters submitted to RCPI's
stockholders (other than the election of directors or the ratification of
appointments of auditors) would, unless a different vote was specified in the
DGCL or in the RCPI Charter, require the approval of the holders of 62.5% of the
then outstanding shares of Common Stock (the "Supermajority Voting
Requirement"). On December 29, 1994, Mr. Ballard resigned as Chairman of the
Board and as a director of RCPI to create the vacancy on the Board to be filled
pursuant to the Board Letter and the remaining members of the Board, Mr.
Holloway, Dr. Linneman, Mr. Murdoch and Mr. Peterson, elected Daniel M. Neidich,
a partner of Goldman Sachs who had led the negotiations relating to the Goldman
Sachs Financing on behalf of the Whitehall Group, as a director pursuant to the
Board Letter; at the same time, Dr. Linneman was elected Chairman of the Board.
On December 29, 1994, RCPI issued $150 million of Floating Rate Notes due
December 31, 2000 (the "Floating Rate Notes") to GSMC pursuant to the GSMC Loan
Agreement and $75 million of 14% Debentures due December 31, 2007 (the "14%
Debentures") to Whitehall pursuant to the Debenture Purchase Agreement. The net
proceeds of $212.5 million from such issuances were used to retire commercial
paper borrowings of $193 million and to retire Swaps with a net notional
principal amount of $145 million at a cost of $9.9 million. The remaining net
proceeds from the Goldman Sachs Financing were used for general corporate
purposes. RCPI maintained Liability Swaps in the notional principal amount of
$105 million to partially hedge the Floating Rate Notes. The Floating Rate Notes
bear interest at the rate of 400 basis points over LIBOR. During 1995, quarterly
interest payments on the Floating Rate Notes ranged from $2.7 million to $3.9
million. In addition, RCPI was required to make a $3.0 million minimum principal
payment on the Floating Rate Notes during 1995, which was satisfied by its
September 1, 1995 cash flow sweep payment of $33.7 million discussed below.
RCPI pledged the Mortgage Note and certain other collateral as security for
the repayment of the Floating Rate Notes and the 14% Debentures, and equally and
ratably secured the Convertible Debentures as required by the Convertible
Debenture Indenture. The 14% Debentures were expressly subordinated to the
Floating Rate Notes pursuant to an intercreditor agreement between GSMC and
Whitehall.
The Floating Rate Notes are prepayable by RCPI at any time, in whole or in
part, at 103% of the principal amount prepaid (plus accrued interest) during the
period ending December 29, 1995, at
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101.5% of the principal amount prepaid (plus accrued interest) thereafter until
December 29, 1996 and at par (plus accrued interest) thereafter. The 14%
Debentures are not redeemable by RCPI before December 30, 2000, but are
prepayable thereafter at declining redemption prices. RCPI is required to make
minimum scheduled principal payments on the Floating Rate Notes annually. There
are no scheduled principal payments on the 14% Debentures until maturity. In the
event that RCPI's net cash flow is insufficient to pay interest on the 14%
Debentures when due, interest need not be paid in cash (and such interest will
accrue). Both the Floating Rate Notes (on a quarterly basis) and the 14%
Debentures (on a semiannual basis) are subject to mandatory prepayment from
RCPI's net cash flow (the "cash flow sweep"), which is defined as all of its
gross receipts, including the net proceeds of any sale of equity by RCPI, minus
actual operating expenses incurred; interest paid or accrued (on a straight line
basis) on the Floating Rate Notes, 14% Debentures, Current Coupon Convertible
Debentures and other debt permitted under the GSMC Loan Agreement; dividends
paid or accrued; and distributions paid or accrued on the Warrants and the SARs.
The Floating Rate Notes and the 14% Debentures contain various covenants,
including the following: (i) a prohibition on any increase in RCPI's outstanding
debt (other than up to $10 million for working capital purposes); (ii) a
prohibition on debt prepayment or any amendment thereof if quarterly debt
service would be materially increased or net cash flow would be materially
decreased; and (iii) a prohibition on the sale or disposition of any part of
RCPI's property other than in the ordinary course of business, except pursuant
to a merger or consolidation in which RCPI would be the surviving corporation,
having a number of outstanding shares of capital stock no greater than that of
RCPI immediately prior to such transaction and in which no default under the
Goldman Sachs Financing would occur.
The Warrant Agreement and the SAR Agreement also contain various covenants,
including covenants prohibiting RCPI from issuing equity other than Common
Stock, prohibiting RCPI from issuing Common Stock at prices less than the "fair
market value of Common Stock" (defined as the 90-day trailing average market
price) and requiring RCPI to issue additional Warrants and SARs to the holders
thereof to permit such holders to maintain their 19.9% fully diluted equity
interest in RCPI, if RCPI were to issue additional Common Stock.
In deciding to enter into these arrangements with GSMC and Whitehall in
December 1994, the Board had considered the indications it had received from the
stockholders of RGI in August 1994 that they were unwilling to commit to cover
future cash shortfalls at the Borrower or to provide assistance to RCPI in
extending the DKB letter of credit unless RCPI agreed to significant concessions
under the Mortgage Note, the fact that the amounts available under the RGI
Letters of Credit would decline on January 1, 1995 from $200 million to $70
million and to $50 million on April 1, 1995 and the fact that the letter of
credit support for RCPI's commercial paper would expire on June 30, 1995, as
well as the substantial time it had taken RCPI to reach an agreement to retire
the May 1993 letter of credit. Since the RGI Letters of Credit provided
additional security for the Borrower's obligations under the Mortgage Note, the
Board believed that the decline in the level of these Letters of Credit would
adversely affect its ability to obtain financing from third parties. The Board
thought it essential, in view of these factors, that RCPI's ability to retire
this commercial paper be assured by the end of 1994. Because neither Whitehall
nor GSMC was an affiliate of RCPI prior to the Goldman Sachs Financing, because
the Board was disinterested as a result of Mr. Ballard's recusal and because the
Board viewed the transaction to be primarily in the nature of a financing, the
Board did not obtain a fairness opinion in making its decision to enter into the
Goldman Sachs Financing.
While the Board was aware that the terms of the arrangements with the
Whitehall Group severely restricted RCPI's ability to incur additional debt or
raise money through equity financing, the Board did not believe more flexible
terms were likely to become available if the Board deferred a decision into
1995, inasmuch as the June 30, 1995 expiration date for the $200 million letter
of credit backing RCPI's commercial paper approached and the amounts available
under the RGI Letters of Credit decreased. Consummation of the Bear Stearns/DLJ
transaction would probably have had the practical effect, in the absence of a
dramatic improvement in conditions in the Midtown Manhattan real estate market,
of restricting RCPI's ability to incur additional debt or raise additional
equity because RCPI's assets would have consisted only of a 50.5% participation
in the Mortgage Note and its equity interest in Deucalion. Under the proposed
terms of the financing contemplated by the Gotham proposal no additional
indebtedness other than $10 million for working capital purposes would have been
permitted.
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On January 11, 1995, Douglas Elliman Appraisal and Consulting Division
("Douglas Elliman"), an independent appraisal firm, issued an appraisal of the
Property (the "Douglas Elliman 1994 Appraisal"), in which it concluded that, as
of December 31, 1994, the fair market value of the Property was $1.25 billion,
an increase of $100 million from the value assigned in an appraisal conducted by
the same firm as of December 31, 1993. On February 15, 1995, The Weitzman Group,
Inc. ("The Weitzman Group"), an independent real estate consulting firm, issued
a review and concurrence report ("The Weitzman Group Concurrence Report") in
which it stated that, based upon the review described in such report, it
concurred with the Douglas Elliman 1994 Appraisal and that, in its opinion, the
market value estimated by Douglas Elliman did not vary by more than 5% from the
market value The Weitzman Group would estimate in a full and complete appraisal
of the same interests. See "Special Factors - Douglas Elliman 1994 Appraisal;
The Weitzman Group Concurrence Report".
In late April 1995, representatives of RGI approached RCPI and suggested the
possibility that RGI might discontinue financial support of the Property and
that RGI might also wish to acquire all of the outstanding stock of RCPI. The
discussions were exploratory in nature and the representatives of RGI made clear
to RCPI and PaineWebber that they were not authorized to make any specific
offers.
Subsequently, at RCPI's initiation, representatives of PaineWebber on behalf
of the Company engaged in "brainstorming" discussions with representatives of
the Whitehall Group regarding contingency plans should RGI actually discontinue
financial support for the Property; no specific plans or agreements were
proposed or developed. Representatives of Whitehall approached several potential
investors to ascertain whether they might be interested in becoming partners
with Whitehall in a possible purchase of the Mortgage Note; the contacts were
exploratory in nature and therefore no specific proposals were discussed and no
agreements or understandings were reached.
On May 11, 1995, RCP and RCPA filed voluntary petitions (the "Chapter 11
Case") for protection under Chapter 11 of Title 11 of the United States Code, as
amended (the "Bankruptcy Code"), one result of which was a cessation of the
Borrower's payments to RCPI on the Mortgage Note. At a meeting on May 11, 1995,
the Board concluded that such cessation would lead to an exhaustion of RCPI's
cash reserves; therefore, the Board determined that it should commence
negotiations with the Whitehall Group with respect to possible waivers under the
Goldman Sachs Financing. To facilitate these negotiations, as well as to explore
other financing or acquisition alternatives, the Board approved the creation of
a Special Committee (the "Special Committee") of the Board on May 11, 1995. The
Special Committee consisted of Mr. Holloway, Dr. Linneman, Mr. Murdoch and Mr.
Peterson. Mr. Neidich, Goldman Sachs's designee on RCPI's Board, was not a
member of the Special Committee. The Special Committee, rather than the entire
Board, considered and negotiated, on behalf of RCPI, all financing and
acquisition alternatives and proposals through August 8, 1995, the date on which
Mr. Neidich resigned from the Board. Because Mr. Neidich was not a member of the
Special Committee, Mr. Neidich did not participate in the consideration or
negotiation of any such financing or acquisition alternatives or proposals on
behalf of RCPI or the Board from and after May 11, 1995, the date on which the
Special Committee was formed. Mr. Neidich did participate in negotiations on
behalf of the Whitehall Group in connection with the proposals of, and
transactions involving, the Whitehall Group described herein, including the
negotiation of the Merger Agreement and the Rights Offering Agreement. The
members of the Special Committee were disinterested with respect to all matters
pertaining to the Whitehall Group described herein. PaineWebber acted as
financial advisor to the Special Committee and the law firms of Shearman &
Sterling, counsel to RCPI, and Weil, Gotshal & Manges, special counsel to RCPI
in connection with the Borrower's Chapter 11 Case, acted as counsel to the
Special Committee. The Special Committee concluded that the large payment that
would have to be made on September 1, 1995 under the cash flow sweep provisions
of the Goldman Sachs Financing would largely exhaust RCPI's operating cash. For
that reason, the Special Committee determined that RCPI needed to have a
financing plan in place by mid-August.
On Friday, May 12, 1995, and Monday, May 15, 1995, following the filing by
the Borrower for protection under the Bankruptcy Code, trading of the Shares on
the NYSE was halted. Trading of the Shares on the NYSE recommenced on May 16,
1995.
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Following the filing of the Borrower's Chapter 11 Case, in addition to
addressing the short-term liquidity issues that RCPI faced, the Special
Committee evaluated the possibility of RCPI's obtaining title to the Property,
concluding that it would be in RCPI's best interests if it could accelerate the
Chapter 11 Case and obtain title to the Property in order to minimize the risk
attendant to the continued ownership of the Property by the Borrower. The
determination was based upon the fact that RGI had stated that it would no
longer provide financial support for the Property. Since RCPI's sole source of
revenue, other than a drawing under the RGI Letters of Credit, was interest
income on the Mortgage Note and the income from the Property was insufficient to
pay for the costs and expenses of operation of the Property, taxes and debt
service on the Mortgage Note, continued ownership of the Property by the
Borrower would deprive RCPI of significant revenue and could lead to a
significant diminution in the value of the Property, which in turn would
diminish the value of RCPI. The Special Committee would have considered a
refinancing or sale of the Property by the Borrower if either of those options
had become available and would have resulted in a transaction that the Committee
believed would have produced a greater value to RCPI's stockholders than RCPI's
ownership of the Property. Under Chapter 11, the Borrower had the exclusive
right for 120 days to propose a plan of reorganization. While this 120-day
exclusivity period is routinely extended in most bankruptcies, RCPI was advised
by its bankruptcy counsel that, after expiration of the initial exclusivity
period on September 8, 1995, it could seek an order of the Bankruptcy Court
terminating the Borrower's exclusive right to propose a plan of reorganization
and authorizing RCPI to file a plan of reorganization under which it would take
title to the Property. In this connection, in May 1995, the Special Committee
concluded that RCPI's goal of obtaining title to the Property would be
jeopardized if it could not demonstrate in the Chapter 11 Case that RCPI could
successfully operate the Property and that it had access to funds to cover the
short-term cash flow deficits that the Property was projected to continue to
generate, as well as RCPI's own debt service.
In undertaking its duties, the Special Committee recognized that RCPI's
financing arrangements, including the Goldman Sachs Financing, as described
above, restricted RCPI's ability to issue equity, repay existing debt, incur
additional debt (other than up to $10 million for working capital purposes), and
sell the assets of RCPI (which were pledged to secure existing debt) and that
the 14% Debentures by the terms of the Debenture Purchase Agreement generally
could not be redeemed prior to 2000. In addition, the Special Committee
recognized that RCPI's ability to pursue certain alternatives would be limited
by the terms of the RCPI Charter. At RCPI's Annual Meeting of Stockholders held
on June 8, 1995, to increase RCPI's flexibility, the Board recommended that the
stockholders of RCPI approve an amendment to the RCPI Charter whereby the Board,
in its discretion, would be able to exempt the ownership and transfer of shares
of Common Stock from the Limit. Under the terms of the SAR Agreement with
Whitehall, if the stockholders approved the proposed amendment, all of the SARs
would have been automatically converted into Warrants. The proposal failed to
achieve the requisite 80% stockholders' vote.
On May 15, 1995, after discussions with PaineWebber, the Whitehall Group
made a proposal to restructure the Goldman Sachs Financing by generally
deferring all payments of principal and interest on the Floating Rate Notes and
the 14% Debentures for 18 months and otherwise amending the terms of the Goldman
Sachs Financing in a manner substantially similar to that proposed on June 20,
1995 as outlined below.
Following receipt of the Whitehall Group's original proposal on May 15,
1995, the Special Committee instructed PaineWebber to further explore the
proposal with the Whitehall Group and to solicit proposals from alternative
financing sources or outside investors in order to obtain the best possible
terms for RCPI and its stockholders.
On May 18, 1995, Leucadia National Corporation ("Leucadia") and its
subsidiaries filed a Schedule 13D with the Commission reporting that they had
acquired 2,705,200 shares of Common Stock (7.1% of the shares of Common Stock
outstanding) and that they would seek to influence management of RCPI.
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Due to the Borrower's failure to make the May 31, 1995 interest payment on
the Mortgage Note, RCPI drew down the full $50 million then available under the
RGI Letters of Credit, $33.7 million of which was required to be repaid on
September 1, 1995 under the cash flow sweep provisions of the Goldman Sachs
Financing. In view of the cessation of payments to RCPI on the Mortgage Note,
the Special Committee concluded in May 1995 that RCPI's operating cash would be
largely exhausted after the September 1 cash flow sweep payment, possibly
causing immediate covenant defaults under the Floating Rate Notes and causing
eventual payment defaults on RCPI's debt.
On June 20, 1995, the Whitehall Group submitted a proposal to provide that
cash interest payments on the Floating Rate Notes and the 14% Debentures would
be deferred until December 1996, mandatory principal payments on the Floating
Rate Notes would be suspended through December 31, 1996 and the cash flow sweep
provisions of both the Floating Rate Notes and the 14% Debentures would be
waived for any payment due as a result of any drawdown on the $50 million RGI
Lettters of Credit, in each case, so long as the Borrower was in payment default
under the Mortgage Note, RCPI had not taken title to the Property and certain
defaults had not occurred. The prepayment penalties under the Floating Rate
Notes would be increased and the maturity of the Floating Rate Notes would be
changed from December 31, 2000 to December 31, 1999. In addition, $50 million
principal amount of Floating Rate Notes would be converted into $50 million
principal amount of 14% Debentures and approximately 6.3 million additional SARs
would be issued to Whitehall to reflect Whitehall's increased investment in the
14% Debentures and approximately 1.6 million SARs would be issued to Whitehall
pursuant to the antidilution provisions of the Warrant Agreement and the SAR
Agreement (which would increase Whitehall's fully diluted interest to 31.3% of
RCPI). The interest rate on the remaining $100 million principal amount of the
Floating Rate Notes would be increased from LIBOR plus 4% to LIBOR plus 8% (the
default rate under the GSMC Loan Agreement). The interest rate on the 14%
Debentures would be increased to 15%. After December 1, 1996, the interest rate
on the Floating Rate Notes would return to the original rate. The proposal
further provided for an increase in the Supermajority Voting Requirement from
62.5% to 72.8% (to reflect the issuance of the additional SARs), the payment of
a $1.5 million debt restructuring fee to GSMC and Whitehall and reimbursement of
the Whitehall Group's expenses.
On June 21, 1995, the Special Committee met to review the results achieved
to date in soliciting proposals from financing sources and investors.
PaineWebber reported that it had held discussions with 14 sophisticated
investors regarding financings. These discussions resulted in two preliminary
proposals for debt financings, which would have addressed RCPI's short-term
capital needs, and the preliminary proposal of the Whitehall Group described
above. PaineWebber reported that the two non-Whitehall Group proposals would
have required the consent of the Whitehall Group, would have resulted in a high
degree of leverage for RCPI and would not have provided the flexible capital
structure the Board deemed necessary to obtain ownership of the Property in the
Borrower's Chapter 11 Case. The Special Committee advised PaineWebber that
because the high degree of leverage associated with debt proposals was
inconsistent with RCPI's strategic direction, PaineWebber should not pursue
these debt proposals. One of the debt proposals (from Equity Office Properties,
Inc. ("EOP"), a company controlled by Samuel Zell) also included a brief
description of a possible alternative proposal that EOP indicated it would be
willing to consider, which proposal would have involved a $250 million equity
investment in RCPI for a 50% equity interest in RCPI. Because the Special
Committee had just begun to explore the market for equity investors and the
price proposed by EOP was not sufficiently compelling to merit the termination
of such exploration, the Special Committee decided not to actively pursue the
EOP proposal at that time and instructed PaineWebber to continue to solicit
proposals from potential financing sources and investors for the sale of RCPI as
a whole or for the sale of a significant equity interest in RCPI. Between June
21 and early August, several exploratory conversations between Dr. Peter D.
Linneman, Chairman of the Board of RCPI, and Mr. Zell took place, although no
specific proposals were made until early August, as described below.
Between June 20, 1995 and July 18, 1995, the Whitehall Group and its legal
counsel initiated several telephone calls with RCPI and its financial and legal
advisors in an effort to elicit a response to
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the Whitehall Group proposal. Such calls did not involve any material
discussions with respect to the Whitehall Group proposal. At a meeting on July
18, 1995 between RCPI's management and representatives of the Whitehall Group,
RCPI's management informed the Whitehall Group that RCPI had a preference for a
recapitalization transaction that would involve an infusion of equity in order
to reduce the debt-to-equity ratio of RCPI. On July 18, 1995, the Whitehall
Group proposed several changes to its June 20 proposal, the most important of
which were:
(i) Goldman Sachs would underwrite a $100 million publicly registered
rights offering at $5.00 per share of Common Stock, in which Whitehall would
be entitled to participate as a holder of Warrants and SARs.
(ii) In addition to the approximately 7.9 million SARs that would be
issued to Whitehall (as described in the June 20, 1995 proposal of the
Whitehall Group described above), RCPI would issue 5 million SARs to
Whitehall pursuant to the antidilution provisions of the Warrant Agreement
and the SAR Agreement to account for the 20,000,000 new shares of Common
Stock to be issued in the rights offering.
(iii) The Supermajority Voting Requirement would increase from 62.5% to
69.2%.
(iv) RCPI would pay the Whitehall Group a transaction fee of $1.5
million, plus up to an additional $5 million in customary underwriting and
take-down fees in connection with the rights offering, and would reimburse
its expenses.
On July 21, 1995, RCPI issued a press release announcing a net loss in the
second quarter of 1995 due to the bankruptcy filing by the Borrower. In
addition, the press release stated that RCPI was exploring a wide range of
strategic alternatives, emphasizing that no decisions had been reached
concerning any course of action and that no assurances could be given that any
transaction would be entered into. RCPI further stated that the exploration of a
broad range of possibilities was part of its continuing efforts to insure that
RCPI considered all possibilities that could be in the best interests of RCPI
and its stockholders.
On August 4, 1995, Gotham proposed to purchase $30 million of Common Stock
at a price per share equal to the "fair market value of Common Stock" (as such
term is defined in the Warrant Agreement) and to make RCPI a $10 million
unsecured working capital loan at an interest rate of 13%.
In early August 1995, following extensive discussions, RCPI received a
proposal from Equity Office Holdings, L.L.C., a company controlled by Samuel
Zell ("EOH"), The Walt Disney Company ("Disney") and Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership III ("ZML" and, together with
EOH and Disney, the "Zell Group"). The Zell Group proposed to commit $30 million
of short-term financing ($10 million in unsecured debt and $20 million through
the purchase of Common Stock by December 1995) to RCPI. A new REIT would be
formed by the Zell Group ("NUREIT") and the Zell Group would contribute to
NUREIT $250 million in cash ($5.50 per share in NUREIT) in exchange for 50% of
its equity on a fully diluted basis. Approximately $700 million of new lease and
debt financing would be raised from third parties and secured by interests in
the Property. RCPI would sell substantially all of its assets to NUREIT, which
would ultimately own and operate the Property, in exchange for (i) sufficient
cash to repay at par all of its debt, including the Convertible Debentures, the
Floating Rate Notes and the 14% Debentures, and (ii) NUREIT common stock, common
stock warrants and stock appreciation rights representing approximately 50% of
the equity of NUREIT on a fully diluted basis. Under the proposal, NUREIT would
assume only specified liabilities, which excluded, among other things, new
litigation and other contingent liabilities. RCPI would then be liquidated.
After provision for liabilities of RCPI not assumed by NUREIT, the NUREIT common
stock would be distributed to RCPI's stockholders and the NUREIT warrants and
stock appreciation rights would be distributed to the holders of the Warrants
and SARs. The Board of Directors of NUREIT would consist of nine members, four
directors appointed by the Zell Group and five independent directors. Under its
proposal, the Zell Group would be entitled to upfront fees of $4.4
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million (including fees under the Investment Agreement referred to below) and
would be entitled to a breakup fee of $9.6 million, plus reimbursement of up to
$2.0 million of certain expenses, if the arrangement were terminated for certain
reasons.
On August 7, 1995, the Special Committee met to review the results achieved
in soliciting proposals from financing sources and investors. PaineWebber
reported that it, RCPI's management and RCPI's legal advisors had held
discussions with 24 sophisticated real estate and securities lenders and
investors. Twelve of these potential lenders or investors signed confidentiality
agreements and received confidential information on RCPI, and five term sheets
were submitted addressing RCPI's immediate financing requirements. PaineWebber
reported that two of these proposals, including a proposal for short-term
financing and a proposal that RCPI issue preferred stock, would not have
permitted RCPI to file a confirmable Chapter 11 plan for the Borrower and the
preferred stock proposal would have violated the RCPI Charter. These two
proposals were, therefore, not pursued. As a result, PaineWebber advised the
Special Committee that it believed that RCPI had received three proposals that
should be evaluated by the Special Committee: the Zell Group, the Whitehall
Group and Gotham proposals.
At the August 7 meeting, the Special Committee also reviewed the possibility
of RCPI's filing for protection under Chapter 11 of the Bankruptcy Code and the
potential consequences of such action. Advantages to such a filing would have
included: (i) the imposition on the commencement date of an automatic stay of
all claims that could be asserted by secured or unsecured creditors of RCPI and
of all litigation against RCPI; (ii) the ability to modify the debt obligations
of RCPI by a vote of the holders of two-thirds of the outstanding debt and a
vote of a majority in number of holders of each class of debt impaired by the
plan; (iii) the ability to amend the RCPI Charter so as to eliminate or modify
any supermajority voting or other provisions therein, if desirable; (iv) the
ability to suspend covenant restrictions in the Convertible Debenture Indenture,
the Goldman Sachs Financing and other similar agreements of RCPI (although the
breach of such covenants could give rise to additional claims against RCPI); (v)
the suspension of any requirement to pay debt service on a current basis during
the pendency of the Chapter 11 case; and (vi) certain tax advantages not
otherwise available to RCPI.
Significant disadvantages of filing under Chapter 11 considered by the
Special Committee included: (a) the introduction of significant uncertainty and
delay in acquiring title to the Property (which the Special Committee desired
for the reasons described above) due to the inability of RCPI to demonstrate its
financial ability to own and operate the Property while RCPI worked out its own
Chapter 11 plan; (b) RCPI's diminished ability to control its future; (c)
increased administrative obligations as a consequence of the Chapter 11 filing;
(d) the need to obtain Bankruptcy Court approval of all business activities
outside of the ordinary course of RCPI's business; (e) the costs of
professionals that might be hired by possible appointed committees of creditors
and equity security holders; (f) the review and possible challenge of RCPI's
actions by such committees because of their ability to influence the Bankruptcy
Court's determination of actions proposed to be taken (or withheld) by RCPI; (g)
the incurrence of interest at penalty rates provided for under RCPI's loan
agreements, as well as additional fees and expenses of the Convertible Debenture
Trustee and other agents under such agreements; and (h) the ability of the
holders of indebtedness of RCPI to preclude the stockholders from retaining any
interest in RCPI unless and until all creditors were paid in full or received
full value for their claims, including all interest and prepayment penalties.
The Special Committee did not perform and did not receive from any third party
any quantitative or numerical bankruptcy analysis.
The Special Committee believed that RCPI had substantial arguments that,
under the Zell Group proposal, the Whitehall Group would be entitled to NUREIT
warrants and stock appreciation rights exercisable for an approximate 9.95%
fully diluted equity interest in NUREIT. However, the Whitehall Group had
asserted that the antidilution provisions contained in the Warrant Agreement and
the SAR Agreement entitled Whitehall to maintain a 19.9% fully diluted equity
interest in NUREIT. Under the Zell Group proposal, to the extent that Whitehall
was entitled to the entire 19.9% fully diluted equity interest, RCPI believed
that its understanding with the Zell Group was that the resulting dilution
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would be split evenly between RCPI's stockholders and the Zell Group. At various
times beginning in June 1995, the Whitehall Group had asserted, among other
things, that the 14% Debentures could not be prepaid without its consent. The
Special Committee believed that, absent the ultimate consent of the Whitehall
Group or the development of a structure to permit the repayment of the 14%
Debentures through operation of the cash flow sweep, RCPI might have to file a
Chapter 11 petition in order to attempt to close the Zell Group transaction.
Despite the uncertainties surrounding the Zell Group proposal, the Special
Committee concluded at its meeting on August 7, 1995, for the reasons set forth
in the description below of the Board's actions on August 15, 1995, that the
Zell Group proposal was superior to RCPI's other options and recommended its
approval by the Board.
On August 8, 1995, Daniel M. Neidich resigned as a director of RCPI. In his
letter of resignation, Mr. Neidich stated that his resignation did not waive any
of Goldman Sachs's or Whitehall's rights with respect to RCPI, including Goldman
Sachs's right to designate one member of RCPI's Board. Mr. Neidich also stated
in this letter that his primary reason for resigning from the Board was the fact
that he had no involvement in Board matters following his voluntary recusal due
to his Goldman Sachs affiliation and because all matters relating to financing
and acquisition proposals, and all negotiations relating thereto, were being
considered and conducted on behalf of RCPI and the Board by the Special
Committee, of which he was not a member, rather than the entire Board. Mr.
Neidich further stated that, after having recused himself from the Board's
restructuring discussions, it no longer made sense to remain on the Board where
he could not fully participate or contribute to matters central to RCPI's
future. As a result of the resignation, the members of the Special Committee
were the same as the members of the Board of Directors and, therefore, the
Special Committee did not meet after August 7, 1995. The members of the Board
continued to be Mr. Holloway, Dr. Linneman, Mr. Murdoch and Mr. Peterson, who
were disinterested with respect to the negotiations described herein.
On August 9, 1995, a representative of EOH contacted the Whitehall Group
about becoming partners with EOH in a proposal to buy 51% of the outstanding
stock of RCPI at $5 per share. No agreements or understandings were reached
between the parties at the time because EOH and the Whitehall Group were unable
to agree upon any of the fundamental terms of a transaction.
On August 11, 1995, Whitehall wrote a letter to RCPI reiterating its
previously stated position that the Whitehall Group would not give its consent
under the Goldman Sachs Financing to the proposed Zell Group transaction, as the
Whitehall Group understood the terms of such proposed transaction, and that it
would pursue all appropriate means to protect its investment in RCPI.
After careful deliberation, on August 15, 1995 the Board determined that the
Zell Group proposal was superior to RCPI's other options. The Board concluded
that both the Zell Group and the Whitehall Group proposals would permit RCPI to
avoid an immediate Chapter 11 filing and would permit RCPI to file a confirmable
Chapter 11 plan in the Borrower's bankruptcy. It also concluded that the
Whitehall Group proposal could be implemented without an RCPI stockholder vote,
while the Zell Group proposal would require a 62.5% stockholders' vote unless
the necessary consents were received from the Whitehall Group. It also concluded
that the Whitehall Group proposal had greater certainty of execution than the
Zell Group proposal, because of, among other things, the uncertainty of the
rights of the Whitehall Group under the Zell Group proposal. On the other hand,
the Board believed that the Zell Group proposal produced a more conservative
capital structure, subjected NUREIT to more flexible covenants than the
Whitehall Group proposal, could permit the future deleveraging of the business
and gave NUREIT the potential ability to expand its business and borrow
additional funds in the market. It also believed that the Zell Group proposal
benefited from EOH's expertise in the property management field and from the
retail and entertainment value added by Disney's participation. The Board
believed that the Gotham proposal did not provide for the long-term viability of
RCPI because the issuance of $30 million of Common Stock to Gotham and the
borrowing of $10 million from Gotham would cover only RCPI's short-term needs.
On August 16, 1995, RCPI and EOH executed a letter of intent with respect to
the Zell Group proposal. In connection with this transaction, RCPI and ZML
entered into an Investment Agreement dated as of August 18, 1995 (the
"Investment Agreement") pursuant to which ZML agreed to lend
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RCPI $10 million for working capital purposes and granted RCPI the right to
require ZML to purchase $10 million of Common Stock at $5.59 per share on
October 2, 1995 and $13 million of Common Stock at $5.59 per share on December
5, 1995.
On August 16, 1995, Gotham filed a Schedule 13D with the Commission,
reporting that it had acquired beneficial ownership of 2,124,900 Shares for
investment purposes. These Shares represented a 5.55% beneficial interest in
RCPI's outstanding Common Stock. In the filing, Gotham indicated that it would
seek to assist RCPI in realizing the full value of RCPI's claims in the
Borrower's bankruptcy proceedings.
On August 17, 1995, Tishman Speyer and RGI made a proposal to the Board to
acquire the Mortgage Note and RCPI's other assets, offering to pay $975 million
in cash, together with a 21% equity interest in the acquiring vehicle, for such
assets. After continued discussions between Tishman Speyer and RGI, the proposal
was withdrawn because, according to Tishman Speyer, RGI determined that it was
no longer willing to participate in the ownership of the Property and to make
the additional investments necessary for its continued ownership.
In an August 17, 1995 letter, Dr. Linneman responded to Whitehall's August
11th letter, stating that RCPI had discussed proposals with various parties,
including Whitehall, that the Board had concluded, based on the proposals
received to date, that the stockholders of RCPI would be best served by a plan
that kept Rockefeller Center substantially intact and provided needed capital to
RCPI while permitting a reduction in RCPI's leverage and that the Whitehall
Group proposal, as modified, would result in a debt level higher than the Board
was willing to accept at that time.
In August 1995, representatives of each of Gotham and Leucadia independently
contacted Whitehall regarding the possibility of making a joint recapitalization
proposal to RCPI which would include an underwritten rights offering; however,
no specific proposals were discussed and no agreements or understandings were
reached. Whitehall did not pursue serious negotiations with either Gotham or
Leucadia at the time due to the fact that Whitehall believed a more compelling
proposal could be made without Gotham or Leucadia.
Between August 18, 1995 and August 31, 1995, representatives of the
Whitehall Group and EOH and their respective legal counsel held discussions and
exchanged draft letters of intent regarding a possible joint recapitalization
proposal for RCPI, which included a possible investment of $200 million in cash
in RCPI, on the basis of $5.59 per Share, the repayment of the Floating Rate
Notes and the restructuring of other debt of RCPI. On August 31, 1995,
representatives of the Whitehall Group and EOH met with Dr. Linneman and
PaineWebber to discuss the possible recapitalization of RCPI. Subsequently,
negotiations among representatives of EOH, the Whitehall Group and RCPI were
abandoned when the parties could not reach agreement on mutually satisfactory
terms. Thereafter, EOH and RCPI, on the one hand, and the Whitehall Group and
RCPI, on the other, pursued independent discussions regarding RCPI.
On August 28, 1995, Goldman Sachs, on behalf of the Whitehall Group, offered
to waive the $33.7 million mandatory prepayment on the Floating Rate Notes
required by the cash flow sweep, in exchange for a $500,000 waiver fee, which
fee would be added to the balance due on the Floating Rate Notes. RCPI did not
accept this offer because RCPI, as a result of its having entered into the
Investment Agreement with ZML on August 16, 1995, had access to sufficient funds
to enable it to make this mandatory payment and cover its cash requirements
through the end of 1995.
On August 29, 1995, RCPI borrowed $10 million under the Investment
Agreement. On September 1, 1995, RCPI made a mandatory prepayment of $33.7
million on the Floating Rate Notes.
In early September 1995, because of what Gotham described as its unhappiness
with the terms of the Zell Group proposal as embodied in the Zell Group's letter
of intent, representatives of Gotham contacted representatives of the Whitehall
Group again about the possibility of making a joint rights offering proposal to
RCPI. The Whitehall Group and Gotham engaged in broad conceptual discussions
pertaining to the size of any rights offering, the treatment of Whitehall's
Warrants and SARs and the
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anti-dilution protection afforded the Warrants and SARs under the Warrant
Agreement and the SAR Agreement; however, no specific proposals were discussed
and no agreements or understandings were reached. The Whitehall Group
discontinued its discussions with Gotham because it remained convinced that it
could make a more compelling offer without Gotham.
On September 11, 1995, following further negotiations, RCPI entered into an
Agreement and Plan of Combination dated as of September 11, 1995 (the
"Combination Agreement") with EOH. The principal difference between the
Combination Agreement and the Zell Group proposal reflected in the letter of
intent was that under the Combination Agreement all dilution, damages and
additional costs and expenses relating to or arising out of contractual
agreements between RCPI and the Whitehall Group would be borne by the
stockholders of RCPI and, accordingly, appropriate provision for the payment of
any costs related to any thereof would have to be made by RCPI before any
distribution to RCPI's stockholders of the NUREIT common stock. The Board
considered that there could be substantial costs, expenses and delays associated
with proceeding with a transaction that, in the Board's view, was not clearly
permitted by RCPI's agreements with the Whitehall Group and that, in the
Whitehall Group's view, was clearly prohibited by these agreements. In the view
of the Board, the letter of intent had contemplated that such costs would be
borne equally by RCPI's stockholders and the Zell Group.
At the time the Combination Agreement was executed, the Zell Group and RCPI
reached an agreement in principle with General Electric Company ("GE") under
which its subsidiary, the National Broadcasting Company ("NBC"), would become a
member of the Zell Group and NBC's lease at Rockefeller Center would be amended
in certain respects and guaranteed by GE in order to permit NUREIT to obtain
lease financing on the basis of GE's credit rating, thereby reducing NUREIT's
cost of funds for its financing requirements. At the time that GE's possible
participation in the Zell Group proposal was revealed, PaineWebber advised
RCPI's Board that GE was a substantial stockholder in PaineWebber. The Board
indicated that it did not believe this relationship compromised PaineWebber's
independence.
On September 12, 1995, RCPI received a new proposal dated September 11, 1995
from the Whitehall Group, under which Whitehall or its designee would (i)
purchase 15,384,615 newly issued shares of Common Stock for $6.50 per share, for
an aggregate purchase price of $100 million, (ii) commit to become a standby
purchaser in a publicly registered rights offering of $100 million of newly
issued shares of Common Stock at a price of $6.50 per share and (iii) commit to
underwrite a $50 million equity rights offering within three years, if
determined by the Board to be in the best interests of RCPI. The Whitehall Group
also proposed to purchase $27 million of such Common Stock upon execution of
definitive agreements and to lend RCPI an additional $33 million at that time in
order for RCPI to meet its capital and operating requirements. Under the
proposal, the Whitehall Group would be entitled to participate in the rights
offering as if it owned Common Stock and would be entitled, under the
antidilution provisions in the Warrant Agreement and SAR Agreement, to
additional Warrants and SARs to maintain an 18% fully diluted equity ownership
position in RCPI (rather than the 19.9% interest to which the Whitehall Group
would have been entitled under those Agreements). Under the proposal, depending
on the results of the rights offering, the Whitehall Group would have owned
between 39.9% and 54.6% of the equity of RCPI on a fully diluted basis.
The Whitehall Group proposal also contemplated a debt restructuring of RCPI.
RCPI would redeem the Floating Rate Notes (at the prepayment premium in effect
at the time of prepayment) and the Current Coupon Convertible Debentures. The
14% Debentures would remain outstanding, but the Whitehall Group would agree to
relax certain of the covenants in the Debenture Purchase Agreement, and the
requirement that RCPI retire the 14% Debentures through the cash flow sweep
would be eliminated. RCPI would be permitted to issue up to $350 million
principal amount of new financing, to which the 14% Debentures would be
subordinated. If either (i) notwithstanding the best efforts of RCPI, the Zero
Coupon Convertible Debentures were required to be repaid or (ii) the new
financing could not be arranged at a satisfactory interest rate, RCPI would be
permitted to refinance the Zero Coupon Convertible Debentures by arranging up to
$625 million of new financing. In that event, the 14% Debentures would not be
subordinated to the new financing, and the interest rate on
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the 14% Debentures would be reduced to 13% per annum. The Whitehall Group
proposal also provided that Goldman Sachs would have the opportunity to
participate as RCPI's financial advisor in obtaining the new financing.
In addition, the Whitehall Group proposal provided that the Board would be
reconstituted to include the following nine members: (i) the four current
directors, all of whose replacements would be chosen by a nominating committee
consisting of three independent directors and two directors chosen by Whitehall,
(ii) four directors designated by Whitehall and (iii) an independent director
selected by Whitehall from among a list of four new potential directors
nominated by the current directors in good faith. Under the proposal, Goldman
Sachs would have been entitled to customary underwriting fees of 3% of its
commitment in the rights offering, 3% of the purchase price of shares taken up
in the rights offering and 1% of the principal amount of the new financing, plus
reimbursement of expenses. Goldman Sachs would also have been entitled to an $8
million breakup fee if the transaction were not consummated for certain reasons.
On September 12, 1995, the Borrower announced in its Chapter 11 Case that it
was willing to work with RCPI toward a consensual plan of reorganization that
would provide for RCPI to take title to the Property. Following such
announcement, RCPI commenced working with the Borrower to develop such a plan.
See " -- Borrower's Chapter 11 Case".
After receiving the September 11, 1995 Whitehall Group proposal, the Board
instructed PaineWebber to obtain additional information from the Whitehall Group
concerning its proposal. On September 15, 1995, PaineWebber sent the Whitehall
Group a list of questions and, on September 18, 1995, the Whitehall Group
provided a written response to these questions, clarifying certain aspects of
its proposal. A copy of the Whitehall Group's written response is available as
Exhibit 9 to Amendment No. 2 to its Schedule 13D, dated September 19, 1995.
On September 14, 1995, Gotham sent the Board a proposal which provided for a
recapitalization of RCPI. Under its proposal, Gotham would (i) commit to act as
a standby purchaser for an unspecified portion of a $200 million rights offering
of Common Stock at $5.25 per Share, (ii) assist RCPI in identifying standby
purchasers for the balance of such offering and (iii) cause a lender to lend
RCPI $425 million secured by a first mortgage on the Property. The Board did not
consider that this proposal by Gotham was sufficiently definitive to enable the
Board to engage in substantive negotiations with Gotham because Gotham's
proposal did not (i) set forth a viable structure, (ii) identify standby
purchasers for the rights offering or (iii) identify a lender prepared to
provide the financing described in the proposal.
On September 22, 1995, the Board met to consider the Whitehall Group
proposal. During the September 22, 1995 Board meeting, the Board reviewed
preliminary financial analyses prepared by PaineWebber with respect to the terms
of the Zell Combination Agreement and the Whitehall Group proposal. Both
proposals were reviewed by PaineWebber on the basis of the discounted equity
value methodology and the application of the assumptions described below under
"Opinion of PaineWebber", with the exception that the discounted equity
valuations assumed RCPI would acquire ownership of the Property from RGI on
December 31, 1995 as opposed to December 31, 1996. Using the discounted equity
value methodology, PaineWebber preliminarily derived a range of possible equity
values for the Zell Combination Agreement of $4.82 to $8.40 per fully diluted
share of Common Stock using discount rates of 15.0% to 10.0%. For the Whitehall
Group proposal, PaineWebber preliminarily derived a range of possible equity
values of $5.21 to $8.24 per fully diluted share of Common Stock using the same
discount rates. The analyses are filed as an exhibit to the Schedule 13E-3 filed
with the Commission in connection with the Merger. For a description of the
qualifications and selection of PaineWebber and a description of certain
relationships between PaineWebber and RCPI, see "Opinion of PaineWebber".
Under the Combination Agreement, RCPI could not exercise its "fiduciary out"
upon receipt of a competing proposal, unless the Board determined that such
proposal could be financially superior to the transaction contemplated by the
Combination Agreement and was a proposal that, based upon the
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advice of counsel, the Board believed it had a fiduciary duty to the
stockholders to pursue. After reviewing with its financial and legal advisors
the terms of both the Combination Agreement and the Whitehall Group proposal,
the Board determined that the Whitehall Group proposal was not financially
superior to the transaction contemplated by the Combination Agreement for
substantially the same reasons discussed above in connection with the Board's
determination on August 15, 1995 that the Zell Group transaction was superior to
RCPI's other options available at such time. In particular, the Board concluded
that, although the $6.50 per Share purchase price under the Whitehall Group
proposal represented an 18% premium over the $5.50 per Share price under the
Combination Agreement at which the Zell Group would acquire a 50% equity
interest in NUREIT, the Zell Group proposal would produce a more conservative
capital structure and provide for more flexible covenants than those contained
in the Whitehall Group proposal, and could permit future deleveraging of the
business, the expansion of the business and the borrowing of additional funds in
the market. The Board also believed that the Zell Group proposal benefited from
EOH's expertise in the office management field and from the retail and
entertainment value added by Disney's participation. In addition, the Board
believed that, under the Whitehall Group proposal, the Whitehall Group would
control many aspects of the operation of RCPI and the Whitehall Group's position
as a debt holder would not parallel the interests of the stockholders of RCPI.
During the summer of 1995, the Whitehall Group approached Mr. Speyer
regarding RCPI and the Property with a view towards Mr. Speyer serving as the
manager of the Property if the Whitehall Group were to take control of the
Property. The Whitehall Group decided to contact Mr. Speyer because the Board
had expressed to the Whitehall Group on several occasions in response to the
Whitehall Group proposals a concern over who would manage the Property if the
Whitehall Group took control of the Property. Toward the end of September 1995,
the Whitehall Group and Mr. Speyer began discussing the possibility of making a
joint proposal to acquire 100% of the outstanding stock of RCPI. Shortly
thereafter, the Whitehall Group and Mr. Speyer agreed that Mr. Rockefeller would
be invited to participate in such a proposal, and Mr. Rockefeller in turn
presented Exor and Troutlet with the opportunity to participate in discussions
concerning such a possible joint proposal.
On September 27, 1995, the Whitehall Group wrote a letter to RCPI in which
it stated to RCPI that any issuance of Common Stock under the Investment
Agreement to the Zell Group at a price of $5.59 per Share would violate
Whitehall's rights under the Warrant Agreement because the Warrant Agreement
prohibits RCPI from issuing shares of Common Stock at a price below the "fair
market value of Common Stock" (as defined in the Warrant Agreement) without
Whitehall's consent. In the letter, Whitehall, on behalf of GSMC, also offered
to relend to RCPI the $33 million previously repaid by RCPI on September 1 to
solve any additional short-term financing needs of RCPI.
During the last week of September 1995, representatives of the Whitehall
Group and Gotham met to discuss again the possibility of jointly proposing a
transaction that would include a rights offering to the stockholders of RCPI;
however, no specific proposals were discussed and no agreements or
understandings were reached.
On September 28, 1995, Gotham submitted an alternative proposal to RCPI,
which provided for a recapitalization of RCPI. Under its proposal, Gotham would
(i) commit to act as a standby purchaser for an unspecified portion of a $105
million rights offering of Common Stock at $5.50 per Share and assist RCPI in
identifying standby purchasers for the balance of such offering and (ii) assist
RCPI in identifying standby purchasers for rights not purchased in an additional
$50 million rights offering and in arranging at least $350 million in senior
financing. The Board did not consider that this proposal by Gotham was
sufficiently definitive to enable the Board to engage in substantive
negotiations with Gotham because Gotham's proposal did not (i) set forth a
viable structure, (ii) identify standby purchasers for the rights offering or
(iii) identify a lender prepared to provide the financing described in the
proposal.
On September 29, 1995, at the request of the Whitehall Group,
representatives of the Whitehall Group, Mr. Rockefeller, Tishman Speyer, Exor
and Troutlet met to discuss their possible joint participation in a transaction
to acquire RCPI. On September 30, 1995, representatives of the Whitehall
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Group, Mr. Rockefeller and Tishman Speyer (collectively, the "Initial
Investors") met further to discuss the proposed terms of such a transaction and
the basis on which the Initial Investors would participate therein.
On October 1, 1995, the Initial Investors proposed to the Board a cash
merger between RCPI and an affiliate of the Initial Investors, pursuant to which
RCPI's public stockholders would receive $7.75 per Share, net in cash. The
proposal was subject to RCPI's having, immediately prior to consummation of the
transaction, no additional shares of Common Stock outstanding and only those
existing liabilities as were set forth on a schedule to the proposal. The
Initial Investors' proposal was also conditioned upon (i) the acquisition by
RCPI of the Property and related assets pursuant to a confirmed Chapter 11 plan
in the Borrower's bankruptcy case satisfactory to the Initial Investors, (ii)
the approval by the RCPI stockholders of the merger agreement and (iii) the
absence of a material adverse change in the financial condition of RCPI or the
Property. The proposal was not subject to the Initial Investors' obtaining
financing. In addition, the Initial Investors' proposal provided for a $7.5
million breakup fee and reimbursement of all of their expenses.
