<PAGE>
As filed with the Securities and Exchange Commission on February 14, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
________________________
THE ROUSE COMPANY
(Exact name of registrant as specified in its charter)
MARYLAND 52-0735512
(State of Incorporation) (I.R.S. Employer
Identification No.)
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
_________________
Richard G. McCauley
Senior Vice-President,
General Counsel and Secretary
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
(410) 992-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Larry P. Scriggins, Esquire Miroslav M. Fajt, Esquire
Piper & Marbury Haythe & Curley
36 South Charles Street 237 Park Avenue
Baltimore, Maryland 21201 New York, New York 10017
(410) 539-2530 (212) 880-6000
---------------------------------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
---------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
maximum Proposed
Amount offering maximum Amount of
Title of Securities to be price per aggregate registration
to be Registered registered unit/(1)/ offering price fee
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series A Convertible
Preferred Stock, par
value $0.01 per share 480,168 $49.25 $23,648,274 $8,154.58
- ----------------------------------------------------------------------------
Common Stock, par
value $0.01 per
share/(2)/ 1,129,788 -- -- --
- ----------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(i) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee based on the sale prices
of the Series A Convertible Preferred Stock on February 10, 1995, as
reported in The Wall Street Journal (Eastern Edition) on February 13, 1995.
(2) These shares are issuable on conversion of the Series A Convertible
Preferred Stock being registered. The number of shares is subject to
adjustment under applicable antidilution provisions.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY __, 1995
PROSPECTUS
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480,168 Shares
THE ROUSE COMPANY
Series A Convertible Preferred Stock
(Liquidation Preference $50.00 Per Share)
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The shares of Series A Convertible Preferred Stock (the "Series A Preferred
Stock") of The Rouse Company (the "Company") covered by this Prospectus are
outstanding shares of Series A Preferred Stock. The shares of Series A
Preferred Stock or shares of Common Stock into which they may be converted are
to be offered and sold from time to time after the date of this Prospectus by
certain stockholders of the Company named herein under "Selling Stockholders."
The shares may be sold through brokers or to dealers in the over-the-
counter market or in negotiated transactions or otherwise, in each case at
prices satisfactory to the Selling Stockholders. Each of the Selling
Stockholders reserves the sole right to accept or reject, in whole or in part,
any proposed purchase of the shares of Series A Preferred Stock. See "Plan of
Distribution."
The brokers or dealers through or to whom the shares of the Company's
Series A Preferred Stock or Common Stock may be sold may be deemed underwriters
of the shares within the meaning of the Securities Act of 1933, in which event
all brokerage commissions or discounts and other compensation received by such
brokers or dealers may be deemed underwriting compensation.
The Company will receive no part of the proceeds from the sale of the
shares. The Selling Stockholders will pay all applicable stock transfer taxes,
transfer fees and brokerage commissions, and related fees and expenses, but the
Company will bear the cost of preparing the Registration Statement and
Prospectus and all filing fees and legal and accounting expenses in connection
with registration under federal and state securities laws. Such expenses are
estimated to be $37,155.
The Series A Preferred Stock is traded in the NASDAQ National Market System
under the symbol "ROUSP." The last sale as reported in The Wall Street Journal
(Eastern Edition) on February 13, 1995 was $18.75.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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The date of this Prospectus is February __, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information statements
and other information filed with the Commission can be inspected and copied at
the Public Reference Room of the Commission, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; and its regional offices located at
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661; and 7 World Trade Center, New York, New York 10048. Copies of
such material can be obtained from the Public Reference Room of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto which the Company has filed with the
Commission under the Securities Act of 1933, as amended, to which reference is
hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents filed with the Commission: its Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and its Quarterly Reports on Form
10-Q for the quarters ended March 31, 1994, June 30, 1994, September 30, 1994,
and its Report by Issuer of Securities Quoted on NASDAQ Interdealer Quotation
System on Form 10-C, filed January 10, 1995.
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby shall be deemed
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. See "Available Information." Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered upon request of any such
person, a copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits to such documents not specifically incorporated
by reference). Written or telephone requests should be directed to David L.