In connection with the merger proposal, the Initial Investors agreed among
themselves, effective October 2, 1995, to capitalize the acquiring entity with
equity of $440 million, of which the Whitehall Group would contribute $220
million (approximately $38 million to be made through Whitehall's contribution
of all of the outstanding Warrants and SARs, which the Initial Investors agreed
to value at $4.00 per Warrant and SAR, held by Whitehall to the acquiring
entity), Tishman Speyer would contribute $20 million and Mr. Rockefeller
(together with any other investors reasonably acceptable to the Whitehall Group)
would contribute $200 million. The Initial Investors agreed that if on or prior
to October 6, 1995 Mr. Rockefeller had not arranged an investor group reasonably
satisfactory to the Whitehall Group to fund a portion of Mr. Rockefeller's
investment commitment, then Mr. Rockefeller could terminate his participation in
the merger proposal.
On October 2, 1995, RCPI decided not to exercise RCPI's right to cause ZML
to purchase $10 million of Common Stock pursuant to the Investment Agreement.
The Board made this decision because the Initial Investors' proposal, which
seemed attractive enough to warrant being pursued, was conditioned upon RCPI's
not issuing additional shares and because the Board was, in any event, reluctant
to issue additional shares at a price below the then current market price unless
it was essential for RCPI to do so. RCPI's decision is the subject of threatened
litigation. See " -- Certain Litigation".
Periodically, from October 2, 1995 through October 11, 1995, the Initial
Investors held discussions with Exor and Troutlet concerning their possible
participation in the Initial Investors' merger proposal to RCPI. On October 6,
1995, Mr. Rockefeller advised the Whitehall Group and Tishman Speyer that he was
fully committed to participation in the Initial Investors' merger proposal and
he waived any rights to terminate his participation therein. On October 11,
1995, each of Exor and Troutlet agreed to participate in the merger proposal,
thus becoming Investors. Of the $200 million that Mr. Rockefeller had agreed to
contribute to the acquiring entity, Exor and Troutlet each agreed to contribute
$90 million. On November 7, 1995, Rockprop became an Investor when Tishman
Speyer designated Rockprop, an affiliate of Tishman Speyer, as its successor to
all of its rights and obligations under the various agreements among the
Investors.
On October 3, 1995, the Initial Investors delivered a form of Agreement and
Plan of Merger to RCPI incorporating the terms of their merger proposal.
Beginning October 4, 1995, RCPI and its advisors negotiated with the Initial
Investors and their advisors on the terms of the Initial Investors' merger
proposal. During the course of these negotiations, RCPI countered with a
proposal for an $8.75 per Share all-cash transaction.
On October 5, 1995, EOH sent RCPI a proposal, which EOH described as an
enhancement of the transaction contemplated by the Combination Agreement and
which included the following modifications:
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(i) EOH offered to reduce its investment from $250 million to $150
million and to underwrite a $100 million rights offering for shares of
NUREIT at $5.50 per share.
(ii) If the Whitehall Group would agree to waive certain of its rights
and consent to a closing under the Combination Agreement prior to December
31, 1995, NUREIT would offer to pay the Whitehall Group $30 million in cash
in exchange for cancelation of the Warrants and the SARs and the Whitehall
Group's consent to the prepayment in full of the Floating Rate Notes and the
14% Debentures without premium.
Alternatively, EOH indicated that it would consider restructuring its
investment to provide for an outright purchase of the Mortgage Note for a
mutually agreeable price in cash or a combination of cash and participating debt
securities (which, after making appropriate provision for RCPI's liabilities,
could be distributed to RCPI's stockholders).
On October 6, 1995, Gotham revised its proposal to include up to $150
million in subordinated financing. In addition, Gotham responded to a written
request from RCPI's advisors for more detailed information with respect to its
proposal, clarifying the structure of the proposed transaction and the
transaction sequence, potential sources for debt financing and potential standby
purchasers for the rights offering. The Board did not consider that the Gotham
proposal was sufficiently definitive to warrant engaging in substantive
negotiations with Gotham, however, because the proposal, even as clarified, did
not (i) set forth a viable structure, (ii) identify standby purchasers for the
rights offering, (iii) identify committed sources of debt financing or (iv)
identify an investment, ownership or management strategy for the Property.
On October 9, 1995, the Initial Investors sent a letter to the Board,
stating that the Initial Investors believed that their merger proposal would
require a "downward price adjustment" due to the existence of additional
liabilities of RCPI that were not known to them at the time they made their
original merger proposal, which were comprised of approximately $12 million of
unanticipated additional expenses (legal and other professional fees and
expenses and swap and related financing costs) that had been incurred by RCPI
and between $15 million and $50 million of liabilities that RCPI informed the
Initial Investors might have to be assumed, depending upon negotiations with the
Borrower, in connection with the transfer of the Property to RCPI under the
Chapter 11 Plan. These liabilities included the Borrower's obligations for
tenant improvement obligations under leases for the Property, tax-related claims
of tenants of the Property and third party vendor and broker claims.
On October 16, 1995, the Board held a meeting to review all of the then
current alternatives with respect to proposed investments in and acquisitions of
RCPI. In addition to the proposals of the Zell Group, the Investors and Gotham,
the Board reviewed with its financial and legal advisors the possibility of an
independent rights offering made by RCPI. The Board instructed PaineWebber and
RCPI's legal advisors to continue to evaluate the various proposals RCPI had
received.
Following the Initial Investors' October 1 merger proposal, the Board
extensively reviewed with its advisors the desirability of two modifications to
the merger proposal: (i) giving each of RCPI's public stockholders the choice of
accepting either an all-cash purchase price or a combination of a reduced cash
purchase price and a participating security and (ii) requiring the Whitehall
Group to agree to a rights offering in the event that RCPI's stockholders failed
to approve the Merger Agreement.
At its meeting on October 16, 1995 and at meetings on October 19 and 23,
1995, the Board discussed a proposal developed by RCPI's advisors under which
each stockholder would have the alternative of selecting either (i) a cash
payment for each Share held, which was assumed to be in the range from $8.00 to
$8.75 or (ii) a combination of an assumed $6.00 per Share in cash and a
participating security valued at between $2.00 and $2.75 per Share. Various
participating securities were analyzed, including common equity in a new REIT
that would own a minority interest in the entity that would own the Property
following the Merger; a contingent value right, the value of which would depend
on the Property's appraised value at December 31, 2000; a five-year
participating subordinated debenture that would pay at maturity its face amount
or, if greater, an amount based on
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the then appraised value of the Property and a five-year convertible
subordinated debenture, the terms of which would permit the holders thereof, at
maturity, either to receive its face amount or to convert it into publicly
traded shares of the entity that then owned the Property. The Board and its
advisors recognized that any participating security would be a complex
instrument to create and would be difficult to value. In particular, the Board
and its advisors were concerned that a security whose value depended on a future
appraisal of the Property was subject to the inherent subjectivity of any real
estate appraisal and that, if a convertible security were created, the
stockholders of RCPI would necessarily be minority stockholders (or future
minority stockholders) in the entity that owned the Property. In addition, the
Board and its advisors thought that the terms of a participating security whose
value depended on an appraisal would have to include constraints on the
flexibility of the Investors in managing the Property prior to the appraisal and
that such constraints would be difficult to agree upon.
During October 1995, the Board and its advisors also developed a proposal
under which the Whitehall Group would agree to a rights offering by RCPI in the
event that RCPI's stockholders failed to approve the Merger Agreement. Under
this proposal, the Whitehall Group would agree to permit RCPI to conduct a
publicly registered rights offering of Common Stock of up to approximately $230
million at a discount from the market value of the Common Stock. The net
proceeds of the rights offering would be used to repay the Floating Rate Notes
and for general corporate purposes. The proposal provided that most of the
material covenants in the 14% Debentures, the Warrant Agreement and the SAR
Agreement would be eliminated or relaxed.
After initial discussion of these proposals with the Whitehall Group and its
advisors, the Investors informed representatives of RCPI that they would be
highly unlikely to proceed with a transaction involving a participating
security. For these reasons and in view of the disadvantages of a participating
security and the interest shown by Gotham and other large RCPI stockholders in a
rights offering, the Board concluded that it should pursue the rights offering
proposal. Between October 27 and November 7, 1995, RCPI and its advisors and the
Whitehall Group and their advisors met on several occasions and exchanged a
number of drafts regarding the terms of a rights offering proposal. Throughout
the negotiations, RCPI made clear to representatives of the Whitehall Group that
an accord on the Rights Offering was an integral component of RCPI's evaluation
of the Investors' Merger proposal. In early negotiations, the Whitehall Group
had requested, in return for its consent to a rights offering (i) the right to
participate fully in the Rights Offering; (ii) the right to maintain up to an
18% equity interest on a fully diluted basis following the Rights Offering;
(iii) the right to fully convert all Warrants to SARs; (iv) the right to
reconstitute the Board with nominees of the Investors constituting 50% of the
Board; (v) the limitation on subordination of the 14% Debentures to $625 million
in senior debt; and (vi) the right to underwrite any Rights Offering.
The Board did not negotiate the rights offering proposal as an alternative
transaction to the Merger. The Board has unanimously recommended (as it agreed
to do in the Merger Agreement) that the stockholders of RCPI approve and adopt
the Merger Agreement because it believes that such approval and adoption is in
the best interests of the stockholders of RCPI. For the reasons set forth below,
if the Merger Agreement is not approved and adopted by the stockholders of RCPI,
the Board may not decide to conduct the Rights Offering. The Board negotiated
the rights offering proposal in conjunction with the Merger Agreement to provide
RCPI with a pre-negotiated potential means to raise the funds it would require
to be able to acquire the Property and service its obligations if the Merger
Agreement were not approved by RCPI's stockholders. The Board recognized that
consummation of any transaction that might be considered if the Merger Agreement
were not approved by RCPI's stockholders might require either the Whitehall
Group's consent, potentially portracted litigation or the commencement of a
Chapter 11 case by RCPI. The fact that the Whitehall Group was willing to agree
in advance to waive prohibitions in the Goldman Sachs Financing to permit the
Rights Offering positively influenced the Board's considerations regarding the
Merger.
On October 27, 1995, EOH, on behalf of the Zell Group, sent RCPI an
alternative proposal to purchase the Mortgage Note from RCPI for a price of
$1.16 billion, consisting of $1.03 billion in cash and a $135 million note
secured by a second mortgage on the Property and guaranteed by GE as to
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principal only. Such note would bear interest at 6%, payable monthly, and would
mature in 12 years. RCPI would have to transfer the Mortgage Note free and clear
of all liens and the Zell Group would not assume any of RCPI's debt or other
liabilities. The alternative proposal also provided that the Zell Group would be
responsible for completing a plan of reorganization with the Borrower's
stockholders. In addition, the proposal provided that RCPI would not be entitled
to a "fiduciary out", that the Zell Group would be entitled to a breakup fee of
$25 million (which amount included the $9.6 million breakup fee provided in the
Combination Agreement) and that, if the transaction did not close, RCPI would
reimburse certain of the Zell Group's expenses. The proposal was conditioned on,
among other things, RCPI's closing within five days on the sale of $10 million
of Common Stock to ZML pursuant to the Investment Agreement, final GE approval
of the transaction and RCPI's termination of discussions with the Whitehall
Group and Gotham. In the proposal, EOH characterized the offer as representing a
total value of approximately $9.00 per Share, without accounting for the
Warrants and SARs.
At a Board meeting on October 30, 1995, the Board reviewed a preliminary
financial analysis prepared by PaineWebber of the Zell alternative proposal to
acquire the Mortgage Note. The methodology used by PaineWebber to value the
proposal involved dividing the offer into a cash component and a debt component.
To value the cash component, PaineWebber calculated the cash distribution per
fully diluted share upon closing, after payment of all of RCPI's debt and other
liabilities. To value the debt component of the proposal, the debt was further
divided into a principal component and an interest component. The principal
component, which would have been guaranteed by GE, was valued by discounting the
principal amount per share of Common Stock upon maturity in 12 years at a
discount rate of 6.5%, the rate for GE debt obligations of similar maturity. The
interest component was valued by discounting such coupon payments at discount
rates of 10.0% to 12.0%, which reflected both the lack of a guarantee on the
interest payments and the subordination of the debt to a first mortgage. Using
this methodology and assuming a closing date of December 31, 1995, PaineWebber
preliminarily derived a range of possible values of $7.65 to $7.76 per fully
diluted share using discount rates on the interest component of 12.0% to 10.0%.
Assuming a closing date of March 31, 1996, PaineWebber preliminarily derived a
range of possible values of $7.11 to $7.23 per fully diluted share using the
same discount rates on the interest component. The Board did not respond to
EOH's alternative proposal and it expired according to its terms. The analyses
are filed as an exhibit to the Schedule 13E-3 filed with the Commission in
connection with the Merger. For a description of the qualifications and
selection of PaineWebber and a description of certain relationships between
PaineWebber and RCPI, see "Opinion of PaineWebber".
Negotiations between RCPI and the Investors were concluded on November 7,
1995. RCPI was represented in these negotiations by Dr. Linneman, Chairman of
the Board of RCPI, PaineWebber and Shearman & Sterling. At the end of these
negotiations, RCPI and the Investors agreed on a cash merger price of $8.00 per
Share and the Investors agreed to reduce their breakup fees from $7.5 million to
$6.5 million and to a $2.5 million cap on RCPI's obligation to reimburse the
expenses of the Investors and their affiliates if the Merger Agreement were
terminated. GSMC agreed to lend RCPI up to $45 million to be evidenced by
additional Floating Rate Notes issued upon terms more favorable to RCPI than the
terms contained in the GSMC Loan Agreement in order to permit RCPI to repay
ZML's loan under the Investment Agreement and to pay certain permitted expenses.
The Merger Agreement, as did the Combination Agreement, provides for
indemnification of agents of RCPI, as well as RCPI's officers and directors. The
Combination Agreement had been structured as a sale of assets as opposed to a
merger, and indemnification obligations to RCPI's officers, directors and agents
(such as PaineWebber, Shearman & Sterling, Weil, Gotshal & Manges and RCPI's
litigation counsel) would have been liabilities of RCPI for which provision
would have had to be made prior to making any distributions to stockholders of
RCPI from the proceeds of such asset sale. Accordingly, it was a major point in
the negotiations of the Combination Agreement that the responsibility for any
indemnification obligations be assumed by the entity (NUREIT) acquiring RCPI's
assets. This approach, which is customary in transactions of this type, was
carried over into the negotiation of the Merger Agreement.
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On November 7, 1995, the Board, whose members were neither employees of RCPI
nor affiliates of the Whitehall Group, held a meeting to consider the final
terms of the Merger Agreement, the Rights Offering Agreement and the other
documents to be delivered in connection therewith. At that meeting, PaineWebber
made a presentation to the Board in which PaineWebber delivered to the Board
certain financial analyses, including the financial analyses described under
"Opinion of PaineWebber" below, a review of RCPI and its historical results of
operations and stock prices, leasing activity with respect to the Property and
information relating to the Midtown Manhattan real estate market, as well as the
cash flow estimates provided to PaineWebber by RCPI for the period from November
1995 through March 1996. The analyses are filed as an exhibit to the Schedule
13E-3 filed with the Commission in connection with the Merger. The description
of such analyses is qualified in its entirety by reference to the text of such
analyses. PaineWebber delivered its oral opinion to the Board that the Merger
Agreement was fair from a financial point of view to RCPI's stockholders. See
"-- Opinion of PaineWebber". The Board determined that the Merger Agreement,
together with the related agreements, were financially superior to the
Combination Agreement and superior to the other proposals made by the Zell Group
and Gotham and to any independent alternative available to RCPI for the reasons
set forth below under "Fairness of the Merger". For these reasons, the Board
unanimously voted to terminate the Combination Agreement and to approve the
Merger Agreement.
The Combination Agreement was terminated and the Merger Agreement was
executed on November 7, 1995. On November 8, 1995, GSMC made available to RCPI
$10.2 million under a supplement to the GSMC Loan Agreement (pursuant to the
arrangements described under "The Merger -- The Merger Agreement -- GSMC Loans")
and RCPI repaid the principal and accrued interest on ZML's $10 million loan
under the Investment Agreement.
On November 7, 1995, the Whitehall Group and RCPI entered into the Rights
Offering Agreement. In the Rights Offering Agreement, the Whitehall Group agreed
that, should the stockholders of RCPI fail to approve the Merger Agreement at
the Special Meeting (unless such failure is due to RCPI's breach of the Merger
Agreement), RCPI would have the right, within 30 days after the Special Meeting,
to conduct a $200 million registered rights offering (the "Rights Offering") at
a price set by the Board, but in no event less than $6.00 per Share, that
Goldman Sachs would have the opportunity, but not the obligation, to underwrite
and lead manage the rights offering on customary terms and that PaineWebber
would have the opportunity, but not the obligation, to co-underwrite up to 50%
of the rights offering on the same terms. The parties further agreed that, in
conjunction with the Rights Offering, the Board would be reconstituted to
include two of the current directors, Mr. Jerry I. Speyer, one director
designated by Goldman Sachs pursuant to the Board Letter and an independent
director selected by Whitehall from a list of three potential directors
nominated by the current directors. The reconstitution of RCPI's Board would not
be subject to a vote or approval by RCPI's stockholders. The parties also agreed
that, if the Rights Offering were consummated, the holders of the Warrants and
the SARs would not be entitled to participate in the Rights Offering, but would
be entitled to additional Warrants and SARs in order to maintain their 19.9%
fully diluted equity ownership position in RCPI, and Whitehall would receive
additional three-year rights to purchase a number of shares of Common Stock
equal to $42 million divided by the rights offering price plus $1.00 for two
years and at the rights offering price plus $1.50 for the third year. Assuming
the rights offering were fully subscribed, the rights offering price were $6.00
per Share and no additional shares of Common Stock (or rights to purchase Common
Stock) were issued by RCPI, the holders of the Warrants, SARs and additional
rights would be entitled, upon full exercise thereof, to 24.9% of the equity of
RCPI. However, as a result of the Limit, the Whitehall Group would not be able
to hold Warrants, additional rights and Shares equalling more than 9.8% of the
outstanding Shares at any time; therefore, any other equity related holdings by
the Whitehall Group would have to be in the form of SARs (whose conversion into
Warrants is subject to compliance with the Limit) or some other form of security
that would give the Whitehall Group the economic equivalent of a Share but would
not give the Whitehall Group the right generally to vote.
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In the Rights Offering Agreement, the parties have agreed that any Warrants
may be converted to SARs at the option of the holders thereof, provided that,
once $6 million of 14% Debentures have been issued in connection with the
exercise of SARs that had been converted pursuant to this allowance or acquired
upon conversion of additional rights, any subsequent 14% Debentures issued in
connection with the exercise of SARs that had been converted pursuant to this
allowance or acquired upon acquisition of additional rights would be prepayable
by RCPI at any time at par. In the Rights Offering Agreement, the parties have
also agreed that the proceeds of the Rights Offering would be used to redeem the
Floating Rate Notes; in addition, if the Rights Offering were consummated and
all of the Shares offered were subscribed for, the cash flow sweep provisions of
the Debenture Purchase Agreement would be eliminated and the covenants governing
the 14% Debentures would be amended to allow RCPI to (i) increase from $10
million to $30 million the amount of unsecured debt that RCPI is permitted to
have outstanding at any time to cover its working capital needs; (ii) permit the
incurrence of debt secured by assets acquired with the proceeds of such debt to
the extent of 66% of the assets' purchase price in the case of nonrecourse debt
and 50% of the assets' purchase price in the case of recourse debt; (iii)
eliminate the restrictions on advances and loans made by RCPI; (iv) eliminate
the limitations on transactions with affiliates of RCPI and thus allow RCPI to
enter into any transactions with affiliates without the transaction having to
satisfy the Whitehall Group that the transaction meets a comparable arms-length
transaction test; (v) eliminate the restrictions of RCPI incurring operating
lease obligations; (vi) eliminate the prohibition on RCPI initiating changes in
its governing documents, except to eliminate the Limit; (vii) eliminate the
restrictions on RCPI's ability to modify the Mortgage Note; and (viii) eliminate
the prohibition on altering the character of RCPI's business. The parties have
also agreed that, in connection with the Rights Offering, certain changes would
be made in the terms of the Warrants and SARs, including the elimination of the
existing required consent of the holders thereof to issuances of Common Stock
for cash or property at a price less than the "fair market value of the Common
Stock". The Rights Offering Agreement is attached hereto as Annex B and is more
fully described in "The Merger -- The Rights Offering Agreement".
The Board negotiated the Rights Offering Agreement in conjunction with the
Merger Agreement to provide RCPI with a pre-negotiated potential means to raise
funds it would require to be able to acquire the Property and service its
obligations if the Merger Agreement were not approved and adopted by RCPI's
stockholders. No decision has been made by the Board as to whether this option
would be exercised if RCPI's stockholders do not approve and adopt the Merger
Agreement; such a decision will be made in the light of the circumstances
obtaining at the time of any such failure to approve and adopt the Merger
Agreement, including any alternatives that may than be available to RCPI. The
Board believes that, if RCPI's stockholders do not approve and adopt the Merger
Agreement, RCPI could be subject to substantial uncertainties. RCPI expects
that, in absence of additional financing, its cash resources will be largely
exhausted by the end of April 1996. There can be no assurance as to the
availability to RCPI of any alternatives to proceeding with the Rights Offering
and there can be no assurance that, if the Board elects to proceed with the
Rights Offering, Goldman Sachs or PaineWebber will agree to underwrite the
Rights Offering or that the Rights Offering can be successfully concluded. RCPI
stockholder approval and adoption of the Merger Agreement is, in any event, a
condition to the effectiveness of the proposed Chapter 11 Plan and, accordingly,
in the event of a rejection of the Merger Agreement, a new Chapter 11 Plan will
have to be negotiated. While the Rights Offering is designed to produce proceeds
to RCPI of $200 million (before expenses), most of these proceeds would be used
to retire the Floating Rate Notes. Thus, the Board believes that, even if the
Rights Offering were successful, RCPI would require additional funds in order to
demonstrate in the Borrower's Chapter 11 Case that RCPI could successfully
operate the Property. While the Whitehall Group agreed in the Rights Offering
Agreement to make certain changes in terms of the 14% Debentures to facilitate
additional borrowings by RCPI, there can be no assurance that RCPI could obtain
the required additional financing on terms satisfactory to it, if at all.
In the Merger Agreement, the Investors agreed that of the $306.09 million
aggregate Merger Consideration, $134.03 million, $15.64 million, $15.64 million,
$70.39 million and $70.39 million would be contributed by Whitehall, Rockprop,
Mr. Rockefeller, Exor and Troutlet, respectively. As
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permitted by the Merger Agreement, Mr. Rockefeller intends, prior to the
consummation of the Merger, to assign his rights and obligations under the
Merger Agreement to one of his controlled affiliates. Additionally, as permitted
by the Merger Agreement, Troutlet has designated each of Gribble and Weevil to
contribute $27.37 million of the $70.39 million that Troutlet has committed to
contribute. Concurrently with the execution of the Merger Agreement, the
Investors entered into a letter agreement, establishing certain mechanisms to
govern the relationship among the Investors relating to the exercise of
Holdings's rights (each, an "Approval Right") under the Merger Agreement to take
any action or approve, consent to or waive any action or matter. If an Investor
objects to the specific exercise of an Approval Right, Holdings may not exercise
the Approval Right unless the remaining Investors assume all of the obligations
of the objecting Investor under the Merger Agreement.
RECOMMENDATION OF THE BOARD
On November 7, 1995, the Board unanimously approved the Merger Agreement,
determined that the Merger Agreement is fair to and in the best interests of
RCPI and its stockholders and recommended that all stockholders of RCPI approve
and adopt the Merger Agreement. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS OF RCPI VOTE FOR APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.
FAIRNESS OF THE MERGER
BOARD. In reaching its fairness determination, the Board considered the
following factors:
(a) The fact that (i) the $8.00 per Share Merger Consideration
represents a 55.4% premium over the $5.15 average closing sales price for
the Shares on the NYSE for the 30 calendar days ended August 1, 1995 (the
last trading day prior to the publication of a newspaper article stating
that Disney and an unnamed investment partner would be bidding against
several other companies for the Property), a 28.9% premium over the $6.21
average closing sales price for the Shares on the NYSE for the 30 calendar
days ended May 9, 1995 (the last trading day prior to the publication of a
newspaper article stating that the Borrower was considering filing for
protection under the Bankruptcy Code in the immediate future), and a 6.6%
premium over the $7.50 closing sales price on the NYSE on November 6, 1995
(the day preceding the date of announcement of the Merger Agreement) and
(ii) the Shares did not trade at a price in excess of $6 7/8 per Share
during the year preceding the Borrower's bankruptcy filing. The market
prices referred to above relating to the premium represented by the Merger
Consideration are market prices of the Shares unaffected by, in the case of
August 1, 1995 and May 9, 1995, trading based on speculation, and in the
case of November 6, 1995, trading based on the announcement of the Merger
Agreement. Except for nine days during October 1995 (during which Shares
were traded at prices between $8 and $8 3/8), the date following
announcement of the letter of intent with respect to the Zell proposal (on
which the Shares traded at up to $8 1/8), and the two days following the
execution of the Zell Combination Agreement (on which the Shares traded at
up to $8), at no time during 1995 did the Shares trade at or above $8 per
Share. The Board believed that these prices were achieved as a result of
market speculation during the period the Board was considering competing
proposals submitted by the Investors, the Zell Group and Gotham. See "Market
Prices and Dividends on RCPI Common Stock".
(b) The substantial risk that the consummation of the Combination
Agreement and the other Zell Group proposals might not occur or might be
significantly delayed as a result of legal challenges brought by the
Whitehall Group.
(c) The substantial risk that the consummation of the Gotham proposals,
or an independent rights offering by RCPI, might not occur or might be
significantly delayed as a result of legal challenges brought by the
Whitehall Group. In evaluating the possible legal challenges the Whitehall
Group might raise to the consummation of the Zell or Gotham proposals or any
independent rights offering by RCPI, the Board was mindful, in particular,
that all of such proposals involved a need to borrow funds on the security
of RCPI's interest in the Property
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which is represented by the Mortgage Note. The Mortgage Note was pledged to
secure the Whitehall Group debt (and the Convertible Debentures), and these
financings could not be effected unless and until the lien held by the
Whitehall Group had been discharged. The Board concluded that securing a
release of this lien without the Whitehall Group's consent would be
expensive and time consuming and subject to the inherent uncertainties of
the litigation process.
(d) The substantial risks to RCPI and its stockholders if RCPI filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code, an action
which the Special Committee and the Board considered taking as part of their
evaluation of RCPI's alternatives and which the Special Committee and the
Board believed RCPI might be required to do if it did not enter into a
financing or acquisition transaction following the Borrower's bankruptcy.
(e) The Board's belief that, in the absence of the existence of a
possible transaction involving the Shares, it was probable that the Shares
would trade at prices significantly below $8.00 per Share. The Board's
belief was based on the historical trading activity of the Shares, the
potential liquidity problems facing RCPI in the absence of a transaction and
the likely impact of an RCPI bankruptcy filing (which the Board believed
might be necessary).
(f) The absence of any firm proposals from prospective purchasers to
acquire the Shares for cash at a price equal to or better than the Merger
Consideration despite the widespread publicity regarding RCPI that existed
following the May 11, 1995 bankruptcy filing by the Borrower, the July 21,
1995 public announcement by RCPI that it was exploring strategic
alternatives, the public announcement of the various acquisition proposals
made to RCPI and the numerous preliminary indications of interest received
by RCPI. See "-- Background of the Merger".
(g) The Board's belief that the Merger represented a financially
superior transaction to the alternate transactions under consideration by
the Board, including the Combination Agreement and the various proposals
submitted by the Zell Group for the reasons described in factors set forth
in paragraphs (a), (b), (c), (k), (l) and (m).
(h) The opinion of PaineWebber that, as of November 7, 1995, the Merger
Consideration was fair from a financial point of view to RCPI and its
stockholders. See "-- Opinion of PaineWebber".
(i) The Board's belief that the fact that the Merger Consideration is
less than the historical net book value per Share ($9.03 per Share at
September 30, 1995) was not relevant because for the last several years the
Common Stock has traded at a substantial discount from book value, which
reflects the value at which the Mortgage Note has been carried on RCPI's
books.
(j) The fact that, following consummation of the Merger, the current
stockholders of RCPI will no longer be able to participate in any potential
increases in value of the Property.
(k) The fact that the Combination Agreement and later Zell Group
proposals were structured as a sale of assets in which the acquiring group
was only responsible for certain liabilities of RCPI and, as a consequence,
the risk that the consideration ultimately received by the stockholders of
RCPI would be significantly reduced by the exposure of RCPI's stockholders
to liabilities not assumed by the acquiring group.
(l) The fact that the Merger Agreement is structured so that the current
stockholders of RCPI would not be exposed to any liabilities of RCPI if the
Merger is consummated.
(m) The fact that the Combination Agreement was structured so that the
value of the consideration to be received ultimately by RCPI's stockholders
could be significantly reduced by the effects of the antidilution provisions
of the Warrant Agreement and the SAR Agreement which, in the Board's view,
the Whitehall Group was likely to seek to enforce.
(n) The requirement that the Merger Agreement be approved and adopted by
the holders of a majority of the Shares. See "The Merger -- The Merger
Agreement -- Conditions to the Merger".
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(o) In the event that the stockholders of RCPI retained an interest in
RCPI or its successor, the significant risks to RCPI's stockholders from
investing in RCPI after the Property had been transferred to RCPI, including
the dependence on a single asset, the continued significant cash flow
deficits expected to be generated by the Property and the highly leveraged
condition of RCPI or its successor at least in the years immediately
following such transaction.
(p) The fact that the Merger Agreement permits RCPI at any time prior to
the Closing to provide information concerning RCPI and the Property to third
parties in response to requests therefor and to enter into discussions with
any unsolicited third party regarding an alternative transaction if the
Board believes, based on advice of outside legal counsel, that it has a
fiduciary duty to do so. See "The Merger -- The Merger Agreement --
Exclusivity".
(q) The fact that the Merger Agreement is not subject to a due diligence
or financing condition in favor of the Investors and the consequent
likelihood that the Merger Agreement will be consummated expeditiously.
(r) The negative implications of terminating the Combination Agreement,
namely that such termination may result in the payment to the Zell Group of
a breakup fee and expenses in an aggregate amount of $11.6 million.
(s) The Board's belief that further negotiations would not have produced
a price higher than $8.00 per Share and might have jeopardized the
possibility of reaching an agreement with the Investors with respect to the
Merger and the Rights Offering Agreement.
(t) The agreement of GSMC to supplement the GSMC Loan Agreement to
permit RCPI to borrow additional amounts of up to $45 million to pay certain
expenses on the terms set forth in the Merger Agreement. See "The Merger --
The Merger Agreement -- GSMC Loans".
In view of the wide variety of factors considered in connection with its
evaluation of the Merger Agreement and the Merger, the Board did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. In addition, the
Board did not undertake to determine the degree to which each of the enumerated
factors was favorable or unfavorable; however, the discussions among the members
of the Board evidenced the general view that the factors set forth in paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (k), (l), (m), (n), (o), (p), (q), (s)
and (t) generally were favorable to the Board's determination to approve the
Merger Agreement, the factors set forth in paragraphs (j) and (r) generally were
unfavorable to the Board's determination and the factor set forth in paragraph
(i) was neither favorable nor unfavorable. The fact that the Whitehall Group was
willing to agree in advance to waive prohibitions in the Goldman Sachs Financing
to permit the Rights Offering positively influenced the Board's considerations
regarding the Merger.
RCPI's analysis did not accord significant weight to the liquidation value
of RCPI because, given that RCPI owns a single asset (the Mortgage Note), a sale
of RCPI has essentially the same economic effect as a liquidation.
Because the members of the Board are not affiliated with the Investors, the
Board did not believe it was necessary to retain an unaffiliated representative
to act solely on behalf of the public stockholders of RCPI for the purpose of
negotiating the Merger Agreement with the Investors. Similarly, no provision has
been made in connection with the Merger Agreement to allow stockholders to
obtain access to RCPI's corporate files or to obtain counsel or appraisal
services at the expense of RCPI or the Investors.
On February 12, 1996, the Board considered the events that had occurred
since its approval of the Merger Agreement, including PaineWebber's current
opinion that the Merger is fair from a financial point of view, the fact that no
other proposed transactions have been forthcoming despite widespread publicity
about the proposed Merger, the allegations made by Charal Investment Company,
Inc. ("Charal") (See "Special Factors -- Certain Litigation") and the Board's
earlier rejection of Charal's
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pre-suit demand. Based on such factors and other relevant factors, including the
factors described above, the Board reviewed and reiterated its determination
that the Merger Agreement is fair to and in the best interests of RCPI and its
stockholders, and continued to recommend its adoption by the stockholders.
WHITEHALL AND GS GROUP. Whitehall and GS Group have reviewed the factors
considered by the Board in reaching its determination on the Merger and believe
that these factors provide a reasonable basis for Whitehall and GS Group to
believe, as they do, that the Merger is fair to the stockholders of RCPI. This
belief should not, however, be construed as a recommendation by Whitehall or GS
Group to RCPI's stockholders to vote to approve and adopt the Merger Agreement.
Whitehall and GS Group have not quantified or assigned specific relative weights
to any of these factors; they have relied principally on, and have adopted as
their own, the conclusion of the Board that the Merger is fair to RCPI's
stockholders.
INTEREST OF CERTAIN PERSONS IN THE MERGER
DIRECTORS AND OFFICERS
In considering the recommendation of the Board with respect to the Merger,
stockholders should be aware that certain members of management and the Board at
the time of approval of the Merger Agreement had certain interests that may
present them with potential conflicts of interest in connection with the Merger,
as summarized below.
Upon consummation of the Merger, the Company's executive officers and
directors will receive, in the aggregate, $87,456 ($8.00 for each of 10,932
Shares) in Merger Consideration.
Directors' and officers' indemnification and insurance policies will be in
effect for six years from the Effective Time (as defined below) with respect to
matters occurring before the Effective Time, provided that, in the case of
insurance, such insurance is available on commercially reasonable terms. See
"The Merger -- The Merger Agreement -- Indemnification and Insurance".
RCPI entered into employment agreements with Richard M. Scarlata, President
and Chief Executive Officer, Stephanie Leggett Young, Vice President and
Secretary, and Janet P. King, Vice President and Treasurer, on May 5, 1995 and
with Stevan A. Sandberg, Executive Vice President, on October 2, 1995. These
executive officers of RCPI, none of whom is a director of RCPI, will be entitled
to certain payments and benefits if the Merger is approved by the stockholders
of RCPI.
(a) If Mr. Scarlata's employment with RCPI is terminated (other than
pursuant to three years' notice or for cause) following approval of the
Merger by the stockholders of RCPI, he will be entitled to receive from RCPI
a lump sum payment equal to the present value of three years' annual salary
and if, in the reasonable judgment of the Board, Mr. Scarlata assisted RCPI
in consummating the Merger, a cash bonus of $75,000. In addition, Mr.
Scarlata will be entitled to life, health and dental insurance and
retirement benefits for a three-year period beginning on the date of the
termination of his employment. Mr. Scarlata's current annual salary is
$250,000.
(b) If Ms. Young's employment with RCPI is terminated (other than
pursuant to two years' notice or for cause) following approval of the Merger
by the stockholders of RCPI, she will be entitled to receive from RCPI a
lump sum payment equal to the present value of two years' annual salary and
if, in the reasonable judgment of the Board, Ms. Young assisted RCPI in
consummating the Merger, a cash bonus of $20,000. In addition, Ms. Young
will be entitled to life, health and dental insurance and retirement
benefits for a two-year period beginning on the date of the termination of
her employment. Ms. Young's current annual salary is $100,000.
(c) If Ms. King's employment with RCPI is terminated (other than
pursuant to one year's notice or for cause) following approval of the Merger
by the stockholders of RCPI, she will be entitled to receive from RCPI a
lump sum payment equal to the present value of one year's annual salary and
if, in the reasonable judgment of the Board, Ms. King assisted RCPI in
consummating
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the Merger, a cash bonus of $20,000. In addition, Ms. King will be entitled
to life, health and dental insurance and retirement benefits for a one-year
period beginning on the date of the termination of her employment. Ms.
King's current annual salary is $100,000.
(d) If Mr. Sandberg's employment with RCPI is terminated prior to April
16, 1996 (other than for cause or pursuant to a determination by RCPI that
Mr. Sandberg is unable to devote substantially all of his business time to
the discharge of his duties to RCPI) or his employment is not extended
beyond April 16, 1996, he will be entitled to receive from RCPI a lump sum
payment equal to $120,000.
It is anticipated that, upon consummation of the Merger, the employment of each
of the above executive officers of RCPI will be terminated.
On November 28, 1995, the Board agreed to pay Dr. Peter D. Linneman,
Chairman of the Board of RCPI, a bonus of $200,000 upon consummation of the
Merger or a similar transaction that results in receipt by RCPI stockholders of
consideration at least equal value to the RCPI stockholders, in recognition of
the substantial services he performed for RCPI in connection with transactions
considered by the Board in 1995, including the Merger Agreement.
Each of the indemnification, insurance, employment, severance and change of
control and bonus arrangements described above grants rights to the relevant
directors and officers of RCPI that are in addition to the rights such directors
and officers enjoy solely in their capacity as stockholders. Therefore, they
have interests in these arrangements that potentially conflict with those of
RCPI and its other stockholders.
AFFILIATES
As a result of their investment in RCPI through the Goldman Sachs Financing
(as defined below), GS Group and Whitehall may have interests that conflict with
those of the stockholders of RCPI. GS Group and Whitehall believe that, by
acquiring the entire equity interest in RCPI (with the other Investors) through
the Merger, they will be better able to protect such investment. In addition,
Whitehall and GS Group seek to acquire RCPI because they believe that they can
more effectively and efficiently manage the property as a privately held
company. See "Special Factors -- Reasons for the Transaction". Daniel M.
Neidich, a general partner of GS Group, was a director of RCPI from December 29,
1994 until August 8, 1995. Mr. Neidich received directors' fees of $21,500 and
was the beneficiary of directors' and officers' indemnification and insurance
policies during such period.
VOTE OF DIRECTORS AND OFFICERS OF RCPI
To RCPI's knowledge after reasonable inquiry, each of RCPI's executive
officers and directors (who hold in the aggregate 10,932 Shares (approximately
.03% of the outstanding Shares)) intends to vote all Shares held of record or
beneficially owned by such person for the approval and adoption of the Merger
Agreement. Except for the recommendation of the Board contained in this Proxy
Statement, to RCPI's knowledge after reasonable inquiry, no executive officer or
director of RCPI has made a recommendation to the stockholders of RCPI in
support of or opposed to the approval and adoption of the Merger Agreement.
OPINION OF PAINEWEBBER
RCPI originally engaged Kidder Peabody in 1993 to provide certain financial
advisory services to RCPI, which engagement was subsequently assigned to, and
assumed by, PaineWebber on December 9, 1994. In connection with the engagement,
the Board requested that PaineWebber render an opinion as to whether the Merger
Consideration is fair, from a financial point of view, to the holders of Common
Stock.
On November 7, 1995, PaineWebber delivered its oral opinion to the Board to
the effect that, as of such date, the $8.00 per Share in cash to be received by
the holders of Shares pursuant to the Merger Agreement was fair from a financial
point of view to RCPI's stockholders. PaineWebber has subsequently confirmed
such opinion by delivery of its written opinion dated as of the date of this
Proxy
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Statement. PaineWebber's opinion does not constitute a recommendation to any
stockholder of RCPI as to how such stockholder should vote with respect to the
Merger. Additionally, PaineWebber's engagement does not contemplate delivery of
any other updated opinion prior to the Special Meeting or consummation of the
Merger.
The full text of the written opinion of PaineWebber, which sets forth the
matters considered and limitations on the review undertaken in connection with
such opinion, is attached hereto as Annex C and is incorporated by reference
herein. HOLDERS OF SHARES ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS
ENTIRETY.
In connection with its opinion, PaineWebber, among other things: (i)
reviewed certain financial and other information that was publicly available or
furnished to PaineWebber by or on behalf of RCPI, including certain internal
analyses, financial forecasts and assumptions, reports and other information
prepared by RCPI's management and/or its representatives; (ii) held discussions
with management of RCPI concerning RCPI's historical and current operations,
financial condition and prospects; (iii) reviewed the price and trading history
of the Common Stock and compared such price and trading history with that of
publicly traded companies which PaineWebber deemed relevant, as described under
"Comparative Transaction Analysis" below; (iv) compared the financial position
and operating results of RCPI with that of certain publicly traded companies
which PaineWebber deemed relevant; (v) reviewed the proposed financial terms of
the Merger and compared such terms with the financial terms of certain other
transactions that PaineWebber deemed relevant; (vi) reviewed the Merger
Agreement and a draft of this Proxy Statement as proposed to be filed with the
Commission; and (vii) conducted such other financial studies, analyses and
investigations and reviewed such other factors as PaineWebber deemed appropriate
for purposes of its opinion.
In rendering its opinion, PaineWebber relied on the accuracy and
completeness of all financial and other information reviewed by it that was
publicly available or furnished or otherwise communicated to it by or on behalf
of RCPI, and it has not independently verified such information. PaineWebber
assumed that the financial forecasts examined by it were reasonably prepared on
bases reflecting the best currently available estimates and good faith judgments
of the management of RCPI as to the future performance of RCPI and the Property.
PaineWebber did not undertake an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of RCPI. PaineWebber was
furnished with the Douglas Elliman 1994 Appraisal, upon which PaineWebber
relied. PaineWebber assumed that all material liabilities (contingent or
otherwise, known or unknown) of RCPI are as set forth in RCPI's consolidated
financial statements. In addition, RCPI advised PaineWebber that, in the absence
of the Merger or an alternative comparable transaction, RCPI would not, in the
reasonably near term, be able to meet its debt service obligations and would not
be in compliance with certain of its loan covenants, which could lead to the
commencement by RCPI of a case under Chapter 11 of the Bankruptcy Code.
PaineWebber assumed, with the consent of RCPI, that certain alternative
transactions proposed to RCPI were not feasible due to existing contractual
obligations of RCPI. RCPI's Board agreed that PaineWebber could make this
assumption for purposes of its opinion because consummation of any of these
alternative transactions would have required the consent of the Whitehall Group
(which the Whitehall Group had indicated it would not provide) or the
institution of litigation against the Whitehall Group (the outcome of which
could not be predicted with certainty and which might have been protracted) or
the commencement of a Chapter 11 case by RCPI.
PaineWebber's opinion does not address any possible rights offering by RCPI
in the event the stockholders do not approve the Merger and does not address the
relative merits of the Merger and any other potential transactions or business
strategies discussed by the Board as alternatives to the Merger or the
underlying business decision of the Board to accept or reject the Merger.
PaineWebber's opinion is directed to the Board and does not constitute a
recommendation to any stockholder of RCPI as to how any such stockholder should
vote with respect to the Merger. PaineWebber assumed that
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there had been no material change in RCPI's assets, financial condition, results
of operations, business or prospects since the date of the last financial
statements made available to PaineWebber. PaineWebber's opinion is based on the
regulatory, economic, monetary and market conditions existing on the date
thereof.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative methods of financial analysis and
the application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. Accordingly, PaineWebber believes that its analysis must be
considered as a whole and that considering any portion of such analysis and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying its opinion. In
its analyses, PaineWebber made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of RCPI. Any estimates contained in these analyses
are not necessarily indicative of actual values or predictive of future results
or values, which may be significantly more or less favorable than as set forth
therein, and neither RCPI nor PaineWebber assumes any responsibility for their
accuracy. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the price at which businesses may
actually be sold.
The following paragraphs summarize the significant analyses performed by
PaineWebber in arriving at its opinion, dated as of the date of this Proxy
Statement, presented to the Board.
STOCK TRADING HISTORY. PaineWebber reviewed the history of the trading
prices and volume for the Common Stock, both separately and in relation to
market indices and a comparative company index. The comparative company index
was comprised of six companies that PaineWebber deemed relevant, including Arbor
Property Trust, Beacon Properties Corporation, Carr Realty Corporation, MGI
Properties, Mellon Participating Mortgage Trust and Property Capital Trust (the
"Comparative Companies"). PaineWebber observed that the Shares had performed
unevenly against both the S&P 500 index and a REIT index comprised of the
Comparative Companies over the last 22 months and had underperformed when
compared to these indices over the past five years. PaineWebber further observed
that the Merger Consideration constituted a premium of 18.5% over the $6.75
highest closing price and a premium of 100.0% over the $4.00 lowest closing
price for the Shares on the NYSE for the 52-week period ended August 1, 1995
(the last trading day prior to publication of a newspaper article stating that
Disney and an unnamed investment partner would be bidding against several other
companies for the Property). The Merger Consideration also constituted a 52.4%
premium over the $5.25 closing price for the Shares on the NYSE on August 1,
1995 and a 60.0% premium over the $5.00 closing price for the Shares on the NYSE
on July 17, 1995 (30 days prior to the announcement of the execution of the
letter of intent between RCPI and EOH). It should be noted that the Comparative
Companies were not the subject of acquisition transactions during the comparison
period, and thus their stock prices did not reflect any value attributable to a
control premium.
SELECTED COMPARATIVE PUBLIC COMPANY ANALYSIS. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of RCPI to the corresponding data of
the Comparative Companies.
With respect to RCPI, PaineWebber compared the implied multiples based on
the Merger Consideration for RCPI with the median multiples of the Comparative
Companies based on closing stock prices as of November 3, 1995. It should be
noted that the Comparative Companies were not the subject of acquisition
transactions at such date, and thus their stock prices did not reflect any value
attributable to a control premium. PaineWebber compared multiples of latest 12
months ("LTM") revenues; LTM net operating income ("NOI"), after general and
administrative expenses ("G&A"); LTM net income; LTM funds from operations
("FFO") per share, as well as book value and 1995 and 1996 estimated (as
estimated by research analysts and compiled by First Call) FFO per share.
PaineWebber noted that RCPI's implied revenue multiple based on the Merger
Consideration was 14.20x versus a median revenue multiple of 6.34x for the
Comparative Companies; RCPI's implied
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NOI (after G&A) multiple was 15.0x versus a median NOI (after G&A) multiple of
11.0x for the Comparative Companies; RCPI's implied net income and FFO multiples
were not meaningful (due to RCPI's negative LTM results); RCPI's implied book
value multiple was 0.69x versus a median book value multiple of 1.87x for the
Comparative Companies; RCPI's implied 1995 estimated FFO per share multiple was
not meaningful (due to negative projections); and RCPI's implied 1996 estimated
FFO per share multiple was 18.2x versus a median 1996 estimated FFO per share
multiple of 9.1x for the Comparative Companies.
PaineWebber applied the low multiples of LTM revenues, LTM NOI (after G&A),
LTM net income, book value, LTM FFO per share, 1995 estimated FFO per share and
1996 estimated FFO per share and applied the high NOI (after G&A) implicit
capitalization rate for the Comparative Companies to the respective results of
RCPI, which resulted in a range of possible equity values for RCPI based on the
comparative company analysis of $4.15 to $8.11 per fully diluted share of Common
Stock. Utilizing the high multiples and the low implicit capitalization rate for
the Comparative Companies would have given a range of possible equity values for
RCPI that was not meaningful. PaineWebber utilized the low multiples for the
Comparative Companies and the high NOI (after G&A) implicit capitalization rate
due to the distressed status of RCPI's sole asset, the Mortgage Note. In
addition, PaineWebber noted that RCPI has a unique property and structure for
which there are no directly comparable companies and, therefore, PaineWebber did
not consider the comparative company analysis to be as relevant as the other
valuation methodologies PaineWebber employed.
DISCOUNTED EQUITY VALUE ANALYSIS. A discounted equity value analysis is a
traditional valuation methodology used to derive a valuation of a corporate
entity by capitalizing the estimated future cash flow and calculating the
estimated future dividends of such corporate entity and discounting such
aggregated results back to the present. PaineWebber performed a discounted
equity value analysis of RCPI based on the fiscal years 1995 to 2000 and 1995 to
2007 financial forecasts for RCPI provided by RCPI management (the "Financial
Forecast"). The Financial Forecast was the same as the "Case 2" financial
projections described below under "Certain Financial Projections", modified only
to reflect actual leasing activity at the Property after June 30, 1995. See
"Certain Financial Projections" for a description of the assumptions underlying
the Financial Forecast. PaineWebber used a 2007 holding period (i) to be
consistent with the Douglas Elliman appraisal and (ii) for comparison with
projected results through the stated maturity of the Mortgage Note and its
conversion into an equity interest in the Property.
Using the information set forth in the Financial Forecast, PaineWebber
calculated RCPI's estimated "net cash flow" based on Property cash flow
projections less operating and debt service expenses. The annual dividends to
common stockholders were based upon RCPI's estimated net cash flow and
assumptions as set forth by RCPI. To estimate the terminal value of RCPI at the
end of the Financial Forecast period, PaineWebber assumed that RCPI would
acquire ownership of the Property on December 31, 1996, and accordingly, started
with the projected values of the Property on December 31, 2000 ($1.76 billion)
and December 31, 2007 ($2.30 billion), and then subtracted the total amount of
debt outstanding on the respective terminal dates, and added proceeds from an
assumed conversion of all Warrants and SARs. This valuation methodology resulted
in terminal value estimates for RCPI of $817 million at December 31, 2000 and
$1.37 billion at December 31, 2007. Future Property values were estimated by
applying the valuation methodology set forth in the Douglas Elliman 1994
Appraisal, including the use of a terminal capitalization rate of 7.5% and a
discount rate of 10% as set forth in the Douglas Elliman 1994 Appraisal.
PaineWebber analyzed the Financial Forecast and discounted the stream of
dividends and terminal values resulting from the Financial Forecast back to
March 31, 1996, using discount rates of 12.0% to 14.0%. Based on this analysis,
PaineWebber derived a range of possible equity values of $4.63 to $6.73 per
fully diluted share of Common Stock.
COMPARATIVE TRANSACTION ANALYSIS. PaineWebber also performed an analysis of
the multiples paid in selected acquisition transactions including Mid-American
Communities, Inc.'s purchase of America First REIT, Horizon Outlet Centers,
Inc.'s purchase of McArthur/Glen Realty Corp., Highwoods
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Properties, Inc.'s purchase of Forsyth Properties, Inc., Liberty Property
Trust's purchase of Lingerfelt Development Corp., Property Trust of America's
purchase of Security Capital Pacific Inc., Wellsford Residential Property
Trust's purchase of Holly Residential Properties, Inc., Simon Property Group's
purchase of MSA Realty Corp., Super Valu Inc.'s purchase of Wetterau Properties
Inc., an investor group's purchase of CenterMark Properties, and California Real
Estate Investment Trust's purchase of Commonwealth Equity Trust USA (the
"Comparative Transactions").
With respect to RCPI, PaineWebber compared the implied multiples based on
the Merger Consideration for RCPI with the median multiples of the Comparative
Transactions based on the offer price paid in each transaction and the LTM
period ending before the announcement of each transaction. PaineWebber compared
multiples of LTM revenues, LTM NOI (after G&A), LTM net income, LTM FFO per
share and book value. PaineWebber noted that RCPI's implied revenue multiple was
14.20x versus a median revenue multiple of 8.56x for the Comparative
Transactions; RCPI's implied NOI (after G&A) multiple was 15.0x versus a median
NOI (after G&A) multiple of 12.2x for the Comparative Transactions; RCPI's
implied net income and FFO multiples were not meaningful (due to negative LTM
results); and RCPI's book value multiple was 0.69x versus a median book value
multiple of 1.02x for the Comparative Transactions.
Based on the $5.00 closing price for the Shares on the NYSE on July 17, 1995
(30 days prior to the announcement of the execution of the letter of intent
between RCPI and EOH) PaineWebber calculated the premium represented by the
Merger Consideration to be 60.0%. PaineWebber then compared this premium to the
median premium paid to the unaffected stock prices for the Comparative
Transactions of 28.0% (using closing stock prices for the target companies as of
the date 30 days prior to the announcement date of each respective transaction).
PaineWebber applied the low multiples of LTM revenues, LTM NOI (after G&A),
LTM net income, LTM FFO per share, book value and premium paid to the respective
results of RCPI which resulted in a range of possible equity values for RCPI
based on the Comparative Transaction analysis of $5.28 to $6.14 per fully
diluted share of Common Stock. PaineWebber utilized the low multiples for the
Comparative Companies due to the distressed status of RCPI's sole asset, the
Mortgage Note. In addition, PaineWebber noted that RCPI has a unique property
and structure for which there are no directly comparable transactions and,
therefore, PaineWebber did not consider the comparative transactions analysis to
be as relevant as the other valuation methodologies PaineWebber employed.
Pursuant to an engagement letter between RCPI and PaineWebber, PaineWebber
was paid a fee of $250,000 upon rendering its opinion on November 7, 1995 and
will receive a transaction fee of $4.25 million upon the closing of the Merger
(which transaction fee will not be paid if the Merger does not close). RCPI
originally engaged Kidder Peabody in 1993 to provide certain financial advisory
services to RCPI, which engagement was subsequently assigned to, and assumed by,
PaineWebber on December 9, 1994. In addition to the fees described above,
PaineWebber has earned fees for financial advisory services rendered to RCPI
since May 11, 1995 (the date the Board first directed PaineWebber to explore
acquisition and financing alternatives on behalf of RCPI) and RCPI has extended
PaineWebber's engagement and will continue to pay PaineWebber a monthly advisory
fee of $85,000 through the earlier of June 30, 1996 or consummation of the
Merger. RCPI has also agreed to reimburse PaineWebber for its out-of-pocket
expenses, including reasonable fees and disbursements of counsel. Assuming a
closing under the Merger Agreement by April 15, 1996, RCPI estimates that, in
addition to the fees described in the first sentence of this paragraph, the
aggregate payment to PaineWebber for its fees and expenses for the period from
May 11, 1995 through the closing will be approximately $1.4 million. In
addition, RCPI agreed to indemnify PaineWebber, its affiliates and each of their
respective directors, officers, agents and employees, and each person, if any,
controlling PaineWebber or any of its affiliates against certain liabilities,
including liabilities under federal securities laws.
PaineWebber has previously provided investment banking services to RCPI and
may provide financial advisory or other investment banking services to RCPI in
the future. In the normal course of its business, PaineWebber may from time to
time trade the debt or equity securities of RCPI for its
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own account and for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities. PaineWebber is a
prominent investment banking and financial advisory firm with experience in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and valuations for corporate purposes. RCPI retained Kidder
Peabody to act as its financial adviser based on Kidder Peabody's substantial
experience in obtaining financing for companies, in mergers and acquisitions and
in securities valuation generally, particularly in the real estate field. Kidder
Peabody was selected after the Board interviewed a number of investment banks
seeking the assignment. The Board was satisfied with the work done by Kidder
Peabody and thus agreed to PaineWebber's succession to this engagement in
December 1994.
DOUGLAS ELLIMAN 1994 APPRAISAL; THE WEITZMAN GROUP CONCURRENCE REPORT
On January 11, 1995, Douglas Elliman issued the Douglas Elliman 1994
Appraisal, in which it concluded that, as of December 31, 1994, the fair market
value of the Property was $1.25 billion, an increase of $100 million from the
value assigned in an appraisal conducted by the same firm as of December 31,
1993. On February 15, 1995, The Weitzman Group issued The Weitzman Group
Concurrence Report in which it stated that, based upon the review described in
such report, it concurred with the Douglas Elliman 1994 Appraisal and that, in
its opinion, the market value estimated by Douglas Elliman did not vary by more
than 5% from the market value The Weitzman Group would estimate in a full and
complete appraisal of the same interests. The summaries of the Douglas Elliman
1994 Appraisal and The Weitzman Group Concurrence Report are qualified in their
entirety by reference to such reports, which were filed as exhibits to RCPI's
Current Report on Form 8-K filed on February 22, 1995 and are filed as exhibits
to the Schedule 13E-3 filed with the Commission in connection with the Merger.
Since 1985, RCPI has annually retained an independent appraisal firm to
appraise the Property, and such annual appraisals have been performed under the
supervision of Abram Barkan, who was a principal at Douglas Elliman at the time
of the Douglas Elliman 1994 Appraisal. Mr. Barkan and Douglas Elliman were
selected to conduct the Douglas Elliman 1994 Appraisal based upon their
expertise and recognized reputation in the real estate appraisal business. In
connection with the preparation of the Douglas Elliman 1994 Appraisal, Douglas
Elliman (i) made a complete review of the financial information relating to the
Property provided to it by the Borrower; (ii) made a physical inspection of the
Property; (iii) updated its study of existing conditions and anticipated future
trends for the Midtown Manhattan office market, focusing particular attention on
higher quality office buildings; (iv) analyzed recent transactions involving the
sale of large higher quality office buildings; (v) reviewed summaries provided
by the Borrower of new leases that had been concluded subsequent to the
appraisal previously prepared by Douglas Elliman; (vi) reviewed capital costs
associated with the Property, including tenant concessions and building
improvements; and (vii) considered the three approved methods in the valuation
of real estate -- the cost, sales comparison and income capitalization
approaches.
The cost approach is an appraisal technique under which the value of a
property is derived by estimating the replacement cost of the improvements, and
deducting the estimated depreciation. The value of the property as if vacant is
added to the depreciated value of the improvements. Douglas Elliman did not
include this approach in its appraisal because of the difficulty in accurately
estimating physical, functional and economic depreciation and because investors
do not typically use this approach to assess an investment opportunity.
The sales comparison approach is an appraisal technique under which the
market value estimate is predicated upon prices paid in actual market
transactions. Recent sales of properties similar to a property under review are
identified, analyzed and compared to the property under review. In analyzing and
comparing the sales data, adjustments are made for factors such as location,
time (date of transaction), plot and building size, age and condition. The lack
of truly comparable activity, coupled with the large adjustments that would have
had to have been made to the sales of similar properties,
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make accurate comparisons difficult. Douglas Elliman, therefore, did not rely
heavily on this approach to determine a market value for the Property, but
included a discussion of the transactions that occurred subsequent to its
previous appraisal in order to provide an indication of current market activity.
The income capitalization approach is an appraisal technique used to derive
a value estimate based on the anticipated net income to be generated by a
property. The value estimate reflects the capital amount an investor would
reasonably be likely to pay to receive the anticipated net income. The capital
amount, often called the capitalized value, is in effect the present value of
the anticipated annual net revenues. Douglas Elliman gave primary emphasis to
this approach because it is the approach most often utilized by investors in
analyzing income-producing property. Douglas Elliman derived the value estimate
of the Property by projecting, on a lease-by-lease basis, the income, expenses
and capital costs associated with operating the Property. Given the size and
intricacies of the Property as a real estate investment, Douglas Elliman
calculated a weighted average net present value based upon six holding periods,
in order to derive a more accurate indication of market value. As a result,
Douglas Elliman estimated the cash flows before debt service in each year of a
16-year projection period for calendar year 1995 through 2011. Douglas Elliman
estimated the residual value of the leased space by capitalizing at an
appropriate rate the net operating income in the year following the holding
period of the cash flow. The cash flows plus the residual value were then
discounted on an annual basis to a present value using a pre-tax market rate of
return. In its discounted cash flow analysis, Douglas Elliman used a real estate
model developed by the Realtech Group ("Realtech"). Results were generated by
the model based on market, economic, leasing and other real estate assumptions
provided by Douglas Elliman. For a discussion of the assumptions used, see
"Certain Financial Projections". RCPI did not place any limitations on Douglas
Elliman with respect to conducting the appraisal.
RCPI engaged The Weitzman Group to issue a review and concurrence report
with respect to the Douglas Elliman 1994 Appraisal because of suggestions by
Mitsubishi Estate and J.P. Morgan in the summer of 1994 that the value of the
Property was substantially lower than the value shown on the appraisal
previously prepared by Douglas Elliman. The Weitzman Group was selected on the
basis of its recognized expertise in the real estate appraisal business. In
connection with the preparation of The Weitzman Group Concurrence Report, The
Weitzman Group (i) conducted an independent analysis of the Property cash flows;
(ii) conducted a detailed analysis of the data and assumptions, as well as of
market conditions, identified in the Douglas Elliman 1994 Appraisal; (iii)
conducted independent research as to market conditions, market rents and
expenses, and prepared independent assumptions and sensitivity analyses of the
cash flows utilized in the estimate of the aggregate market value of the
Property determined by Douglas Elliman; (iv) conducted physical inspections of
the Property and held extensive meetings with management and leasing personnel;
and (v) undertook research as to appropriate rates of return (using a
securitized financing component) commensurate with the risks involved in
acquiring real estate such as the Property. The cash flows were prepared using
the Realtech model, modified by assumptions proposed by The Weitzman Group. The
Weitzman Group performed limited due diligence on the Douglas Elliman 1994
Appraisal relating only to selected lease-by-lease input. Based on the
assumptions, projected cash flows and rates of return developed by The Weitzman
Group, which in certain cases differed from those in the Douglas Elliman 1994
Appraisal, The Weitzman Group issued an opinion that the value conclusion in the
Douglas Elliman 1994 Appraisal was appropriate and reasonable.
The preparation of the cash flows (using the Realtech model) included the
preparation of detailed assumptions incorporating an eleven-year holding period.
Office market rents, depending upon building and location, were in the range of
$35 to $47 per square foot of rentable area based on 1968 measurements. Retail
market rents were $220 per square foot for Fifth Avenue frontage, $110 per
square foot on Sixth Avenue, $70 to $85 per square foot on the side streets and
$37 per square foot on the concourse and mezzanine levels. All rents included a
10.0% step-up in the base rent after each five-year period. Lease terms and rent
concessions were projected based upon size. Free rent for office
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tenants ranged from six to twelve months depending upon the size of the space,
declining over the subsequent two years to a stabilized level. Tenant work for
offices ranged from $20 to $45 per square foot for new leases depending upon
size, with lower allowances assigned for renewal leases. A 4.0% growth rate for
the tenant work was projected. The renewal probability was projected at 70.0% -
30.0% for office leases. Vacant office space was projected to be absorbed over
an 18-month period. Capital improvements were reflective of management estimates
through 2004 with a reserve utilized thereafter. The residual capitalization
rate was 8.0% of the net operating income before capital expenditures in 2006
less selling and transfer taxes, including a provision for the New York State
capital gains tax of 10.0% from the point of purchase (assumed to be the date of
value). Discount rates were in the range of 10.0% to 10.5% and were 9.75%
assuming the use of securitized debt for a portion of the purchase. RCPI did not
place any limitations on The Weitzman Group with respect to conducting the
concurrence report.
Pursuant to an engagement letter between RCPI and Douglas Elliman, Douglas
Elliman was paid a fee of $75,000 upon delivery of the Douglas Elliman 1994
Appraisal. Pursuant to an engagement letter between RCPI and The Weitzman Group,
The Weitzman Group was paid a fee of $95,000 upon delivery of its concurrence
report. RCPI agreed to reimburse The Weitzman Group for its out-of-pocket
expenses and to indemnify The Weitzman Group, its stockholders and employees
against certain liabilities, including liabilities under the federal securities
laws.
PURPOSE AND STRUCTURE OF THE TRANSACTION
The purpose of the Merger is for the Investors, through Holdings, to acquire
all of the outstanding Common Stock of RCPI. The transaction has been structured
as a cash merger in order to provide a prompt and orderly transfer of control of
RCPI from the public stockholders of RCPI to Holdings. Because of the Limit
imposed by the RCPI Charter, the Investors determined that a cash tender offer
for all of the Common Stock of RCPI was not a viable alternative.
REASONS FOR THE TRANSACTION
Whitehall and GS Group seek, through the Merger, to acquire, together with
the Investors, the entire equity interest in RCPI at this time because Whitehall
and GS Group believe that RCPI and the Property can be more effectively and
efficiently managed, and therefore would be more likely to provide the Investors
with a return on their investment if it were managed as a privately held
company. As a privately held company, RCPI will be managed only in the interests
of the Investors. As noted under "Certain Effects of the Merger", the Investors
intend to seek the delisting of the Common Stock from the NYSE and the
termination of registration of the Common Stock under the Exchange Act as soon
as possible after consummation of the Merger, if the requirements for the
delisting and termination of registration are met.
Whitehall and GS Group also seek, through the Merger, to acquire, together
with the Investors, the entire equity interest in RCPI at this time because, in
the view of Whitehall and GS Group, the investment of the Whitehall Group in
RCPI provided through the Goldman Sachs Financing would be protected in the
Merger, whereas GS Group and Whitehall would likely have had to resort to
litigation in order to protect such interests in the Goldman Sachs Financing
under the other transactions that were being considered by the Board during the
summer and autumn of 1995. In addition, the bankruptcy of Borrower raised, in
the view of Whitehall and GS Group, serious questions concerning RCPI's ability
to meet its payment and other obligations under the terms of the Goldman Sachs
Financing.
PLANS FOR RCPI AFTER THE MERGER
It is expected that immediately following the Merger, the Property (and
related real and personal property) will be conveyed to the Surviving
Corporation or its designee (the "Designee") pursuant to the Borrower's Chapter
11 Plan. Immediately thereafter, it is expected that the Property (and such
related real and personal property) or all of the equity interest in the
Designee will be contributed to a newly formed entity ("Newco"). It is also
expected that Newco will be owned 50% by the Surviving
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Corporation and 50% by a newly formed limited liability company owned by the
Investors. This structure is intended to provide flexibility with respect to
financial, operational and tax planning considerations while complying with the
provisions of the Convertible Debenture Indenture.
The Investors currently intend that, following the Merger, at least $430
million in new debt financing would be raised and that a portion of the proceeds
thereof would be used to repay the indebtedness outstanding under the Floating
Rate Notes and the Current Coupon Convertible Debentures. In addition, the
Investors may decide to incur additional financing and use the proceeds to repay
the Convertible Debentures. In connection therewith, Whitehall would agree to
subordinate the 14% Debentures to the new debt financing. It is further intended
that the 14% Debentures would be repaid on December 31, 2000 in accordance with
their terms, subject to financial considerations at that time. The Investors'
financing plans may change in light of changes in market conditions and other
considerations.
Following the Effective Time, the Investors expect that the board of
directors of the Surviving Corporation will consist of four members designated
by the Whitehall Group and four members designated by the other Investors. The
officers of the Surviving Corporation will be appointed by the directors.
The Investors expect that Newco will own and operate the Property
consistently with past practices but may increase capital expenditures and make
such other changes as deemed appropriate by the Investors. The Property will be
managed by Tishman Speyer pursuant to a management agreement.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, RCPI's current stockholders will receive $8.00 in
cash for each of their shares of Common Stock (other than Excluded Shares),
which amount will not be reduced by any expenses or liabilities of RCPI. In
addition, as a result of the Merger, stockholders will not have an opportunity
to continue their equity interest in RCPI as an ongoing concern and therefore
will not share in the future earnings and potential growth of RCPI or the
Property, if any. After the Merger, the acquiring entity formed by the Investors
will own 100% of the equity interest in, and will have a 100% interest in the
net book value and net income or net loss of, RCPI. The Investors, therefore, as
the only stockholders of RCPI after the Merger, will benefit from any increases
in the value of RCPI and also bear the risk of any decreases in the value of
RCPI's assets or operations. Pursuant to agreements among the Investors,
Whitehall will have an indirect interest of approximately 50% of the equity in
RCPI after consummation of the Merger. Such equity interest will reflect the
relative investment of Whitehall in the acquiring entity that will be merged
with and into RCPI in the Merger. See "-- Background of the Merger".
If the Merger is consummated, the Shares will cease to be listed on the
NYSE, public trading of the Shares will cease and the registration of the Shares
under the Exchange Act will be terminated. The termination of registration of
the Common Stock under the Exchange Act will reduce the information required to
be furnished by RCPI to the Commission and will make certain of the provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b) and the requirement of furnishing a proxy or information statement
in connection with stockholders' meetings, no longer applicable to RCPI.
THE RECEIPT OF CASH PURSUANT TO THE MERGER WILL BE A TAXABLE TRANSACTION.
SEE "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER".
BORROWER'S CHAPTER 11 CASE
The Borrower filed its petition under Chapter 11 of the Bankruptcy Code on
May 11, 1995. On September 12, 1995, in a proceeding held in the Bankruptcy
Court, the Borrower stated that it was willing to work with RCPI toward a plan
of reorganization in the Borrower's Chapter 11 Case (the "Chapter 11 Plan") that
would provide for RCPI to take title to the Property. Thereafter, RCPI began
negotiations with the Borrower to develop a consensual Chapter 11 Plan. Since
November 7, 1995, the
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Investors have also been negotiating with the Borrower and RGI, both directly
and jointly with RCPI. The Merger is subject to the satisfaction of certain
conditions set forth in the Merger Agreement and summarized below, including the
entry of an order confirming the Chapter 11 Plan and the absence of any
injunction preventing the effectuation of the Chapter 11 Plan. On October 30,
1995, the Bankruptcy Court approved debtor-in-possession financing for the
Borrower of up to $80 million to be provided by Chemical Bank. The availability
and uses of any debtor-in-possession financing are subject to certain
restrictions set by the Bankruptcy Court or contained in the Merger Agreement.
The obligations of Holdings and the Investors to consummate the transactions
contemplated by the Merger Agreement are subject to the condition (among others)
that Holdings be reasonably satisfied with the form and substance of the Chapter
11 Plan confirmed in the Borrower's Chapter 11 Case, the disclosure statement
for the Chapter 11 Plan and the proceedings relating to the confirmation of the
Chapter 11 Plan. The Chapter 11 Plan will, among other things, provide for the
transfer to the Surviving Company (or its designee) of (i) the Property, (ii)
all other real property (including leasehold interests) owned by the Borrower
and used in connection with the operation of the Property consistent with past
practices and (iii) all personal property (including leasehold interests) owned
by the Borrower and material to the operation of the Property consistent with
past practices. The Chapter 11 Plan may also provide for a transfer directly or
indirectly to the Surviving Company (or its designee) of an equity interest in
the entity that owns all or a portion of the Property. The maximum amount to be
provided (or assumed) by RCPI under the Chapter 11 Plan to be used to fund
liabilities of the Borrower or its estate may not exceed (1) $20 million
(exclusive of the debtor-in-possession financing permitted under the Merger
Agreement) of liabilities may consist only of liabilities related to
administrative expenses, claims entitled to priority under the Bankruptcy Code,
cure payments relating to leases and other executory contracts to be assumed
(including liabilities for tenant improvements) that are reasonably acceptable
to Holdings and the Investors, and certain general unsecured claims reasonably
acceptable to Holdings and the Investors and (2) all unpaid allowed ordinary
course administrative operating expense claims of the types specified in the
Chapter 11 Plan, subject to the right to object to such claims as provided for
under the Chapter 11 Plan. See "The Merger -- The Merger Agreement -- Conditions
to the Merger".
An amended Chapter 11 Plan and an amended disclosure statement were filed by
the Borrower and RGI on December 12, 1995 and January 22, 1996. The Chapter 11
Plan and disclosure statement may be amended in the future to take into account
the results of negotiations between the Investors, RCPI, RGI and the Borrower
after January 22, 1995 relating to the Chapter 11 Plan and the transfer of
ownership of the Property. In addition, the Bankruptcy Court, after several
postponements, has fixed February , 1996 as the date for a hearing to consider
the adequacy of the disclosure statement. In the event that RCPI, the Borrower
and RGI reach agreement on all of the terms of the Chapter 11 Plan and the
related agreements and the Court approves the disclosure statement, the final
form of the Chapter 11 Plan will be submitted for a vote to the creditors of the
Borrower whose claims are impaired under the Chapter 11 Plan and, assuming that
the requisite majorities of two-thirds in amount of the claims and more than 50%
in number of the claimants voting in each impaired class vote in favor of the
Chapter 11 Plan, it is anticipated that the Chapter 11 Plan would be confirmed
by the end of March 1996, which will permit consummation of the Merger to occur
by April 30, 1996, as required by the Merger Agreement. In light of the fact
that all impaired creditors of the Borrower are to receive payment in full in
cash of the allowed amounts of their claims plus post-petition interest at the
contract rate or the judgment rate (if there is no existing contractual
obligation to pay interest), it is highly probable that the Chapter 11 Plan will
be accepted by all classes of impaired creditors of the Borrower. If, however,
that does not occur or the Borrower does not enter into a mutually acceptable
arrangement with RCPI for the transfer of ownership of the Property to RCPI or
its designee, RCPI would have available the following options: RCPI could seek
leave of the Bankruptcy Court to (i) file its own Chapter 11 plan for the
Borrower, which could be confirmed and consummated without the consent of the
Borrower or the acceptance by other classes of creditors or (ii) foreclose the
mortgage on the Property that secures payment of the Mortgage Note. In either
event, it is anticipated that the Borrower would oppose such actions in the
Bankruptcy Court and, in the case of foreclosure, in the
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court in which such a foreclosure would be sought. In light of the potential
delays and additional expenses that would be entailed in either of the
alternatives described above (and real estate transfer taxes payable in respect
of a foreclosure sale), RCPI believes it would be in its best interests to
pursue the Chapter 11 Plan with the support of the Investors pursuant to the
Merger Agreement.
If the Merger is not consummated, RCPI believes that there would be no
material tax cost in connection with a transfer of the Property to RCPI pursuant
to the Chapter 11 Plan. If, instead, the Property were transferred to RCPI in a
foreclosure or other sale outside of a confirmed chapter 11 plan, RCPI could be
liable for New York City and State real property transfer tax as a transferee.
ACCOUNTING TREATMENT
The Merger will be accounted for using the purchase method of accounting for
business combinations, and, accordingly, the purchase price will be allocated to
RCPI's underlying net assets in proportion to their respective fair values.
REGULATORY APPROVALS
HSR ACT. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), provides that certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") and the applicable waiting period in connection with such
information has expired or been earlier terminated. The Investors have
determined that the formation and capitalization of Holdings requires the filing
of a notification and report form under the HSR Act ("Notification Form") by
certain of the Investors. Whitehall, Exor, Gribble and Weevil each filed a
Notification Form with the FTC and the DOJ. The required waiting period under
the HSR Act will expire on March 2, 1996, unless such waiting period is earlier
terminated by the FTC and the DOJ or extended by a request from the FTC or the
DOJ for additional information or documentary material prior to the expiration
of the waiting period.
Holdings and RCPI know of no remaining federal or state regulatory
requirements with which they must comply or approvals that they must obtain in
order to consummate the Merger, other than the filing of the Certificate of
Merger or the Merger Agreement with the Secretary of State of Delaware.
CERTAIN LITIGATION
On May 24, 1995, Jerry Krim commenced an action encaptioned KRIM V.
ROCKEFELLER CENTER PROPERTIES, INC. AND PETER D. LINNEMAN. On June 7, 1995,
Kathy Knight and Moishe Malamud commenced an action encaptioned KNIGHT ET AL. V.
ROCKEFELLER CENTER PROPERTIES, INC. AND PETER D. LINNEMAN. Both actions were
filed in the United States District Court for the Southern District of New York
and purport to be brought on behalf of a class of plaintiffs comprising all
persons who purchased Common Stock between March 20, 1995 and May 10, 1995. The
complaints allege that RCPI and Dr. Linneman violated the federal securities
laws by their purported failure to disclose prior to May 11, 1995 that the
Borrower would file for bankruptcy protection. The cases have been consolidated.
On July 28, 1995, RCPI and Dr. Linneman filed answers to the complaints denying
plaintiffs' substantive allegations and asserting numerous affirmative defenses.
On September 22, 1995, plaintiffs served an Amended Class Action Complaint
adding RCPI's remaining directors and its president as defendants. In addition
to the foregoing claims, the Amended Complaint also asserts a cause of action
for breach by RCPI's directors and its president of their fiduciary duties by
approving the Combination Agreement. The plaintiffs are seeking damages in such
amounts as may be proved at trial and are also seeking injunctive relief, plus
costs, attorneys' fees and interest. RCPI intends to vigorously contest these
actions.
On July 6, 1995, Charal commenced a derivative action against certain of
RCPI's present and former directors in the Court of Chancery of the State of
Delaware in and for New Castle County. RCPI was named as a nominal defendant.
The plaintiff alleges that the directors breached their fiduciary duties by: (1)
using commercial paper proceeds to repurchase Convertible Debentures in
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1987-1992; (2) entering into interest rate swaps; and (3) making capital
distributions to stockholders during the years 1990 through 1994. On February
21, 1995, prior to the commencement of the action, the Board appointed a special
committee of the Board to review Charal's February 3, 1995 pre-suit demand that
the Board institute litigation on RCPI's behalf with respect to such claims and
recommend a course of action to the full Board. Plaintiff nevertheless commenced
the action, asserting that circumstances did not permit further delay. On
November 7, 1995, the Delaware Court of Chancery dismissed this action without
prejudice due to the plaintiff's failure to comply with the requirements of the
Delaware Court of Chancery Rule 23.1.
On November 14, 1995, Charal moved to amend and supplement its complaint
and/or to amend or alter the Delaware Court's judgment so as to permit the
filing of additional derivative allegations, as well as class allegations that
the Board had approved the proposed Merger without considering the value to RCPI
of the matters set forth in Charal's pre-suit demand. The Delaware Court has not
ruled on Charal's motion.
On November 28, 1995, the special committee reviewed the report of its
counsel and, after deliberation, determined to recommend to the Board that
Charal's pre-suit demand be rejected because it would not be in the best
interest of RCPI to pursue the matters set forth in such demand. On December 5,
1995, after considering the recommendation of the special committee and the
report of the special committee's counsel, the Board voted to reject Charal's
pre-suit demand.
On July 31, 1995, L.L. Capital Partners, L.P. commenced an action against
RCPI in the United States District Court in the Southern District of New York.
The plaintiff alleges that, in an RCPI prospectus dated November 3, 1993, RCPI
failed to disclose its purported belief that the Rockefeller Interests and
Mitsubishi Estate would cease to fund the Borrower's cash flow shortfalls. The
plaintiff seeks recovery under Section 12(2) of the Securities Act of 1933,
Section 10(b) of, and Rule 10b-5 under the Exchange Act and the common law. RCPI
intends to vigorously contest this action. In September 1995, counsel for RCPI
filed a motion to dismiss this action for failure to state a claim.
On September 13 and 14, 1995, five class action complaints, captioned
FAEGHEH MOEZINIA V. PETER D. LINNEMAN, BENJAMIN D. HOLLOWAY, PETER G. PETERSON,
WILLIAM F. MURDOCH, JR. AND ROCKEFELLER CENTER PROPERTIES, INC.; MARTIN
ZACHARIAS V. B.D. HOLLOWAY, P.G. PETERSON, W.F. MURDOCH, P.D. LINNEMAN AND
ROCKEFELLER CENTER PROPERTIES, INC.; JAMES COSENTINO V. PETER D. LINNEMAN,
BENJAMIN D. HOLLOWAY, PETER G. PETERSON, WILLIAM F. MURDOCH, JR. AND ROCKEFELLER
CENTER PROPERTIES, INC.; MARY MILLSTEIN V. PETER D. LINNEMAN, PETER G. PETERSON,
BENJAMIN D. HOLLOWAY, WILLIAM F. MURDOCH, JR. AND ROCKEFELLER CENTER PROPERTIES,
INC.; and ROBERT MARKEWICH V. PETER D. LINNEMAN AND DANIEL M. NEIDICH, ET AL.,
were filed in the Delaware Court of Chancery. On October 11, 1995, an additional
complaint encaptioned HOGAN V. ROCKEFELLER CENTER PROPERTIES, INC., ET AL., was
filed in the Delaware Court of Chancery. Each of the complaints purports to be
brought on behalf of a class of plaintiffs comprised of stockholders of RCPI who
have been or will be adversely affected by the Combination Agreement. All of the
complaints allege that RCPI's directors breached their fiduciary duties by
approving the Combination Agreement. The complaints seek damages in such amount
as may be proved at trial. Plaintiffs also seek injunctive relief, plus costs
and attorneys' fees. On November 8, 1995, the Delaware Court of Chancery entered
an order consolidating these actions. RCPI intends to contest these actions
vigorously.
On January 23, 1995, Bear Stearns and DLJ commenced an action against RCPI
in the Supreme Court of New York, County of New York. The plaintiffs allege that
RCPI breached a contract relating to the plaintiffs' provision of investment
banking services to RCPI in connection with the proposed 1994 Deucalion
transaction referred to above. The plaintiffs seek $5,062,500 in damages, plus
costs, attorneys' fees and interest. The Supreme Court of New York denied RCPI's
motion to dismiss the complaint on September 21, 1995. On October 10, 1995, RCPI
filed an answer to the complaint that denied the plaintiffs' allegations and
asserted numerous affirmative defenses. RCPI intends to vigorously contest the
plantiffs' claims. RCPI does not expect the outcome of this litigation to have a
material adverse effect on its financial condition.
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On December 1, 1995, counsel to ZML wrote to counsel to RCPI claiming that
RCPI had wrongfully refused to sell to ZML 1,788,908 Shares at a price of $5.59
per Share under the Investment Agreement on October 2, 1995. On December 8,
1995, counsel to RCPI wrote to counsel to ZML stating that RCPI had not
defaulted on its obligations under the Investment Agreement. RCPI does not
believe that the dispute will have a material adverse effect on its financial
condition.
For a description of other legal proceedings to which RCPI is a party, see
RCPI's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1995.
FEES AND EXPENSES
Estimated fees and expenses incurred or to be incurred in connection with
the Merger and related transactions are approximately as follows, assuming the
Merger closes on April 15, 1996:
<TABLE>
<CAPTION>
PAID OR
PAID OR TO BE PAID
TO BE PAID BY WHITEHALL
BY RCPI AND GS GROUP
-------------- -------------
<S> <C> <C>
Zell Group fees and expenses (1)........................................ $ 16,042,000 $ --
Investment banking fees and expenses.................................... 6,650,000 --
Legal fees and expenses................................................. 4,126,000 3,000,000
Printing and mailing fees............................................... 407,000 --
Exchange Agent fees..................................................... 129,000 --
Accounting fees......................................................... 80,000 --
SEC filing fee.......................................................... 61,218 --
Proxy solicitation agent fees........................................... 10,000 --
Miscellaneous expenses.................................................. 35,000 50,000
-------------- -------------
Total............................................................... $ 27,540,218 $ 3,050,000
-------------- -------------
-------------- -------------
</TABLE>
- ------------------------
(1) Amounts either previously paid to, or claimed by, the Zell Group as fees and
expenses in connection with the Combination Agreement and Investment
Agreement.
Investment banking fees and expenses include $750,000 payable to the
Whitehall Group by RCPI as reimbursement for certain of its expenses incurred in
1995 pursuant to the terms of the Goldman Sachs Financing. In addition, the
above fees and expenses do not include the fees and expenses incurred by RCPI
that are directly attributable to the Borrower's bankruptcy or any fees and
expenses that may be payable to the attorneys for the plaintiffs as described in
"Certain Litigation" above. For information regarding PaineWebber's engagement
by RCPI, see "Opinion of PaineWebber".
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THE MERGER
GENERAL
As a result of the Merger, holders of certificates formerly representing
Shares will cease to have any equity interest in RCPI. At the Effective Time,
each Share, other than the Excluded Shares outstanding immediately prior to the
Merger, will be canceled and converted automatically into the right to receive
$8.00 net to the holder thereof in cash, without interest, less any required
withholding taxes, upon surrender of the certificate formerly representing such
Share in the manner described herein.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a conformed copy of which is included with this Proxy Statement as
Annex A. Such summary is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference. All stockholders of RCPI
are urged to read the Merger Agreement in its entirety.
GENERAL TERMS OF THE MERGER. To effect the transactions contemplated by the
Merger Agreement, the Investors have organized Holdings and own all of its
outstanding capital stock. Upon the terms and subject to the conditions of the
Merger Agreement, Holdings will be merged into RCPI, Holdings will cease to
exist and RCPI will continue as the Surviving Corporation in the Merger and the
separate corporate existence of RCPI with all its rights, privileges and
franchises shall continue unaffected by the Merger. The Merger will become
effective at the Effective Time referred to below. At the Effective Time, each
Share, other than any Excluded Shares outstanding immediately prior to the
Merger, will, by virtue of the Merger and without any action by the holders
thereof, be converted into the right to receive an amount equal to $8.00 net to
the holder thereof in cash, without interest, less any required withholding
taxes, upon surrender of the certificate formerly representing such Share in the
manner provided in the Merger Agreement, and each such Share shall cease to be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each registered owner or holder of a certificate representing any
such Shares shall thereafter have only the right to receive the Merger
Consideration, without interest, less any required withholding taxes, for such
Shares upon the surrender of such certificate in accordance with the Merger
Agreement. Each dissenting stockholder shall thereafter have the rights set
forth under "Rights of Dissenting Stockholders", provided that if any dissenting
stockholder shall cease to be entitled to appraisal rights under the DGCL such
dissenting stockholder shall thereafter have only the right to receive the
Merger Consideration for such Shares.
At the Effective Time, each Share, if any, that is owned by RCPI or Holdings
or any subsidiary of Holdings shall, by virtue of the Merger and without any
action by the holder thereof, automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor. At
the Effective Time, each share of Holdings common stock will, by virtue of the
Merger and without any action by the holders thereof, be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $0.01 per share, of the Surviving Corporation.
As promptly as practicable after the approval of the Merger Agreement and
the satisfaction or waiver of the other conditions to consummation of the
Merger, the parties will file the Merger Agreement or a Certificate of Merger
with the Secretary of State of the State of Delaware. The Merger will become
effective at the time when such filing is made or at such later time specified
in the Certificate of Merger (the "Effective Time").
EXCHANGE OF SHARES. Prior to the Effective Time, Holdings shall designate a
bank or trust company reasonably satisfactory to RCPI to act as exchange agent
in the Merger (the "Exchange Agent"). At or prior to the Effective Time,
Holdings will deposit with the Exchange Agent an amount in cash sufficient to
pay the aggregate Merger Consideration.
As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to each record holder of a certificate that immediately prior to
the Effective Time represented outstanding
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Shares, other than Excluded Shares (the "Certificates"), a form of letter of
transmittal and instructions for use in effecting the surrender of Certificates
for payment therefor. STOCKHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES ALONG
WITH THEIR PROXY CARDS FOR THE SPECIAL MEETING. Upon surrender to the Exchange
Agent of a Certificate, together with such letter of transmittal, duly executed,
and any other required documents, and upon acceptance thereof by the Exchange
Agent, the holder of such Certificate will be entitled to receive in exchange
therefor cash in an amount equal to the product of the number of Shares
represented by such Certificate multiplied by $8.00 less any withholding taxes,
and such Certificate will then be canceled. No interest will be required to be
paid or accrued on the cash payable upon the surrender of the Certificate. If
payment is to be made to a person other than the person in whose name the
Certificate surrendered is registered, it will be a condition of payment that
the Certificate so surrendered will be properly endorsed, with the signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such payment will pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the Certificate
surrendered, or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until so surrendered, each
Certificate will represent for all purposes only the right to receive $8.00 net
in cash, without any interest thereon, less any required withholding taxes. Any
funds remaining with the Exchange Agent six months following the Effective Time
will be delivered to the Surviving Corporation, after which time former holders
of Shares, subject to applicable law, must look only to the Surviving
Corporation for payment of their claims for the Merger Consideration, without
interest thereon, less any required withholding taxes, and will have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under Delaware law.
AGREEMENTS OF RCPI, HOLDINGS AND THE INVESTORS. The Merger Agreement
provides that, at the Effective Time (or, at the election of Holdings,
immediately following the Effective Time), the RCPI Charter will be amended and
restated to be substantially in the form of the Certificate of Incorporation
attached as Exhibit A to the Merger Agreement. The Merger Agreement also
provides that the By-laws of Holdings, as in effect immediately prior to the
Effective Time, will be the By-laws of the Surviving Corporation. The Merger
Agreement provides that the directors and officers of Holdings immediately prior
to the Effective Time will be the initial directors and officers of the
Surviving Corporation.
The Merger Agreement provides that each Warrant and SAR issued and
outstanding immediately prior to the Effective Time will automatically be
canceled and retired and will cease to exist, and no consideration will be
delivered in exchange therefor.
The Merger Agreement provides that from the date thereof through the earlier
of the Effective Time and the termination thereof, (i) Whitehall will cause
Goldman Sachs to refrain from, among other things, exercising its rights to
designate a nominee to the Board and (ii) Whitehall will not exercise, and will
cause each holder of SARs not to exercise, any SARs unless RCPI has taken any
action and as a result the failure to exercise such SARs would adversely affect
the rights of Whitehall or such holder with respect to the SARs, the value of
the SARs to Whitehall or such holders or the position of Whitehall, such holders
or GSMC in RCPI. Any conversion of such SARs into 14% Debentures during this
period will be deemed not to be an incurrence of debt in violation of the Merger
Agreement, and such new 14% Debentures will be deemed not to be additional debt
for purposes of determining the satisfaction of the conditions in the Merger
Agreement.
GSMC LOANS. Pursuant to the Merger Agreement, GSMC has agreed to supplement
the GSMC Loan Agreement to permit RCPI to borrow additional amounts of up to
$47.5 million to pay certain permitted expenses. By January 31, 1996, RCPI had
borrowed $39 million of such amounts. Such loans will be made under the terms of
the GSMC Loan Agreement provided that (i) such loans may be prepaid by RCPI at
any time (without penalty), (ii) once prepaid, the amount of such repaid loans
may not be reborrowed by RCPI and (iii) any such loans will accrue interest at a
rate equal to 10% per annum (compounded quarterly), and provided further that,
if any such amount has not been repaid by
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the earlier of (i) April 30, 1996, and (ii) the termination of the Merger
Agreement in certain circumstances, then any such amount that remains
outstanding will be subject to all terms and conditions (including interest and
repayment provisions) of the GSMC Loan Agreement. Except as described above,
such loans will be made on the same terms as the GSMC Loan Agreement.
CONDITIONS TO THE MERGER. The Merger will occur only if the Merger
Agreement is approved and adopted at the Special Meeting by the affirmative vote
of the holders of a majority of the Shares, in accordance with Section 251 of
the DGCL. In addition, the respective obligations of Holdings and the Investors,
on the one hand, and RCPI, on the other, to consummate the transactions
contemplated by the Merger Agreement are subject to the satisfaction of certain
conditions (any of which may be waived by the party or parties entitled to the
benefit thereof), including (i) the absence of any action by any governmental
authority or court that has the effect of restraining or preventing the
consummation of the Merger or subjecting any party or any of its affiliates to
substantial damages as a result of the consummation of the Merger; (ii) the
termination or expiration of any waiting period applicable to the Merger under
the HSR Act; (iii) the accuracy in all material respects, as of the date made
and as of the Effective Time, of the representations and warranties of the other
parties provided in the Merger Agreement; and (iv) the performance in all
material respects by the other parties of all obligations required to be
performed by them under the Merger Agreement. The obligations of Holdings and
the Investors to consummate the transactions contemplated by the Merger
Agreement are also subject to the satisfaction of the following conditions (any
of which may be waived by Holdings in its sole discretion):
(i) the absence of any material adverse change since December 31, 1994
in the financial condition of RCPI or the financial or physical condition of
the Property, provided that changes in the financial condition of RCPI will
not be considered material to the extent the changes are attributable to (A)
the initiation of certain litigation (including enumerated pending,
threatened or potential litigation, certain other litigation that would not
have a material adverse effect on RCPI, and certain ordinary course
litigation arising after the execution of the Merger Agreement that will not
result in an uninsured material recovery), (B) any acceleration or attempted
acceleration of indebtedness of RCPI (or any attempt to exercise any rights
consequent thereto) as a result of any of the transactions contemplated by
the Merger Agreement or (C) any event or condition the occurrence of which
is reasonably foreseeable based on the disclosures made in RCPI's Annual
Report on Form 10-K for the year ended December 31, 1994 or its quarterly
reports on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995
(other than filing for relief under the Bankruptcy Code by RCPI, unless such
filing is made with the consent of Holdings);
(ii) the absence of any outstanding debt or other liabilities of RCPI or
its subsidiaries other than (A) debt and other liabilities specified on
Schedule B to the Merger Agreement in an aggregate amount up to $835.16
million, together with any accrued but unpaid interest thereon accruing
after December 31, 1995, (B) up to $14.5 million borrowed from GSMC after
December 31, 1995 to pay certain permitted expenses, (C) certain pending
litigation (including enumerated pending, threatened or potential
litigation, certain other litigation that would not have a material adverse
effect on RCPI and its subsidiaries, and certain ordinary course litigation
arising after the execution of the Merger Agreement that will not result in
an uninsured material recovery), and (D) other DE MINIMIS liabilities (as of
February , 1996, neither the Company nor the subsidiaries had outstanding
debts or liabilities other than those described in clauses (A) through (D)
above);
(iii) Holdings's reasonable satisfaction with the form and substance of
the Chapter 11 Plan and the disclosure statement relating thereto and the
proceedings relating to the confirmation thereof. The Chapter 11 Plan shall
provide (A) for the transfer to RCPI following the Merger or its designee of
(1) the Property, (2) all other real property (including leasehold
interests) owned by the Borrower and used in connection with the operation
of the Property consistent with past practices and (3) all personal property
(including leasehold interests) owned by the Borrower and
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material to the operation of the Property consistent with past practices,
and (B) that the maxi-
mum amount to be provided (or assumed) by RCPI under the Chapter 11 Plan to
be used to fund liabilities of the Borrower or its estate will not exceed
(1) $20 million (exclusive of the debtor-in-possession financing permitted
under the Merger Agreement) of liabilities related to administrative
expenses, claims entitled to priority under the Bankruptcy Code, cure
payments relating to leases and other executory contracts to be assumed
(including liabilities for tenant improvements) reasonably acceptable to
Holdings, and certain general unsecured claims reasonably acceptable to
Holdings and (2) all unpaid allowed ordinary course administrative operating
expense claims of the types specified in the Chapter 11 Plan, subject to the
right to object to such claims as provided for under the Chapter 11 Plan;
(iv) RCPI's having taken all steps reasonably requested by Holdings to
terminate the Investment Agreement and the Combination Agreement with the
Zell Investor Group;
(v) the absence of (A) certain violations of law relating to the
Property, (B) structural defects in the Property that would require the
expenditure of more than $25 million to cure, repair or replace, (C) except
for certain permitted liens, defects of title to the Property and (D)
violations by the Borrower under the Mortgage Note (other than defaults in
the payment of principal or interest thereunder) that would have a material
adverse effect on the physical or financial condition of the Property;
(vi) the absence of certain environmental conditions relating to the
Property, the compliance with all applicable environmental laws and the
receipt of all required environmental permits and compliance therewith;
(vii) Holdings and the Investors being reasonably satisfied that
immediately after the Effective Time the Property (and other real property
(including leasehold interests)) owned by the Borrower and used in
connection with the operation of the Property consistent with past practices
and all personal property (including leasehold interests) owned by Borrower
and material to the operation of the Property consistent with past practices
will be conveyed to RCPI or its designee pursuant to the Chapter 11 Plan;
and
(viii) the occurrence of the effective date of the Chapter 11 Plan.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains
representations and warranties by each of the parties regarding, among other
things, its organization (if it is not an individual), authority to enter into
the transactions, requisite consents and approvals, information in the Proxy
Statement, non-contravention of organizational documents, material contracts or
applicable laws and brokers and finders. In addition, RCPI makes certain
representations and warranties regarding, among other things, its
capitalization, compliance with applicable laws, the content and submission of
forms and reports required to be filed by RCPI with the Commission, the absence
of certain changes in RCPI's business since December 31, 1994, litigation to
which RCPI is a party, intellectual property, material contracts, certain
agreements, employee benefit plans, tax matters, title to its properties and
assets, approval by the Board of the Merger Agreement and the recommendation by
the Board of the Merger to the stockholders of RCPI, the opinion of PaineWebber,
governmental regulation, subordination of certain leases and adequacy of
insurance. The representations and warranties of each of the parties to the
Merger Agreement will expire at the Effective Time.