Tripp, Vice-President and Director of Investor Relations, The Rouse Company,
10275 Little Patuxent Parkway, Columbia, Maryland 21044-3456, (410) 992-6000.
BACKGROUND
The shares of Series A Preferred Stock offered by this Prospectus were
purchased by the Selling Stockholders in a private placement that was effective
as of December 31, 1994.
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<PAGE>
In connection with the private placement, the Company agreed to file this
Form S-3 Registration Statement covering all of the shares that were purchased
by the Selling Stockholders, and to act to keep the Registration Statement
continuously effective for a period of three years. Under its agreements with
the Selling Stockholders, the Company has the right to temporarily suspend
effectiveness of the Registration Statement in the event of material corporate
developments and other circumstances. Additional information regarding the
agreements between the Company and the Selling Stockholders is provided below
under "Plan of Distribution."
THE COMPANY
The Company was incorporated as a business corporation under the laws of
the State of Maryland in 1956. The Company's executive offices are located at
10275 Little Patuxent Parkway, Columbia, Maryland 21044-3456, and its telephone
number is (410) 992-6000.
The Company, through its subsidiaries and affiliates, is engaged in (i) the
acquisition, development, ownership and management of income-producing and other
real estate in the United States, including retail centers, office buildings,
mixed-use projects, community retail centers and two hotels, and the management
of one retail center in Canada, and (ii) the development and sale of land in and
around Columbia, Maryland to builders and other developers for residential,
commercial and industrial uses.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares by
the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth the number of shares and percentage of the
Company's Series A Preferred Stock owned beneficially by the Selling
Stockholders as of February 14, 1995 and the number of shares of the Company's
Series A Preferred Stock offered by the Selling Stockholders hereby. Since the
Selling Stockholders may sell all or some of the Series A Preferred Stock
offered hereby, no estimate can be made of the aggregate amount of the Company's
Series A Preferred Stock that will be owned by each Selling Stockholder upon
completion of the offering to which this Prospectus relates. Moreover, the
number of shares of the Company's Series A Preferred Stock held by the Selling
Stockholders may change as a result of sales or purchases by the Selling
Stockholders after the date hereof. Except as otherwise noted, none of the
Selling Stockholders has had a material relationship within the past three years
with the Company and its subsidiaries, other than as a result of the ownership
or placement of the Company's Series A Preferred Stock.
-3-
<PAGE>
<TABLE>
<CAPTION>
Prior to Offering
----------------------- Shares
Percent of Offered
Shares Outstanding Hereby
--------- ------------ -------
<S> <C> <C> <C>
Pier 17 Realty Holding Company, Inc. 456,159 10.1% 456,159
Pearl Realty Holding Company, Inc. 8,003 .2% 8,003
Front Realty Holding Company, Inc. 16,006 .4% 16,006
</TABLE>
Effective as of December 31, 1994, the Company and a limited partnership
comprised of subsidiaries of the Company entered into agreements modifying a
restated permanent loan agreement, dated as of May 16, 1985, governing loans
relating to a project owned by such partnership. In the transaction, a number
of changes in the arrangements were made, including an exchange of a portion of
the indebtedness on the project for a $37.5 million loan, and the exchange of
that loan for the 480,168 shares of Series A Preferred Stock that are offered by
this Prospectus. Except for the relationships with respect to the financing of
such project, the Selling Stockholders are unrelated to the Company or any of
its subsidiaries.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the shares to or through underwriters or
dealers and also may sell the shares directly to other purchasers or through
agents. The dealers also may act as agents. The dealers or agents may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Stockholders or the purchasers of shares for which they may act
as agent. A purchaser of shares also may receive a commission from purchasers
of shares for whom it acts as agent. The purchaser may effect such transactions
by selling such shares to or through other broker-dealers, and such broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the purchaser and/or commissions from purchasers of such shares
for which such broker-dealers may act as agent. The purchaser and any broker-
dealer that participates with the purchaser in sales of such shares may be
deemed to be underwriters, and any commissions received by them and any profit
on the sale of such shares sold by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
Neither the delivery of the Prospectus, or any Prospectus Supplement, nor
any other action taken by the Company, the Selling Stockholders or any purchaser
in connection with the purchase or sale of shares offered hereby shall be deemed
or treated as an admission that any of them is an underwriter within the meaning
of the Securities Act of 1933 in connection with any sales of shares.