COVENANTS. In the Merger Agreement, each of the parties thereto has agreed
to certain covenants regarding the satisfaction of conditions, confidentiality
and publicity. In addition, RCPI has agreed that, except as otherwise
contemplated by the Merger Agreement, prior to the Effective Time, RCPI will
conduct its operations only in the ordinary course of business consistent with
past practices; provide Holdings and its agents reasonable access to RCPI and
its facilities, properties, books and records; submit all new leases and lease
renewals with respect to the Property to Holdings for approval; upon obtaining
knowledge thereof, promptly give written notice to Holdings of the occurrence of
any default under any material contract of RCPI, the pendency or commencement of
any
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material litigation, arbitration or governmental proceeding against RCPI, any
levy of an attachment, execution or other process against RCPI's assets in
excess of $1,000,000 in the aggregate, the occurrence of any event that would
prevent RCPI from qualifying as a REIT, or the occurrence of any event or
condition that would have a material adverse effect on the financial condition
of RCPI and file a Chapter 11 plan of the Borrower pursuant to which the
Property will be transferred to RCPI and other motions and pleadings in
connection therewith, with the approval of Holdings. In addition, RCPI agreed to
take all steps reasonably requested by Holdings to terminate the Combination
Agreement, prepay all borrowings made under the Investment Agreement, take all
steps reasonably requested by Holdings to terminate the Investment Agreement
and, except for payments or actions described in this sentence, not to make any
payments under the Combination Agreement and the Investment Agreement without
the prior written consent of Holdings and not to take any action with respect to
the Combination Agreement or the Investment Agreement without the prior written
consent of Holdings, which may not be unreasonably withheld.
In addition, prior to the Effective Time, RCPI will not, without the prior
written consent of Holdings: (a) declare, set aside or pay any dividend or
distribution (whether in cash, stock or property or combination thereof) in
respect of its capital stock, unless and to the extent required to meet
qualification rules for a REIT under the Internal Revenue Code; (b) authorize or
effect the issuance, sale, pledge, disposition or encumbrance (whether through
the issuance or granting of options, warrants, convertible securities or
otherwise) of any capital stock of RCPI; (c) subject to certain exceptions,
adopt or amend in any material respect any employment, consulting or severance
agreement with any present or former director, officer, consultant or other
employee of RCPI or any of RCPI's subsidiaries; (d) subject to certain
exceptions, establish any new benefit plan, or amend any existing benefit plan,
for any directors, officers, consultants or employees; (e) amend the RCPI
Charter or the RCPI By-laws; (f) acquire or agree to acquire (by merger,
consolidation or acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division thereof or any assets
that are material to RCPI; (g) sell, dispose or otherwise subject to a lien any
of its real property or material assets; (h) except as specified in the Merger
Agreement, incur any debt or assume, guarantee or endorse or otherwise become
responsible for the obligations of any person, or make any loans, advances or
investments; (i) create or acquire any subsidiary; (j) except as specified in
the Merger Agreement, incur any expenses; (k) except as specified in the Merger
Agreement, amend, modify or cancel, or waive any rights under, any material
agreement; (l) adopt any plan of complete or partial liquidation or merger,
consolidation, restructuring, recapitalization or reorganization; (m) amend,
waive or modify the Mortgage Note in any manner adverse to RCPI or the
Investors; (n) change any accounting principles of RCPI except as required by
the Commission or in accordance with the Financial Accounting Standards Board;
(o) settle any shareholder claims; (p) enter into any transactions with
affiliated parties other than on terms and conditions at least as favorable to
RCPI as would be obtainable by RCPI with an unaffiliated party; (q)consent to or
approve (i) any debtor-in-possession financing other than the
debtor-in-possession financing previously approved by the bankruptcy court in
the Borrower's Chapter 11 proceeding (except that RCPI may not consent to
certain borrowings under the stipulation relating thereto) or (ii) any
application of the proceeds of any debtor-in-possession financing that deviates
from the uses approved by such bankruptcy court and such stipulation; or (r)
agree to take any of the actions described above.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that
subsequent to the Effective Time the Surviving Corporation will indemnify and
hold harmless each present and former director, officer, employee, fiduciary and
agent of RCPI against all losses in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as director or officer occurring before the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, for a period of
six years after the Effective Time, in each case to the fullest extent permitted
under applicable law (and shall pay any expenses in advance of the final
disposition of such action or proceeding to the fullest extent permitted under
Delaware law).
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Section 145 of the DGCL provides, in summary, that a Delaware corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action by reason of the fact that
he or she is or was a director or officer of the corporation against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, if he or she had no reasonable cause to
believe their conduct was unlawful; PROVIDED that no indemnification may be made
against expense in respect of any claim, issue or matter as to which they shall
have been adjudged to be liable to the corporation, unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, they are fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper. Any such
indemnification may be made by the corporation only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct. Article TWELFTH of the RCPI Charter provides
that no director of RCPI shall be personally liable to RCPI or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability to the extent provided by applicable law (i) for any breach of such
director's duty of loyalty to RCPI or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL (unlawful payment of
dividends or unlawful purchase or redemption) or (iv) for any transaction from
which such director derived any improper personal benefit. Article V of RCPI's
By-laws entitles officers, directors, employees and agents of RCPI to
indemnification if and to the extent authorized by applicable law.
The Merger Agreement provides that for a period of six years after the
Effective Time, the Surviving Corporation will maintain in effect policies of
directors' and officers' liability insurance in substantially the same form with
substantially the same terms and conditions as contained in RCPI's current
policies of directors' and officers' liability insurance in an amount not less
than the amount currently maintained by RCPI with respect to claims arising from
facts or events that occurred prior to the Effective Time, provided that, in the
case of insurance, such insurance is available on commercially reasonable terms.
If the Surviving Corporation consolidates with or merges into any other person
and will not be the surviving corporation of such consolidation or merger, or
transfers all or substantially all of its assets to any person, the successors
and assigns of the Surviving Corporation must assume the obligations relating to
insurance and indemnification.
EXCLUSIVITY. Prior to the termination of the Merger Agreement, and except
as provided below, neither RCPI nor any of its affiliates, nor any of their
respective agents (collectively, the "RCPI Parties"), will, directly or
indirectly, solicit, pursue or attempt to engage in or enter into any
discussions with any person (including the Borrower and its affiliates) other
than the Investors, GSMC, Holdings or Mergerco (or any of their affiliates),
with a view toward entering into an Alternate Transaction (as defined in the
Merger Agreement). Notwithstanding the foregoing, RCPI may respond to and pursue
an unsolicited proposal to consummate an Alternate Transaction (an "Alternate
Transaction Proposal") that the Board determines could be financially superior
to the Merger, if, based on the advice of outside legal counsel, the Board
believes it has a fiduciary duty to the holders of Common Stock under applicable
law to respond to and pursue such Alternate Transaction Proposal, provided that
RCPI must inform Holdings of such Alternate Transaction Proposal (but not the
identity of the person making the Alternate Transaction Proposal or the terms
thereof) prior to responding thereto. In addition, RCPI may provide at any time
information concerning RCPI and the Property to third parties in response to
requests for such information (but may not provide information about Holdings,
GSMC (or their affiliates), any Investor or the Merger Agreement or anything
contained therein or relating thereto unless and to the extent required by law).
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may
be terminated and the Merger abandoned at any time prior to the Effective Time,
whether before or after approval by the
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stockholders of RCPI, in the following circumstances: (a) by mutual written
consent of Holdings and RCPI; (b) by Holdings if there has been a material
breach of any representation, warranty, covenant or agreement on the part of
RCPI; (c) by RCPI if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Holdings, GSMC or any Investor;
(d) by either Holdings or RCPI if the Merger has not been consummated before
April 30, 1996, provided that such failure has not been caused by the material
breach of the Merger Agreement by the party seeking to terminate the Merger
Agreement; (e) by either Holdings or RCPI if the stockholders of RCPI fail to
approve and adopt the Merger Agreement at the Special Meeting; (f) by Holdings
if (i) the Board withdraws, modifies or changes its recommendation to the
stockholders in any manner adverse to Holdings, (ii) the Board recommends to the
stockholders of RCPI, or enters into, an Alternate Transaction, (iii) a tender
offer is commenced that would result in any person or group owning in excess of
50% of the Shares or (iv) any person or group acquires or has the right to
acquire beneficial ownership of more than 50% of the outstanding Shares; (g) by
RCPI, at any time prior to the occurrence of a vote by the stockholders of RCPI,
if (i) RCPI has received an Alternate Transaction Proposal that RCPI's Board of
Directors determines in good faith could be financially superior to the Merger,
(ii) based on the advice of outside legal counsel, RCPI's Board of Directors
believes that it is required to respond to and pursue such Alternate Transaction
Proposal in order to comply with its fiduciary obligations and (iii) RCPI has
entered into a definitive agreement to consummate an Alternate Transaction or
(h) by Holdings or RCPI if a court or governmental entity issues an order,
decree or ruling or takes any action restraining, enjoining or otherwise
prohibiting the consummation of the Merger, and such order, decree, ruling or
other action becomes final and nonappealable.
The Merger Agreement provides that RCPI will pay Holdings $6.5 million
(including any amounts paid Holdings in accordance with the final sentence of
this paragraph) (i) if the Merger Agreement is terminated due to any events
described in clause (b), (f) or (g) in the preceding paragraph and, within 30
months after the date on which the Merger Agreement is terminated, RCPI
consummates an Alternate Transaction or (ii) if the Merger Agreement is
terminated due to any of the events described in clause (d) (if each of
Holdings, GSMC and each Investor (x) is not in material breach of any covenant,
representation or warranty; (y) is willing and able to consummate the Merger;
and (z) has satisfied in all material respects the conditions set forth in the
Merger Agreement applicable to it) or clause (e), if at the time the Merger
Agreement is terminated there exists an Alternate Transaction Proposal and,
within 30 months after the date on which the Merger Agreement is terminated,
RCPI consummates an Alternate Transaction. In any event, RCPI will pay to
Holdings $2.925 million if the Merger Agreement is terminated due to the RCPI
stockholders' failure to approve and adopt the Merger Agreement as described in
clause (e) in the preceding paragraph.
If the Merger Agreement is terminated for any reason (other than as a result
of a material breach of any representation, warranty, covenant or agreement on
the part of Holdings, GSMC or any Investor), RCPI will reimburse Holdings for
expenses of up to an aggregate amount of $2.5 million incurred by Holdings and
the Investors in connection with the preparation, execution and performance of
the Merger Agreement and the transactions contemplated thereby, including fees
and expenses of counsel.
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Holdings to acquire the Shares
pursuant to the Merger is estimated to be $306.09 million. Of such amount,
Whitehall, Rockprop, Mr. Rockefeller, Exor and Troutlet have committed to fund
$134.03 million, $15.64 million, $15.64 million, $70.39 million and $70.39
million, respectively. As permitted by the Merger Agreement, Mr. Rockefeller
intends, prior to the consummation of the Merger, to assign his rights and
obligations under the Merger Agreement to one of his controlled affiliates.
Additionally, as permitted by the Merger Agreement, Troutlet has designated each
of Gribble and Weevil to contribute $27.37 million of the $70.39 million that
Troutlet has committed to contribute.
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The funds to be used by Whitehall to meet its funding commitments are
expected to come from capital contributions from the partners in Whitehall.
The funds to be used by Rockprop to meet its funding commitments are
expected to come from capital contributions or loans from the members of
Rockprop.
The funds to be used by the affiliate of Mr. Rockefeller to meet its funding
commitments are expected to come from capital contributions of its equity
holders.
The funds to be used by Troutlet to meet its funding commitments are
expected to come from capital contributions by its stockholders and from Gribble
and Weevil. The funds to be used by Gribble and Weevil are expected to come from
capital contributions by their respective stockholders.
The funds to be used by Exor to meet its funding commitments are expected to
come from currently available working capital of Exor.
While the Investors have not yet received the capital contributions to be
raised from their respective equity holders, each of the Investors has
represented in the Merger Agreement that, as of November 7, 1995 it had, and as
of the Effective Time it will have, funds available to satisfy its funding
commitments. In addition, the Investors' obligations under the Merger Agreement
are not subject to the Investors' obtaining financing.
THE RIGHTS OFFERING AGREEMENT
The following is a summary of the material provisions of the Rights Offering
Agreement, a conformed copy of which is included with this Proxy Statement as
Annex B. Such summary is qualified in its entirety by reference to the Rights
Offering Agreement, which is incorporated herein by reference. Any election by
RCPI to proceed with a rights offering would not require prior approval of the
RCPI stockholders.
At the time of the execution of the Merger Agreement, RCPI entered into the
Rights Offering Agreement with Goldman Sachs and Whitehall, which agreement sets
forth the agreement of the parties with respect to the matters summarized below
in the event that the stockholders of RCPI fail to approve the Merger Agreement
at the Special Meeting (unless such failure results from RCPI's breach of the
Merger Agreement).
RIGHTS OFFERING. If the stockholders of RCPI fail to approve the Merger
Agreement at the Special Meeting (unless such failure results from RCPI's breach
of the Merger Agreement) and RCPI so elects within 30 days after the Special
Meeting, RCPI will conduct a $200 million registered public rights offering (the
"Rights Offering") in which each holder of Common Stock as of the record date
therefor would be offered the right to acquire newly issued shares of Common
Stock, at a price per share (the "Rights Offering Price") set by the Board in
its discretion, which in no event will be less than $6.00 per share, but which
may be less than the "fair market value of Common Stock" (as defined in the
Warrant Agreement). The rights (the "Rights") offered in the Rights Offering
would be freely transferable and participants in the Rights Offering would be
offered the right to oversubscribe. In addition, appropriate measures would be
taken to ensure, to the extent practicable, compliance with the "Limit"
contained in the RCPI Charter.
If RCPI decides to engage an underwriter for the Rights Offering, Goldman
Sachs would have the opportunity to underwrite and lead manage the Rights
Offering on customary terms, which would include a fee of 3% of the amount
underwritten and an additional fee of 3% of the Rights Offering Price for each
Right taken up by the underwriters. PaineWebber would have the opportunity to
co-underwrite up to 50% of the Rights Offering on the same terms (proportionate
to its participation).
The net proceeds of the Rights Offering would be used to redeem the Floating
Rate Notes (as supplemented by the additional GSMC Loans made pursuant to the
Merger Agreement), at the redemption price (with the prepayment premium) in
effect at the time of repayment, and any balance
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of the net proceeds would be available to RCPI for working capital purposes and
to reimburse the Whitehall Group for the $750,000 of expenses incurred by it in
connection with the enforcement of its rights under the Goldman Sachs Financing.
RECONSTITUTION OF RCPI'S BOARD OF DIRECTORS. Prior to the implementation of
the debt restructuring referred to below, the Board would be reconstituted
(without a stockholder vote) to include the following five members: (i) two of
the current directors, (ii) a director designated by Goldman Sachs pursuant to
their December 1994 agreement with RCPI, (iii) Mr. Speyer and (iv) an
independent director selected by Whitehall from a list of three new potential
directors (who have stature in the real estate industry and are not affiliated
with direct competitors of Goldman Sachs in the principal investing business or
in the real estate investment banking business) nominated by the current
directors of RCPI. The reconstituted Board would elect a new Chairman.
WHITEHALL GROUP PARTICIPATION. Immediately following the closing of the
Rights Offering, the holders of the Warrants and SARs would be issued additional
Warrants and SARs, so that they would hold, on account only of their holdings of
the Warrants and the SARs, a 19.9% fully diluted equity ownership position in
RCPI (or such lower percentage as may exist as a result of any exercise of
Warrants or SARs prior to such closing). In addition, Whitehall would be granted
rights (the "Additional Rights") to purchase a number of shares of Common Stock
equal to 42,000,000 divided by the sum of the Rights Offering Price plus $1. The
Additional Rights will be issued pursuant to an agreement containing
substantially the same terms as set forth in the Warrant Agreement as amended at
the time of their issuance. Under no circumstances will the issuance of the
Additional Rights entitle the holders of the Warrants and the SARs to any
additional Warrants or SARS. The exercise price of such rights would equal the
Rights Offering Price plus $1 per share of Common Stock until the second
anniversary of the closing of the Rights Offering and the Rights Offering Price
plus $1.50 per share of Common Stock for the period beginning on the second
anniversary of such closing and ending on the third anniversary of such closing.
Any such rights that are not exercised by the third anniversary of such closing
would expire. Assuming the Rights Offering was fully subscribed, the Rights
Offering Price were $6.00 and no additional shares of Common Stock (or rights to
purchase Common Stock) were issued by RCPI, the holders of the Warrants, SARs
and the Additional Rights would be entitled, upon full exercise thereof, to
24.9% of the equity of RCPI. However, as a result of the Limit, the Whitehall
Group would not be able to hold Warrants, additional rights and Shares equalling
more than 9.8% of the outstanding Shares at any time; therefore, any other
equity related holdings by the Whitehall Group would have to be in the form of
SARs (whose conversion into Warrants is subject to compliance with the Limit) or
some other form of security that would give the Whitehall Group the economic
equivalent of a Share but would not give the Whitehall Group the right generally
to vote.
DEBT RESTRUCTURING. If the Rights Offering were closed and all of the
shares offered were subscribed for, certain of RCPI's debt would be
restructured. The Debenture Purchase Agreement would be amended to permit RCPI
to issue up to $375 million principal amount of senior debt or, if the Board
determines that the Zero Coupon Convertible Debentures should not remain
outstanding, up to $700 million principal amount of senior debt. Except as set
forth in the following paragraph, the 14% Debentures would be subordinated to
the senior debt and this senior debt could be secured under the Collateral Trust
Agreement under which the 14% Debentures, the Floating Rate Notes and the
Convertible Debentures are currently secured. However, if the Zero Coupon
Convertible Debentures were refinanced, the "pay-in-kind" or accrual feature of
the 14% Debentures would be terminated.
In addition, RCPI would be permitted to enter into a credit lease financing
arrangement relating to a lease from, or guaranteed by, GE. The portion of the
Property covered by the lease financing would be released from the Collateral
Trust Agreement. GE and its subsidiaries, including NBC, currently lease
approximately 21.4% of the Property. If a lease financing were consummated, the
14% Debentures would no longer be subordinated to any other debt of RCPI. In
connection with any such lease financing, Goldman Sachs would have the
opportunity to lead-manage the financing and PaineWebber would have the
opportunity to co-manage 25% of the financing, in each case on customary terms.
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Additionally, the cash flow sweep provisions of the Debenture Purchase
Agreement would be eliminated. The covenants contained in the Debenture Purchase
Agreement would be further amended (without a stockholder vote) to (i) increase
from $10 million to $30 million the amount of unsecured debt that RCPI is
permitted to have outstanding at any time to cover its working capital needs;
(ii) permit the incurrence of debt secured by assets acquired with the proceeds
of such debt to the extent of 66% of the assets' purchase price in the case of
nonrecourse debt and 50% of the assets' purchase price in the case of recourse
debt; (iii) eliminate the restrictions on advances and loans made by RCPI; (iv)
eliminate the limitations on transactions with affiliates of RCPI and thus allow
RCPI to enter into any transactions with affiliates without the transaction
having to satisfy the Whitehall Group that the transaction meet a comparable
arms-length transaction test; (v) eliminate the restrictions on RCPI incurring
operating lease obligations; (vi) eliminate the prohibition on RCPI initiating
changes in its governing documents, except to eliminate the Limit; (vii)
eliminate the restrictions on RCPI's ability to modify the Mortgage; and (viii)
eliminate the prohibition on altering the character of RCPI's business.
CHANGES IN THE WARRANTS AND SARS. In connection with Rights Offering,
certain changes would be made in the terms of the Warrants and SARs. The Warrant
Agreement and the SAR Agreement would be amended to provide that (i) the SARs
would no longer be automatically convertible into Warrants in the event of
certain changes to the Limit; rather SARs would be convertible into Warrants
only at the option of the holders and subject to the Limit and (ii) all Warrants
may be converted into SARs at the option of the holders thereof, provided that,
once $6 million of 14% Debentures have been issued in connection with the
exercise of SARs issued upon conversion of Warrants or acquired upon conversion
of Additional Rights, any subsequent 14% Debentures issued in connection with
the exercise of SARs issued upon conversion of Warrants or acquired upon
acquisition of Additional Rights would be prepayable by RCPI at any time at par.
After completion of the Rights Offering, the Warrants and SARs would be
amended (i) to eliminate the existing requirement for consent of the holders of
the Warrants and the SARs to issuances of Common Stock for cash or property at a
price less than the "fair market value of Common Stock" and the existing
"anti-dilution protection" with respect to issuances of Common Stock for cash or
property at a price at least equal to the then "fair market value of Common
Stock", (ii) to base the "fair market value of Common Stock" on a 30-day, rather
than a 90-day, trailing average and (iii) to make changes to the covenants in
the Warrant Agreement and the SAR Agreement corresponding to the changes
(described under "Debt Restructuring" above) to like covenants in the Debenture
Purchase Agreement.
DECISION TO CONDUCT RIGHTS OFFERING UNDER RIGHTS OFFERING AGREEMENT. No
decision has been made by the RCPI Board as to whether the option to conduct the
Rights Offering will be exercised if the RCPI stockholders do not approve the
Merger Agreement; such a decision would be made in the light of the
circumstances obtaining at the time of a failure to approve the Merger
Agreement.
MISCELLANEOUS. The December 1994 agreement among RCPI, Whitehall and
Goldman Sachs providing for a 62.5% special supermajority voting requirement for
certain stockholder actions would be amended to provide that the voting
percentage would be equal to 0.5006 mulitplied by a fraction the denominator of
which is the aggregate number of shares of Common Stock then outstanding and the
numerator of which is the sum of (a) the aggregate number of shares of Common
Stock then outstanding, (b) the aggregate number of Warrants then outstanding
and (c) the aggregate number of SARs then outstanding. The voting percentage
would be recalculated upon any change in any of (a), (b) or (c).
RCPI would appoint Tishman Speyer as the exclusive managing agent for the
Property for a three-year term, subject to renewal at the option of RCPI for two
successive one-year terms, and for a fee of 1.5% of gross revenues plus a
one-half standard commission override. In addition, Tishman Speyer would have
the right to provide cleaning and other property-related services on customary
terms as approved by the Board.
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RIGHTS OF DISSENTING STOCKHOLDERS
If the Merger is consummated, holders of shares are entitled to appraisal
rights under Section 262 of the DGCL, provided that they comply with the
conditions established by Section 262.
SECTION 262 OF THE DGCL IS REPRINTED IN ITS ENTIRELY AS ANNEX D TO THIS
PROXY STATEMENT. THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW
RELATING TO APPRAISAL RIGHTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SECTION 262 OF THE DGCL ATTACHED AS ANNEX D. THIS DISCUSSION AND SECTION 262 OF
THE DGCL ATTACHED AS ANNEX D SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER WHO
WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE THE
RIGHT TO DO SO, AS FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH HEREIN OR
THEREIN WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.
A record holder of Shares who makes the demand described below with respect
to such Shares, who continuously is the record holder of such Shares through the
Effective Time, who otherwise complies with the statutory requirements of
Section 262 and who neither votes in favor of the approval and adoption of the
Merger Agreement nor consents thereto in writing will be entitled to receive
from RCPI the fair value of such holder's Shares as determined in an appraisal
proceeding conducted by the Delaware Court of Chancery (the "Delaware Court").
Except as set forth herein, stockholders of RCPI will not be entitled to
appraisal rights in connection with the Merger.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the Special Meeting, not less than 20 days prior
to the meeting, a constituent corporation must notify each of the holders of its
stock for which appraisal rights are available that such appraisal rights are
available and include in each such notice a copy of Section 262. This Proxy
Statement constitutes such notice to the record holders of the Shares.
Holders of Shares who desire to exercise their appraisal rights must not
vote in favor of approval and adoption of the Merger Agreement and must deliver
a separate written demand for appraisal to RCPI BEFORE the vote by the
stockholders of RCPI on the Merger Agreement. A stockholder who signs and
returns a proxy without expressly directing by checking the applicable boxes on
the reverse side of the proxy card enclosed herewith that such stockholder's
Shares be voted against the proposal or that an abstention be registered with
respect to such stockholder's Shares in connection with the proposal will have
thereby effectively waived such stockholder's appraisal rights because, in the
absence of express contrary instructions, such Shares will be voted in favor of
the proposal. Accordingly, a stockholder who desires to perfect appraisal rights
must either (i) refrain from executing and returning the enclosed proxy card and
from voting in person in favor of the proposal to approve the Merger Agreement
or (ii) check either the "Against" or the "Abstain" box next to the proposal on
such card or attend the Special Meeting and either affirmatively vote in person
against the proposal or abstain from voting thereon. A demand for appraisal must
be executed by or on behalf of the stockholder of record and must reasonably
inform RCPI of the identity of the stockholder of record and that such record
stockholder intends thereby to demand appraisal of such stockholder's Shares. A
person having a beneficial interest in Shares that are held of record in the
name of another person, such as a broker, fiduciary or other nominee, must act
promptly to cause the record holder to follow the steps summarized herein
properly and in a timely manner to perfect whatever appraisal rights are
available. If the Shares are owned of record by a person other than the
beneficial owner, including a broker, fiduciary (such as a trustee, guardian or
custodian) or other nominee, such demand must be executed by or for the record
owner. If the shares are owned of record by more than one person, as in a joint
tenancy or tenancy in common, such demand must be executed by or for all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute the demand for appraisal for the stockholder of record; however, the
agent must identify the record owner and expressly disclose the fact that, in
exercising the demand, such person is acting as agent for the record owner.
A record owner, such as a broker, fiduciary or other nominee, who holds
Shares as a nominee for others, may exercise appraisal rights with respect to
the Shares held for all or less than all beneficial
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owners of shares as to which such person is the record owner. In such case, the
written demand must set forth the number of Shares covered by such demand. Where
the number of Shares is not expressly stated, the demand will be presumed to
cover all shares outstanding in the name of such record owner.
A stockholder who elects to exercise appraisal rights should mail or deliver
such stockholder's written demand to Rockefeller Center Properties, Inc., 1270
Avenue of the Americas, New York, New York 10020, Attention: Stephanie Leggett
Young, Vice President and Secretary.
The written demand for appraisal should specify the stockholder's name and
mailing address, the number of Shares owned, and that the stockholder is thereby
demanding appraisal of such stockholder's Shares. A proxy or vote against the
approval and adoption of the Merger Agreement will not by itself constitute such
a demand. Within ten days after the Effective Time, the Surviving Corporation
must provide notice of the Effective Time to all stockholders who have complied
with Section 262.
Within 120 days after the Effective Time, either the Surviving Corporation
or any stockholder who has complied with the required conditions of Section 262
may file a petition in the Delaware Court, with a copy served on the Surviving
Corporation in the case of a petition filed by a stockholder, demanding a
determination of the fair value of the Shares of all dissenting stockholders.
There is no present intent on the part of the Investors to file an appraisal
petition and stockholders seeking to exercise appraisal rights should not assume
that the Surviving Corporation will file such a petition or that the Surviving
Corporation will initiate any petitions with respect to the fair value of such
Shares. Accordingly, stockholders who desire to have their Shares appraised
should initiate any petitions necessary for the perfection of their appraisal
rights within the time periods and in the manner prescribed in Section 262.
Within 120 days after the Effective Time, any stockholder who has theretofore
complied with the applicable provisions of Section 262 will be entitled, upon
written request, to receive from the Surviving Corporation a statement setting
forth the aggregate number of Shares not voting in favor of the approval and
adoption of the Merger Agreement and with respect to which demands for appraisal
were received by the RCPI and the number of holders of such Shares. Such
statement must be mailed within 10 days after the written request therefor has
been received by the Surviving Corporation.
If a petition for an appraisal is timely filed, at the hearing on such
petition the Delaware Court will determine which stockholders are entitled to
appraisal rights. The Delaware Court may require the stockholders who have
demanded an appraisal for their Shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; if any
stockholder fails to comply with such direction, the Delaware Court may dismiss
the proceedings as to such stockholder. Where proceedings are not dismissed, the
Delaware Court will appraise the Shares owned by such stockholders, determining
the fair value of such Shares exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value. In
determining fair value, the Delaware Court is to take into account all relevant
factors. In WEINBERGER V. UOP INC., the Delaware Supreme Court discussed the
factors that could be considered in determining fair value in an appraisal
proceeding, stating that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered, and that "fair price obviously
requires consideration of all relevant factors involving the value of a
company". The Delaware Supreme Court stated that in making this determination of
fair value, the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts which would
be ascertained as of the date of the merger which throw light on future
prospects of the merged corporation. In WEINBERGER, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered". Section 262, however, provides that
fair value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger".
75
<PAGE>
Holders of Shares considering seeking appraisal should recognize that the
fair value of their Shares determined under Section 262 could be more than, the
same as or less than the consideration they are entitled to receive pursuant to
the Merger Agreement if they do not seek appraisal of their Shares. The cost of
the appraisal proceeding may be determined by the Delaware Court and taxed
against the parties as the Delaware Court deems equitable in the circumstances.
Upon application of a dissenting stockholder of RCPI, the Delaware Court may
order that all or a portion of the expenses incurred by any dissenting
stockholder in connection with the appraisal proceeding, including without
limitation, reasonable attorneys' fees and the fees and expenses of experts, be
charged pro rata against the value of all Shares entitled to appraisal.
Any holder of Shares who has duly demanded appraisal in compliance with
Section 262 will not, after the Effective Time, be entitled to vote for any
purpose any Shares subject to such demand or to receive payment of dividends or
other distributions on such Shares, except for dividends or distributions
payable to stockholders of record at a date prior to the Effective Time.
At any time within 60 days after the Effective Time, any stockholder
electing to demand an appraisal of Shares under Section 262 of the DGCL will
have the right to withdraw such demand for appraisal and to accept the terms
offered in the Merger; after this period, the stockholder may withdraw such
demand for appraisal only with the consent of the Surviving Corporation. If no
petition for appraisal is filed with the Delaware Court within 120 days after
the Effective Time, stockholders' rights to appraisal will cease, and all
holders of Shares will be entitled to receive the consideration offered pursuant
to the Merger Agreement. Inasmuch as the Surviving Corporation has no obligation
to file such a petition, and the Investors have no present intention to do so,
any holder of Shares who desires such a petition to be filed is advised to file
it on a timely basis. Any stockholder may withdraw such stockholder's demand for
appraisal and accept the Merger Consideration, except that (i) any such attempt
to withdraw made more than 60 days after the Effective Time will require written
approval of the Surviving Corporation and (ii) no appraisal proceeding in the
Delaware Court will be dismissed as to any stockholder without the approval of
the Delaware Court, and such approval may be conditioned upon such terms as the
Delaware Court deems just.
76
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER
The receipt of cash for Shares in the Merger or pursuant to the exercise of
dissenters' appraisal rights will be a taxable transaction for federal income
tax purposes and generally will also be a taxable transaction under applicable
state, local, foreign or other tax laws. Generally, a stockholder who disposes
of all of such stockholder's Shares in connection with the Merger will recognize
gain or loss for such purposes equal to the difference between the cash received
for the Shares and such stockholder's tax basis for the Shares such stockholder
sells in the Merger. For federal income tax purposes, such gain or loss will be
capital gain or loss if the Shares are a capital asset in the hands of the
stockholder, and long-term capital gain or loss if the stockholder's holding
period is more than one year as of the Effective Time. There are significant
limitations on the deductibility of capital losses. Gain or loss will be
calculated separately for each block of Shares canceled and converted into the
right to receive the Merger Consideration or with respect to which dissenters'
appraisal rights are exercised.
Legislative proposals have been under consideration that would reduce the
rate of federal income taxation of certain capital gains. Such legislation, if
enacted, might apply only to gain realized on sales occurring after a date
specified in the legislation. It cannot be predicted whether any such
legislation ultimately will be enacted and, if enacted, what its effective date
will be.
In general, in order to prevent backup federal income tax withholding at a
rate of 31% on the Merger Consideration to be received, each RCPI stockholder
who is not otherwise exempt from such requirements must provide such holder's
correct taxpayer identification number (and certain other information) by
completing a Substitute Form W-9, which will be provided to each stockholder.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
TAXPAYERS, SUCH AS BROKER-DEALERS AND PERSONS WHO ARE NOT CITIZENS OR RESIDENTS
OF THE UNITED STATES OR WHO ARE FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED ON PRESENT LAW. STOCKHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO THEM,
INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND OF ANY
STATE, LOCAL AND FOREIGN LAWS.
77
<PAGE>
CERTAIN FINANCIAL PROJECTIONS
RCPI does not, as a matter of course, make public forecasts or projections
as to future performance, earnings or cash flows. However, in connection with
the Board's review of strategic alternatives following the bankruptcy of the
Borrower, certain projections, set forth below (the "Projections"), of future
net cash flows before debt service of the Property were submitted to the Board
at a meeting held on August 3, 1995 at which Daniel Neidich, who was still at
that time a member of the Board, was present.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS OR THE COMMISSION REGARDING PROJECTIONS AND FORECASTS. RCPI'S
INDEPENDENT AUDITORS HAVE NOT EXAMINED, COMPILED OR APPLIED AGREED-UPON
PROCEDURES TO THE PROJECTIONS AND HAVE NO RESPONSIBILITY FOR THE INFORMATION
CONTAINED THEREIN. IN ADDITION, THE PROJECTIONS ARE BASED UPON MANY ESTIMATES
AND ASSUMPTIONS, AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE OWNER OF THE PROPERTY. ACCORDINGLY, ACTUAL CASH FLOW MAY BE
MATERIALLY HIGHER OR LOWER THAN THAT PROJECTED. THE INCLUSION OF SUCH
PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS A REPRESENTATION BY RCPI OR ANY
OTHER PERSON THAT THE PROJECTIONS WILL PROVE TO BE CORRECT.
The Realtech Group ("Realtech") has provided exclusive valuation services to
Rockefeller Center since 1985. Realtech has prepared a model containing data on
all existing leases at Rockefeller Center and on the Property's expenses, from
which it can generate projections of various financial statement items based on
inputted assumptions. In completing its 1994 appraisal, Douglas Elliman utilized
the Realtech model to prepare projections based on leasing data as of November
30, 1994 and a series of assumptions specified by Douglas Elliman. In preparing
the Projections, RCPI utilized the Realtech model to calculate the projected net
cash flow before debt service of the Property based on the same assumptions
utilized by Douglas Elliman, except that the lease data was updated to June 30,
1995 ("Case 1") and based on two sets of specified changes to the Douglas
Elliman assumptions ("Case 2" and "Case 3", respectively).
A summary of Cases 1, 2 and 3 is set forth below, together with the
principal assumptions used in the Douglas Elliman 1994 Appraisal.
ROCKEFELLER CENTER PROJECTED NET CASH FLOW BEFORE DEBT SERVICE
(CASE 1: SIX MONTH LEASE-UP)
<TABLE>
<CAPTION>
1995
PARTIAL (1) 1996 1997 1998 1999 2000
---------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Effective gross income.............. $ 87,814 $ 208,443 $ 256,175 $ 282,031 $ 293,085 $ 298,208
Total operating expense (2)......... 71,343 148,179 153,893 161,320 169,119 177,307
---------- ----------- ----------- ----------- ----------- -----------
Net operating income.............. 16,471 60,264 102,282 120,711 123,966 120,900
Tenant work......................... 41,288 2,071 1,369 2,705 4,118 14,052
Leasing commissions................. 17,562 2,340 914 1,411 2,126 6,608
Capitalized expense (3)............. 48,411 14,644 12,485 14,167 20,825 11,775
---------- ----------- ----------- ----------- ----------- -----------
Total property investment......... 107,261 19,055 14,768 18,283 27,069 32,435
---------- ----------- ----------- ----------- ----------- -----------
Net cash flow before debt
service (4)........................ $ (90,790) $ 41,209 $ 87,513 $ 102,428 $ 96,897 $ 88,465
---------- ----------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
78
<PAGE>
(CASE 2: 2.5 YEAR LEASE-UP)
<TABLE>
<CAPTION>
1995
PARTIAL (1) 1996 1997 1998 1999 2000
---------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Effective gross income.............. $ 87,698 $ 194,725 $ 234,713 $ 283,374 $ 294,428 $ 300,436
---------- ----------- ----------- ----------- ----------- -----------
Total operating expense (2)......... 71,343 148,179 153,893 161,320 169,119 177,307
---------- ----------- ----------- ----------- ----------- -----------
Net operating income.............. 16,356 46,546 80,820 122,054 125,309 123,129
---------- ----------- ----------- ----------- ----------- -----------
Tenant work......................... 5,616 21,908 21,900 2,705 4,118 5,664
Leasing commissions................. 2,775 10,103 9,230 1,411 2,126 3,673
Capitalized expense (3)............. 48,411 14,644 12,485 14,167 20,825 11,775
Total property investments........ 56,802 46,655 43,615 18,283 27,069 21,112
---------- ----------- ----------- ----------- ----------- -----------
Net cash flow before debt service
(4)................................ $ (40,447) $ (110) $ 37,204 $ 103,771 $ 98,240 $ 102,017
---------- ----------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
(CASE 3: 5.5 YEAR LEASE-UP)
<TABLE>
<CAPTION>
1995
PARTIAL (1) 1996 1997 1998 1999 2000
---------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Effective gross income.............. $ 88,449 $ 194,875 $ 222,935 $ 258,536 $ 274,515 $ 282,127
Total operating expense (2)......... 71,343 146,806 151,050 155,421 159,923 164,560
---------- ----------- ----------- ----------- ----------- -----------
Net operating income.............. 17,106 48,069 71,885 103,115 114,592 117,567
Tenant work......................... 5,616 10,836 9,907 10,464 11,253 6,009
Leasing commissions................. 2,775 5,661 4,263 4,465 4,907 3,647
Capitalized expense (3)............. 48,411 14,644 12,485 14,167 20,825 11,775
---------- ----------- ----------- ----------- ----------- -----------
Total property investment......... 56,802 31,141 26,655 29,096 36,985 21,431
---------- ----------- ----------- ----------- ----------- -----------
Net cash flow before debt
service (4)........................ $ (39,697) $ 16,928 $ 45,229 $ 74,020 $ 77,607 $ 96,135
---------- ----------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
- ------------------------
(1) Reflects a partial year beginning July 1, 1995.
(2) Does not include New York City tax rebates expected in 1995 and 1996, due to
the uncertainty of the net impact on the Property after reimbursements to
tenants.
(3) Includes $39.8 million of pre-petition tenant improvement obligations of the
Borrower. Capital expenditures represent the amounts budgeted by the
Borrower.
(4) Does not include the Property's cash balance ($7.9 million) on June 30,
1995. During the three years ended December 31, 1994, the Borrower's
interest expense averaged $115.3 million per year, a portion of which was
not payable in cash.
Case 1 uses the assumptions incorporated in the Douglas Elliman 1994
Appraisal, which are set forth below, as updated to reflect all 1995 leasing and
property activity through June 30, 1995. The Douglas Elliman 1994 Appraisal
assumed that the 926,000 square feet of vacant space at the Property at the end
of 1994 and the 465,000 square feet of space under leases expiring during 1995
would be leased by December 1995, and that thereafter the Property would
maintain a 100% occupancy level (effectively 96% after credit loss and downtime
assumptions). Case 1 assumes that the 979,000 square feet of vacant space on
June 30, 1995 is leased up within six months and a 100% occupancy level
(effectively 96%) is maintained thereafter. The actual Case 1 given to the Board
projected net cash flow before debt service through 2014, showing annual net
cash flow before debt service of between $101.3 million and $149.0 million for
the period 2001 to 2011 (except for $59.8 million in 2005) and higher amounts
thereafter.
79
<PAGE>
Case 2 assumes that the 979,000 square feet of vacant space at the Property
on June 30, 1995 is leased over the next 2.5 years and that thereafter the
Property achieves a 100% occupancy level (effectively 96% after credit loss and
downtime assumptions). The actual Case 2 given to the Board projected net cash
flow before debt service through 2014, showing annual net cash flow before debt
service of between $93.4 million and $111.3 million for the period 2001 to 2009
(except for increased amounts in 2003 and 2008) and of between $129.9 million
and $157.8 million for the five years thereafter.
Case 3 changed several assumptions included in the Douglas Elliman 1994
Appraisal, the most important of which were that the vacant space at June 30,
1995 was leased up over 5.5 years and that the maximum occupancy achieved was
97% (effectively 93% after credit loss and downtime assumptions). The actual
Case 3 given to the Board projected net cash flow before debt service through
2014, showing annual net cash flow before debt service of between $93.7 million
and $126.5 million for the period 2001 to 2014.
In the course of discussions among the Board and RCPI's management and
advisors, members of the Board indicated that, subject to the various caveats
expressed above regarding financial projections, it was their belief that the
future net cash flow before debt service of the Property was most probably
closer to Case 2 than to Case 1 or Case 3. The Board concluded that Case 1's
assumption that lease-up could be completed by December 31, 1995 was overly
optimistic, given the slower than expected pace of leasing activity at the
Property during the first six months of 1995 and the continuing impact of the
Borrower's bankruptcy proceeding. On the other hand, the Board also concluded
that Case 3's assumed lease-up over 5.5 years was unduly pessimistic. Case 2,
with a 2.5 year projected lease-up period, was selected as the most reasonable.
The assumptions underlying the Projections were otherwise the same as those
developed by Douglas Elliman in connection with its 1994 Appraisal, as described
below. Douglas Elliman, in turn, developed its assumptions regarding projected
capital expenditures, tenant improvements, occupancy rates and other property
specific data through its discussions with the Borrower's management and it own
analysis of local market conditions. In adopting such assumptions for use in
developing the Projections, the Board concluded that there was no reason to
believe that such assumptions were unreasonable.
DOUGLAS ELLIMAN 1994 APPRAISAL
PRINCIPAL ASSUMPTIONS
<TABLE>
<S> <C>
1995 MARKET RENTS
Office Range of $37.50 to $45.00 per square foot
("psf")
Retail:
Fifth Avenue $210.00 psf
Avenue of the Americas $110.00 psf
Side Streets $60.00-$100.00 psf
Concourse $42.00 psf
Mezzanine $42.00 psf
Storage space $22.00 psf
LEASES SIGNED AFTER 1995 5% compounded increase over 1995 market
rents
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
TENANT RENT CONCESSIONS (IN MONTHS) 1995/96 1997 Thereafter
- --------------------------------------------------- ------------- ----- ---------------
<S> <C> <C> <C> <C>
Office:
50,000 sq ft & over 11 10 4
10,000 to 50,000 sq ft 11 7 2
Less than 10,000 sq ft 9 4 2
Retail 4 2 2
Storage 0 0 0
</TABLE>
<TABLE>
<S> <C>
TENANT IMPROVEMENTS
1995 Average of $45 psf for new and renewal
space
New 1996 $35 psf
New thereafter 5% compounded increase
Renewal after 1995 25% of new improvement allowance for new
leases
REQUIRED RATE OF RETURN DISCOUNT RATE 9.5% - 10.0%: emphasis on 10.0%
RESIDUAL CAPITALIZATION RATE 7.5%
INITIALLY VACANT SPACE Vacant space, as well as all turnover
space will be leased in 12 months in
accordance with other vacancy assumptions.
VACANCY DOWNTIME 12 months of downtime assumed for 1995
Average vacancy between new tenancies
equal 5% of lease term (3 to 9 months)
STEP-UPS IN RENT
Leases signed through 1996 10% step every 5 years
Leases signed after 1996 15% step every 5 years
</TABLE>
<TABLE>
<CAPTION>
TENANT RENEWAL PROBABILITY & TERM Renewal Probability Term (years)
- ------------------------------------------------------ ------------------- --------------
<S> <C> <C>
Office:
50,000 sq ft & over 70% 15
10,000 to 50,000 sq ft 60 10
Less than 10,000 sq ft 50 5
Retail 50 15
Storage associated with office Same as office Same as office
Storage - other 50% 10
</TABLE>
<TABLE>
<S> <C>
CAPITAL IMPROVEMENTS Management budgets used through 2004,
thereafter 5% compounded increases
</TABLE>
81
<PAGE>
BUSINESS OF RCPI
RCPI was formed in 1985 to permit public investment in two convertible
participating mortgages on the 12 original landmarked buildings in Rockefeller
Center. RCPI's principal asset is the Mortgage Note issued by the two
partnerships that together own most of the land and buildings known as
Rockefeller Center in Midtown Manhattan in New York City. Rockefeller Center is
one of the best-known business and entertainment complexes in the world.
Occupying most of three blocks, the Property includes 12 landmarked buildings,
all but one of which were completed between 1932 and 1940, having approximately
6.2 million square feet of rentable office, retail, storage and studio space.
Rockefeller Center contains a wide range of amenities, including the Channel
Gardens landscaped promenade, the lower plaza used as an ice skating rink during
colder weather and at other times for outdoor dining, a six-story 725-car
parking garage and extensive off-street truck delivery areas, an underground
retail and pedestrian concourse connecting all of the buildings and providing
direct access to a subway station, roof gardens and Radio City Music Hall.
Retail space within Rockefeller Center includes approximately 200 shops and 35
restaurants.
RCPI qualifies and has elected to be treated as a REIT under the Internal
Revenue Code.
The Borrower filed for protection under Chapter 11 of the Bankruptcy Code on
May 11, 1995. In September 1995, the Borrower and RCPI commenced working
together to develop a consensual plan of reorganization that would provide for
RCPI to take title to the Property.
82
<PAGE>
MARKET PRICES AND DIVIDENDS ON RCPI COMMON STOCK
The Common Stock is listed on the NYSE under the symbol "RCP". As of the
close of business on February 8, 1996, there were 38,260,704 Shares outstanding,
held of record by 9,867 holders. The following table sets forth the high and low
per-share sales prices of Common Stock as reported on the NYSE Composite Tape
for the periods indicated and the cash dividends per Share declared by RCPI for
each of such periods.
<TABLE>
<CAPTION>
SALES PRICES
-------------------- DIVIDENDS
HIGH LOW DECLARED
--------- --------- -----------
<S> <C> <C> <C>
1993:
1st Quarter......................................................................... $ 10 1/8 $ 6 7/8 $ .25
2nd Quarter......................................................................... 8 3/4 6 3/4 .25
3rd Quarter......................................................................... 7 1/2 6 7/8 .25
4th Quarter......................................................................... 7 1/4 6 1/2 .25
1994:
1st Quarter......................................................................... 8 3/8 5 1/2 .175
2nd Quarter......................................................................... 5 7/8 5 1/8 .175
3rd Quarter......................................................................... 6 5 1/8 .15
4th Quarter......................................................................... 5 3/4 3 3/4 .15
1995:
1st Quarter......................................................................... 6 7/8 5 .15
2nd Quarter......................................................................... 6 5/8 4 1/8 .00
3rd Quarter......................................................................... 8 1/8 4 5/8 .00
4th Quarter......................................................................... 8 3/8 7 1/8 .00
1996:
1st Quarter (through February 9, 1996).............................................. 7 7/8 7 1/2 .00
</TABLE>
On August 1, 1995, the last trading day prior to the publication of a
newspaper article stating that Disney and an unnamed investment partner were
bidding against several other companies for the Property, the closing sale price
per Share on the NYSE Composite Tape was $5 1/4. On November 6, 1995, the last
trading day prior to the date the execution of the Merger Agreement was
announced, the closing sale price per Share on the NYSE Composite Tape was
$7 1/2. On February 9, 1996, the last trading day prior to the printing of this
Proxy Statement for which quotations were available, the closing price per Share
on the NYSE Composite Tape was $ . STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THEIR SHARES.
In order to maintain its qualification as a REIT under the Internal Revenue
Code, RCPI is obligated to distribute to its stockholders at least 95% of its
annual taxable income. Historically, RCPI has distributed to its stockholders
substantially all of its annual cash flow in excess of interest and operating
expenses, reserves and investments. On June 6, 1995, RCPI announced that it
would suspend its quarterly dividend of $.15 per share for the quarter ended
June 30, 1995, primarily because of the interruption in payments on the Mortgage
Note and uncertainties resulting from the Borrower's Chapter 11 Case. RCPI has
not paid any dividend since the first quarter of 1995 and does not anticipate
that it will pay any dividends on the Common Stock during the next year and, in
any event, until the later of the termination of the Merger Agreement and the
completion of the Borrower's bankruptcy case.
If the Merger is not approved and adopted by the RCPI stockholders, it is
anticipated that RCPI will continue to qualify for taxation as a REIT. In order
for RCPI to continue to so qualify, it would be required to pay dividends in
respect of its taxable year to the extent of 95% of its REIT taxable income for
such year. Under current conditions, RCPI is operating at a taxable loss due to
nonaccrual of interest income. If, however, the Merger is not approved and
adopted and it were to acquire the Property, it could be expected to have REIT
taxable income for 1996 or subsequent years. RCPI expects that, for any taxable
year in which RCPI has REIT taxable income, it will pay dividends in amounts at
least sufficient to maintain its qualification as a REIT. Such required
dividends are permitted under the Merger Agreement and the terms of the Goldman
Sachs Financing.
83
<PAGE>
SELECTED FINANCIAL DATA OF RCPI
The following selected financial data have been derived from RCPI's
financial statements. The financial statements for each of the five years in the
period ended December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors. Ernst & Young LLP's report dated February 3, 1995 on
RCPI's financial statements for the year ended December 31, 1994 included an
emphasis paragraph regarding the status of RCPI's principal asset and is
incorporated by reference herein. Financial data as of September 30, 1994 and
1995 and for the nine-month periods then ended are derived from RCPI's unaudited
financial statements, which, in the opinion of RCPI's management, include all
normal recurring adjustments necessary for a fair presentation of such data. The
following selected financial data should be read in conjunction with the
financial statements and the related notes that have been included or
incorporated by reference in the reports filed by RCPI under the Exchange Act
and that are incorporated by reference in this Proxy Statement.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ------------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Revenues (1)................. $ 123,513 $ 123,182 $ 122,414 $ 113,560 $ 109,285 $ 81,949 $ 21,342
---------- ---------- ---------- ---------- ---------- ------------- ----------
Interest expense............. 82,024 80,784 80,799 78,343 77,501 61,301 64,275
General and administrative... 2,990 3,349 4,299 3,728 4,170 3,611 6,112
Amortization of deferred debt
issuance and letter of
intent costs (2)............ 800 760 705 705 705 529 8,116
Cost of evaluating
alternative financings...... -- -- -- -- 1,942 -- --
Stock appreciation rights
liability (3)............... -- -- -- -- -- -- 10,050
Effects of the execution and
delivery of the Merger
Agreement (2)............... -- -- -- -- -- -- 99,163
---------- ---------- ---------- ---------- ---------- ------------- ----------
85,814 84,893 85,803 82,776 84,318 65,441 187,716
Income (loss) before non-
recurring income and
extraordinary item.......... 37,699 38,289 36,611 30,784 24,967 16,508 (166,374)
---------- ---------- ---------- ---------- ---------- ------------- ----------
Non-recurring income (gain on
sales of portfolio
securities)................. -- -- -- 8,593 31 31 --
---------- ---------- ---------- ---------- ---------- ------------- ----------
Extraordinary (loss) gain on
debt extinguishment......... (360) 38 2,537 (3,451) (9,855) -- --
---------- ---------- ---------- ---------- ---------- ------------- ----------
Net income (loss)............ $ 37,339 $ 38,327 $ 39,148 $ 35,926 $ 15,143 $ 16,539 $ (166,374)
---------- ---------- ---------- ---------- ---------- ------------- ----------
---------- ---------- ---------- ---------- ---------- ------------- ----------
Income (loss) per share
before extraordinary item... $ 1.01 $ 1.02 $ 0.97 $ 1.05 $ 0.66 $ 0.43 $ (4.35)
---------- ---------- ---------- ---------- ---------- ------------- ----------
---------- ---------- ---------- ---------- ---------- ------------- ----------
Net income (loss) per
share....................... $ 1.00 $ 1.02 $ 1.04 $ 0.96 $ 0.40 $ 0.43 $ (4.35)
---------- ---------- ---------- ---------- ---------- ------------- ----------
---------- ---------- ---------- ---------- ---------- ------------- ----------
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets (1)(2).......... $1,460,617 $1,450,103 $1,432,210 $1,317,509 $1,319,995 $ 1,324,343 $1,206,347
Total debt................... 859,462 876,959 879,284 756,936 760,394 740,194 761,820
Total liabilities............ 880,831 904,009 910,360 792,344 802,528 801,769 860,993
Total stockholders' equity... 579,786 546,094 521,850 525,165 517,467 522,574 345,354
OTHER FINANCIAL DATA:
Ratio of earnings to fixed
charges (4)................. 1.46X 1.47X 1.45X 1.50X 1.32X 1.27X --
Net cash provided by (used
in) operating activities.... $ 56,356 $ 57,909 $ 62,735 $ 58,231 $ 57,198 $ 38,359 $ (2,387)
Net cash provided by
investing activities........ 23,162 17,200 23,560 126,668 14,331 14,331 50,000
Dividends paid............... 70,894 72,019 63,392 37,697 24,869 19,130(5) 5,739
Dividends paid per share..... 1.89 1.92 1.69 1.00 0.65 .50(5) .15
Portion of dividends
representing a return of
capital (6)................. 46.7% 46.8% 38.2% 7.4% 39.4%
Book value per share......... $ 15.46 $ 14.56 $ 13.91 $ 13.73 $ 13.52 $ 13.65 $ 9.03
Repurchase of convertible
debentures (7).............. 23,845 10,000 30,410 -- -- -- --
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
84
<PAGE>
- ------------------------
(1) On May 11, 1995, the Borrower filed for protection under Chapter 11 of the
Bankruptcy Code. RCPI's only significant source of income is interest
received on the Mortgage Note from the Borrower.
Due to the significant uncertainties created by the Borrower's Chapter 11
Case, RCPI has limited recognition of income on the Mortgage Note for the
nine months ended September 30, 1995 to the cash actually received from the
Borrower during this period. In the second quarter of 1995, RCPI drew down
$50 million under letters of credit supporting the Borrower's obligations
under the Mortgage Note and reduced the carrying value of the Mortgage Note
to $1,250,000,000.
(2) RCPI has reflected at September 30, 1995 a valuation reserve, totaling
$74,000,000, to reduce the carrying value of its Mortgage Note to reflect
the economics of the transactions contemplated by the Merger Agreement. In
addition, RCPI has recorded certain deal expenses and transaction costs
aggregating $25,200,000, as well as recognizing as expense certain deferred
debt issuance and letter of intent costs totaling $4,400,000.
(3) Due to the increase in the market price of RCPI's stock during the nine
months ended September 30, 1995, RCPI was required to increase its liability
for the SARs issued in December 1994 and record a current noncash charge to
earnings of $10,050,000 in the first nine months of 1995.
(4) For the nine months ended September 30, 1995, earnings were inadequate to
cover fixed charges by $166,374,000 due to RCPI's net loss for this period.
The loss was due primarily to the Borrower's failure to pay interest on the
Mortgage Note after commencement of the Borrowers' Chapter 11 Case (see (1)
above).
(5) Amount includes dividends of $5,739,000 declared during the third quarter of
1994 but paid during the fourth quarter of 1994. Due to the significant
uncertainties created by the Borrower's Chapter 11 Case, the Board has not
declared a dividend since the first quarter of 1995. Moreover, since
November 7, 1995, the Merger Agreement has prohibited the payment of
dividends on the Common Stock unless and to the extent required to meet
qualification rules for a REIT under the Internal Revenue Code.
(6) The portion of dividends representing a return of capital has not been
calculated for interim periods.
(7) As of September 30, 1995, the aggregate face value of the Convertible
Debentures repurchased since 1987 was $487,895,000.
85
<PAGE>
SELECTED FINANCIAL DATA OF THE PROPERTY
The following selected financial data have been derived from the combined
financial statements of Rockefeller Center Properties and RCP Associates. The
financial statements for each of the five years in the period ended December 31,
1994 have been audited by Ernst & Young LLP, independent auditors. Ernst & Young
LLP's report, dated February 3, 1995 except for Note 4 as to which the date is
November 11, 1995, which is incorporated by reference herein, has been modified
with respect to the 1994 financial statements to indicate that there was
substantial doubt as to the Borrower's ability to continue as a going concern.
Financial data as of September 30, 1994 and 1995 and for the nine-month periods
then ended are derived from the unaudited financial statements of RCP and RCPA,
which, in the opinion of management, include all normal and recurring
adjustments necessary for the fair presentation of such data, however, these
statements do not include any adjustments which will be required as a result of
the transactions described in Note 1 below. The selected financial data should
be read in conjunction with the financial statements and the related notes that
have been included or incorporated by reference in the reports filed by RCPI
under the Exchange Act and that are incorporated by reference in this Proxy
Statement.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- ----------------------
1990 1991 1992 1993 1994 1994 1995(1)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
GROSS REVENUE:
Fixed and percentage rents.... $ 150,328 $ 152,289 $ 150,197 $ 148,960 $ 156,314 $ 114,207 $ 132,073
Operating and real estate tax
escalation................... 51,926 57,224 57,029 55,643 42,201 36,724 11,509
Consideration revenues........ 3,630 984 3,295 3,227 3,443 3,157 948
Sales and service revenues.... 19,932 19,700 18,479 18,767 18,893 14,625 12,997
---------- ---------- ---------- ---------- ---------- ---------- ----------
225,816 230,197 229,000 226,597 220,851 168,713 157,527
---------- ---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Real estate taxes............. 37,922 42,725 44,481 44,336 40,884 30,953 25,703
Real estate tax refund........ -- -- -- -- -- -- (7,388)
Utilities..................... 15,288 16,092 16,360 16,553 16,386 12,842 13,207
Maintenance and engineering... 28,907 30,037 30,509 33,657 32,062 24,112 23,096
Other operating expenses...... 40,677 40,927 40,792 40,639 39,839 30,070 29,212
Depreciation and
amortization................. 14,008 17,137 19,834 21,821 25,761 17,615 20,559
Management fee................ 2,267 2,402 2,491 2,579 2,636 1,971 2,036
General and administrative.... 4,715 4,285 6,231 5,871 4,322 3,228 3,708
---------- ---------- ---------- ---------- ---------- ---------- ----------
143,784 153,605 160,698 165,456 161,890 120,791 110,133
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before interest and
reorganization items......... 82,032 76,592 68,302 61,141 58,961 47,922 47,394
Interest expense, net (1)..... 113,835 114,481 114,040 114,599 117,328 87,327 45,038
Earnings (loss) before
reorganization items......... (31,803) (37,889) (45,738) (53,458) (58,367) (39,405) 2,356
---------- ---------- ---------- ---------- ---------- ---------- ----------
REORGANIZATION ITEMS:
Professional fees and
expenses..................... -- -- -- -- -- -- 547
Interest income............... -- -- -- -- -- -- (274)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income............. $ (31,803) $ (37,889) $ (45,738) $ (53,458) $ (58,367) $ (39,405) $ 2,083
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets.................. $ 702,808 $ 737,527 $ 747,220 $ 774,030 $ 878,320 $ 840,620 $ 969,135
Liabilities not subject to
compromise (1)............... 1,390,597 1,463,205 1,518,636 1,598,904 1,761,561 1,704,899 9,132
Liabilities subject to
compromise (1)............... -- -- -- -- -- -- 1,841,161
Partners' capital
deficiency................... (687,789) (725,678) (771,416) (824,874) (883,241) (864,279) (881,158)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed
charges (2).................. .72X .67X .60X .53X .50X .55X --
Net cash provided by (used in)
operating activities......... $ 9,167 $ (8,486) $ (18,316) $ (17,723) $ (41,672) $ (17,581) $ 13,698
Net cash used by investing
activities................... (48,719) (47,214) (31,275) (43,675) (63,160) (31,273) (49,591)
Net cash provided by financing
activities................... 39,552 55,701 49,591 61,395 104,831 48,853 55,664
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
86
<PAGE>
- ------------------------
(1) On May 11, 1995, the partnerships that comprise the Borrower filed for
protection under Chapter 11 of the Bankruptcy Code and discontinued accrual
and payment of interest on the Mortgage Note. The separate Chapter 11 cases
of RCP and RCPA have been assigned case numbers 95 B 42089 and 95 B 42088
(PBA), respectively, have been consolidated for procedural purposes and are
being jointly administered pursuant to an order of the Bankruptcy Court. A
statutory unsecured creditors' committee has been appointed for RCP. In the
second quarter of 1995, RCPI drew down $50 million under letters of credit
supporting the Borrower's obligations under the Mortgage Note. These
payments were accounted for by the Borrower as reductions in the principal
amount of the Mortgage Note.
Subsequent to the Petition Date, the Borrower has continued in possession of
its properties and is operating and managing its business as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy
Code. The Borrower has sought and obtained orders from the Bankruptcy Court
intended to continue to allow the Borrower to maintain operations and obtain
new business and otherwise minimize the disruption caused by the Chapter 11
Case, including orders: (i) authorizing the Borrower to pay certain
prepetition liabilities, wages and other employee obligations and (ii)
approving the use of cash collateral.
On September 12, 1995, the Borrower reported to the Bankruptcy Court that it
intended to transfer the Property to the mortgage holder, RCPI. The date of
transfer is uncertain at this time.
On October 30, 1995, the Bankruptcy Court approved an $80 million
Debtor-in-Possession Revolving Credit Agreement (the "Facility"), which may
be used to fund tenant improvements, leasing commissions, required capital
expenditures and other permitted working capital needs of the Borrower. The
Facility is secured by a first mortgage on the Property, which is senior to
the mortgages securing the Mortgage Note. The Facility matures on the
earlier of December 31, 1996 and the substantial consummation of a plan of
reorganization for the Borrower.
For financial reporting purposes, the Borrower has applied the provisions of
the American Institute of Certified Public Accountants' Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"), in preparing the unaudited combined financial
statements as of and for the period May 11, 1995 through September 30, 1995.
In accordance with SOP 90-7, those liabilities and obligations whose
disposition is dependent upon the outcome of the Chapter 11 Case have been
segregated and classified as "Liabilities Subject to Compromise" in the
unaudited combined balance sheet at September 30, 1995.
In the opinion of the Borrower, the unaudited combined financial statements
for the current reporting period include all operating adjustments, which
comprise the normal accruals (exclusive of certain effects of bankruptcy)
required to reflect the operations of the Borrower in the ordinary course,
necessary for a fair presentation of the results for the period.
The Bankruptcy Court set September 13, 1995 as the last day for filing
proofs of claim for pre-petition claims. With certain exceptions, creditors
have been barred from filing pre-petition claims subsequent to that date.
The Borrower has received claims involving aggregate amounts substantially
in excess of those recorded at the Petition Date. The Borrower is
reconciling these claims to its records and does not expect that the
resolution of these matters will result in liabilities materially in excess
of those recorded at May 11, 1995.
The financial statements, from which the selected financial data were
derived, have been prepared on a going concern basis and reflect the
combined historical cost basis of the Borrower in its assets and
liabilities. The transfer of the Property to RCPI is subject to the approval
of the Bankruptcy Court. The transfer of the Property and related release of
the Mortgage Note and cancelation of indebtedness of the Borrower to RCPI
and to RGI and its affiliates, if consummated, will result in substantial
noncash gains to the Borrower. Further, upon consummation of
87
<PAGE>
these transactions, either the Borrower will cease its business activities
or control of the Borrower will vest with parties other than RGI. The
Borrower's financial statements do not include any adjustments that would be
required to reflect the transfer of the Property to RCPI, the release or
cancelation of indebtedness, the wind-down of the affairs of the Borrower or
any change in control that may occur with respect to the Borrower. In the
event that a Chapter 11 Plan is not consummated and, as a result, the
Property is foreclosed upon, other adjustments would be required. All such
adjustments could be material.
Certain items in the 1994 combined financial statements have been
reclassified in the 1995 combined financial statements in accordance with
SOP 90-7.
(2) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net income plus fixed charges. Fixed charges consist of
interest expense and amortization of debt issuance cost and mortgage
recording tax cost. Except for the nine months ended September 30, 1995,
earnings were inadequate to cover fixed charges by $31,803,000, $37,889,000,
$45,738,000, $53,458,000, $58,367,000 and $39,405,000 for the years ended
December 31, 1990, 1991, 1992, 1993 and 1994 and in the nine months ended
September 30, 1994, respectively. The inadequacy of coverage is due to high
interest expense and operating losses generated by the Property. Due to the
Borrower's Chapter 11 Case, the Borrower ceased on May 11, 1995 accruing and
paying interest on the Mortgage Note, and thus its ratio of earnings to
fixed charges for the nine months ended September 30, 1995 is not
meaningful.
88
<PAGE>
OWNERSHIP OF COMMON STOCK
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of December 13, 1995, the number of Shares
beneficially owned by each person who since January 1, 1995 served as a director
or executive officer of RCPI and all directors and officers of RCPI as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF SHARES
NAME OF BENEFICIAL OWNER OWNERSHIP (1) OUTSTANDING
- ----------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Benjamin D. Holloway................................................... 3,734(2) *
Peter D. Linneman...................................................... 1,000(3) *
William F. Murdoch, Jr................................................. 3,000 *
Daniel M. Neidich...................................................... 4,155,927(4)(5) 9.8%
Peter G. Peterson...................................................... 1,000 *
Stevan A. Sandberg..................................................... 1,125 *
Richard M. Scarlata.................................................... 1,071(6) *
All directors and officers as a group (8 persons)...................... 10,932(7) *
</TABLE>
- ------------------------
(1) The table lists beneficial ownership in accordance with the definitions
contained in Rule 13d-3 adopted by the Commission under the Exchange Act.
All shares listed are subject to the sole investment and voting power of the
named beneficial owner, except as set forth in footnotes (2) and (3) below.
The table excludes executive officers who beneficially own no Shares or an
immaterial number of Shares.
(2) These Shares are held by Mr. Holloway as a joint tenant with his spouse with
whom he shares voting and investment powers.
(3) These Shares are held by Dr. Linneman as a joint tenant with his spouse with
whom he shares voting and investment powers.
(4) Mr. Neidich is a general partner of GS Group and Goldman Sachs. GS Group, as
the direct beneficial owner of all of the capital stock of the general
partners of Whitehall and certain other investment funds under the indirect
control of GS Group, may be deemed to beneficially own the 4,155,927
currently exercisable Warrants owned by such funds (4,045,102 of which are
owned by Whitehall). Whitehall and such other funds also own an aggregate of
5,349,341 SARs (5,206,887 of which are owned by Whitehall) exchangeable for
14% Debentures or Warrants on a one-for-one basis, unless such exchange for
Warrants would cause the holder of such Warrants to exceed the Limit. When
effect is given to all of the Warrants and SARs beneficially owned by GS
Group, GS Group has a 19.9% fully diluted equity interest in RCPI. Because
the SARs are not currently convertible within 60 days into shares of Common
Stock, GS Group is not deemed to have beneficial ownership of the shares of
Common Stock into which such SARs might be converted. See "Special Factors
-- Background of the Merger". As a general partner of GS Group, Mr. Neidich
could be deemed to beneficially own the Warrants and SARs beneficially owned
by Whitehall and such other investment funds; however, Mr. Neidich disclaims
beneficial ownership of such Warrants and SARs. The Shares attributed to Mr.
Neidich in the table do not include 3,000 Shares owned by David M. Silfen
and 100 Shares owned by Thomas J. Healey, both of whom are partners of GS
Group.
(5) On August 8, 1995, Mr. Neidich resigned as a director of RCPI.
(6) Does not include 106 shares held by an officer's daughter. The officer has
no voting or investment powers and disclaims beneficial ownership of such
shares.
(7) See footnotes (2), (3) and (7). All directors and officers as a group
excludes Mr. Neidich.
* Shares of Common Stock beneficially owned represent less than 1% of the
shares outstanding.
89
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of the date of this
Proxy Statement concerning the beneficial ownership of the outstanding Shares by
each person known by the Company to own more than 5% of the outstanding Shares
on December 13, 1995.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF SHARES
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
The Goldman Sachs Group, L.P. 4,155,927(1) 9.80%
85 Broad Street
New York, New York 10004
Whitehall Street Real Estate Limited 4,045,102(1) 9.54
Partnership V
85 Broad Street
New York, New York 10004
Leucadia National Corporation 2,714,000(2) 7.10
315 Park Avenue South
New York, New York 10010
Gotham Partners L.P. 2,124,900(3) 5.55
237 Park Avenue
Ninth Floor
New York, New York 10017
Goodman & Company Ltd. 1,917,300(4) 5.00
40 King St. West
55th Floor
Toronto, Ontario M5H 4A9
Canada
Elliott Associates, L.P. 1,507,700(5) 3.94
712 Fifth Avenue
36th Floor
New York, New York 10019
Westgate International, L.P. 531,500(5) 1.39
Martley International, Inc.
222 Cedar Lane
Suite 111
Teaneck, New Jersey 07666
</TABLE>
- ------------------------
(1) GS Group, as the direct beneficial owner of all of the capital stock of the
general partners of Whitehall and certain other investment funds under the
indirect control of GS Group, may be deemed to beneficially own the
4,155,927 currently exercisable Warrants owned by such funds (4,045,102 of
which are owned by Whitehall). Whitehall and such other funds also own an
aggregate of 5,349,541 SARs (5,206,887 of which are owned by Whitehall)
exchangeable for 14% Debentures or Warrants on a one-for-one basis, unless
such exchange for Warrants would cause the holder of such Warrants to exceed
the Limit. When effect is given to all of the Warrants and SARs beneficially
owned by GS Group, GS Group has a 19.9% fully diluted equity interest in
RCPI. Because the SARs are not currently convertible within 60 days into
shares of Common Stock, GS Group is not deemed to have beneficial ownership
of the shares of Common Stock into which such SARs might be converted. See
"Special Factors -- Background of the Merger". The amount shown in the table
does not include 3,000 Shares owned by David M. Silfen and 100 Shares owned
by Thomas J. Healey, both of whom are partners of GS Group.
90
<PAGE>
(2) In a statement of Beneficial Ownership on Schedule 13D dated June 21, 1995
filed by Leucadia National Corporation, Leucadia Inc. and LNC Investments
Inc., such persons reported that funds controlled by Leucadia National
Corporation beneficially owned 2,714,000 Shares.
(3) In a statement of Beneficial Ownership on Schedule 13D dated September 29,
1995 filed by Gotham Partners L.P., such person reported that it
beneficially owned 2,124,900 Shares.
(4) In a statement of Beneficial Ownership on Schedule 13D dated September 14,
1995 filed by Goodman & Company Ltd., such person reported that it
beneficially owned 1,917,300 Shares.
(5) In a statement of Beneficial Ownership on Schedule 13D dated December 8,
1995 filed by Elliot Associates, L.P., Westgate International, L.P.
("Westgate") and Martley International, Inc. ("Martley"), such persons
reported that they constitute a "group" as defined in Rule 13d-5(b)(1) of
the Exchange Act with respect to their beneficial ownership of the Shares
and that they beneficially owned an aggregate of 2,039,200 Shares or 5.33%
of Shares outstanding. Martley expressly disclaims equitable ownership of
and pecuniary interest in any Shares. Westgate and Martley have shared
voting and dispositive power with respect to the shares owned by Westgate.
91
<PAGE>
TRANSACTIONS BY CERTAIN PERSONS IN SHARES
On October 2, 1995, Mr. Rockefeller and his wife sold 97,501 Shares on the
NYSE at a price of $8.00 per Share, or an aggregate of $780,008. Except as set
forth above, since October 16, 1995, 60 days prior to the filing of the Schedule
13E-3, none of the Investors, Holdings, Mergerco, GS Group, RCPI, any subsidiary
thereof, any director or executive officer thereof, and no pension, profit
sharing or similar plan of Holdings, Mergerco, GS Group, Whitehall or RCPI has
effected any purchases or sales of Shares. On October 2, 1995, certain officers
and managing directors of the general partner of Tishman Speyer sold 38,700
Shares on the NYSE at a price of $8.00 per share, or an aggregate of $309,600.
None of the Investors, Holdings, Mergerco or RCPI has purchased any Shares since
January 1, 1993; however, on December 18, 1994, Whitehall acquired the Warrants
and the SARs, and after December 18, 1995 neither GS Group nor Whitehall has
purchased any Shares. See "Special Factors -- Background of the Merger".
REVOCATION OF PROXIES
If the Special Meeting is adjourned, for whatever reason, the approval of
the Merger Agreement will be considered and voted upon by stockholders at the
subsequent "adjourned meeting" (as such term is used in Section 222 of the
DGCL), if any.
You may revoke your proxy at any time prior to its exercise by attending the
Special Meeting and voting in person (although attendance at the Special Meeting
will not in and of itself constitute revocation of a proxy), by giving notice of
revocation of your proxy at the Special Meeting or by delivering a written
notice of revocation or a duly executed proxy relating to the matters to be
considered at the Special Meeting and bearing a later date to the Secretary of
RCPI at 1270 Avenue of the Americas, New York, New York 10020. Unless revoked in
the manner set forth above, proxies in the form enclosed will be voted at the
Special Meeting in accordance with your instructions.
INDEPENDENT AUDITORS
The financial statements as of December 31, 1994 and the related
Consolidated Statements of Income, Stockholders' Equity and Cash Flows for each
of the three fiscal years in the period ended December 31, 1994, included in
this Proxy Statement, have been audited by Ernst & Young LLP, independent
accountants, as stated in their report appearing in RCPI's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 incorporated herein by
reference. A representative of Ernst & Young LLP will be at the Special Meeting
to answer appropriate questions from stockholders and will have the opportunity
to make a statement if so desired.
STOCKHOLDER PROPOSALS
RCPI's 1996 Annual Meeting of Stockholders is anticipated to be held in June
1996. If the Merger is consummated, the 1996 Annual Meeting of Stockholders will
not occur. If the Merger is not consummated, proposals of stockholders intended
to be presented at the 1996 Annual Meeting of Stockholders must have been
received by RCPI on or before January 2, 1996 in order to be eligible for
inclusion in RCPI's Proxy Statement and form of proxy for such Annual Meeting.
92
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed by RCPI with the Commission,
are incorporated herein by reference:
(1) RCPI's Annual Report on Form 10-K for the year ended December 31,
1994;
(2) RCPI's definitive Proxy Statement dated May 1, 1995 for the 1995
Annual Meeting of Stockholders;
(3) RCPI's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995; and
(4) RCPI's Current Reports on Form 8-K filed February 22, 1995, August
22, 1995, September 18, 1995, November 13, 1995 and December 14, 1995.
All documents and reports filed by RCPI pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act on or after the date of this Proxy Statement and
prior to the date of the Special Meeting will be deemed to be incorporated by
reference in this Proxy Statement and to be a part hereof from the date of
filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this Proxy Statement to the extent that a statement contained herein
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. RCPI WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS
DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF THE
FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS
THERETO THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). SUCH REQUESTS SHOULD BE DIRECTED TO ROCKEFELLER CENTER PROPERTIES,
INC., 1270 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10020, ATTENTION:
STEPHANIE LEGGETT YOUNG, VICE PRESIDENT AND SECRETARY, TELEPHONE NUMBER (212)
698-1440. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST MUST
BE RECEIVED BY MARCH 18, 1996.
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AVAILABLE INFORMATION
RCPI, Whitehall and GS Group have filed a Rule 13e-3 Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3") with the Commission with respect to the
Merger described in this Proxy Statement. As permitted by the rules and
regulations of the Commission, this Proxy Statement omits certain information
contained in the Schedule 13E-3 and exhibits thereto. Such additional
information can be inspected at and obtained from the Commission and the NYSE in
the manner set forth below. For further information pertaining to RCPI,
Whitehall and GS Group, reference is made to the Schedule 13E-3 and the exhibits
thereto, of which the material aspects are summarized in this Proxy Statement.
Statements contained herein concerning any such documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Schedule 13E-3. Each such statement is qualified in
its entirety by such reference.
RCPI is subject to the informational requirements of the Exchange Act, and,
in accordance therewith files reports, proxy statements and other information
with the Commission.
Each report, opinion and appraisal filed as an exhibit to the Schedule 13E-3
filed with the Commission in connection with the Merger shall be available for
inspection and copying at the principal executive offices of RCPI during its
regular business hours by any interested stockholder of RCPI or such
stockholder's representative who has been so designated in writing.
The Schedule 13E-3 and the exhibits thereto, as well as such reports, proxy
statements and other information filed by RCPI with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
also should be available for inspection at the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60611. Copies of such materials may also be obtained by mail,
upon payment of the Commission's customary fees, by writing to its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock is
quoted on the NYSE, and certain of RCPI's reports and other information may be
available for inspection at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
94
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ANNEX A
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AGREEMENT AND PLAN OF MERGER
AMONG
RCPI HOLDINGS INC.,
RCPI MERGER INC.,
THE INVESTORS LISTED HEREIN
AND
ROCKEFELLER CENTER PROPERTIES, INC.
DATED AS OF NOVEMBER 7, 1995
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER.......................................................................................... A-1
Section 1.1 The Merger.......................................................................... A-1
Section 1.2 Closing............................................................................. A-2
Section 1.3 Effective Time...................................................................... A-2
Section 1.4 Certificate of Incorporation and By-laws............................................ A-2
Section 1.5 Directors and Officers.............................................................. A-2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF RCPI AND SUB;
PAYMENT FOR SHARES................................................................................ A-2
Section 2.1 Effect on Capital Stock............................................................. A-2
(a) Conversion of Shares of Common Stock................................................ A-2
(b) Cancellation of Common Stock Owned by RCPI, Parent and Sub.......................... A-2
(c) Conversion of Shares of Sub Common Stock............................................ A-3
Section 2.2 Payment for Common Stock............................................................ A-3
(a) Exchange Agent...................................................................... A-3
(b) Payment Procedures.................................................................. A-3
(c) Further Ownership Rights in Common Stock............................................ A-3
(d) Termination of Exchange Fund........................................................ A-3
(e) No Liability........................................................................ A-4
Section 2.3 Dissenting Shares................................................................... A-4
Section 2.4 Treatment of Warrants and SARs...................................................... A-4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES...................................................................... A-4
Section 3.1 Representations and Warranties of RCPI.............................................. A-4
(a) Organization, Standing and Corporate Power.......................................... A-4
(b) Capitalization...................................................................... A-4
(c) SEC Documents; Financial Statements; Liabilities; Etc............................... A-5
(d) Authority........................................................................... A-6
(e) Compliance with Applicable Laws..................................................... A-6
(f) Government Approvals; Required Consents............................................. A-6
(g) Non-Contravention................................................................... A-7
(h) Litigation.......................................................................... A-7
(i) Taxes and Related Tax Matters....................................................... A-7
(j) Certain Agreements.................................................................. A-8
(k) Employee Benefits................................................................... A-8
(l) The "Rockefeller Center" Name....................................................... A-9
(m) Contracts........................................................................... A-9
(n) Absence of Certain Changes or Events................................................ A-9
(o) Recommendation of Board of Directors; Vote Required................................. A-10
(p) Opinion of Financial Advisor........................................................ A-10
(q) Accuracy of Information Supplied.................................................... A-10
(r) Proxy Statement..................................................................... A-10
(s) Brokers or Finders.................................................................. A-11
(t) Government Regulation............................................................... A-11
(u) No Pending Condemnation or Eminent Domain........................................... A-11
(v) Subordination of Certain Leases..................................................... A-11
(w) No Insolvency Proceeding............................................................ A-11
(x) Insurance........................................................................... A-11
</TABLE>
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Section 3.2 Representations and Warranties of Parent, Sub, Investors and GSMC................... A-12
(a) Organization, Standing and Corporate Power.......................................... A-12
(b) Authority........................................................................... A-12
(c) Government Approvals; Required Consents............................................. A-12
(d) Non-Contravention................................................................... A-13
(e) Financing........................................................................... A-13
(f) Proxy Statement..................................................................... A-13
(g) Brokers or Finders.................................................................. A-13
(h) No Agreement........................................................................ A-13
ARTICLE 4 COVENANTS............................................................................................ A-13
Section 4.1 Mutual Covenants of RCPI, Parent, Sub, GSMC and Each Investor....................... A-13
(a) Satisfaction of Conditions; Additional Agreements................................... A-13
(b) Confidentiality..................................................................... A-14
(c) Publicity........................................................................... A-14
(d) Advice of Breach.................................................................... A-14
Section 4.2 Covenants of RCPI................................................................... A-14
(a) Access to Information and Facilities................................................ A-14
(b) Ordinary Course..................................................................... A-15
(c) Stockholders' Meeting; Fiduciary Duties............................................. A-17
(d) Preparation of the Proxy Statement.................................................. A-17
(e) Exclusivity......................................................................... A-18
(f) New Leases; Approval Rights......................................................... A-18
(g) Notice of Default................................................................... A-18
(h) Bankruptcy Cases.................................................................... A-19
(i) Prepayment of Zell/Merrill Lynch Loans; Termination of Zell Agreements.............. A-20
(j) Release............................................................................. A-20
Section 4.3 Covenants of the Investors.......................................................... A-20
(a) Releases............................................................................ A-20
(b) Investor Commitments................................................................ A-20
Section 4.4 Covenants of GSMC and Whitehall..................................................... A-20
(a) GS Board Nominee.................................................................... A-20
(b) GSMC Loans.......................................................................... A-20
(c) No Exercise of SARs................................................................. A-21
ARTICLE 5 CONDITIONS PRECEDENT................................................................................. A-21
Section 5.1 Conditions to the Obligations of Parent, Sub, the Investors and RCPI to Effect the
Merger............................................................................. A-21
(a) Stockholder Approval................................................................ A-21
(b) No Injunctions or Restraints........................................................ A-21
(c) HSR Act............................................................................. A-21
(d) Governmental Approvals.............................................................. A-21
(e) Required Consents................................................................... A-21
Section 5.2 Conditions to the Obligations of Parent, Sub and the Investors...................... A-22
(a) Accuracy of Representations and Warranties.......................................... A-22
(b) Performance of Agreements........................................................... A-22
(c) No Material Adverse Change.......................................................... A-22
(d) Liabilities of RCPI................................................................. A-22
(e) Satisfactory Chapter 11 Plan........................................................ A-22
(f) Termination of Zell Agreements...................................................... A-23
(g) Condition of the Property........................................................... A-23
</TABLE>
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(h) Environmental Matters............................................................... A-23
(i) Conveyance of Property.............................................................. A-23
(j) No Taxes............................................................................ A-24
(k) Employee Benefits................................................................... A-24
Section 5.3 Conditions to the Obligations of RCPI............................................... A-24
(a) Accuracy of Representations and Warranties.......................................... A-24
(b) Performance of Agreements........................................................... A-24
ARTICLE 6 TERMINATION.......................................................................................... A-25
Section 6.1 Termination......................................................................... A-25
Section 6.2 Effect of Termination............................................................... A-25
ARTICLE 7 GENERAL PROVISIONS................................................................................... A-26
Section 7.1 Certain Definitions................................................................. A-26
Section 7.2 Notices............................................................................. A-30
Section 7.3 Interpretation...................................................................... A-33
Section 7.4 Waivers and Amendments.............................................................. A-33
Section 7.5 Expenses and Other Payments......................................................... A-33
Section 7.6 Assignment.......................................................................... A-34
Section 7.7 Directors' and Officers' Insurance; Indemnity....................................... A-34
Section 7.8 Non-Survival of Representations and Warranties...................................... A-35
Section 7.9 Entire Agreement; No Third Party Beneficiaries...................................... A-35
Section 7.10 Governing Law....................................................................... A-35
Section 7.11 Counterparts........................................................................ A-35
</TABLE>
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EXHIBITS AND SCHEDULES
<TABLE>
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Schedule A Cash Flow Requirements
Schedule B Maximum Permitted RCPI Liabilities
Attachment 1 -- Other Liabilities
Exhibit A Form of Certificate of Incorporation
Exhibit B Form of Release
Exhibit C Investor Commitments
</TABLE>
<TABLE>
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RCPI Disclosure Schedule
Section 3.1(b)(ii) Capitalization
Section 3.1(c)(iii) Leases with Nondisturbance Agreements
Section 3.1(c)(v) Subsidiaries
Section 3.1(e) Investigation and Reviews by Governmental Entities
Section 3.1(f)(i) RCPI Governmental Approvals
Section 3.1(f)(ii) RCPI Required Consents
Section 3.1(h) Litigation
Section 3.1(i)(ii) Taxes and Related Tax Matters
Section 3.1(j) Certain Agreements
Section 3.1(k) Employee Benefits
Section 3.1(m) Contracts
Section 3.1(n) Absence of Certain Changes or Events
Section 3.1(x) Insurance
Section 4.2(b)(C) Bonuses, Etc.
Section 4.2(b)(K) Waivers, Etc.
Section 5.2(h) Environmental Matters
P&S Disclosure Schedule
Section 3.2(c)(i) Government Approvals; Required Consents
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 7, 1995, among
ROCKEFELLER CENTER PROPERTIES, INC., a Delaware corporation ("RCPI"), WHITEHALL
STREET REAL ESTATE LIMITED PARTNERSHIP V, a Delaware limited partnership
("Whitehall"), ROCKPROP, L.L.C., a Delaware limited liability company
("Rockprop"), DAVID ROCKEFELLER ("Rockefeller"), EXOR GROUP S.A., a Luxembourg
investment holding company ("Exor"), TROUTLET INVESTMENTS CORPORATION, a British
Virgin Islands private company ("Troutlet"), RCPI HOLDINGS INC., a Delaware
corporation ("Parent"), RCPI MERGER INC., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"). Whitehall, Rockprop, Rockefeller, Exor and
Troutlet are sometimes referred to herein collectively as the "Investors" and
individually as an "Investor." (Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed thereto in Section 7.1.)
WHEREAS, RCPI owns a $1.3 billion loan secured by a mortgage on property in
New York, New York, commonly known as "Rockefeller Center," which is owned by
Rockefeller Center Properties ("RCP") and RCP Associates ("RCPA" and together
with RCP, the "Borrower"), each a New York partnership under the control of
Rockefeller Group, Inc., a New York corporation ("RGI");
WHEREAS, the Borrower has filed for protection under Chapter 11 of the
Bankruptcy Code in proceedings (the "Borrower's Chapter 11 Case") pending in the
United States Bankruptcy Court for the Southern District of New York (Case Nos.
95B42088 and 95B42089), has stopped making payments under the 1985 Loan
Agreement and is consequently in default thereunder;
WHEREAS, the Board of Directors of RCPI has determined that the merger of
Sub with and into RCPI (the "Merger") on the terms and subject to the conditions
set forth in this Agreement would be fair to, and in the best interests of,
RCPI's stockholders, and the Board of Directors of RCPI has approved and adopted
this Agreement and has approved the Merger and the other transactions
contemplated hereby;
WHEREAS, the Board of Directors of each of Parent and Sub has determined
that the Merger on the terms and subject to the conditions set forth in this
Agreement would be fair to, and in the best interests of, its stockholders, and
the Board of Directors of each of Parent and Sub has approved and adopted this
Agreement and has approved the Merger and the other transactions contemplated
hereby; and
WHEREAS, each of RCPI, the Investors, Parent and Sub wish to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), Sub shall be merged with and into RCPI at the Effective Time.
Upon and after the Effective Time, the separate corporate existence of Sub shall
cease and RCPI shall be the surviving corporation in the Merger (the "Surviving
Company"). In accordance with the DGCL, all of the rights, privileges, powers,
immunities, purposes and franchises of RCPI and Sub shall vest in the Surviving
Company, and all of the debts, liabilities, obligations and duties of RCPI and
Sub shall become the debts, liabilities, obligations and duties of the Surviving
Company.
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<PAGE>
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison in New York
City at 10:00 a.m. on the fifth Business Day following the date on which the
conditions set forth in Article 5 (other than the delivery of the certificates
of RCPI and Parent referred to therein) have been satisfied or waived by the
party entitled to the benefit of such conditions, or at such other place, time
and date as Parent and RCPI may agree. The date on which the Closing occurs is
referred to herein as the "Closing Date."
Section 1.3 EFFECTIVE TIME. On the Closing Date (or on such other date as
Parent and RCPI may agree), Parent, Sub and RCPI shall cause a Certificate of
Merger (the "Certificate of Merger") to be executed and filed with the Secretary
of State of the State of Delaware in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
later time as is specified in the Certificate of Merger (the "Effective Time").
Section 1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Restated
Certificate of Incorporation of RCPI shall be amended and restated as of the
Effective Time (or, at the election of Parent, immediately following the
Effective Time Parent shall amend and restate the Restated Certificate of
Incorporation) to be substantially in the form attached hereto as Exhibit A and
as so amended and restated shall be the Certificate of Incorporation of the
Surviving Company until thereafter changed or amended as provided therein or by
applicable Law. The By-laws of Sub at the Effective Time shall be the By-laws of
the Surviving Company until thereafter changed or amended as provided therein or
by applicable Law.
Section 1.5 DIRECTORS AND OFFICERS. The directors and officers of Sub at
the Effective Time shall be the directors and officers of the Surviving Company
and shall hold office until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Company.
ARTICLE 2
EFFECT OF THE MERGER ON THE
CAPITAL STOCK OF RCPI AND SUB; PAYMENT FOR SHARES
Section 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
common stock, par value $.01 per share, of RCPI ("Common Stock") or the holder
of any shares of common stock, par value $.01 per share, of Sub ("Sub Common
Stock"):
(a) CONVERSION OF SHARES OF COMMON STOCK. Each issued and outstanding
share of Common Stock (other than (i) shares of Common Stock held by RCPI or
any of its Subsidiaries as treasury shares, (ii) any shares of Common Stock
held by Parent or any of its Subsidiaries (including Sub) and (iii) any
Dissenting Shares (as defined below)) shall be converted into the right to
receive $8.00 per share net in cash (the "Merger Consideration"), payable to
the holder thereof upon surrender of the certificate formerly representing
such shares in accordance with Section 2.2, without interest thereon, less
any required withholding taxes. Each such share of Common Stock shall cease
to be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate formerly representing any
such shares of Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration to be paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.2, without interest thereon, less any required withholding taxes.
(b) CANCELLATION OF COMMON STOCK OWNED BY RCPI, PARENT AND SUB. Each
share of Common Stock that is owned by, or by any Subsidiary of, RCPI or by
Parent or any Subsidiary of Parent (including Sub) shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
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(c) CONVERSION OF SHARES OF SUB COMMON STOCK. Each share of Sub Common
Stock issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Company.
Section 2.2 PAYMENT FOR COMMON STOCK.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to RCPI to act as
exchange agent in the Merger (the "Exchange Agent"). At or prior to the
Effective Time, Parent or Sub shall deposit with the Exchange Agent the
funds necessary to make the payments contemplated by Section 2.1(a) hereof
(the "Exchange Fund").
(b) PAYMENT PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Company shall instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Common Stock (collectively, the "Certificates") whose shares were converted
into the right to receive the Merger Consideration pursuant to Section
2.1(a), (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as the Surviving Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as
reasonably may be required by the Exchange Agent, and acceptance thereof by
the Exchange Agent, each holder of a Certificate shall receive in exchange
therefor the Merger Consideration specified in Section 2.1(a) hereof,
without interest thereon, less any required withholding taxes, and the
Certificate so surrendered shall forthwith be canceled. The Exchange Agent
shall accept such Certificates upon compliance with such reasonable terms
and conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices. After the
Effective Time, there shall be no further transfer on the books and records
of RCPI or its transfer agent of Certificates, and if Certificates are
presented to RCPI for transfer, they shall be canceled against payment of
the Merger Consideration as herein provided. If any payment of Merger
Consideration is to be made to a Person other than the Person in whose name
the Certificate surrendered for exchange is registered, it shall be a
condition of such payment that the Certificate so surrendered shall be
properly endorsed, with the signature guaranteed, or otherwise in proper
form for transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the Certificate surrendered, or establish to
the satisfaction of the Surviving Company that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration, without interest thereon, less any required withholding
taxes.
(c) FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger Consideration
paid upon the surrender for exchange of Certificates in accordance with the
terms of this Article 2 shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Common Stock
theretofore represented by such Certificates. If, after the Effective Time,
Certificates are presented to the Surviving Company or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this
Article 2.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the former stockholders of RCPI for six months
after the Effective Time shall be delivered to the Surviving Company upon
demand, and any former stockholders of RCPI who
A-3
<PAGE>
have not theretofore complied with this Article 2 shall thereafter look only
to the Surviving Company for payment of their claim for any Merger
Consideration, without interest thereon, less any required withholding
taxes.
(e) NO LIABILITY. None of Parent, Sub, RCPI or the Exchange Agent
shall be liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.3 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock outstanding immediately prior to the
Effective Time held by a holder (if any) who is entitled to demand, and who
properly demands, appraisal for such shares in accordance with Section 262 of
the DGCL ("Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration unless such holder fails to perfect or otherwise loses
such holder's right to appraisal, if any. If, after the Effective Time, such
holder fails to perfect or loses any such right to appraisal, such shares shall
be treated as if they had been converted as of the Effective Time into the right
to receive the Merger Consideration, without interest thereon, less any required
withholding taxes. RCPI shall give prompt notice to Parent of any demands
received by RCPI for appraisal of shares of Common Stock, and Parent shall have
the right to participate in and direct all negotiations and proceedings with
respect to such demands. Except with the prior written consent of Parent, RCPI
shall not make any payment with respect to, or settle or offer to settle, any
such demands.
Section 2.4 TREATMENT OF WARRANTS AND SARS.
As of the Effective Time, each Warrant and SAR issued and outstanding
immediately prior to the Effective Time shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF RCPI. RCPI represents and
warrants to each of the Investors, Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of RCPI and each
of its Subsidiaries is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization with all requisite power
and authority to engage in its business as currently conducted and to own
the assets and properties currently owned by it. Each of RCPI and each of
its Subsidiaries is licensed or qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which such
qualification is necessary or advisable for the carrying out of its
business. True, correct and complete copies of the certificate of
incorporation and by-laws of each of RCPI and each of its Subsidiaries as in
effect on the date hereof, and all minutes of all meetings (or written
consents in lieu of meetings) of the Board of Directors (and all committees
thereof) and stockholders of RCPI shall have been made available to Parent
on or prior to the Closing.
(b) CAPITALIZATION.
(i) The authorized capital stock of RCPI consists of 150,000,000
shares of Common Stock, par value $.01 per share, 38,260,704 of which are
currently issued and outstanding. All of such shares of Common Stock (A)
are validly issued, fully paid and nonassessable and (B) are free of
preemptive rights. There are no shares of capital stock of RCPI held in
the treasury of RCPI, and except in respect of the outstanding Warrants
and SARs, RCPI's Dividend Reinvestment Plan and the RCPI Indenture, no
shares of capital stock of RCPI are currently reserved for issuance for
any purpose or upon the occurrence of any event or condition.
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(ii) Except as set forth on Section 3.1(b)(ii) of the RCPI Disclosure
Schedule, no shares of capital stock or other equity securities of RCPI
are issued or outstanding or reserved for any other purpose, and there
are no subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character to which
RCPI is a party relating to the issued or unissued capital stock or other
equity securities or ownership interests of RCPI (or the purchase, sale,
issuance, repurchase, redemption, acquisition, transfer, disposition,
holding or voting thereof).
(iii) Except as provided in Article ELEVENTH of the Restated
Certificate of Incorporation of RCPI, RCPI has no outstanding bonds,
debentures, notes or other obligations whose holders have the right to
vote with the holders of Common Stock on any matter.
(c) SEC DOCUMENTS; FINANCIAL STATEMENTS; LIABILITIES; ETC.
(i) RCPI has made available to Parent a true and complete copy of
each form, report, schedule, registration statement and definitive proxy
statement filed by RCPI with the SEC since January 1, 1992 (as such
documents have since the time of their filing been amended or
supplemented, the "RCPI SEC Documents"), which are all the documents
(other than preliminary material) that RCPI was required to file with the
SEC since such date. As of their respective dates, the RCPI SEC Documents
(other than preliminary material) complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as
applicable, and none of the RCPI SEC Documents (including all financial
statements included therein and exhibits and schedules thereto and
documents incorporated by reference therein) contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(ii) The financial statements (including the notes thereto) of RCPI
included in the RCPI SEC Documents comply as to form in all material
respects with the applicable accounting requirements and with the rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP consistently applied (except as may be indicated in
the notes thereto) and present fairly in accordance with GAAP the
financial position of RCPI as of the dates thereof and the results of
operations and cash flows of RCPI for the periods then ended (subject, in
the case of unaudited financial statements, to normal year-end
adjustments).
(iii) RCPI has good title to all of its real property and material
assets, including, without limitation, the Mortgage Note and the
Mortgage, free and clear of all Liens (other than Permitted Liens and the
restrictions on transfer contained in the 1985 Loan Agreement). RCPI has
not granted to any Person (other than any holder of a Permitted Lien) any
rights, recorded or unrecorded, in the Mortgage or the Mortgage Note. To
RCPI's knowledge, no Person, other than RCPI or any holder of a Permitted
Lien, has any right or option, recorded or unrecorded, to acquire the
Property or any portion thereof or interest therein (except for (x)
presently existing rights to renew leases and to lease additional space
and (y) rights to renew leases and to lease additional space under leases
entered into in accordance with the terms of this Agreement after the
date hereof). Section 3.1(c)(iii) of the RCPI Disclosure Schedule sets
forth or describes, as of the date hereof, each lease for space in the
Property in respect of which RCPI has entered into a nondisturbance
agreement, and RCPI has made available to Parent all such nondisturbance
agreements. The Mortgage is a valid lien on all the Property and on the
Lessor's interest in all Leases (each as defined in the Mortgage), with a
priority in all material respects no less than its priority as of
September 19, 1985, except for any Permitted Liens and as such priority
may be affected by the subordination referred to in Clause (ii) of
Recital G to the Amendment and Restatement of the Mortgage, dated as of
December 1, 1988, and the execution and delivery of Leases (as so
defined) after the date of recordation of the Assignment of Rents. Except
for breaches and defaults described on
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Section 3.1(c)(iii) of the RCPI Disclosure Schedule, to the knowledge of
RCPI, no Person has materially breached any term of the Mortgage or the
Mortgage Note, and no circumstance exists that constitutes (with or
without notice or lapse of time or both) a default under the Mortgage or
the Mortgage Note. The outstanding aggregate principal amount of the
Mortgage Note is $1,300,000,000.
(iv) RCPI is the beneficiary under the Title Insurance and, subject
to the Collateral Trust Agreement, has the right to assign its rights
under the Title Insurance as provided for therein.
(v) Except as set forth on Section 3.1(c)(v) of the RCPI Disclosure
Schedule, RCPI does not have (nor has it ever had) any direct or indirect
Subsidiaries, either wholly or partially owned, and RCPI does not hold
any direct or indirect economic, voting or management interest in any
Person or directly or indirectly own any security issued by any Person.
(vi) Other than (A) the Combination Agreement and (B) nondisturbance
agreements with respect to the leases set forth or described on Section
3.1(c)(iii) of the RCPI Disclosure Schedule and nondisturbance agreements
in form reasonably satisfactory to Parent with respect to leases entered
into in accordance with the terms of this Agreement after the date
hereof, RCPI has never been a party to a merger or consolidation and has
not otherwise assumed or become liable for the obligations of any other
Person.
(d) AUTHORITY. RCPI has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, subject in the case of the
Merger, to the approval of this Agreement by the stockholders of RCPI in
accordance with the DGCL. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of RCPI,
and no other corporate proceedings on the part of RCPI are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject in the case of the Merger, to the approval of this Agreement
by the stockholders of RCPI and the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the DGCL.
This Agreement has been duly and validly executed and delivered by RCPI and
constitutes a valid and binding obligation of RCPI enforceable against RCPI
in accordance with its terms, subject in the case of the Merger, to the
approval of this Agreement by the stockholders of RCPI in accordance with
the DGCL, and except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
(e) COMPLIANCE WITH APPLICABLE LAWS. Each of RCPI and each of its
Subsidiaries holds all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities required in connection
with the operation of the businesses of RCPI and its Subsidiaries (the "RCPI
Permits"); RCPI and its Subsidiaries are in material compliance with the
terms of all RCPI Permits; and, except as RCPI has previously disclosed in
writing to Parent, the businesses of RCPI and its Subsidiaries are not being
conducted in violation of any Law in any material respect. As of the date of
this Agreement, except as set forth on Section 3.1(e) of the RCPI Disclosure
Schedule, no investigation or review by any Governmental Entity with respect
to RCPI or any of its Subsidiaries is pending or, to the knowledge of RCPI,
threatened, nor to the knowledge of RCPI, has any Governmental Entity
indicated an intention to conduct the same.
(f) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No material consent, approval or authorization of, or declaration
or filing with, or notice to, any Governmental Entity on the part of RCPI
is required in connection with the execution or delivery by RCPI of this
Agreement, the consummation by RCPI of the transactions contemplated
hereby or compliance by RCPI with the provisions hereof, other than
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(A) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware in accordance with the DGCL, (B) filings with
the SEC and any applicable national securities exchange, (C) filings
under state securities or "Blue Sky" laws, (D) filings under the HSR Act
and (E) as otherwise set forth on Section 3.1(f)(i) of the RCPI
Disclosure Schedule (any such consents, approvals, authorizations,
declarations, filings or notices specified in clauses (A) through (E)
being referred to as the "RCPI Governmental Approvals").
(ii) No consent, approval or action of, or filing with, or notice to,
any Person (other than a Governmental Entity) is required in connection
with the execution or delivery by RCPI of this Agreement, consummation by
RCPI of the transactions contemplated hereby or compliance by RCPI with
the provisions hereof, other than (A) the approval of this Agreement by
the holders of the Common Stock in accordance with the DGCL, (B) as set
forth on Section 3.1(f)(ii) of the RCPI Disclosure Schedule and (C) any
consent, approval, action, filing or notice that if not obtained or made
would not, individually and in the aggregate, have a Material Adverse
Effect on RCPI (any such consents, approvals, actions, filings or notices
specified in clauses (A) and (B) being referred to as the "RCPI Required
Consents").
(g) NON-CONTRAVENTION. The execution and delivery of this Agreement by
RCPI do not, and the consummation of the transactions contemplated hereby
and compliance by RCPI with the provisions hereof will not, (i) conflict
with or result in any violation of any provision of the Restated Certificate
of Incorporation or By-laws of RCPI; (ii) if the RCPI Required Consents are
obtained or given, as the case may be, result in any violation or breach of,
or result in a modification of the effect of, or constitute (with or without
notice or lapse of time or both) a default under or give rise to any right
of termination, cancellation or acceleration under any material Contract to
which RCPI is a party or by or to which it or any of its properties may be
bound or subject, or result in the creation of any Lien upon the properties
of RCPI, in each case pursuant to the terms of any such Contract; (iii) if
the RCPI Governmental Approvals are obtained, result in any violation of any
Law applicable to RCPI in any material respect; or (iv) if the RCPI
Governmental Approvals and the RCPI Required Consents are obtained or given,
as the case may be, result in the violation, revocation or suspension of any
RCPI Permit.
(h) LITIGATION. Except as set forth on Section 3.1(h) of the RCPI
Disclosure Schedule and except for Permitted Litigations, there are no
actions, suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations pending or, to the knowledge of
RCPI, threatened against or affecting RCPI or any of its Agents in their
capacity as such, or any of RCPI's properties or businesses. RCPI is not
subject to any order, judgment, decree, injunction, stipulation or consent
order specifically naming RCPI of any court or other Governmental Entity.
RCPI has not entered into any agreement to settle or compromise any
proceeding pending or threatened against it that has involved any obligation
other than the payment of money or for which RCPI has any continuing
obligation.
(i) TAXES AND RELATED TAX MATTERS.
(i) For all taxable years from and after the year in which RCPI was
organized through the most recent December 31, RCPI has been subject to
taxation as a real estate investment trust (a "REIT") under Subchapter M
of the Code and has satisfied all requirements to qualify as a REIT for
such years. In addition, assuming hypothetically that (i) RCPI's taxable
year in which the Merger occurs were to close immediately prior to the
Closing, and (ii) all recordkeeping and notice requirements in respect of
such year will be complied with, then, without giving effect to the
Merger, RCPI will be for such hypothetical short year subject to taxation
as a REIT under Subchapter M of the Code and will satisfy all
requirements to qualify as a REIT for such year. RCPI is not aware of any
fact or circumstance that could reasonably be expected to prevent it from
continuing so to qualify until the time immediately prior to the Closing
(without giving effect to the Merger).
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(ii) Except as set forth on Section 3.1(i)(ii) of the RCPI Disclosure
Schedule or as would not, individually and in the aggregate, have a
Material Adverse Effect on RCPI:
(A) All Taxes required to be paid on or before the date hereof by
or with respect to RCPI and its Subsidiaries have been timely paid,
and any Taxes required to be paid by or with respect to RCPI and its
Subsidiaries (or any of them) after the date hereof and on or before
the Effective Time shall be timely paid.
(B) All Tax Returns required to be filed by or with respect to
RCPI or its Subsidiaries on or before the date hereof have been
timely filed. All Tax Returns required to be filed by or with respect
to RCPI or any of its Subsidiaries after the date hereof and on or
before the Effective Time shall be prepared and timely filed in a
manner consistent with prior years and applicable Laws. No penalties
or other charges are or will become due with respect to the late
filing of any Tax Return of RCPI or any of its Subsidiaries or
payment of any Tax of RCPI or any of its Subsidiaries required to be
filed or paid on or before the Effective Time.
(C) With respect to all Tax Returns filed by or with respect to
RCPI and any of its Subsidiaries, no audit is in progress and no
waiver or agreement for an extension of time has been executed with
respect to any date on which any Tax Return was or is to be filed and
no waiver or agreement has been executed for the extension of time
for the assessment or payment of any Tax.
(D) There are no liens for Taxes upon the assets of RCPI or any
of its Subsidiaries except liens for current Taxes not yet
delinquent.
(E) RCPI has provided Parent copies of all revenue agent reports
and related schedules related to pending Tax audits of RCPI or any of
its Subsidiaries or any predecessor thereof or any of its
Subsidiaries. Neither RCPI nor any of its Subsidiaries has received
any notice of deficiency, assessment or proposed deficiency or
assessment from any federal, state, local or foreign taxing
authority, and neither RCPI nor any of its Subsidiaries has been
advised by any such authority that any such notice is forthcoming.
(F) RCPI has not filed a consent to the application of Section
341(f) of the Code.
(G) Neither RCPI nor any of its Subsidiaries has made or become
obligated to make, or will become obligated as a result of any event
connected with any transaction contemplated herein to make, any
"excess parachute payment" as defined in Section 280G of the Code.
(H) Neither RCPI nor any of its Subsidiaries is subject to any
joint venture, partnership or other arrangement or contract that is
treated as a partnership for Federal income tax purposes.
(j) CERTAIN AGREEMENTS. Except as set forth on Section 3.1(j) of the
RCPI Disclosure Schedule and except for this Agreement, as of the date of
this Agreement, neither RCPI nor any of its Subsidiaries is a party to any
oral or written plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan, any of whose
benefits will be increased, or the vesting of whose benefits will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of whose benefits will be calculated on
the basis of any of the transactions contemplated by this Agreement. RCPI
has made available to Parent copies of the plans listed on Section 3.1(j) of
the RCPI Disclosure Schedule.
(k) EMPLOYEE BENEFITS.
(i) Except as set forth on Section 3.1(k) of the RCPI Disclosure
Schedule, neither RCPI nor any of its Subsidiaries is a party to or
participates in or has any liability or contingent
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liability with respect to (A) any "employee welfare benefit plan" or
"employee pension benefit plan" as those terms are respectively defined
in sections 3(1) and 3(2) of ERISA (collectively, the "Plans"); (B) any
retirement or deferred compensation plan, incentive compensation plan,
stock plan, unemployment compensation plan, vacation pay, severance pay,
bonus or benefit arrangement, insurance or hospitalization program or any
other fringe benefit arrangements for any current or former Agent,
whether pursuant to contract, arrangement, custom or informal
understanding, that does not constitute an "employee benefit plan" (as
defined in section 3(3) of ERISA); or (C) any employment, consulting or
similar agreement. RCPI has made available to Parent true and complete
copies of all plans, arrangements and agreements set forth on Section
3.1(k) of the RCPI Disclosure Schedule.
(ii) Except as set forth on Section 3.1(k) of the RCPI Disclosure
Schedule, neither RCPI nor any of its Subsidiaries contributes to, has
contributed to, or has any liability or contingent liability with respect
to, any multiemployer plan (as defined in section 3(37) of ERISA).
(iii) Except for violations or instances of noncompliance or
nonperformance specifically described on Section 3.1(k) of the RCPI
Disclosure Schedule, each of RCPI and each of its Subsidiaries (A) is in
compliance with and not in default with respect to statutes, orders,
rules and regulations under ERISA and the Code applicable to any Plans
sponsored by RCPI; (B) has performed all obligations required to be
performed by it with respect to such Plans; (C) is not in violation, and
has no knowledge of any default or violation of any third party, in
respect of any of the Plans; and (D) has properly and timely made all
required contributions, has fully funded on a termination basis the Plans
and has maintained and operated each Plan intended to qualify under
section 401(a) of the Code in compliance with the requirements of section
401(a) of the Code (and has maintained and operated any related trust in
compliance with the requirements of section 501(a) of the Code.)
(iv) Except pursuant to any agreement set forth on Section 3.1(k) of
the RCPI Disclosure Schedule or in the RCPI SEC Documents, the
consummation of the transactions contemplated by this Agreement will not,
without additional discretionary action by RCPI, any of RCPI's
Subsidiaries, Parent or Sub with respect to current or former Agents of
RCPI, entitle any individual to severance pay or accelerate the time of
payment or vesting of, increase the amount of, or satisfy a condition to
the compensation due to any individual.
(l) THE "ROCKEFELLER CENTER" NAME. RCPI has not sold, conveyed,
assigned, pledged or otherwise transferred or disposed of any rights in or
to the "Rockefeller Center" name or any variation thereof, nor has RCPI
granted to any Person any license or any other right to use the "Rockefeller
Center" name or any variation thereof. The foregoing shall not imply that
RCPI has or has had any such rights.
(m) CONTRACTS. Section 3.1(m) of the RCPI Disclosure Schedule lists
(i) all the material Contracts to which RCPI or any of its Subsidiaries is a
party or by which RCPI or any of its Subsidiaries is bound or to which any
of the assets or properties of RCPI or any of its Subsidiaries is subject
and (ii) any material licenses, certificates or permits that RCPI or any of
its Subsidiaries holds or to which RCPI or any such Subsidiary is subject.
RCPI has made available true and complete copies of each document listed on
Section 3.1(m) of the RCPI Disclosure Schedule and a written description of
each oral arrangement so listed. Except for defaults, breaches or violations
described on Section 3.1(m) or Section 3.1(c)(iii) of the RCPI Disclosure
Schedule, neither RCPI nor any of its Subsidiaries is, and, to the knowledge
of RCPI, no other parties thereto are, in default, breach or violation of
any such contracts. Except for the Combination Agreement and the Investment
Agreement, RCPI is not a party to any agreement, arrangement or
understanding of any kind with Samuel Zell ("Zell"), any of Zell's
Affiliates or any party to the Combination Agreement or the Investment
Agreement.
(n) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for any change,
occurrence or circumstance described on Section 3.1(n) of the RCPI
Disclosure Schedule and except as contemplated
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by this Agreement, since December 31, 1994, RCPI has conducted its
businesses only in the ordinary course of business consistent with past
practices, and as of the date of this Agreement, there has not been (i)
unless and to the extent required to meet the qualification rules for a REIT
under Section 857(a) of the Code or to avoid any excise tax under Section
4981 of the Code, any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to
any of RCPI's capital stock or any return of any capital or other
distribution of assets to stockholders of RCPI; (ii) any investment by RCPI
either by the purchase of any property or assets or by any acquisition (by
merger, consolidation or acquisition of stock or assets) of any corporation,
partnership or other business organization or division thereof; (iii) any
sale, disposition or other transfer of assets or properties of RCPI in
excess of $250,000 individually or $1,000,000 in the aggregate (other than
the repayment of Debt or other liabilities as required by the agreements
with respect thereto and subject to the terms of RCPI's other agreements as
in effect as of the date hereof); or (iv) any change, occurrence or
circumstance of any character (whether or not in the ordinary course of
business) that, individually or in the aggregate, has had or would have a
Material Adverse Effect on RCPI. For the purposes of the foregoing, the
phrase "ordinary course of business consistent with past practices" shall
include changes in the ordinary course of business of RCPI instituted as a
result of, and shall take into account the effects of, the Borrower's
Chapter 11 Case (it being understood that such construction shall not
relieve RCPI of any of its obligations under this Agreement).
(o) RECOMMENDATION OF BOARD OF DIRECTORS; VOTE REQUIRED. The Board of
Directors of RCPI has unanimously approved this Agreement, the Merger and
the other transactions contemplated hereby and, subject to Section 6.1(g)
hereof, has determined to recommend to its stockholders (the
"Recommendation") that its stockholders vote in favor of the adoption and
approval of this Agreement. The provisions of clause (a)(ii) of paragraph A
of Article EIGHTH of the Restated Certificate of Incorporation of RCPI have
been satisfied. Assuming that the holders of at least 62.5% of the Warrants
and SARs approve this Agreement pursuant to the sixth paragraph of the
December 1994 Letter, the affirmative vote of a majority of the votes that
the holders of the outstanding shares of Common Stock are entitled to cast
with respect to the adoption and approval of this Agreement is the only vote
of the holders of any class or series of the capital stock of RCPI necessary
to approve the Merger and the other transactions contemplated hereby.
(p) OPINION OF FINANCIAL ADVISOR. RCPI has received the opinion of
PaineWebber Incorporated, dated the date hereof, to the effect that, as of
such date, the Merger Consideration is fair to the RCPI stockholders from a
financial point of view, and such opinion has not been withdrawn.
(q) ACCURACY OF INFORMATION SUPPLIED. Neither this Agreement nor any
schedule, exhibit, written statement, list, document or certificate
furnished or to be furnished by or on behalf of RCPI to Parent, Sub or any
of their Agents or Affiliates in connection with this Agreement or any of
the transactions contemplated hereby, taken as a whole, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not
misleading.
(r) PROXY STATEMENT.
(i) On the date the Proxy Statement is first mailed to RCPI's
stockholders, at the time of the Stockholders' Meeting (as hereinafter
defined) and at the Effective Time, the Proxy Statement will comply in
all material respects with the requirements of the Exchange Act and will
not contain any statement that, at such time and in light of the
circumstances under which it is made, is false or misleading with respect
to any material fact, or omits to state any material fact required to be
stated therein or necessary to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders' Meeting that shall have become false or misleading;
provided, however, that the representations and warranties in this
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subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information
furnished to RCPI in writing by or on behalf of Parent, Sub or any
Investor (or any Affiliate of any Investor) expressly for use in the
Proxy Statement.
(ii) The accountants who certified the financial statements and
supporting schedules of RCPI included (or incorporated by reference) or
to be included (or incorporated by reference) in the Proxy Statement are
independent public accountants as required by the Securities Act.
(iii) The financial statements of RCPI included (or incorporated by
reference) or to be included (or incorporated by reference) in the Proxy
Statement present or will present fairly the financial position of RCPI
and its consolidated Subsidiaries as of the dates indicated and the
results of their operations for the periods specified in accordance with
GAAP (subject, in the case of unaudited financial statements, to normal
year-end adjustments), and the supporting schedules included (or
incorporated by reference) or to be included (or incorporated by
reference) in the Proxy Statement present or will present fairly the
information required to be stated therein in accordance with GAAP. Except
as otherwise stated in the Proxy Statement, such financial statements
have been or will have been prepared in conformity with GAAP consistently
applied.
(s) BROKERS OR FINDERS. Except as otherwise disclosed herein or in the
Schedules attached hereto, no broker, finder or investment banker (other
than PaineWebber Incorporated) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of RCPI. RCPI has
heretofore made available to Parent a complete and correct copy of all
agreements between RCPI and PaineWebber Incorporated pursuant to which such
firm would be entitled to any payment relating to the transactions
contemplated hereby.
(t) GOVERNMENT REGULATION. RCPI is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or the
Interstate Commerce Act, each as amended. In addition, RCPI is not (i) an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such a
company, or (ii) a "holding company," or a "subsidiary company" or a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(u) NO PENDING CONDEMNATION OR EMINENT DOMAIN. RCPI has no knowledge
of any pending or threatened condemnation or eminent domain proceedings that
would affect the Property.
(v) SUBORDINATION OF CERTAIN LEASES. To the knowledge of RCPI, each of
the lease, dated July 1, 1982, between RCP and Radio City Music Hall
Productions, Inc., and the lease, dated July 15, 1985, between RCP and
Rockefeller Center Management Corporation ("RCMC") relating to the parking
garage located at the Property, if and as each such lease has been amended
and supplemented, is subject and subordinate to the Mortgage, and none of
the tenants under such leases has any rights of nondisturbance under such
leases. RCPI has not entered into any agreement pursuant to which RCPI has
agreed to recognize the rights of Rockefeller Center Telecommunications
Corporation ("RCTC") under that certain Franchise Agreement, dated September
7, 1985, for the Provision of Telecommunications Services between RCMC and
RCTC, as it may be amended, notwithstanding a foreclosure on the Property
pursuant to the Mortgage.
(w) NO INSOLVENCY PROCEEDING. No proceeding for relief under the
Bankruptcy Code or for similar relief under the laws of any state has been
commenced by or against RCPI.
(x) INSURANCE. Section 3.1(x) of the RCPI Disclosure Schedule sets
forth a list of all policies or binders of fire, liability, product
liability and other insurance held by or on behalf of RCPI or any of its
Subsidiaries (the "Insurance Policies"), and a brief description of each
Insurance Policy, including (i) the amount of any deductible under such
Insurance Policy, (ii) a
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description of each pending claim under such Insurance Policy of more than
$50,000, (iii) the aggregate amounts paid out under such Insurance Policy
through the date hereof and (iv) the aggregate limit, if any, of the
insurer's liability under such Insurance Policy. The Insurance Policies
insure against risk and liabilities to the extent and in the manner deemed
appropriate and sufficient by RCPI. RCPI and its Subsidiaries are not in
default with respect to any provision contained in any Insurance Policy and
have not failed to give any notice or present any claim under any such
Insurance Policy in a due and timely fashion. Except with respect to any
Insurance Policies that are to be replaced as indicated on Section 3.1(x) of
the RCPI Disclosure Schedule, RCPI and its Subsidiaries have received no
notice of cancellation or non-renewal of, or denial of coverage under, any
Insurance Policy. RCPI has made available to Parent copies of each Insurance
Policy.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT, SUB, INVESTORS AND
GSMC. Each Investor represents and warrants to RCPI (with respect to itself and
each of Parent and Sub), Parent represents and warrants to RCPI (with respect to
itself and Sub) and each of Sub and Goldman Sachs Mortgage Company ("GSMC")
represents and warrants (with respect to itself) (provided that in the case of
GSMC, all references to this Agreement throughout this Section 3.2 shall mean
only the Sections of this Agreement by which GSMC is bound as indicated on the
signature pages hereof) as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent, Sub,
GSMC and each of the Investors (other than Rockefeller) is a corporation,
partnership or limited liability company duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization.
(b) AUTHORITY. Each of Parent, Sub, GSMC and each of the Investors has
all requisite power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action, if any, on the part of each of
Parent, Sub, GSMC and each of the Investors and no other organizational
proceedings on the part of any of Parent, Sub, GSMC or any of the Investors
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent, Sub, GSMC and each of the Investors and
constitutes a valid and binding obligation of each of Parent, Sub, GSMC and
each of the Investors enforceable against each of Parent, Sub, GSMC and each
of the Investors in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent
transfer, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability
of specific remedies.
(c) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No material consent, approval or authorization of, or declaration
or filing with, or notice to, any Governmental Entity on the part of
Parent, Sub, GSMC or any Investor is required in connection with the
execution or delivery by any of them of this Agreement, or the
consummation by Parent, Sub, GSMC or any Investor of the transactions
contemplated hereby or compliance by Parent, Sub, GSMC or any Investor
with the provisions hereof, other than (A) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL, (B) filings under the HSR Act and (C) as
otherwise set forth in Section 3.2(c)(i) of the P&S Disclosure Schedule
(any such consents, approvals, authorizations, declarations, filings or
notices specified in clauses (A) through (C) being referred to as "P&S
Governmental Approvals").
(ii) No material consent, approval or action of, or filing with, or
notice to, any Person (other than a Governmental Entity) is required in
connection with the execution or delivery by Parent, Sub, GSMC or any
Investor of this Agreement, the consummation by Parent, Sub,
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GSMC or any Investor of the transactions contemplated hereby or
compliance by Parent, Sub, GSMC or any Investor with the provisions
hereof, other than those that if not obtained or made would not,
individually and in the aggregate, have a material adverse effect on the
ability of Parent, Sub, GSMC or such Investor, as the case may be, to
consummate the Merger or the other transactions contemplated hereby.
(d) NON-CONTRAVENTION. The execution and delivery of this Agreement by
each of Parent, Sub, GSMC and each of the Investors do not, and the
consummation of the transactions contemplated hereby and compliance by each
of Parent, Sub, GSMC and each of the Investors with the provisions hereof
will not (i) conflict with or result in any violation of any provision of
the certificate of incorporation or by-laws or equivalent organizational
documents, in each case as amended to date, of Parent, Sub, GSMC or any
Investor (other than Rockefeller); (ii) result in any violation or breach
of, or result in a modification of the effect of, or constitute (with or
without notice or lapse of time or both) a default under or give rise to any
right of termination, cancellation or acceleration under, any material
Contract to which Parent, Sub, GSMC or any Investor is a party or by or to
which any of them or any of their properties may be bound or subject, or
result in the creation of any Lien upon the properties of Parent, Sub, GSMC
or any Investor in each case pursuant to the terms of any such Contract; or
(iii) if the P&S Governmental Approvals are obtained, result in any
violation of any Law applicable to Parent, Sub, GSMC or any Investor in any
material respect.
(e) FINANCING. Each Investor has, and at the Closing will have,
available to it all the funds necessary to satisfy its obligation under
Section 4.3(b).
(f) PROXY STATEMENT. The information supplied by each of Parent, Sub
and each of the Investors for inclusion in the Proxy Statement will not, on
the date the Proxy Statement is first mailed to stockholders of RCPI, at the
time of the Stockholders' Meeting and at the Effective Time, contain any
statement that, at such time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact, or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein not false or misleading or necessary
to correct any statement in any information previously supplied by any of
Parent, Sub or any Investor for inclusion in the Proxy Statement that shall
have become false or misleading.
(g) BROKERS OR FINDERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or
on behalf of Parent, Sub or any Investor.
(h) NO AGREEMENT. As of the date hereof, there is no agreement between
any of the Investors, Parent, Sub or any of their respective Affiliates, on
the one hand, and Mitsubishi Estates Corporation, RGI or any of their
respective Affiliates, on the other hand, with respect to the transactions
contemplated hereby.
ARTICLE 4
COVENANTS
Section 4.1 MUTUAL COVENANTS OF RCPI, PARENT, SUB, GSMC AND EACH
INVESTOR. With respect to itself only, each of RCPI, each of the Investors,
Parent, Sub and, with respect to Sections 4.1(a) and (b) only, GSMC agrees that,
except as expressly contemplated or permitted by this Agreement, it shall comply
with the following covenants:
(a) SATISFACTION OF CONDITIONS; ADDITIONAL AGREEMENTS. Subject to the
terms and conditions of this Agreement, each party hereto agrees to use its
reasonable best efforts to cause the conditions set forth in Article 5 of
this Agreement to be satisfied, and to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or
advisable under applicable
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Laws to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including cooperating fully
with the other parties, including by provision of information and making of
all necessary filings in connection with, among other things, the HSR Act.
(b) CONFIDENTIALITY. From and after the date hereof, each party hereto
shall, and shall use its best efforts to cause its Affiliates and its and
their respective Agents to, keep secret and hold in strictest confidence any
and all documents and information identified by any other party as
confidential and furnished to such first party (whether before or after the
date hereof) in connection with the transactions contemplated hereunder,
other than the following: (i) information that has become generally
available to the public other than as a result of a disclosure by such
party, its Affiliates or its Agents; (ii) information that has become
available to such party or an Agent of such party on a nonconfidential basis
from a third party having, to the knowledge of such party (after reasonable
inquiry), no obligation of confidentiality or other legal or fiduciary
obligation of secrecy to a party to this Agreement and that has not itself,
to the knowledge of such party (after reasonable inquiry), received such
information directly or indirectly in breach of any such obligation; (iii)
information that is required to be disclosed by applicable Law or pursuant
to any listing agreement with, or the rules or regulations of, any
securities exchange on which securities of such party or any such Affiliate
are listed or traded; (iv) disclosures made by any party as shall be
reasonably necessary in connection with obtaining the RCPI Required
Consents; and (v) disclosures required in connection with the Borrower's
Chapter 11 Case. If any party hereto is required to disclose any such
confidential information pursuant to applicable Law, such party shall
promptly notify each other party in writing, which notification shall
include the nature of the legal requirement and the extent of the required
disclosure, and shall cooperate with each other party to preserve the
confidentiality of such information consistent with applicable Law. In the
event the transactions contemplated by this Agreement are not consummated,
each party hereto shall return all materials in its possession containing
confidential information belonging to another party and shall not use any
such information for any purpose whatsoever.
(c) PUBLICITY. Except as otherwise required by applicable Law or the
rules or regulations of any securities exchange on which the securities of
such party or any Affiliate of such party are listed or traded, no party
shall issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of each other party, and in any event, each party agrees
that it shall give each other party reasonable opportunity to review and
comment upon any such release or announcement prior to publication of the
same.
(d) ADVICE OF BREACH. RCPI, on the one hand, and Parent, on the other
hand (the "notifying party"), shall promptly notify the other in writing of
any material breach of any covenant hereunder by the notifying party (and,
in the case of Parent, by Sub, GSMC or any Investor) and of any event
occurring subsequent to the date of this Agreement of which the notifying
party becomes aware that renders any representation or warranty of the
notifying party (and, in the case of Parent, of Sub, GSMC or any Investor)
contained herein untrue or inaccurate in any material respect. Information
provided to a party pursuant to this Section shall not be deemed to cure any
breach of any representation, warranty or covenant of the notifying party
(and, in the case of Parent, of Sub, GSMC or any Investor) made in this
Agreement.
Section 4.2 COVENANTS OF RCPI. During the period from the date of this
Agreement and continuing until the earlier of the Closing and the termination of
this Agreement in accordance with Section 6.1, RCPI agrees that, except as
expressly permitted by this Agreement, or to the extent that Parent shall
otherwise consent in writing:
(a) ACCESS TO INFORMATION AND FACILITIES. RCPI shall give Parent and
its Agents reasonable access during normal business hours to all of the
facilities, properties, books, Contracts, commitments and records of RCPI
and shall make the officers of RCPI available to Parent and its Agents
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as Parent shall from time to time reasonably request pursuant to reasonable
notice. RCPI shall make available to Parent and its Agents (x) all financial
statements, rent rolls, environmental reports, engineering reports and other
similar documents relating to the Property upon receipt thereof from the
Borrower (or, with respect to any such documents received prior to the date
hereof, promptly following the date hereof), (y) all filings with the SEC
made by or relating to RCPI as promptly as reasonably practicable after
filing, in the case of filings made by RCPI, or receipt, in the case of
filings made by unrelated third parties, and (z) all information concerning
RCPI that Parent and its Agents may reasonably request (provided that such
information shall not be required to include any information related to the
consideration by RCPI's Board of Directors of the Merger or any Alternate
Transaction, except as required by Section 4.2(e) hereof). Notwithstanding
the foregoing, to the extent that making any documents or information
available to Parent and its Agents pursuant to clause (x) or (z) would
violate any confidentiality agreement to which RCPI is a party as of the
date hereof, RCPI shall not be obligated to do so; provided, however, that
RCPI shall, in such event, (A) use reasonable best efforts to obtain waivers
of any such confidentiality agreement to the extent necessary to permit RCPI
to make such documents and information available to Parent and its Agents
and (B) notify Parent promptly to the extent that it is prohibited from
making any such documents or information available to Parent and its Agents
under any such confidentiality agreement.
(b) ORDINARY COURSE. Except as may otherwise be expressly provided by
the terms of this Agreement, RCPI shall (and shall cause each of its
Subsidiaries to) (i) operate only in the ordinary course of business
consistent with past practices, (ii) not take or permit any action or
omission that would cause any of the representations or warranties of RCPI
contained herein to become inaccurate in any material respect or any of the
covenants of RCPI to be breached in a material manner, and (iii) take such
reasonable steps as may be within its power prior to the Closing so that it
shall continue to qualify to be taxed as a REIT, based on the income and
assets of RCPI for the periods prior to the Closing, as long as a REIT is
accorded substantially the same treatment under the United States income tax
laws from time to time in effect as under Sections 856-860 of the Code, in
effect at the date of this Agreement, as originally executed. For the
purposes of the foregoing, the phrase "ordinary course of business
consistent with past practices" shall include changes in the ordinary course
of business of RCPI instituted as a result of, and shall take into account
the effects of, the Borrower's Chapter 11 Case (it being understood that
such construction shall not relieve RCPI of any of its obligations under
this Agreement).
Except as may be required by Law or as expressly provided by the terms
of this Agreement, RCPI shall not (and shall cause each of its Subsidiaries
not to):
(A) declare or pay any dividend on, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of,
Common Stock or other equity securities unless and to the extent required
to meet qualification rules for a REIT under Section 857(a) of the Code
or to avoid any excise tax under Section 4981 of the Code;
(B) authorize for issuance, issue, deliver, sell or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock,
any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights);
(C) except as described on Section 4.2(b)(C) of the RCPI Disclosure
Schedule or except with respect to annual bonuses made in the ordinary
course of business consistent with past practice, adopt or amend in any
material respect any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, pension, retirement,
employment, consulting or other employee benefit agreement, trust, plan
or other arrangement for
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the benefit or welfare of any current or former director, officer,
consultant or employee of RCPI or increase in any manner the compensation
or fringe benefits of any current or former director, officer, consultant
or employee of RCPI or any of its Subsidiaries, or pay any benefit not
required by any existing arrangement or agreement or place any assets in
any trust for the benefit of any director, officer or employee of RCPI;
(D) amend its Restated Certificate of Incorporation or By-laws;
(E) acquire or agree to acquire (x) by merging or consolidating with,
or by purchasing a substantial portion of the stock or assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
or (y) any assets that are material, individually or in the aggregate, to
RCPI;
(F) (x) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien (other than Permitted Liens), or otherwise dispose of
or transfer any of its real property or material assets, whether now
owned or hereafter acquired (other than the repayment of Debt or other
liabilities as required by the agreements with respect thereto and
subject to the terms of RCPI's other agreements as in effect as of the
date hereof), (y) sell any of its real property or material assets
subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts
receivable or notes with recourse to it) or (z) assign any right to
receive income;
(G) incur any Debt, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of RCPI or any of its
Subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for Debt permitted to be
incurred after December 31, 1995 under Section 4.4(b) hereof to fund
Permitted Expenses (as hereinafter defined);
(H) make any loans, advances or capital contributions to, or
investments in, any other Person;
(I) form, create or acquire any Subsidiary;
(J) incur or make payments with respect to any general and
administrative expenses or any other expenditures or commitments of any
kind, except for (x) the payment of interest on any Debt pursuant to the
terms of the agreements with respect thereto, (y) general and
administrative expenses in amounts not to exceed the amounts identified
as "Total G&A Expenses" on Schedule A incurred or paid during the months
set forth on Schedule A and (z) payments required to be made under
interest rate swap agreements to which RCPI is a party as of the date
hereof in amounts not to exceed the amounts identified as "Swap Expenses"
on Schedule A paid during the months set forth on Schedule A (together
with any "Transaction Costs" set forth on Schedule B, the payments
referred to in clauses (x), (y) and (z) being referred to as "Permitted
Expenses"); provided that any amounts to be incurred or paid pursuant to
clause (y) or (z) in any month in accordance with Schedule A may be paid
in any subsequent month rather than in the scheduled month;
(K) except as described on Section 4.2(b)(K) of the RCPI Disclosure
Schedule, waive, release, grant, or transfer any rights of value or
modify or change in any material respect any material existing license,
lease, Contract or other document (including, without limitation, the
RCPI Indenture);
(L) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(M) (x) amend or in any way waive or modify in any manner adverse to
RCPI or the Investors (other than in connection with any
debtor-in-possession financing permitted by
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clause (Q) below) any provision of the Mortgage or the Mortgage Note or
the 1985 Loan Agreement or the Purchase Option or (y) exercise the rights
granted to it in the Purchase Option and Article X of the 1985 Loan
Agreement;
(N) change any of its accounting principles, unless required by the
SEC or the Financial Accounting Standards Board;
(O) settle or compromise any shareholder derivative or class action
suits arising out of the transactions contemplated hereby or any other
litigation (whether or not commenced prior to the date of this Agreement)
or settle, pay or compromise any claims not required to be paid,
individually in an amount in excess of $100,000 and in the aggregate in
an amount in excess of $1,000,000, other than in consultation and
cooperation with Parent, and with respect to any such settlement, with
the prior written consent of Parent (which consent shall not be
unreasonably withheld);
(P) enter into any transaction or series of transactions with any
Affiliate of RCPI or otherwise that would be required to be disclosed
pursuant to Item 404 of Regulation S-K other than on terms and conditions
substantially as favorable to RCPI as would be obtainable by RCPI at the
time of such transaction with a Person that is not an Affiliate of RCPI;
(Q) consent to or approve (x) any debtor-in-possession financing
other than the debtor-in-possession financing approved by order of the
Bankruptcy Court on October 30, 1995 (the "DIP Facility"), as limited by
that certain Stipulation and Order Supplementing Cash Collateral Orders
in Connection with Debtor in Possession Financing (the "Stipulation"),
except that RCPI shall not consent to any borrowings under subparagraph
1(iii) or (iv) of the Stipulation, or (y) any application of the proceeds
of any debtor-in-possession financing that deviates from the uses
approved by the Bankruptcy Court or permitted by the Stipulation, in
either case, without Parent's written consent, which shall not be
unreasonably withheld or delayed; or
(R) agree to take any of the actions described in clauses (A) through
(Q) above.
(c) STOCKHOLDERS' MEETING; FIDUCIARY DUTIES. Promptly after the date
hereof, RCPI shall give notice of and take all other action necessary in
accordance with the DGCL, its Restated Certificate of Incorporation and
By-laws and the Exchange Act to convene and hold a meeting of RCPI's
stockholders (the "Stockholders' Meeting") as promptly as practicable after
the date hereof to, among other things, consider and vote upon this
Agreement, and RCPI shall consult with Parent with respect to the date, time
and location of, agenda for, and all other arrangements with respect to such
meeting. The Board of Directors of RCPI shall not withdraw or modify or
propose to withdraw or modify in a manner adverse to Parent or Sub the
Recommendation, unless the Board of Directors of RCPI concludes in good
faith based on the advice of outside legal counsel that such action is
necessary for the Board of Directors of RCPI to comply with its fiduciary
obligations to stockholders under applicable Law. Unless the Recommendation
shall have been withdrawn or modified in a manner adverse to Parent, RCPI
shall use its reasonable best efforts to solicit from stockholders of RCPI
proxies in favor of the approval and adoption of this Agreement and to
secure the vote or the consent of the stockholders required by the DGCL and
its Restated Certificate of Incorporation and By-laws to approve and adopt
this Agreement.
(d) PREPARATION OF THE PROXY STATEMENT.
(i) As soon as practicable following the date of this Agreement, with
all reasonably necessary assistance from Parent, RCPI shall prepare and
cause to be filed with the SEC the Proxy Statement. The Proxy Statement
shall comply with all applicable provisions of the Exchange Act,
including, without limitation, Rule 14a-9 thereunder. RCPI shall provide
Parent and its Agents with reasonable opportunity to review and comment
upon the Proxy
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Statement prior to the filing thereof with the SEC or the distribution
thereof to the stockholders of RCPI, and shall make all reasonable
changes thereto requested by Parent or its Agents, and shall not file the
Proxy Statement or any amendments thereto to which Parent or its Agents
shall reasonably object.
(ii) RCPI will file promptly all reports and any other definitive
proxy or information statements required to be filed by RCPI with the SEC
pursuant to the Exchange Act for so long as the delivery of a proxy
statement is required in connection with the solicitation of the holders
of Common Stock pursuant to the Proxy Statement.
(iii) If any event shall occur as a result of which it is necessary,
in the opinion of legal counsel to Parent or RCPI, to amend the Proxy
Statement in order to make the Proxy Statement not misleading in the
light of the circumstances existing at the time it is delivered to a
holder of Common Stock, RCPI shall forthwith amend the Proxy Statement
(in form and substance reasonably satisfactory to legal counsel to
Parent) so that, as so amended, the Proxy Statement will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a holder of Common
Stock, not misleading.
(e) EXCLUSIVITY. Prior to the termination of this Agreement pursuant
to Article 6 hereof, and except as hereinafter provided, neither RCPI nor
any Affiliate thereof, nor any of their respective Agents (collectively, the
"RCPI Parties"), shall, directly or indirectly, solicit, pursue or attempt
to engage in or enter into any discussions with any Person (including the
Borrower and Affiliates thereof) other than the Investors, GSMC, Parent or
Sub (or any of their respective Affiliates), with a view toward entering
into an Alternate Transaction. Notwithstanding the foregoing, RCPI may
respond to and pursue an unsolicited proposal to consummate an Alternate
Transaction (an "Alternate Transaction Proposal") that RCPI's Board of
Directors determines could be financially superior to the Merger, if, based
on the advice of outside legal counsel, RCPI's Board of Directors believes
it has a fiduciary duty to the holders of Common Stock under applicable Law
to respond to and pursue such Alternate Transaction Proposal; provided that
RCPI shall notify Parent of such Alternate Transaction Proposal prior to
responding thereto (but RCPI shall not be obligated to disclose the identity
of the Person making such Alternate Transaction Proposal or any of the terms
thereof). In addition, RCPI may provide at any time information concerning
RCPI and the Property to third parties in response to requests for same (but
may not provide information about Parent, Sub, GSMC (or its Affiliates), any
Investor or this Agreement or anything contained herein or relating hereto
unless and to the extent required by Law).
(f) NEW LEASES; APPROVAL RIGHTS. Prior to the termination of this
Agreement pursuant to Section 6.1 hereof, (i) RCPI shall not, without the
prior written consent of Parent, approve the terms of any lease for space in
the Property and will object to any such lease submitted to it for approval
unless otherwise instructed in writing by Parent, but Parent shall not
unreasonably object to, withhold or delay its approval as to any such lease
and any objection or disapproval shall be based solely on economic
considerations (provided that the form of such lease shall be consistent
with the forms of leases for space in the Property in effect as of the date
hereof) and (ii) RCPI shall not exercise any other approval rights in its
capacity as mortgagee under the Mortgage without the prior written consent
of Parent, which consent shall not be unreasonably withheld or delayed. A
failure by Parent to object to any proposed exercise of an approval right by
RCPI within five Business Days after a written request for approval by
Parent is received by Parent shall be deemed an approval by Parent.
(g) NOTICE OF DEFAULT. Upon RCPI's obtaining knowledge thereof, it
shall give written notice to Parent promptly, but in any event within five
Business Days, of the occurrence of any of the following with respect to
each of RCPI and any of its Subsidiaries: (i) the occurrence of an event or
condition that constitutes a default or an event of default under any
material Contract of RCPI or any of its Subsidiaries, specifying the nature
and existence thereof and what action RCPI
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proposes to take with respect thereto; (ii) the pendency or commencement of
any material litigation, arbitral or governmental proceeding against RCPI or
any of its Subsidiaries; (iii) any levy of an attachment, execution or other
process against their respective assets in excess of $1,000,000 in the
aggregate; (iv) any development in its business or affairs that has resulted
in, or that RCPI reasonably believes may result in, a Material Adverse
Effect on RCPI; (v) the institution of any proceedings against RCPI, or the
receipt of notice of potential liability or responsibility of RCPI for any
violation, or alleged violation of any Law the violation of which could give
rise to a material liability, or have a Material Adverse Effect on RCPI;
(vi) the occurrence of an event or condition that may render RCPI unable to
qualify as a REIT under the Code or (vii) the occurrence of any other event
or condition that would have a Material Adverse Effect on RCPI.
(h) BANKRUPTCY CASES.
(i) RCPI has filed with the Bankruptcy Court in the Borrower's
Chapter 11 Case its Motion Pursuant to Bankruptcy Code Section 1121(d) to
Terminate Exclusivity and for Authority to Conduct Bankruptcy Rule 2004
Examinations (the "Bankruptcy Motion") (x) requesting that the Borrower's
exclusive solicitation period be terminated and (y) seeking authorization
for RCPI to file its own plan of reorganization for the Borrower.
Following a hearing on the Bankruptcy Motion, Borrower has agreed that it
will transfer the Property to RCPI pursuant to a chapter 11 plan to be
proposed and filed jointly by RGI, Borrower and RCPI in Borrower's
Chapter 11 Case (the "Joint Plan for Borrower"). RCPI shall file the
Joint Plan for Borrower, which shall be reasonably acceptable to Parent,
as promptly as reasonably practicable. In addition, a motion requesting
the Bankruptcy Court to set a hearing on approval of the disclosure
statement and authorizing commencement of solicitation of acceptances of
the Joint Plan for Borrower shall be filed as soon as possible after the
filing of the Joint Plan for Borrower and the related disclosure
statement, but in any event so as to allow the Joint Plan for Borrower to
be confirmed by February 29, 1996.
(ii) Except as specifically set forth in subparagraph (h)(i) above
with respect to the Bankruptcy Motion or subparagraph (h)(iii) below with
respect to "emergency" matters, RCPI shall not file or support any
material applications, motions, pleadings, chapter 11 plans, disclosure
statements or other documents ("RCPI Pleadings") or take any other
material action (including, without limitation, accepting or approving
any chapter 11 plan or affirming or disaffirming any lease or contract)
relating to the Borrower's Chapter 11 Case (it being understood that
whether any pleading, document or other action is "material" for purposes
of this paragraph shall be reasonably determined by Parent), without the
prior consent (in writing, to the extent practicable) of Parent (which
consent shall not be unreasonably withheld or delayed).
(iii) Any and all RCPI Pleadings filed by RCPI in the Borrower's
Chapter 11 Case that are material (as reasonably determined by Parent)
shall be in form and substance reasonably satisfactory to Parent. RCPI
shall not file any material RCPI Pleadings, nor take any other action
that is material (as reasonably determined by Parent) in any way relating
to the Borrower's Chapter 11 Case without the prior consent (in writing,
to the extent practicable) of Parent (which consent shall not be
unreasonably withheld or delayed). RCPI shall provide Parent copies of
all RCPI Pleadings proposed to be filed by RCPI in the Borrower's Chapter
11 Case and shall fully advise Parent of any material action proposed to
be taken by RCPI in any way relating to the Borrower's Chapter 11 Case no
less than 48 hours prior to any such proposed filing or action unless
there shall not be sufficient time to permit such 48-hour notice, in
which event RCPI shall fully advise Parent orally if any such action is
to be taken on a short term or "emergency" basis.
(iv) RCPI shall as promptly as reasonably practicable advise Parent
of any "emergency" matters relating to or arising in Borrower's Chapter
11 Case.
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(v) Without limiting the foregoing, as promptly as reasonably
practicable, RCPI shall provide Parent with all notices, amendments,
stipulations, waivers, requests and consents relating to the DIP
Facility.
(i) PREPAYMENT OF ZELL/MERRILL LYNCH LOANS; TERMINATION OF ZELL
AGREEMENTS. Concurrently with the execution of this Agreement, RCPI shall
take all steps reasonably requested by Parent to terminate the Combination
Agreement, and upon receipt of the proceeds of the initial GSMC Loans (as
hereinafter defined), RCPI shall repay any and all amounts borrowed by RCPI
pursuant to the terms of the Investment Agreement, and shall thereafter take
all steps reasonably requested by Parent to terminate the Investment
Agreement. Except as permitted by this Section 4.2(i), RCPI shall not, (i)
without the prior written consent of Parent, make any payments under or (ii)
without the prior written consent of Parent, which shall not be unreasonably
withheld, take any action with respect to the Combination Agreement or the
Investment Agreement.
(j) RELEASE. Concurrently with the execution of this Agreement, RCPI
shall execute a release substantially in the form of Exhibit B.
Section 4.3 COVENANTS OF THE INVESTORS. Each Investor agrees (with respect
to itself only) as follows:
(a) RELEASES. Concurrently with the execution of this Agreement, each
of the Investors shall (and Whitehall shall cause GSMC and Goldman, Sachs &
Co. ("GS") to) execute a release substantially in the form of Exhibit B.
(b) INVESTOR COMMITMENTS. Immediately prior to the Effective Time,
each of the Investors (or its designee) shall contribute to the capital of
Parent or Sub an amount in cash equal to the amount set forth opposite such
Investor's name on Exhibit C, the sum of which amounts shall be sufficient
to satisfy the obligations of Parent and Sub to pay the Merger Consideration
to the holders of Common Stock pursuant to Section 2.1(a).
Section 4.4 COVENANTS OF GSMC AND WHITEHALL.
(a) GS BOARD NOMINEE. From the date hereof through the earlier of (i)
the Effective Time and (ii) the termination of this Agreement pursuant to
Section 6.1, Whitehall shall cause GS to refrain from exercising its rights
under the December 1994 Letter to (x) designate the GS Nominee (as defined
in the December 1994 Letter) to the Board of Directors of RCPI and (y)
enforce RCPI's obligations under the December 1994 Letter to use its best
efforts to cause the Board and each committee thereof to include the GS
Nominee.
(b) GSMC LOANS. Concurrently with the execution of this Agreement,
GSMC shall make available to RCPI additional credit (secured pursuant to
existing security arrangements provided for in the Loan Documents) in an
amount up to a total of (A) $33 million plus (B) $12 million to pay
Permitted Expenses if the Closing Date shall not have occurred on or before
December 31, 1995, in each case under the terms of the Goldman Loan
Agreement (the "GSMC Loans"); provided that (1) of the amount described in
clause (A), an amount sufficient to pay all interest that will become due
from RCPI to Whitehall and GSMC on or before December 31, 1995 shall be
available only to pay such interest and (2) of the amount described in
clause (B), an amount sufficient to pay all interest that will become due
from RCPI to Whitehall and GSMC on or before March 31, 1996 shall be
available only to pay such interest. Notwithstanding the provisions of the
Goldman Loan Agreement, (i) such additional amounts may be borrowed by RCPI
at any time and from time to time after the date hereof, (ii) once borrowed,
such amounts may be prepaid by RCPI at any time (without penalty), (iii)
once prepaid, such amounts may not be reborrowed by RCPI and (iv) any such
amounts shall accrue interest at a rate equal to 10% per annum (compounded
quarterly); provided that if any such additional borrowings shall not have
been repaid by the earlier of March 31, 1996 and the termination of this
Agreement pursuant to Sections 6.1(b), 6.1(f) or 6.1(g), then any such
borrowings that remain outstanding shall thereafter be subject to
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all of the terms and conditions (including interest rate and prepayment
provisions) contained in the Goldman Loan Agreement. In consideration of the
transactions contemplated by this Agreement, GSMC, on behalf of the Lenders
(as defined in the Goldman Loan Agreement), hereby agrees that (x) RCPI
shall not be required to use the proceeds of the GSMC Loans to make the
prepayments required by Section 2.05(b) of the Goldman Loan Agreement and
(y) RCPI shall be deemed not to have breached the Goldman Loan Agreement by
reason of having spent amounts reserved for payment of interest (and thus
deducted from Net Cash Flow as such term is defined in the Goldman Loan
Agreement) for purposes other than payment of interest, provided that such
amounts were used to pay expenses of the type included in Permitted Expenses
as such term is defined herein.
(c) NO EXERCISE OF SARS. Whitehall shall not (and shall cause each
holder of SARs not to), prior to the earlier of the Effective Time and the
termination of this Agreement pursuant to Section 6.1, exercise the SARs,
unless RCPI has taken any action and as a result the failure to exercise
such SARs would adversely affect the rights of Whitehall or such holders
with respect to the SARs, the value of the SARs to Whitehall or such holders
or the position of Whitehall, such holders or GSMC in RCPI. The conversion
by Whitehall or such holders of any SARs into 14% Debentures (as such term
is defined in the Stock Appreciation Rights Agreement) shall be deemed not
to be (i) an incurrence of Debt by RCPI in violation of this Agreement or
(ii) additional Debt for purposes of determining the satisfaction of the
conditions set forth in Section 5.2 of this Agreement.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE OBLIGATIONS OF PARENT, SUB, THE INVESTORS AND
RCPI TO EFFECT THE MERGER. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the affirmative vote of a majority of the votes that the holders
of the outstanding shares of Common Stock are entitled to cast.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order or decree issued by any
court of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition (an "Injunction") restraining or preventing the
consummation of the Merger or subjecting any party or any of its Affiliates
to substantial damages as a result of the consummation of the Merger shall
be in effect, provided that the party invoking this condition shall have
used reasonable best efforts to have such Injunction vacated.
(c) HSR ACT. All HSR Act waiting periods shall have expired or been
terminated.
(d) GOVERNMENTAL APPROVALS. The RCPI Governmental Approvals and the
P&S Governmental Approvals shall have been obtained and shall be in full
force and effect.
(e) REQUIRED CONSENTS. The RCPI Required Consents (other than any
consents and approvals of the Investors, GSMC and their respective
Affiliates) shall have been obtained and be in full force and effect.
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Section 5.2 CONDITIONS TO THE OBLIGATIONS OF PARENT, SUB AND THE
INVESTORS. The obligations of Parent, Sub and each of the Investors under this
Agreement to consummate the transactions contemplated hereby are subject to the
satisfaction of the following conditions, the imposition of which is solely for
the benefit of Parent, Sub and each of the Investors and any one of more of
which may be expressly waived by Parent, in its sole discretion, except as
otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of RCPI contained herein shall have been true and correct in
all material respects when made, and shall be true and correct in all
material respects (without regard to any "knowledge" qualifier contained
therein) at and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that any such representation and warranty
had by its terms been made as of a specific date in which case such
representation and warranty shall have been true and correct in all material
respects (without regard to any "knowledge" qualifier contained therein) as
of such specific date). For purposes of this Section 5.2(a), the requirement
that the representations and warranties of RCPI shall be true and correct in
"all material respects" is not intended to establish a different or higher
materiality standard with respect to any representation or warranty that is
already qualified by a materiality or a Material Adverse Effect standard by
the terms thereof. Parent shall have received a certificate of RCPI dated
the Closing Date and signed by an officer of RCPI certifying, to the
knowledge of RCPI, to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. RCPI shall have performed in all
material respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in this
Agreement or otherwise contemplated hereby to be performed and complied with
by it at or prior to the Closing Date, and Parent shall have received a
certificate of RCPI dated the Closing Date and signed by an officer of RCPI
certifying, to the knowledge of RCPI, to the fulfillment of this condition.
(c) NO MATERIAL ADVERSE CHANGE. Since December 31 1994, no material
adverse change in the financial condition of RCPI or the financial or
physical condition of the Property shall have occurred and be continuing, it
being understood that changes in the financial condition of RCPI shall not
be considered material for this purpose to the extent such changes are
attributable to (i) the initiation of any Permitted Litigation, (ii) any
acceleration or attempted acceleration of indebtedness of RCPI (or any
attempt to exercise any rights consequent thereto) as a result of any of the
transactions contemplated hereby, or (iii) any event or condition the
occurrence of which is reasonably foreseeable based on the disclosures made
in RCPI's Annual Report on Form 10-K for the year ended December 31, 1994 or
its quarterly reports on Form 10-Q for the quarters ended March 31, 1995 and
June 30, 1995 (other than a filing for relief under the Bankruptcy Code by
RCPI, unless such filing is made with the consent of Parent).
(d) LIABILITIES OF RCPI. Except for (i) the liabilities set forth or
described on Schedule B, (ii) any liabilities incurred after December 31,
1995 in accordance with Section 4.2(b)(G) to fund Permitted Expenses
incurred after December 31, 1995, (iii) any accrued but unpaid interest on
the outstanding Debt set forth or described on Schedule B accruing after
December 31, 1995, and (iv) Permitted Litigations, as of the Closing Date,
there shall be no outstanding Debt or other liabilities or claims
(including, without limitation, guaranty obligations) of or against RCPI or
any of its Subsidiaries (other than liabilities and claims that,
individually and in the aggregate, are de minimis).
(e) SATISFACTORY CHAPTER 11 PLAN. The Joint Plan for Borrower or any
other chapter 11 plan (an "Alternative Chapter 11 Plan") confirmed in the
Borrower's Chapter 11 Case, shall, among other things, provide for the
transfer to the Surviving Company (or its designee approved by Parent) of
(i) the Property, (ii) all other real property (including leasehold
interests) owned by the Borrower and used in connection with the operation
of the Property consistent with past practices and (iii) all personal
property (including leasehold interests) owned by the Borrower and material
to the operation of the Property consistent with past practices and shall
otherwise be
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filed on a date and be in form and substance reasonably satisfactory to
Parent. The maximum amount to be provided (or assumed) by RCPI under the
Joint Plan for Borrower or under any Alternative Chapter 11 Plan to be used
to fund liabilities of the Borrower or its estate shall not exceed $20
million (exclusive of the debtor-in-possession financing permitted under
Section 4.2(b)(Q)), and such funded liabilities shall consist only of
liabilities related to administrative expenses, claims entitled to priority
under the Bankruptcy Code, cure payments relating to leases and other
executory contracts to be assumed (including tenant improvements) reasonably
acceptable to Parent, and certain general unsecured claims reasonably
acceptable to Parent. The disclosure statement for, and the proceedings
relating to confirmation of, the Joint Plan for Borrower or for any
Alternative Chapter 11 Plan also shall be in form and substance reasonably
satisfactory to Parent.
(f) TERMINATION OF ZELL AGREEMENTS. RCPI shall have taken all steps
reasonably requested by Parent to terminate the Investment Agreement and the
Combination Agreement.
(g) CONDITION OF THE PROPERTY. As of the Closing Date,
(i) there shall not exist any violations of Law relating to the
Property or structural defects in the Property that would require the
expenditure of more than $25 million to cure, repair or replace (as
applicable);
(ii) except for Permitted Liens, there shall exist no defect of title
to the Property arising since the date of the Title Insurance that would
materially adversely affect the value of the Property or the ability to
operate the Property for its current use; and
(iii) the Borrower shall not have violated or taken any action
inconsistent with any of the covenants set forth in the 1985 Loan
Agreement or the Mortgage (other than any covenants relating to the
payment of principal or interest on the Mortgage Note), except to the
extent that such violation or action together with any other such
violations and actions would not have and would not be reasonably likely
to have a material adverse effect on the physical or financial condition
of the Property.
(h) ENVIRONMENTAL MATTERS.
(i) Except as set forth on Section 5.2(h) of the RCPI Disclosure
Schedule, (A) no portion of the real property owned, operated or subject
to any mortgage or security interest held by RCPI shall have been used
for the generation, storage, transportation or disposal, if any, of
Hazardous Materials and (B) no Hazardous Materials shall be present in,
on or under any portion of any such property except to the extent that
any such use or presence, individually and in the aggregate, would not
have and would not be reasonably likely to have a material adverse effect
on the physical or financial condition of the Property.
(ii) Except as set forth on Section 5.2(h) of the RCPI Disclosure
Schedule, RCPI and its Affiliates, and all portions of the real property
owned, operated or subject to any mortgage or security interest held by
RCPI or its Affiliates, (A) shall be in compliance with all applicable
Environmental Laws, (B) shall have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (C) shall be in compliance with
all terms and conditions of any such permit, license or approval, except
to the extent that any such noncompliance or failure to receive,
individually and in the aggregate, would not have and would not be
reasonably likely to have a material adverse effect on the physical or
financial condition of the Property.
(i) CONVEYANCE OF PROPERTY. Parent, Sub and each Investor shall be
reasonably satisfied that immediately after the Effective Time (or such
later time as shall be reasonably determined by Parent) (i) the Property,
(ii) all other real property (including leasehold interests) owned by the
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Borrower and used in connection with the operation of the Property
consistent with past practices and (iii) all personal property (including
leasehold interests) owned by the Borrower and material to the operation of
the Property consistent with past practices will be conveyed to the
Surviving Company (or its designee approved by Parent) pursuant to the Joint
Plan for Borrower.
(j) NO TAXES. Prior to the date on which the Proxy Statement is first
mailed to the stockholders of RCPI, Parent, Sub and each Investor shall be
reasonably satisfied that neither the Merger nor the conveyance of the
Property to the Surviving Company (or its designee approved by Parent) will
subject the Surviving Company (or its designee approved by Parent) to any
liabilities for transfer tax or gains tax under the laws of the City of New
York or the State of New York. Notwithstanding any other provision of this
Agreement to the contrary, this Section 5.2(j) is intended to be the
exclusive provision in this Agreement relating to any liabilities for the
taxes referred to in this Section 5.2(j) that may arise from the Merger or
the conveyance of the Property to the Surviving Company (or its approved
designee).
(k) EMPLOYEE BENEFITS. Prior to the date on which the Proxy Statement
is first mailed to the stockholders of RCPI, Parent, Sub and each Investor
shall be reasonably satisfied that, following the consummation of the
transactions contemplated hereby, the Surviving Company will not have, at or
any time following the Effective Time, whether arising by operation of law
or otherwise, any direct or indirect, actual or contingent liability (as a
successor employer or otherwise) arising out or relating to the employment
(including the performance of services by any consultant) on or prior to the
Effective Time of any individual in connection with the operation of the
Property (whether or not employed by the Surviving Company at or following
the Effective Time), including, but not limited to, under any federal or
state labor or tax law, any employment, consulting, severance or other
compensatory agreement or arrangement, any collective bargaining agreement
or any benefit plan, practice or arrangement, whether such direct or
indirect, actual or contingent liability arises prior to, at the time of or
following the Effective Time.
Section 5.3 CONDITIONS TO THE OBLIGATIONS OF RCPI. The obligations of RCPI
to consummate the transactions contemplated hereby are subject to the
satisfaction of the following conditions, the imposition of which is solely for
the benefit of RCPI and any one or more of which may be expressly waived by
RCPI, in its sole discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent, Sub, GSMC and the Investors contained herein shall
have been true and correct in all material respects when made, and shall be
true and correct in all material respects at and as of the Closing Date as
though made on and as of the Closing Date (except to the extent that any
such representation and warranty had by its terms been made as of a specific
date, in which case such representation and warranty shall have been true
and correct in all material respects as of such specific date). For purposes
of this Section 5.3(a), the requirement that the representations and
warranties of Parent, Sub, GSMC and the Investors shall be true and correct
in "all material respects" is not intended to establish a different or
higher materiality standard with respect to any representation or warranty
that is already qualified by a materiality or a Material Adverse Effect
standard by the terms thereof. RCPI shall have received a certificate of
Parent dated the Closing Date and signed by an officer of Parent certifying,
to the knowledge of Parent, to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. Each of Parent, Sub, GSMC and each of
the Investors shall have performed in all material respects all obligations
and agreements and complied in all material respects with all covenants and
conditions contained in this Agreement to be performed and complied with by
it at or prior to the Closing Date, and RCPI shall have received a
certificate of Parent dated the Closing Date and signed by an officer of
Parent certifying, to the knowledge of Parent, the fulfillment of this
condition.
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ARTICLE 6
TERMINATION
Section 6.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the date on which the
Proxy Statement is first mailed to the stockholders of RCPI, in the case of
Section 6.1(b)(ii), and at any time prior to the Effective Time, whether before
or after approval by the stockholders of RCPI, in all other cases:
(a) by mutual written consent of Parent and RCPI;
(b) by Parent if (i) there has been a material breach of any
representation, warranty, covenant or agreement on the part of RCPI set
forth in this Agreement that, if not a willful breach, has not been cured
within 30 days following receipt by RCPI of notice of such breach from
Parent or (ii) the condition set forth in Section 5.2(j) or Section 5.2(k)
shall not have been satisfied prior to the date on which the Proxy Statement
is first mailed to the stockholders of RCPI;
(c) by RCPI if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Parent, Sub, GSMC or any
Investor set forth in this Agreement that, if not a willful breach, has not
been cured within 30 days following receipt by Parent, Sub or such Investor
of notice of such breach from RCPI;
(d) by either Parent or RCPI, if the Merger shall not have been
consummated before March 31, 1996 (or such later date as may be agreed to by
Parent and RCPI), provided that neither party may terminate this Agreement
under this Section 6.1(d) if the failure has been caused by such party's
material breach of this Agreement;
(e) by either Parent or RCPI, if this Agreement shall fail to receive
the requisite vote for approval and adoption by the stockholders of RCPI at
the Stockholders' Meeting;
(f) by Parent, if (i) the Board of Directors of RCPI shall withdraw,
modify or change the Recommendation in a manner adverse to Parent or shall
have resolved to do any of the foregoing; (ii) the Board of Directors of
RCPI shall have recommended to the stockholders of RCPI, or agreed to enter
into, an Alternate Transaction; (iii) a tender offer or exchange offer for
shares of capital stock of RCPI that would result in the beneficial
ownership by any Person or any "group" (as defined in Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) of more
than 50% of the outstanding shares of any class of capital stock of RCPI is
commenced; or (iv) any Person shall have acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" shall have been
formed that beneficially owns, or has the right to acquire "beneficial
ownership" of, more than 50% of the then-outstanding shares of any class of
capital stock of RCPI;
(g) by RCPI, prior to the occurrence of the vote of the stockholders of
RCPI with respect to this Agreement, if (i) RCPI has received an Alternate
Transaction Proposal that RCPI's Board of Directors determines in good faith
could be financially superior to the Merger, (ii) based on the advice of
outside legal counsel, RCPI's Board of Directors believes that it is
required to respond to and pursue such Alternate Transaction Proposal in
order to comply with its fiduciary obligations to holders of Common Stock
under applicable Law, and (iii) RCPI has entered into a definitive agreement
to consummate such Alternate Transaction Proposal; or
(h) by Parent or RCPI, if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
consummation of the Merger, and such order, decree, ruling or other action
shall have become final and nonappealable.
Section 6.2 EFFECT OF TERMINATION. If this Agreement is terminated and the
Merger abandoned pursuant to Section 6.1, all further obligations of the parties
hereunder shall terminate, except that the obligations set forth in Sections
4.1(b), 4.1(c) and 4.4(b), this Section 6.2 and Section 7.5 shall
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survive; provided, however, if this Agreement is so terminated by a party
because one or more of the conditions to such party's obligations hereunder is
not satisfied as a result of the other party's willful failure to comply with
its obligations under this Agreement, the terminating party's right to pursue
all legal remedies for breach of contract or otherwise, including, without
limitation, damages relating thereto, shall also survive such termination
unimpaired.
ARTICLE 7
GENERAL PROVISIONS
Section 7.1 CERTAIN DEFINITIONS. As used in this Agreement, unless the
context otherwise requires or unless another meaning is specifically indicated,
the following terms shall have the meanings set forth in this Section:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"Agent" means, with respect to any Person, such Person's officers,
directors, employees, fiduciaries, attorneys, accountants, investment
bankers, consultants or advisors or other representatives or agents.
"Agreement" means this Agreement and Plan of Merger, including all
exhibits and schedules hereto, as it may be amended from time to time.
"Alternate Transaction" means (i) whether pursuant to or in the context
of a proceeding in a Bankruptcy Court or otherwise, (A) a sale of stock or
other equity securities or a material portion of assets, tender offer
(including a self tender offer) or exchange offer, financing, refinancing,
recapitalization, restructuring, liquidation, dissolution, reorganization,
merger, consolidation, transfer, foreclosure, deed in lieu of foreclosure or
other business combination or similar transaction (or series of
transactions) involving RCPI, the Borrower, the Mortgage Note, the Mortgage
or the Property and involving or having a value of at least $50 million, in
the case of any issuance, repurchase or transfer of stock or other equity
securities of RCPI, or $100 million, in the case of any other transaction,
or (B) any other material corporate transaction whose consummation would
reasonably be expected to prevent or materially delay the Merger or (ii) a
confirmed plan of reorganization pursuant to Chapter 11 of the Bankruptcy
Code for RCPI or RCP or RCPA. It is understood and agreed that, without
limiting the generality of the foregoing, (x) a reinstatement, restructuring
or "cram down" pursuant to 11 U.S.C. Section 1129(b) of the Mortgage Note
and the Mortgage would constitute an Alternate Transaction and (y) the
rights offering to be effectuated pursuant to the Rights Offering Agreement
would not constitute an Alternate Transaction.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code.
"Bankruptcy Court" means the applicable court presiding over the
Borrower Chapter 11 Case.
"Business Day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings and other than a day on which
(i) banks in the State of New York are authorized or required to be closed
or (ii) the New York Stock Exchange, Inc. is closed.
"By-laws" means the By-laws of RCPI, as amended or otherwise modified
from time to time.
"Closing" means the consummation of the transactions contemplated herein
in accordance with Section 1.2.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Collateral Trust Agreement" means the Collateral Trust Agreement, dated
as of December 29, 1994, by and among RCPI and Bankers Trust Company and
Gary R. Vaughan, Trustees.
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"Combination Agreement" means the Agreement and Plan of Combination,
dated as of September 11, 1995, between Equity Office Holdings, L.L.C., a
Delaware limited liability company, and RCPI.
"Contract" means any contract, lease, commitment, understanding, sale,
stipulation, order, purchase order, agreement, indenture, mortgage, note,
bond, right, warrant, instrument or plan, whether written or oral.
"Debt" of any Person means, without duplication, (i) all indebtedness of
such Person for borrowed money; (ii) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments; (iii)
all obligations of such Person as lessee under leases that have been or
should be, in accordance with GAAP, recorded as capital leases; (iv) all
obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities; (v) all Debt of others referred to
in clauses (i) through (iv) above guaranteed directly or indirectly in any
manner by such Person; and (vi) all Debt of others referred to in clauses
(i) through (v) above secured by (or for which the holder of such Debt has
an existing right, contingent or otherwise, to be secured by) any Lien 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 Debt.
"December 1994 Letter" means the letter agreement, dated December 18,
1994, among GS, Whitehall and RCPI.
"Environmental Laws" means all Laws relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in the United
States at the time in effect.
"Goldman Loan Agreement" means the Loan Agreement between RCPI, the
lender parties thereto and Goldman Sachs Mortgage Company, as Agent, dated
as of December 18, 1994.
"Governmental Entity" means the government of the United States or any
foreign country or any state or political subdivision thereof and any
entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including quasi-governmental entities established to perform such functions.
"Hazardous Materials" includes, without limitation, any hazardous
substance, pollutant or contaminant regulated under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section
9601, et seq., as amended by the Superfund Amendments and Reauthorization
Act, and the Emergency Planning and Community Right-to-Know Act; oil and
petroleum products and natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; pesticides regulated under the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 2601
et seq.; asbestos, polychlorinated biphenyls, and other substances regulated
under the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq; source
material, special nuclear material, and by-product materials regulated under
the Atomic Energy Act; and industrial process and pollution control wastes
to the extent regulated under applicable Environmental Laws.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Investment Agreement" means the Investment Agreement, dated as of
August 18, 1995, between RCPI and Zell/Merrill Lynch Real Estate Opportunity
Partners Limited Partnership III.
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"knowledge" of any Person means actual knowledge of a responsible
officer of such person, and, unless otherwise specified, without inquiry
having been made by such Person or such officer of such Person.
"Law" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Entity.
"Lien" means any mortgage, lien (except for any lien for taxes not yet
due and payable), charge, restriction, pledge, security interest, option,
lease or sublease, easement, encroachment or encumbrance.
"Loan Documents" means the "Loan Documents" as defined in the Goldman
Loan Agreement.
"Loss" or "Losses" means any and all liabilities, losses, costs, claims,
damages, penalties and expenses (including, without limitation, attorneys'
fees and expenses and costs of investigation and litigation).
"Material Adverse Effect" means, with respect to any Person, any effect
that is or is reasonably likely to be materially adverse to the financial
condition of such Person and its Subsidiaries taken as a whole.
"Mortgage" means, collectively, (i) the Mortgage and Security Agreement,
dated as of September 19, 1985, by RCPA and RCP to RCPI, (ii) the
Consolidation, Extension, Modification and Spreader Agreement, dated as of
September 19, 1985, among RCPA, RCP and RCPI, recorded with the City
Register of the City of New York, and (iii) the Assignment of Rents, dated
as of September 19, 1985, by RCPA and RCP to RCPI, recorded with the City
Register of the City of New York, each as amended from time to time.
"Mortgage Note" means, collectively, the Mortgage Note, dated as of
September 19, 1985, in the amount of $1,255,160,004, in favor of RCPI and
the Consolidated Mortgage Note, dated as of September 19, 1985, in the
amount of $44,839,996, each as amended from time to time.
"1985 Loan Agreement" means the Loan Agreement, dated as of September
19, 1985, among RCPI, RCPA and RCP, as amended from time to time.
"P&S Disclosure Schedule" means the disclosure schedule delivered to
RCPI by Parent and Sub concurrently with the execution of this Agreement.
"Permitted Liens" means (i) all exceptions to title to the Mortgage set
forth in the Title Insurance; (ii) Liens created in connection with the
Goldman Loan Agreement or the "Loan Documents" as defined therein, including
Liens created to secure loans contemplated by Section 4.4(b) hereof; (iii)
all nondisturbance agreements set forth on Section 3.1(c)(iii) of the RCPI
Disclosure Schedule, and all other nondisturbance agreements hereafter
entered into by RCPI in accordance with the terms of this Agreement; (iv)
Liens created pursuant to the terms of this Agreement; (v) Liens for taxes
not yet due or as otherwise provided in clause (xiii) below; (vi) easements,
rights-of-way, restrictive covenants and concourse, subway and franchise
agreements of record as set forth on Schedule B-1 to the Title Report of
Ticor Title Insurance Company and Ticor Title Guarantee Company No.
4193-00483 dated October 10, 1995 ("Title Report"), but no other matters set
forth in the Title Report other than as covered by clause (i) above or
provided for in clause (vii) below; (vii) Liens (other than those described
in clause (viii) below) in respect of property imposed by law arising in the
ordinary conduct of business, such as materialmen's, mechanics',
warehousemen's and other like Liens, which are set forth in the Title Report
and the disposition of which (whether by payment, cancellation or otherwise)
is provided for in the Joint Plan for Borrower or an Alternative Chapter 11
Plan provided in Section 5.2(e) (the "Approved Plan"); (viii) mechanics',
materialmen's and similar Liens filed by reason of work performed by or on
behalf of tenants of space in the Property if (A) under the terms of the
leases of
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such tenants, such tenants are obligated to remove and discharge such Liens
and to pay for the work that gives rise to such Liens (whether or not such
tenants are entitled to an allowance or other reimbursement from their
landlord) and (B) the disposition of such Liens (whether by payment,
cancellation or otherwise) is provided for in the Approved Plan; (ix) unpaid
water charges, sewer rents and vault charges, the disposition of which is
provided for in the Approved Plan; (x) leases or subleases granted to others
(under which RCP or RCPA is the landlord or sublandlord, as applicable)
existing as of the date hereof and those hereafter entered into which are
approved pursuant to this Agreement and/or by the Bankruptcy Court; (xi) any
Lien approved by the Bankruptcy Court in the Borrower's Chapter 11 Case,
including any Lien securing debtor-in-possession financing permitted under
Section 4.2(b)(Q), which is to be paid in full under the terms of the
Approved Plan; (xii) the Mortgage; and (xiii) any other Liens (including,
but not limited to, Liens for taxes and Liens in respect of property imposed
by law arising in the ordinary conduct of business such as materialmen's,
mechanic's, warehousemen's and other like Liens), the disposition (whether
by payment, cancellation or otherwise) of which is provided for in the
Approved Plan or is otherwise approved by Parent; provided, however, that
when used in respect of the Mortgage, as opposed to the Property, "Permitted
Liens" shall mean only those matters set forth in this definition which are
paramount and superior to the lien of the Mortgage.
"Permitted Litigations" means (i) the pending, threatened and potential
litigation described on Section 3.1(h) of the RCPI Disclosure Schedule, (ii)
any derivative or class action suit not described on Section 3.1(h) of the
RCPI Disclosure Schedule alleging a breach by the Board of Directors of RCPI
of its fiduciary duty to stockholders in connection with a significant
corporate transaction; provided that the suits contemplated by this clause
(ii) would not, individually and in the aggregate, have a Material Adverse
Effect on RCPI and (iii) litigations arising after the date hereof to which
RCPI is a party, in the ordinary course of business, involving property,
personal injury or contract claims that will not result in any material
recovery that is not covered by insurance.
"Person" means any individual, corporation, partnership, firm, group (as
such term is used in Section 13(d)(3) of the Exchange Act), joint venture,
association, trust, limited liability company, unincorporated organization,
estate, trust or other entity.
"Property" shall mean the real and personal property covered by the
Mortgage.
"Proxy Statement" means the proxy statement filed with the SEC by RCPI
in connection with the Stockholders' Meeting, including any amendments
thereto.
"Purchase Option" means the Purchase Option, dated as of September 19,
1985, among RCPA, RCP and RCPI, as amended.
"RCPI Disclosure Schedule" means the disclosure schedule delivered to
Parent and Sub by RCPI concurrently with the execution of this Agreement.
"RCPI Indenture" means the Indenture, dated as of September 15, 1985,
between RCPI and Manufacturers Hanover Trust Company, as amended.
"Regulation G, T, U or X" shall mean, respectively, Regulation G, T, U
and X of the Board of Governors of the Federal Reserve System as from time
to time in effect and any successor to all or a portion thereof.
"Restated Certificate of Incorporation" means the Restated Certificate
of Incorporation of RCPI, as amended.
"Rights Offering Agreement" means the letter agreement, dated the date
hereof, between RCPI, GS and Whitehall relating to the effectuation of a
rights offering in the event that the stockholders of RCPI do not approve
this Agreement, as amended from time to time.
A-29
<PAGE>
"SARs" means the stock appreciation rights issued pursuant to the Stock
Appreciation Rights Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stock Appreciation Rights Agreement" means the Stock Appreciation
Rights Agreement, dated December 18, 1994, between RCPI and Chemical Bank,
as amended.
"Subsidiary" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or
through or together with any other Subsidiary of such Person), owns,
directly or indirectly, 50% or more of the stock or other equity interests
the holders of which are generally entitled to vote for the election of the
board of directors or similar governing body of such corporation,
partnership, joint venture or other legal entity.
"Taxes" means federal, state, county, local, foreign and other taxes
(including, without limitation, income, profits, premium, estimated, excise,
sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, withholding, employment, unemployment
compensation, payroll related, property, real property transfer and real
property gains taxes, import duties and other governmental charges and
assessments), whether or not measured or based in whole or in part by net
income, and including deficiencies, interest, additions to tax or interest,
and penalties with respect thereto, and including expenses associated with
contesting any proposed adjustment related to any of the foregoing.
"Tax Return" means any report, return or other information required to
be supplied to a Governmental Entity in connection with any Taxes.
"Title Insurance" means (i) the title insurance policy set forth in
Schedule III to the Collateral Trust Agreement and (ii) the title insurance
policy described in the Letter Agreement dated as of December 29, 1994
regarding the assignment by RCPI of its title insurance benefits to the
Trustees referred to in clause (i) above.
"Warrant Agreement" means the Warrant Agreement dated December 18, 1994
between RCPI and Chemical Bank, as amended.
"Warrants" means the warrants for the purchase of shares of Common Stock
issued pursuant to the Warrant Agreement.
Section 7.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, upon receipt
of a transmittal confirmation if sent by facsimile or like transmission and on
the next Business Day when sent by Federal Express, Express Mail or similar
overnight courier service to the parties at the following addresses or facsimile
numbers (or at such other address or facsimile number for a party as shall be
specified by like notice):
(a) If to RCPI, to:
Rockefeller Center Property, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attention: Secretary
Facsimile: (212) 698-1453
A-30
<PAGE>
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Cornelius J. Dwyer, Jr.
Facsimile: (212) 848-7179
(b) If to Parent or Sub, to:
Whitehall Street Real Estate
Limited Partnership V
85 Broad Street
New York, New York 10004
Attention: Daniel Neidich
Facsimile: (212) 902-3000
with copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert B. Schumer
Facsimile: (212) 757-3990
and
Each of the Investors and their respective
counsel at the addresses set forth
in paragraphs (c) - (g) below:
(c) If to Whitehall, to:
Whitehall Street Real Estate
Limited Partnership V
85 Broad Street
New York, New York 10004
Attention: Daniel Neidich
Facsimile: (212) 902-3000
with copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert B. Schumer
Facsimile: (212) 757-3990
and
Sullivan & Cromwell
250 Park Avenue
New York, New York 10177
Attention: Joseph Shenker
Facsimile: (212) 558-3792
A-31
<PAGE>
(d) If to Rockprop, to:
Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: Jerry I. Speyer
Facsimile: (212) 319-1745
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Thomas P. Dore, Jr.
Facsimile: (212) 450-5738
(e) If to Rockefeller, to:
Spears, Benzak, Salomon & Farrell, Inc.
45 Rockefeller Plaza, 33rd Floor
New York, New York 10111
Attention: Richard E. Salomon
Facsimile: (212) 586-6652
with a copy to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Peter W. Herman
Facsimile: (212) 530-5219
(f) If to Exor, to:
Exor Group S.A.
Voltastrasse, 61
Zurich, SWITZERLAND CH804-1
Attention: Siegfried Maron
Facsimile: 011-41-1-262-4212
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Ernest Rubenstein
Facsimile: (212) 757-3990
(g) If to Troutlet, to:
Troutlet Investments Corporation
c/o Villa Bijou
19, Avenue de la Costa
Monte Carlo M.C. 98000
MONACO
Attention: Alois Jurt
Facsimile: 011-33-93-301-672
A-32
<PAGE>
with copies to:
Andreas C. Dracopoulos
39 East 51st Street
New York, New York 10022
Facsimile: (212) 832-9732
and
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Squire N. Bozorth
Facsimile: (212) 530-5219
Section 7.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to November 7, 1995. Dollar amounts
referred to in this Agreement shall not be deemed to establish any standard of
materiality.
Section 7.4 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by written instruments signed by the parties to this Agreement, or in the
case of a waiver, by the party waiving compliance. Except where a specific
period for action or inaction is provided herein, no delay on the part of a
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Neither any waiver on the part of a party of any such right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege, shall preclude any further exercise thereof or the exercise of any
other such right, power or privilege.
Section 7.5 EXPENSES AND OTHER PAYMENTS.
(a) Except as otherwise specifically provided herein, the parties to
this Agreement shall bear their respective expenses incurred in connection
with the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees
and expenses of their respective Agents.
(b) RCPI agrees that if this Agreement shall be terminated pursuant to:
(i) Section 6.1(b)(i), 6.1(f) or 6.1(g) and within 30 months after
the date on which this Agreement is terminated RCPI shall consummate an
Alternate Transaction; or
(ii) Section 6.1(d) (if (x) each of Parent, Sub, GSMC and each of the
Investors is not in material breach of any covenant, representation or
warranty; (y) each of Parent, Sub and each of the Investors is ready,
willing and able to consummate the Merger; and (z) each of Parent, Sub,
GSMC and each of the Investors has satisfied in all material respects the
conditions set forth in Section 5.3 applicable to it) or 6.1(e) and (A)
at the time this Agreement is terminated there shall exist an Alternate
Transaction Proposal or any Person shall have publicly announced its
intention to make an Alternate Transaction Proposal and (B) within 30
months after the date on which this Agreement is terminated RCPI shall
consummate an Alternate Transaction; then RCPI shall pay to Parent an
amount equal to $6.5 million less any amounts paid to Parent pursuant to
Section 7.5(c).
(c) RCPI agrees that if this Agreement shall be terminated pursuant to
Section 6.1(e), then RCPI shall pay to Parent an amount equal to $2.925
million.
A-33
<PAGE>
(d) In addition, RCPI agrees that if this Agreement shall be terminated
pursuant to Section 6.1 (other than Section 6.1(c)), then RCPI shall pay to
Parent all expenses up to an aggregate amount of $2.5 million incurred by
Parent, Sub and the Investors in connection with the preparation, execution
and performance of this Agreement and the transactions contemplated hereby,
including, without limitation, all fees and expenses of their respective
Agents.
(e) Any payment required to be made pursuant to Section 7.5(b) shall be
made concurrently with the consummation of the applicable Alternate
Transaction, and any payment required to be made pursuant to Section 7.5(c)
or (d) shall be made promptly following any termination to which Section
7.5(c) or (d), as the case may be, applies.
Section 7.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party and any such assignment made without such consent
shall be void and of no effect; provided that each of Parent and Sub shall have
the right to assign its rights, interests and obligations hereunder to one or
more entities (each a "New Entity") which shall be formed, capitalized and owned
by the Investors, and upon such assignment, the parties shall amend this
Agreement to provide (a) that, at the election of the Investors, a New Entity
(and not RCPI) shall be the Surviving Company of the Merger and (b) for such
other modifications to the terms hereof as shall be necessary to reflect the
revised structure (it being understood that any such amendment shall not affect
the Merger Consideration or any other economic terms of this Agreement);
provided further that any Investor may assign any of its rights, interests or
obligations hereunder to any of its Affiliates so long as (i) any such Affiliate
assignee enters into an agreement by which it agrees to become a party to, and
be bound by the terms of, this Agreement and (ii) the Investor making such an
assignment is not relieved of its obligations under this Agreement.
Section 7.7 DIRECTORS' AND OFFICERS' INSURANCE; INDEMNITY. (a) For a
period of six years after the Effective Time, the Surviving Company shall
maintain in effect policies of directors' and officers' liability insurance in
substantially the same form with substantially the same terms and conditions as
contained in RCPI's current policies of directors' and officers' liability
insurance in an amount not less than the amount currently maintained by RCPI
with respect to claims arising from facts or events that occurred prior to the
Effective Time; provided that such insurance is available on commercially
reasonable terms.
(b) Subsequent to the Closing, Parent shall cause the Surviving Company to
indemnify and hold harmless each present and former director, officer, employee,
fiduciary and agent of RCPI (collectively, the "Special Indemnified Parties")
against all losses in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action or omission in their capacity as director or
officer occurring before the Closing, whether asserted or claimed prior to, at
or after the Closing Date, for a period of six years after the Closing Date in
each case to the fullest extent permitted under applicable law (and shall pay
any expenses in advance of the final disposition of such action or proceeding to
each Special Indemnified Party to the fullest extent permitted under applicable
law, upon receipt from the Special Indemnified Party to whom expenses are
advanced of an undertaking to repay such advances as required under applicable
law). In the event of any such claim, action, suit, proceeding or investigation,
the Surviving Company, at its expense, shall have the right to defend such
claim, action, suit, proceeding or investigation, unless there is, as determined
by counsel to the Surviving Company, a conflict or reasonable likelihood of a
conflict such that the representation of one or more of the Special Indemnified
Parties would be impermissible under applicable standards of professional
conduct, in which case, or in the case that the Surviving Company elects not to
defend such claim, suit, proceeding or investigation, then the Surviving Company
shall pay the reasonable fees and expenses of one counsel selected by the
Special Indemnified Parties, which counsel shall be reasonably satisfactory to
the Surviving Company, promptly after statements therefor are received and the
Surviving Company shall cooperate in the defense of any such matter; provided,
however, that, if any claim for indemnification is asserted or made within such
six-year period, all rights to indemnification in respect of such
A-34
<PAGE>
claim shall continue until the disposition of such claim. For the purposes
solely of this Section 7.7(b), the corporate law of the State of Delaware shall
be assumed to be the "applicable law" referred to in this Section 7.7(b).
(c) For a period of six years after the Effective Time, the Surviving
Company shall not amend or otherwise modify Article SEVENTH of its Amended and
Restated Certificate of Incorporation or otherwise amend or modify its Amended
and Restated Certificate of Incorporation to the extent that such amendment or
modification would restrict the Surviving Company's ability to fulfill its
obligations under Section 7.7(b).
(d) In the event the Surviving Company or any of its respective successors
or assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, provision shall be made so that the
successors and assigns of the Surviving Company shall assume the obligations set
forth in this Section 7.7.
Section 7.8 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in this Agreement or in any instrument
delivered pursuant to this Agreement shall not survive the Effective Time.
Section 7.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof (it being understood that except as expressly provided herein, this
Agreement shall not affect the Goldman Loan Agreement, the Warrant Agreement,
the Stock Appreciation Rights Agreement, the documents executed in connection
therewith or the Rights Offering Agreement) and (b) is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder
(except as provided in Section 7.7).
Section 7.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (other than its
rules of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby); provided, however, that with
respect to matters of corporate law, the DGCL shall govern.
Section 7.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has signed or caused this Agreement
to be signed as of the date first above written.
ROCKEFELLER CENTER PROPERTIES, INC.
By: /s/ STEVEN A. SANDBERG
-----------------------------------
Name: Steven A. Sandberg
Title: Executive Vice President
A-35
<PAGE>
RCPI HOLDINGS INC.
By: /s/ DANIEL M. NEIDICH
-----------------------------------
Name: Daniel M. Neidich
Title: President
RCPI MERGER INC.
By: /s/ DANIEL M. NEIDICH
-----------------------------------
Name: Daniel M. Neidich
Title: President
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP V
By: W.H. Advisors L.P. V,
General Partner
By: WH Advisors, Inc. V,
General Partner
By: /s/ DANIEL M. NEIDICH
-----------------------------------
Name: Daniel M. Neidich
Title:
ROCKPROP, L.L.C.
By: Tishman Speyer Crown Equities
its Managing Member
By: Tishman Speyer Associates
Limited Partnership,
General Partner
By: /s/ JERRY I. SPEYER
-----------------------------------
Name: Jerry I. Speyer
Title: General Partner
By: TSE Limited Partnership,
General
Partner
A-36
<PAGE>
By: /s/ CHARLES H. GOODMAN
----------------------------------
Name: Charles H. Goodman
Title: General Partner
/s/ DAVID ROCKEFELLER*
--------------------------------------
David Rockefeller
* By Peter W. Herman, Attorney-in-Fact
EXOR GROUP S.A.
By: /s/ ERNEST RUBENSTEIN
-----------------------------------
Name: Ernest Rubenstein
Title: Attorney-in-Fact
TROUTLET INVESTMENTS CORPORATION
By: /s/ SQUIRE N. BOZORTH
-----------------------------------
Name: Squire N. Bozorth
Title: Attorney-in-Fact
For Purposes of Sections 3.2, 4.1(a),
4.1(b), 4.3(a) and 4.4(b) only:
GOLDMAN SACHS MORTGAGE COMPANY
By: /s/ STEVEN T. MNUCHIN
-----------------------------------
Name: Steven T. Mnuchin
Title: President of Goldman Sachs
Real
Estate Funding Corp, General
Partner.
A-37
<PAGE>
SCHEDULE A
ROCKEFELLER CENTER PROPERTIES, INC.
PROJECTED CASH FLOW REQUIREMENTS
(IN MILLIONS)
PROJECTED REIT CASH FLOW (1)
<TABLE>
<CAPTION>
1995 1996
------------------------------------------ ----------------------------------------------
SEPT. OCT. NOV. DEC. JAN. FEB. MAR. TOTAL
--------- --------- --------- --------- --------- --- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH SOURCES
Beginning Cash Balance............. $ 16.4 $ 13.3 $ 34.6 $ 24.6 $ 6.6 $ 5.0 $ 16.4
Estimated Interest Income.......... 0.1 0.1 0.1 -- 0.0 0.0 0.3
GSMC Loan (2)...................... -- 33.0 -- 12.0 -- -- 45.0
--------- --------- --------- --------- --- --- -----
$ 16.5 $ 46.3 $ 34.7 $ 36.6 $ 6.6 $ 5.0 $ 61.7
CASH REQUIREMENTS
Interest Expense
Current Coupon Convertible
Debentures (3).................. $ -- $ -- $ -- $ 27.7 $ -- $ -- $ 27.7
Zero Coupon Convertible
Debentures...................... -- -- -- -- -- -- --
Floating Rate Notes.............. -- -- 2.9 -- -- 2.9 5.8
14% Debentures................... -- -- 5.4 -- -- -- 5.4
Working Capital.................. -- -- -- -- -- -- --
--------- --------- --------- --------- --- --- -----
Total Interest Expense............. $ -- $ -- $ 8.3 $ 27.7 $ -- $ 2.9 $ 38.9
Total G&A Expenses................. 2.4 1.6 1.9 1.7 1.7 1.7 10.8
Swap Expenses...................... 0.8 -- -- 0.6 -- 0.4 1.8
Repayment of Unsecured Debt (2).... -- 10.2 -- -- -- -- 10.2
--------- --------- --------- --------- --- --- -----
Total Cash Requirements............ $ 3.2 $ 11.8 $ 10.1 $ 30.0 $ 1.7 $ 5.0 $ 61.7
Ending Cash Balance (Deficit)
(4)............................... $ 16.4 $ 13.3 $ 34.6 $ 24.6 $ 6.6 $ 5.0 $ 0.0 $ 0.0
</TABLE>
- ------------------------------
(1) All numbers have been rounded to the nearest $100,000.
(2) Assumes concurrent funding of GSMC Loan and termination of Investment
Agreement on November 10, 1995.
(3) Interest payment on the Current Coupon Convertible Debentures scheduled for
December 31, 1995 is payable on January 2, 1996.
(4) Assumes waiver of the net cash flow sweep and interest reserve requirements
upon signing of the Merger Agreement.
SCHEDULE A
1
<PAGE>
SCHEDULE B
MAXIMUM PERMITTED RCPI LIABILITIES
AS OF DECEMBER 31, 1995
<TABLE>
<S> <C>
OUTSTANDING DEBT: (1)
Current Coupon Convertible Debentures...................................... $ 213,170,000
Zero Coupon Convertible Debentures......................................... 360,283,410
Floating Rate Notes........................................................ 117,285,234
GSMC Loan (2).............................................................. 33,467,500
14% Debentures............................................................. 75,787,500
-------------
TOTAL OUTSTANDING DEBT....................................................... $ 799,993,644
OTHER LIABILITIES:
Swaps (3).................................................................. 10,000,000
Transaction Costs (4)...................................................... 8,000,000
Liquidation Expenses and Other Liabilities
(see Attachment 1)........................................................ 5,588,196
Zell Breakup Fee and Related Expenses (5).................................. 11,575,000
-------------
TOTAL OTHER LIABILITIES (6).................................................. $ 35,163,196
TOTAL LIABILITIES............................................................ $ 835,156,840
-------------
-------------
</TABLE>
- ------------------------
(1) Includes accrued interest, except in the case of the Current Coupon
Convertible Debentures which is payable on January 2, 1996.
(2) Assumes 10% per annum fixed rate interest accrual, compounded quarterly.
(3) Subject to adjustment to reflect changes in interest rates following the
date of this Agreement.
(4) Includes only professional fees to PaineWebber, Weil, Gotshal & Manges,
Shearman & Sterling, and expense liabilities payable to GS, GSMC and
Whitehall under existing agreements. This amount will be increased by the
amount, if any, by which the expense liabilities payable to GS, GSMC and
Whitehall under existing agreements exceed $750,000.
(5) Such amount shall be increased by the interest accrued from the 90th day
after termination of the Combination Agreement on a portion of such amount
equal to $9,575,000 at 8% per annum, compounded semiannually.
(6) Such liabilities do not include Property-related bankruptcy costs and
expenses of the Borrower to be assumed by RCPI pursuant to Section 5.2(e)
hereof.
SCHEDULE B
1
<PAGE>
ATTACHMENT 1
OTHER LIABILITIES
(AMOUNTS ESTIMATED AS OF DECEMBER 31, 1995)
All Permitted Litigation and any expenses incurred by RCPI in connection
therewith and any indemnity payments due from RCPI to its officers and directors
in connection therewith.
<TABLE>
<CAPTION>
Audit Fees..................................................................... $ 150,000
<S> <C>
Property Appraisal............................................................. 150,000
Investor Relations Consulting.................................................. 150,000
Consulting Fees................................................................ 20,000
Office space lease (future cash rent to the end of the lease).................. 770,000
Tax Return Preparation Fees.................................................... 10,000
Directors' Fees and Expenses................................................... 5,000
Property Inspection............................................................ 7,500
Registrar and Transfer Agent Fees.............................................. 35,000
Dividend Reinvestment Plan..................................................... 2,000
Investor Communications........................................................ 50,000
Taxes.......................................................................... 2,500
Data Processing................................................................ 5,000
Travel and Reimbursable Expenses............................................... 3,000
Telephone Service.............................................................. 3,000
Miscellaneous.................................................................. 127,000
Office Equipment Leases........................................................ 26,100
EDGAR Filings -- Merrill Corporation........................................... 25,000
Payroll -- Salaries............................................................ 20,745
Payroll -- Taxes............................................................... 19,702
Payroll -- Incentive Savings Plan.............................................. 3,166
Contractual Severance Pay...................................................... 1,602,000
Contractual Severance Benefits................................................. 152,429
Retirement Plan................................................................ 513,000
Directors' and officers' insurance............................................. 1,736,054
----------
Total...................................................................... $5,588,196
----------
----------
</TABLE>
ATTACHMENT 1
1
<PAGE>
EXHIBIT A
FORM OF
CERTIFICATE OF INCORPORATION
OF
[THE SURVIVING COMPANY]
1. NAME. The name of the corporation is [Name] (the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the Corporation's
registered office is 32 Loockerman Square, Suite L-100, City of Dover, County of
Kent, State of Delaware; and its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
3. PURPOSES. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that the
Corporation shall have authority to issue is: One thousand (1,000), all of which
shall be shares of Common Stock of the par value of one cent ($.01) each.
5. ELECTION OF DIRECTORS. The number of directors shall be as from time to
time fixed by, or in the manner provided in, the By-laws of the Corporation.
Members of the Board of Directors of the Corporation (the "Board") may be
elected either by written ballot or by voice vote.
6. LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits.
Any repeal or modification of the foregoing provision shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
7. INDEMNIFICATION.
7.1 To the extent not prohibited by law, the Corporation shall indemnify
any person who is or was made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (a "Proceeding"),
whether civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of the Corporation to procure a
judgment in its favor, by reason of the fact that such person, or a person of
whom such person is the legal representative, is or was a director or officer of
the Corporation or its predecessor, or at the request of the Corporation or its
predecessor, is or was serving as a director or officer of any other corporation
or in a capacity with comparable authority or responsibilities for any
partnership, joint venture, trust, employee benefit plan or other enterprise (an
"Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including, without limitation,
attorneys' fees, disbursements and other charges). Persons who are not directors
or officers of the Corporation or its predecessor (or otherwise entitled to
indemnification pursuant to the preceding sentence) may be similarly indemnified
in respect of service to the Corporation or its predecessor or to an Other
Entity at the request of the Corporation or its predecessor to the extent the
Board at any time specifies that such persons are entitled to the benefits of
this Section 7.
7.2 The Corporation shall, from time to time, reimburse or advance to any
director or officer or other person entitled to indemnification hereunder the
funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the General
EXHIBIT A
1
<PAGE>
Corporation Law, such expenses incurred by or on behalf of any director or
officer or other person may be paid in advance of the final disposition of a
Proceeding only upon receipt by the Corporation of an undertaking, by or on
behalf of such director or officer (or other person indemnified hereunder), to
repay any such amount so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right of appeal that such
director, officer or other person is not entitled to be indemnified for such
expenses.
7.3 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any statute, this Certificate of Incorporation, the By-laws of the Corporation
(the "By-laws"), any agreement, any vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.
7.4 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 shall continue as
to a person who has ceased to be a director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
7.5 The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of an Other Entity, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Section 7, the By-laws or under Section 145 of the General
Corporation Law or any other provision of law.
7.6 The provisions of this Section 7 shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Section 7 is in effect and any other person
entitled to indemnification hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be, and
shall be, legally bound. No repeal or modification of this Section 7 shall
affect any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
7.7 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 7 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board, its independent legal counsel and its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
7.8 Any director or officer of the Corporation serving in any capacity (a)
another corporation of which a majority of the shares entitled to vote in the
election of its directors is held, directly or indirectly, by the Corporation or
(b) any employee benefit plan of the Corporation or any corporation referred to
in clause (a) shall be deemed to be doing so at the request of the Corporation.
EXHIBIT A
2
<PAGE>
7.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 7 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
8. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board may from time
to time adopt, amend or repeal the By-laws of the Corporation; PROVIDED,
HOWEVER, that any By-laws adopted or amended by the Board may be amended or
repealed, and any By-laws may be adopted, by the stockholders of the Corporation
by vote of a majority of the holders of shares of stock of the Corporation
entitled to vote in the election of directors of the Corporation.
EXHIBIT A
3
<PAGE>
EXHIBIT B
FORM OF RELEASE
RELEASE, dated as of November , 1995, made by [RCPI][Investor][GSMC][GS]
(together with its predecessors, successors and assigns, the "Releasor") in
favor of each of the Released Parties (as defined herein).
This Release is being executed and delivered pursuant to Section [4.2(j)]
[4.3(a)] of the Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), among Rockefeller Center Properties, Inc., a Delaware
corporation, RCPI Holdings Inc., a Delaware corporation, RCPI Merger Inc., a
Delaware corporation and a wholly owned subsidiary of RCPI Holdings Inc., and
the Investors named therein. Capitalized terms used but otherwise not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
The Releasor does hereby release and forever discharge (on behalf of itself
and its Affiliates) the Released Parties from any and all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
obligations, variances, trespasses, damages, judgments, extents, executions,
claims, counterclaims and demands of any kind relating to RCPI (collectively,
"Claims"), whether in law, admiralty, or equity, that the Releasor or any of its
Affiliates ever had, now has, or hereafter can, shall, or may have, for, upon,
or by reason of any matter, cause, or thing from the beginning of the world
until the execution of this Release arising from or relating to (a) any breach
of contract by any Released Party, but only if such breach occurred prior to the
date of this Release, or (b) to the extent not arising out of a breach of
contract, actions or omissions of any Released Party with respect to the
Releasor or any of its Affiliates, but only if such actions or omissions
occurred prior to the date of this Release. For purposes of this Release, the
term "Released Parties" means [RCPI] [each of GSMC, GS and each of the
Investors] and its Affiliates and Agents (each in its capacity as such) and
their respective predecessors, successors and assigns.
Notwithstanding anything to the contrary herein, the Releasor does not
hereby release any Released Party from the performance of any continuing
obligation that such Released Party has under or relating to any agreement,
arrangement or understanding (whether oral or written) whose terms provide that
the beneficiary of any such obligation is the Releasor or any of its Affiliates,
including, without limitation, the Merger Agreement, the Loan Documents and any
other agreements executed in connection with the Loan Documents, and the
Releasor does not hereby release any Released Party from any Claims arising from
and after the execution hereof relating to such Released Party's performance of
any such obligations.
This Release is not intended to confer upon any person other than each of
the Released Parties any rights or remedies hereunder.
This Release shall be governed by and construed in accordance with the laws
of the State of New York (other than its rules of conflicts of law to the extent
the application of the laws of another jurisdiction would be required thereby).
IN WITNESS WHEREOF, the Releasor has caused this Release to be signed by its
officer thereto duly authorized as of the date first above written.
[RELEASOR]
By: __________________________________
Name:
Title:
EXHIBIT B
1
<PAGE>
EXHIBIT C
INVESTOR COMMITMENTS
<TABLE>
<CAPTION>
INVESTOR COMMITMENT
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
Whitehall Street Real Estate Limited Partnership V.............................................. $ 134,031,880
Rockprop, L.L.C. ............................................................................... $ 15,639,686
David Rockefeller............................................................................... $ 15,639,686
Exor Group S.A. ................................................................................ $ 70,387,190
Troutlet Investments Corporation................................................................ $ 70,387,190
</TABLE>
EXHIBIT C
1
<PAGE>
ANNEX B
November 7, 1995
Goldman, Sachs & Co.
Whitehall Street Real Estate Limited Partnership V
85 Broad Street
New York, N.Y.
Attention: Daniel M. Neidich
Dear Dan:
The Board of Directors of Rockefeller Center Properties, Inc. ("RCPI") has
approved the execution and delivery by RCPI of the Agreement and Plan of Merger
in the form attached hereto (the "Agreement") and, subject to the terms and
conditions thereof, has determined to recommend to stockholders of RCPI approval
of the Agreement. In connection with the execution of the Agreement, Goldman,
Sachs & Co. ("Goldman") and Whitehall Street Real Estate Limited Partnership V
("Whitehall") have agreed that, should the stockholders of RCPI fail to approve
the Agreement at the Stockholders' Meeting called for such purpose (unless such
failure results from RCPI's breach of the Agreement), and should RCPI elect
(within thirty days of such Meeting) to make a rights offering upon the terms
described herein (the "Rights Offering"), RCPI, Goldman and Whitehall will take
or cause to be taken the following.
1) RCPI would conduct a $200 million publicly registered Rights Offering in
which each stockholder as of the record date of the Rights Offering
would be offered the right to acquire newly issued shares of RCPI common
stock ("Common Stock"), at a price per share (the "Rights Offering
Price") set by the Board in its discretion, which in no event will be
less than $6.00 per share but which may be less than the "fair market
value of Common Stock" as defined in Section 6.2(f) of the Warrant
Agreement, dated as of December 18, 1994, between RCPI and Chemical
Bank, Warrant Agent, as amended (the "Warrant Agreement"), as of the
date of the Rights Offering and as of the date of the closing of the
Rights Offering. The rights offered in the Rights Offering would be
freely transferable and participants in the Rights Offering would be
offered the right to oversubscribe. Appropriate measures would be
included in the Rights Offering to ensure, to the extent practicable,
compliance with the Limit contained in Article NINTH of RCPI's Restated
Certificate of Incorporation, as amended.
2) The Warrant Agreement and the SAR Agreement, dated as of December 18,
1994, between the Company and Chemical Bank, as SAR Agent, as amended
(the "SAR Agreement"), would be amended to provide (i) that any and all
Stock Appreciation Rights ("SARs") are convertible to Warrants under the
Warrant Agreement ("Warrants") only at the option of the Holders thereof
exercised from time to time and subject to the limitations contained in
the RCPI Restated Certificate of Incorporation, as amended and (ii) any
and all Warrants may be converted to SARs at the option of the Holder
thereof exercised from time to time, provided that to the extent the
aggregate 14% Debentures issued in connection with SARs issued upon any
such conversions to SARs and conversions to SARs of rights issued
pursuant to paragraph 8 of this letter agreement exceed the principal
amount of $6,000,000, such excess 14% Debentures will be prepayable by
the Company at any time at par.
3) Proceeds of the Rights Offering would be applied to redeem, at the
redemption price (with the prepayment premium) in effect at the time of
repayment, the Floating Rate Notes ("Floating Rate Notes") outstanding
under the Loan Agreement, dated as of December 18, 1994, among RCPI, the
Lenders parties thereto and Goldman Sachs Mortgage Company, as Agent, as
amended and supplemented, to provide RCPI with working capital and to
reimburse
B-1
<PAGE>
Goldman, Sachs & Co. November 7, 1995
Goldman, Whitehall and their affiliates the $750,000 of expenses
incurred in connection with the enforcement of their rights (including
the proposed securitization of the Floating Rate Notes).
4) Any 14% Debentures ("14% Debentures") issued pursuant to the Debenture
Purchase Agreement between RCPI and Whitehall, dated as of December 18,
1994, as amended (the "Debenture Purchase Agreement") would remain
outstanding (subject to the modifications in the terms thereof described
below).
5) The registration rights provisions contained in section four of the
Warrant Agreement, and section five of the SAR Agreement shall not be
applicable to the registration statement filed in connection with the
Rights Offering.
6) The provisions contained in section six of the Warrant Agreement shall
continue to be applicable so that immediately following the closing, the
holders of the Warrants and SARs hold, on account only of their holdings
of Warrants and SARs, a 19.9% fully diluted equity ownership position in
RCPI (or such lower percentage as may exist as a result of any exercises
of Warrants or SARs prior to the closing of the Rights Offering).
Thereafter, section 6 of the Warrant Agreement will be amended to
provide that (i) the "fair market value of Common Stock" shall be based
on a 30-day, rather than a 90-day, trailing average, (ii) in the event
of issuances of Common Stock for cash or property at a price less than
the "fair market value of Common Stock" the consent of the holders of
the Warrants will not be required, and (iii) in the future, the Warrants
and SARs will not receive "anti-dilution protection" with respect to
issuances of Common Stock for cash or property at a price at least equal
to the then "fair market value of Common Stock".
7) In the event RCPI decides to engage an underwriter with respect to the
Rights Offering, Goldman will have the opportunity (to be exercised
within a reasonable period of time) to underwrite and lead manage the
Rights Offering on customary terms (I.E., at a 3% fee for the
underwriting commitment and an additional 3% fee for any Rights taken up
pursuant thereto). PaineWebber will have the opportunity (to be
exercised within a reasonable period of time) to co-underwrite and
co-manage such percentage as PaineWebber shall determine (within such
reasonable period of time) up to 50% of the Rights Offering on the same
pro rata terms.
8) In connection with the Rights Offering, Whitehall will be granted rights
to purchase that number of shares of Common Stock as shall equal
42,000,000 divided by the Rights Offering Price plus $1. The exercise
price of such rights shall equal the Rights Offering Price plus $1 per
share of Common Stock until the second anniversary of the closing of the
Rights Offering and the Rights Offering Price plus $1.50 per share of
Common Stock for the period beginning on the second anniversary of such
closing and ending on the third anniversary of such closing. Any such
rights to purchase Common Stock (i) shall be issued pursuant to an
agreement containing terms identical to those contained in the Warrant
Agreement, as amended pursuant to this letter agreement, except that
such agreement shall not contain any of the rights contained in Sections
11.2, 11.3 and 11.4 of the Warrant Agreement, and (ii) upon any
conversion to SARs, shall not be entitled to the rights contained in
Article 3 and Section 10.1 of the SAR Agreement. Any issuance of Common
Stock pursuant to such rights to purchase Common Stock shall be deemed
to be issued at the "fair market value of Common Stock" under the
Warrant Agreement. In addition, any such additional rights to purchase
Common Stock that are not exercised by the third anniversary of such
closing shall expire.
B-2
<PAGE>
Goldman, Sachs & Co. November 7, 1995
9) The following would occur simultaneously with closing of, and only upon
the full subscription under, the Rights Offering:
(a) The subordination of the 14% Debentures upon the terms provided in
the Intercreditor Agreement attached hereto as Exhibit A to up to
$375 million principal amount of existing or subsequently issued
senior debt of RCPI which may be secured pursuant to the Collateral
Trust Agreement. If the Company's Board of Directors (as
reconstituted pursuant to (f) below) determines that the Company's
Zero Coupon Convertible Debentures will not remain outstanding, the
14% Debentures may be subordinated to up to a total $700,000,000
principal amount of senior RCPI debt which may be secured pursuant
to the Collateral Trust Agreement; in such event the "pay-in-kind"
or accrual feature of the Debentures (as set forth in Section 2.03
(b) of the Debenture Purchase Agreement) will be deleted.
Following the closing, RCPI may effect, by action of its Board of
Directors reconstituted in accordance with paragraph 9(f) of this
letter agreement, a credit lease financing with a lease from, or
guaranteed by, General Electric Company that would involve the
release from the Collateral Trust Agreement of property subject to
such lease and the elimination of the subordination of the 14%
Debentures to any other debt of RCPI. In connection with any such
credit lease financing, Goldman shall have the opportunity (to be
exercised within a reasonable period of time) to lead-manage the
financing and PaineWebber shall have the opportunity (to be
exercised within a reasonable period of time) to co-manage 25% of
the financing (and receive 25% of the fees in connection
therewith), in each case on customary terms.
(b) The amendment of the Debenture Purchase Agreement in accordance
with Exhibit B hereto.
(c) The amendment of the Warrant Agreement and SAR Agreement
corresponding with amendments to the Debenture Purchase Agreement
set forth in (b) above.
(d) The Letter Agreement, dated December 18, 1994, by and among RCPI,
Whitehall and Goldman shall be amended to provide that the 62.5%
special supermajority voting requirement for certain stockholder
action be reduced upon conversions or exercises of SARs or Warrants
from time to time to a percentage determined in accordance with the
following formula:
C + W + S
0.5006 X ____________
C
where:
C = Aggregate number of shares of common stock then outstanding
W = Aggregate number of Warrants then outstanding
S = Aggregate number of SARs then outstanding.
(e) The appointment by RCPI of Tishman Speyer Properties, L.P. as the
exclusive Managing Agent for the Rockefeller Center Properties for
a three-year term, subject to renewal at the option of the Company
for two successive one-year terms, and for a fee of 1.5% of gross
revenues plus a one-half standard commission override. In addition,
Tishman Speyer Properties, L.P. will provide cleaning and other
property related services on customary terms as approved by the
RCPI Board.
B-3
<PAGE>
Goldman, Sachs & Co. November 7, 1995
(f) The appointment to the RCPI Board of Directors of Jerry Speyer and
of an independent director selected by Whitehall from among a list
of three new potential directors (who have stature in the real
estate industry and are not affiliated with direct competitors of
Goldman in the principal investing business or in real estate
investment banking) nominated by the existing Board, the filling by
Goldman of its existing seat on the Board, and the continuation on
the Board of two of the current directors. The reconstituted Board
will elect a new Chairman.
(g) Any and all conforming changes necessary to effect the foregoing.
Please indicate the agreement of Goldman and Whitehall to the foregoing by
signing and returning to me the enclosed copy of this letter agreement.
Sincerely,
/s/ Stevan A. Sandberg
________________________
Stevan A. Sandberg
Executive Vice President
Agreed:
Goldman, Sachs & Co.
By /s/ Goldman, Sachs & Co.
_________________________
Whitehall Street Real
Estate Limited Partnership V
By Whitehall Advisors L.P. V
General Partner
By Whitehall Advisors, Inc. V
General Partner
By /s/ Daniel M. Neidich
_____________________
B-4
<PAGE>
ANNEX C
OPINION OF PAINEWEBBER INCORPORATED
February , 1996
Board of Directors
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
New York, NY 10020
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, par value $0.01 per share ("Common
Stock"), of Rockefeller Center Properties, Inc. (the "Company"), other than
shares of Common Stock held by the Investors (defined below) or any of their
affiliates, of the consideration to be received by such holders in connection
with the proposed merger (the "Merger") of RCPI Holdings Inc. ("Holdings") with
and into the Company, pursuant to the Agreement and Plan of Merger dated as of
November 7, 1995 (as amended on February , 1996 and as it may be further
amended from time to time, the "Merger Agreement"), among the Company, Whitehall
Street Real Estate Limited Partnership V ("Whitehall"), Rockprop, L.L.C.
("Rockprop"), David Rockefeller ("Rockefeller"), Exor Group S.A. ("Exor"),
Troutlet Investments Corporation ("Troutlet"), Holdings and RCPI Merger Inc.
(Whitehall, Rockprop, Rockefeller, Exor and Troutlet are referred to
collectively as the "Investors"). In the Merger, each issued and outstanding
share of Common Stock (subject to certain exceptions) will be converted into the
right to receive $8.00 per share in cash. The terms and conditions of the Merger
are more fully outlined in the Merger Agreement.
In connection with our opinion, we have reviewed the Merger Agreement and a
draft of the Company's Proxy Statement to be delivered by the Company to its
stockholders in connection with the Merger as proposed to be filed with the
Securities and Exchange Commission. We have also reviewed certain financial and
other information that was publicly available or furnished to us by or on behalf
of the Company, including certain internal analyses, financial forecasts,
reports and other information prepared by the Company's management and/or its
representatives. We have held discussions with senior management of the Company
concerning the Company's historical and current operations, financial condition
and prospects. In addition, we have: (i) reviewed the price and trading history
of the Company's shares of common stock and compared such price and trading
history with that of publicly traded companies we deemed relevant; (ii) compared
the financial position and operating results of the Company with that of certain
publicly traded companies we deemed relevant; (iii) compared certain financial
terms of the Merger to certain financial terms of selected other transactions we
deemed relevant; and (iv) conducted such other financial studies, analyses and
investigations and reviewed such other factors as we deemed appropriate for
purposes of this opinion.
In rendering this opinion, we have relied on the accuracy and completeness
of all financial and other information reviewed by us that was publicly
available or furnished or otherwise communicated to us by or on behalf of the
Company, without assuming any responsibility to independently verify such
information. With respect to the financial forecasts examined by us, we have
assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and good faith judgments of the Company's
management as to the future performance of the Company and the real property
assets constituting the collateral pledged to the Company (the "Property"). We
have not made an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company. We have been furnished
with an appraisal of the Property, dated December 31, 1994, prepared by Douglas
Elliman Appraisal and Consulting Division, upon which we have relied with your
consent. We have assumed, with your consent, that all material liabilities
(contingent or otherwise,
C-1
<PAGE>
known or unknown) are as set forth on the consolidated financial statements of
the Company. In addition, you have advised us that in the absence of the Merger
or an alternative comparable transaction, the Company would not, in the near
term, be able to meet its debt service obligations and would not be in
compliance with certain of its loan covenants, which would likely lead to the
commencement by the Company of a case under Chapter 11 of the Federal Bankruptcy
Code. We have also assumed, with your consent, that certain alternative
transactions proposed to the Company are not feasible due to existing
contractual obligations of the Company.
This opinion does not address any possible rights offering by the Company in
the event the stockholders do not approve the Merger and does not address the
relative merits of the Merger and any other transactions or business strategies
discussed by the Board of Directors as alternatives to the Merger or the
underlying business decision of the Board of Directors as to whether to accept
or reject the Merger. Our opinion is addressed to the Board of Directors of the
Company and does not constitute a recommendation to any stockholder of the
Company as to how such stockholder should vote with respect to the Merger. Our
opinion is based upon economic, monetary and market conditions existing on the
date hereof.
This opinion has been prepared for the use of the Board of Directors of the
Company and shall not be reproduced, summarized, described or referred to, or
given to any other person or otherwise made public, without the prior written
consent of PaineWebber Incorporated; provided, however, that this letter may be
reproduced in full in the Proxy Statement to be delivered by the Company to its
stockholders in connection with the Merger.
As you are aware, PaineWebber Incorporated has worked closely with the
Company as financial advisor for a considerable period of time, and is currently
acting as financial advisor to the Company and will receive a fee for rendering
this opinion and will receive a fee upon consummation of the Merger. We may
provide financial advisory services to, and act as an underwriter or placement
agent for, the Company in the future.
In the ordinary course of our business, we may trade the equity and debt
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
On the basis of and subject to the foregoing, it is our opinion that, as of
the date hereof, the consideration to be received by the holders of Common Stock
(other than the Investors or any of their respective affiliates) in connection
with the Merger is fair, from a financial point of view, to such holders.
Very truly yours,
PAINEWEBBER INCORPORATED
By: _____________________________
C-2
<PAGE>
ANNEX D
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
SECTION262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of his shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word "stockholder"
means a holder of record of stock in a stock corporation and also a member of
record of a nonstock corporation; the words "stock" and "share" mean and include
what is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 stockholders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require for
its approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) or (g) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
stockholders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
D-1
<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provide. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation
who has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it appears
on the records of the corporation. Any stockholder entitled to appraisal
rights may, within 20 days after the date of mailing of the notice, demand
in writing from the surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after
D-2
<PAGE>
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing of such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon the
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
D-3
<PAGE>
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 79, L.
'95, effective 7-l-95.)
D-4
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF RCPI
Set forth below is the name, business address and five-year employment
history of each of the directors and executive officers of RCPI. Each person
listed below is a citizen of the United States. The business address of each of
the individuals listed below is care of Rockefeller Center Properties, Inc.,
1270 Avenue of the Americas, New York, New York, 10020.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------- -----------------------------------------------------------------------------
<S> <C>
Peter D. Linneman (a).............. Peter D. Linneman has been Chairman of the Board of RCPI since December 29,
1994 and a director of RCPI since April 26, 1993. Dr. Linneman has been
associated with The Wharton School of the University of Pennsylvania since
1979, where he is currently the Albert Sussman Professor of Real Estate,
Finance and Public Policy. Dr. Linneman also serves as the Director of The
Wharton Real Estate Center and Chariman of the Real Estate Unit. Dr. Linneman
is a Director of Gables Residential Property Trust, Kranzco Realty Trust and
Universal Health Realty Income Trust.
Benjamin D. Holloway (b)(c)........ Benjamin D. Holloway has been a director of RCPI since the incorporation of
RCPI on July 17, 1985. Mr. Holloway is currently a financial consultant. From
September 1988 to March 1990, he was Vice Chairman of The Equitable Life
Assurance Society of the United States ("The Equitable"). From June 1987 to
1988, he was President and Chief Executive Officer of Equitable Investment
Corporation, the holding company for the investment subsidiaries of The
Equitable. From 1984 to 1987, he served as Chairman and Chief Executive
Officer of Equitable Real Estate Group, Inc. He is also a Director of
Alliance Capital Management Corporation.
William F. Murdoch (a)............. William F. Murdoch, Jr. has been a director of RCPI since February 17, 1994.
Mr. Murdoch has been Principal of Murdoch and Associates since 1990. Mr.
Murdoch was previously President and Chief Executive Officer of HRE
Properties, a real estate investment trust, from 1974 to 1989, and Trustee
from 1974 to 1994.
Peter G. Peterson (d)(e)........... Peter G. Peterson has been a director of RCPI since the incorporation of RCPI
on July 17, 1985. Mr. Peterson has been Chairman of The Blackstone Group, a
private investment banking firm, since its founding in 1985. Mr. Peterson is
a director of Sony Corporation and Transtar, Inc.
Richard M. Scarlata................ Richard M. Scarlata has been President and Chief Executive Officer of RCPI
since October 1, 1994. He was previously Senior Vice President-Finance and
Administration of RCPI from June 1992 through September 1994 and Treasurer
from June 1993 to May 1994, and was a Vice President of RCPI from March 1990
through June 1992 and Treasurer from March 1991 through June 1992. Mr.
Scarlata was Director-Financial Services Group of Cushman & Wakefield, Inc.
and Managing Director of Cushman & Wakefield Realty Advisors, Inc. ("C&W
Realty") from 1985 to June 1993.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------- -----------------------------------------------------------------------------
<S> <C>
Stevan A. Sandberg................. Stevan A. Sandberg has been Executive Vice President of RCPI since October
16, 1995. He was previously General Counsel and Secretary of Cushman &
Wakefield, Inc. from September 1987 through October 1995.
Stephanie Leggett Young............ Stephanie Leggett Young has been a Vice President of RCPI since December 6,
1994 and Secretary of RCPI since June 1993. She previously was Assistant Vice
President of RCPI from March 1990 through December 1994. Ms. Young was
associated with C&W Realty from 1985 to June 1993, where she directed
investor relations for RCPI.
Janet P. King...................... Janet P. King has been a Vice President of RCPI since March 16, 1995 and
Treasurer since May 24, 1994. She previously was Director of Finance from
September 1993 through May 1994. From April 1993 to August 1993, she was
Eastern Regional Controller of GFS/Northstar, which has residential and
commercial real estate interests in various states. From January 1989 to
March 1993, she was associated with Trammell Crow Residential Services as
Assistant Controller and Accounting Manager.
</TABLE>
- ------------------------
(a) Member of the Audit Committee
(b) Member of the Compensation Committee
(c) Chairperson of the Audit and Nominating Committees
(d) Member of the Nominating Committee
(e) Chairperson of the Compensation Committee
S-2
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF WH ADVISORS, INC.
The following table sets forth the name of each director and executive
officer of WH Advisors, Inc. Unless otherwise indicated, the business address of
each person listed below is 85 Broad Street, New York, New York 10004 and,
unless otherwise indicated, each natural person listed below is a citizen of the
United States of America. The principal occupation of each person listed below
is the position set forth next to his name at Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION AT GOLDMAN,
NAME AND BUSINESS ADDRESS SACHS & CO.
- -------------------------- ---------------------------
<S> <C>
David T. Hamamoto General Partner
Daniel M. Neidich General Partner
Michael D. Fascitelli General Partner
Ralph F. Rosenberg Vice President
David M. Weil Vice President
Todd A. Williams Vice President
G. Douglass Gunn Vice President
Douglas A. Kessler Vice President
Angie Madison Vice President
Kevin D. Naughton Vice President
Kim Bonfield Vice President
Paul Vogel Vice President
Edward M. Siskind Vice President
Kraig A. Danielson Associate
Richard E. Georgi III Associate
</TABLE>
S-3
<PAGE>
SCHEDULE III
GENERAL PARTNERS OF GS GROUP
The following table sets forth the name of each of the general partners of
GS Group and Goldman Sachs who is a natural person. Each person listed below is
a general partner of both GS Group and Goldman Sachs. Unless otherwise
indicated, the business address of each person listed below is 85 Broad Street,
New York, New York 10004, and, unless otherwise indicated, each natural person
listed below is a citizen of the United States of America. The principal
occupation of each person listed below is a general partner of Goldman Sachs.
The persons listed below who have an asterisk marked next to their names are
members of the Management Committee of GS Group.
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
<S> <C>
Roy J. Zuckerberg*
David M. Silfen*
Jon S. Corzine*
Eugene V. Fife* 133 Fleet Street
London EC4A 2BB, England
Richard M. Hayden 133 Fleet Street
London EC4A 2BB, England
Robert J. Hurst*
Howard C. Katz
Peter K. Barker 333 South Grand Avenue
Los Angeles, CA 90071
Eric S. Dobkin
Willard J. Overlock, Jr.*
Henry M. Paulson, Jr.*
Jonathan L. Cohen
Fredric B. Garonzik
Kevin W. Kennedy
William C. Landreth 4900 Sears Tower
Chicago, IL 60609
Daniel M. Neidich
Edward Spiegel
Fischer Black
Robert F. Cummings, Jr.
Angelo De Caro
Steven G. Einhorn
David B. Ford
David M. Leuschen
Michael R. Lynch
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Michael D. McCarthy
<S> <C>
Donald C. Opatrny, Jr.
Thomas E. Tuft
Robert J. Katz*
Michael P. Mortara
Lloyd C. Blankfein
John P. Curtin, Jr. 150 King St. West
Suite 1201
Toronto, Ontario M5H 1J9
Canada
Gavyn Davies 133 Fleet Street
United Kingdom London EC4A 2BB, England
Dexter D. Earle
J. Christopher Flowers
Gary Gensler
Charles T. Harris III
Thomas J. Healey
Stephen Hendel
Robert E. Higgins
Ernest S. Liu
Eff W. Martin 555 California Street
San Francisco, CA 94104
Charles S. Mayer, Jr.
Michael J. O'Brien 133 Fleet Street
United Kingdom London EC4A 2BB, England
Mark Schwartz
Stephen M. Semlitz
Robert K. Steel 133 Fleet Street
London EC4A 2BB, England
John A. Thain*
John L. Thornton 133 Fleet Street
London EC4A 2BB, England
Bracebridge H. Young, Jr. 133 Fleet Street
London EC4A 2BB, England
Joseph R. Zimmel
Barry L. Zubrow
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Gary L. Zwerling
<S> <C>
Jonathan R. Aisbitt 133 Fleet Street
United Kingdom London EC4A 2BB, England
Andrew M. Alper
William J. Buckley
Frank L. Coulson, Jr.
Connie Kadrovach Duckworth 4900 Sears Tower
Chicago, IL 60606
Richard A. Friedman
Alan R. Gillespie 133 Fleet Street
United Kingdom London EC4A 2BB, England
Joseph H. Gleberman
Jacob D. Goldfield
Steven M. Heller
Ann F. Kaplan
Robert S. Kaplan
Peter D. Kiernan III
T. Willem Mesdag 133 Fleet Street
London EC4A 2BB, England
Gaetano J. Muzio
Robin Illgen Neustein
Timothy J. O'Neill
Scott M. Pinkus
John J. Powers
Stephen D. Quinn
Arthur J. Reimers 133 Fleet Street
London EC4A 2BB, England
James P. Riley, Jr.
Richard A. Sapp 133 Fleet Street
London EC4A 2BB, England
Donald F. Textor
Thomas B. Walker III
Patrick J. Ward 133 Fleet Street
London EC4A 2BB, England
Jeffrey M. Weingarten 140 Fleet Street
London EC4A 2BJ, England
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Jon Winkelried
<S> <C>
Richard Witten
Gregory K. Palm 133 Fleet Street
London EC4A 2BB, England
Carlos A. Cordeiro 133 Fleet Street
London EC4A 2BB, England
John O. Downing 1 New York Plaza
New York, NY 10004
W. Mark Evans 3 Garden Road Central
Canada Hong Kong
Michael D. Fascitelli
Sylvain M. Hefes 2, rue de Thann
France 75017 Paris, France
Reuben Jeffery III 133 Fleet Street
London EC4A 2BB, England
Lawrence H. Linden
Jun Makihara 12-32 Akasaka 1-chome
Japan Minato-ku, Tokyo 107,
Japan
Masanori Mochida 12-32 Akasaka 1-chome
Japan Minato-ku, Tokyo 107,
Japan
Robert B. Morris III 133 Fleet Street
London EC4A 2BB, England
Philip D. Murphy MesseTurm, D-6000
Frankfurt am Main 1, Germany
Suzanne M. Nora Johnson 333 South Grand Avenue
Los Angeles, CA 90071
Terence M. O'Toole
Carl G.E. Palmstierna 133 Fleet Street
Sweden London EC4A 2BB, England
Michael G. Rantz
J. David Rogers
Joseph Sassoon 133 Fleet Street
Israel London EC4A 2BB, England
Peter Savitz 12-32 Akasaka 1-chome
Minato-ku, Tokyo 107,
Japan
Charles B. Seelig Jr.
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Ralph F. Severson 555 California Street
San Francisco, CA 94104
<S> <C>
Gene T. Sykes 333 South Grand Avenue
Los Angeles, CA 90071
Gary A. Syman 12-32, Akasaka 1-chome
Minato-ku, Tokyo 107,
Japan
Leslie C. Tortora
John L. Townsend
Lee G. Vance 133 Fleet Street
London EC4A 2BB, England
David A. Viniar
John S. Weinberg
Peter A. Weinberg
Laurence M. Weiss
George W. Wellde Jr. 12-32, Akasaka 1-chome
Minato-ku, Tokyo 107,
Japan
Jaime E. Yordan
Sharmin Mossavar-Rahmani
United Kingdom
Hideo Ishihara 12-32, Akasaka 1-chome
Japan Minato-ku, Tokyo 107,
Japan
Paul M. Achleitner MesseTurm, D-6000
Frankfurt am Main 1, Germany
Armen A. Avanessians
Joel S. Beckman
David W. Blood 133 Fleet Street
London EC4A 2BB, England
Zachariah Cobrinik 133 Fleet Street
London EC4A 2BB, England
Gary D. Cohn 133 Fleet Street
London EC4A 2BB, England
Christopher A. Cole
Henry Cornell 3 Garden Road Central
Hong Kong
Robert V. Delaney
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Joseph Della Rosa
<S> <C>
J. Michael Evans 133 Fleet Street
London EC4A 2BB, England
Lawton W. Fitt
Joseph D. Gatto
Peter C. Gerhard
Nomi P. Ghez
David T. Hamamoto
Walter H. Haydock Munsterhof 4
8022 Zurich, Switzerland
David L. Henle
Francis J. Ingrassia
Scott B. Kapnick 133 Fleet Street
London EC4A 2BB, England
Kevin M. Kelly
John C. Kleinert
Jonathan L. Kolatch
Peter S. Kraus
Robert Litterman
Jonathan M. Lopatin
Thomas J. Macirowski
Peter G.C. Mallinson 3 Garden Road Central
Hong Kong
Oki Matsumoto 12-32 Akasaka 1-chome
Minato-ku, Tokyo 107,
Japan
E. Scott Mead 133 Fleet Street
London EC4A 2BB, England
Eric M. Mindich
Steven T. Mnuchin
Thomas K. Montag
Edward A. Mule
Kipp M. Nelson 133 Fleet Street
London EC4A 2BB, England
Christopher K. Norton
Robert J. O'Shea
</TABLE>
S-9
<PAGE>
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP BUSINESS ADDRESS
- ----------------------------------- ------------------------------------------
Wiet H. Pot 133 Fleet Street
London EC4A 2BB, England
<S> <C>
Jack L. Salzman
Eric S. Schwartz
Michael F. Schwerin
Richard S. Sharp 133 Fleet Street
London EC4A 2BB, England
Richard G. Sherlund
Michael S. Sherwood 133 Fleet Street
London EC4A 2BB, England
Cody J. Smith
Daniel W. Stanton
Esta E. Stecher
Fredric E. Steck
Byron D. Trott 4900 Sears Tower
Chicago, IL 60606
Barry S. Volpert
Peter S. Wheeler 3 Garden Road Central
Hong Kong
Anthony G. Williams 133 Fleet Street
London EC4A 2BB, England
Gary W. Williams
Tracy R. Wolstencroft 100 Crescent Court, Suite 1000
Dallas, Texas 75201
Danny O. Yee 3 Garden Road Central
Hong Kong
Michael J. Zamkow
Mark A. Zurack
</TABLE>
S-10
<PAGE>
SCHEDULE IV
DIRECTORS AND EXECUTIVE OFFICERS OF EACH CORPORATE GENERAL PARTNER OF GS GROUP
The name, business address, present principal occupation or employment and
citizenship of each controlling person, if any, director and executive officer
of each general partner of GS Group or Goldman Sachs that is a corporation are
set forth below.
I. NOBUYOSHI JOHN EHARA INC.
Nobuyoshi John Ehara Inc. is controlled by Nobuyoshi John Ehara, its
President and one of its directors. The business address of each person listed
below other than Nobuyoshi John Ehara is 85 Broad Street, New York, New York
10004, and each such person is a citizen of the United States of America. The
business address of Nobuyoshi John Ehara, a citizen of Japan, is the Ark Mori
Building, 12-32, Akasaka 1-chome, Minato-ku, Tokyo 107, Japan.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS POSITION OCCUPATION
- --------------------------- --------------------------------- --------------------------
<S> <C> <C>
Robert J. Katz Chairman of the Board General Partner of
Goldman, Sachs & Co.
Joel S. Beckman Vice Chairman of the Board and General Partner of
Treasurer Goldman, Sachs & Co.
Nobuyoshi John Ehara President and Director General Partner of
Goldman, Sachs & Co.
James B. McHugh Secretary Vice President of Goldman,
Sachs & Co.
</TABLE>
II. MASANORI MOCHIDA INC.
Masanori Mochida Inc. is controlled by Masanori Mochida, its President and
one of its directors. The business address of each person listed below other
than Masanori Mochida is 85 Broad Street, New York, New York 10004, and each
such person is a citizen of the United States of America. The business address
of Masanori Mochida, a citizen of Japan, is 12-32, Akasaka 1-chome, Minato-ku,
Tokyo 107, Japan.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS POSITION OCCUPATION
- ------------------------- --------------------------------- --------------------------
<S> <C> <C>
Robert J. Katz Chairman of the Board General Partner of
Goldman, Sachs & Co.
Joel S. Beckman Vice Chairman of the Board and General Partner of
Treasurer Goldman, Sachs & Co.
Masinori Mochida President and Director General Partner of
Goldman, Sachs & Co.
James B. McHugh Secretary Vice President of Goldman,
Sachs & Co.
</TABLE>
S-11
<PAGE>
III. JUN MAKIHARA INC.
Jun Makihara Inc. is controlled by Jun Makihara, its President and one of
its directors. The business address of each person listed below other than Jun
Makihara is 85 Broad Street, New York, New York 10004, and each such person is a
citizen of the United States of America. The business address of Jun Makihara, a
citizen of Japan, is 333 South Grand Avenue, Los Angeles, California 90071.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS POSITION OCCUPATION
- ------------------------- --------------------------------- --------------------------
<S> <C> <C>
Robert J. Katz Chairman of the Board General Partner of
Goldman, Sachs & Co.
Joel S. Beckman Vice Chairman of the Board and General Partner of
Treasurer Goldman, Sachs & Co.
Jun Makihara President and Director General Partner of
Goldman, Sachs & Co.
James B. McHugh Secretary Vice President of Goldman,
Sachs & Co.
</TABLE>
IV. HIDEO ISHIHARA INC.
Hideo Ishihara Inc. is controlled by Hideo Ishihara, its President and one
of its directors. The business address of each person listed below other than
Hideo Ishihara is 85 Broad Street, New York, New York 10004, and each such
person is a citizen of the United States of America. The business address of
Hideo Ishihara, a citizen of Japan, is the Ark Mori Building, 12-32, Akasaka
1-chome, Minato-ku, Tokyo 107, Japan.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS POSITION OCCUPATION
- ------------------------- --------------------------------- --------------------------
<S> <C> <C>
Robert J. Katz Chairman of the Board General Partner of
Goldman, Sachs & Co.
Joel S. Beckman Vice Chairman of the Board and General Partner of
Treasurer Goldman, Sachs & Co.
Hideo Ishihara President and Director General Partner of
Goldman, Sachs & Co.
James B. McHugh Secretary Vice President of Goldman,
Sachs & Co.
</TABLE>
S-12
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
1270 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
Proxy for Special Meeting of Stockholders
March 25, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephanie Leggett Young and Janet P. King,
jointly and severally, proxies for the undersigned with full power of
substitution, and hereby authorizes them to represent and to vote, in accordance
with the instructions on the reverse side of this card, all shares of the Common
Stock of Rockefeller Center Properties, Inc. the undersigned is entitled to vote
at the Special Meeting of Stockholders to be held on March 25, 1996 in the
Auditorium at The Equitable Center, 787 Seventh Avenue, New York City,
commencing at 9:30 a.m., Eastern Standard Time, or at any postponement or
adjournment thereof. The proxies may vote in their discretion upon such other
business as may properly be brought before the meeting or any postponement or
adjournment thereof.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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FOLD AND DETACH HERE
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ITEM 1.
PLEASE MARK
/ X / YOUR VOTES
AS THIS
Item 1--Approve and adopt the Merger FOR AGAINST ABSTAIN
Agreement as described in RCPI's Proxy / / / / / /
Statement. The Board of Directors recommends
a vote FOR the Merger Agreement.
Item 2--In their discretion upon such other
business as may be properly brought before
the Special Meeting or any postponement or
adjournment thereof.
If you plan to attend the Special / /
Meeting, please check this box.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have / /
written comments/address change
on the reverse side.
Receipt is hereby acknowledged of Rockefeller
Center Properties, Inc. Notice of Special
Meeting and Proxy Statement
Signature(s) Date
------------------------------------------------ ------------
Please mark, date and sign as your name appears opposite and return it in the
enclosed envelope. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signer is a corporation, please sign
full corporate name.
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FOLD AND DETACH HERE
[LOGO]
SPECIAL MEETING OF STOCKHOLDERS
THIS IS YOUR ADMISSION CARD FOR THE FORTHCOMING
SPECIAL MEETING OF STOCKHOLDERS.
IT WILL SAVE YOU UNNECESSARY DELAY IF YOU PRESENT
THIS CARD WHEN YOU ARRIVE AT THE MEETING.
DATE: MARCH 25, 1996
TIME: 9:30 A.M.
PLACE: THE EQUITABLE CENTER
AUDITORIUM
787 SEVENTH AVENUE
NEW YORK, NEW YORK