When a particular offering of shares is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and type
of shares being offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, any discounts, commissions and
other terms constituting compensation from the Selling Stockholders and any
discounts, commissions or concessions allowed or re-allowed or paid to dealers.
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<PAGE>
The sale of the shares may be effected from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions or in a
combination of such methods of sale at fixed prices (which may be changed from
time to time), at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Any NASD member firm participating in a distribution of the shares will not
receive compensation in excess of fees which are customary and usual for similar
transactions.
The Selling Stockholders have agreed not to sell any of the shares for a
period not exceeding 90 days, if the Company's Chief Executive Officer, Board of
Directors or the Executive Committee or other duly constituted Committee of the
Board of Directors determines that the distribution of the Series A Preferred
Stock will materially adversely interfere with, or be inadvisable in light of a
public offering by the Company (for such time, not to exceed twenty (20)
business days, during the distribution period as the underwriters in good faith
deem advisable) or with a financing, acquisition, corporate reorganization or
other material or potentially material corporate transaction of the Company or
any subsidiary of the Company.
The Company has agreed to file the Registration Statement of which this
Prospectus is a part with the Commission and to use all reasonable efforts to
have it declared effective as soon as practicable after such filing. The
Company has agreed to use all reasonable efforts to keep the Registration
Statement of which this Prospectus is a part continuously effective until three
years after the Registration Statement is declared effective or for such shorter
period as will terminate when all the shares have been sold hereunder.
The Company has agreed with the Selling Stockholders that it will pay the
expenses incident to the offering and sale of the shares to the public, other
than discounts, commissions and fees and disbursements of dealers or agents
(except for fees and disbursements customarily paid by issuers of securities
under similar circumstances relating to compliance with applicable state
securities or "Blue Sky" laws and reasonable attorneys' fees of the Selling
Stockholders (up to $7,500)). In addition, the Selling Stockholders will be
indemnified by the Company against certain civil liabilities, including
liabilities under the Securities Act of 1933.
DESCRIPTION OF SERIES A CONVERTIBLE PREFERRED STOCK
The summary of certain terms and provisions of the Series A Preferred Stock
contained in this Prospectus does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the terms and provisions of the
Company's Charter, as amended and restated (the "Charter"), Bylaws, as amended,
and the Articles Supplementary setting forth the particular terms of the Series
A Preferred Stock (the "Articles Supplementary"), copies of which are filed as
exhibits to the Registration Statement.
The Charter authorizes the issuance of 50,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). The Preferred Stock
may be issued from time to time in one or more series, without stockholder
approval, with such voting powers (full or limited),
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<PAGE>
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations, or restrictions thereof as shall be
established by the Board of Directors. Thus, without stockholder approval, the
Company could authorize the issuance of Preferred Stock with voting, conversion
and other rights that could dilute the voting power and other rights of the
holders of Common Stock.
General
The Board of Directors has classified and authorized the issuance of an
aggregate of 4,505,168 shares of the Series A Preferred Stock as part of the
50,000,000 shares of the Company's authorized Preferred Stock.
The Series A Preferred Stock is validly issued, fully paid and
nonassessable. The holders of the Series A Preferred Stock have no preemptive
rights with respect to any shares of capital stock of the Company or any other
securities of the Company convertible into or carrying rights or options to
purchase any such shares. The Series A Preferred Stock is not subject to any
sinking fund or other obligation of the Company to redeem or retire the Series A
Preferred Stock. Unless converted or redeemed by the Company, the Series A
Preferred Stock has a perpetual term, with no maturity. The Series A Preferred
Stock is quoted on the NASDAQ National Market System under the symbol "ROUSP."
The shares of Common Stock issuable upon conversion or redemption of the Series
A Preferred Stock are quoted on the NASDAQ National Market System.
Ranking
The Series A Preferred Stock ranks senior to the Common Stock with respect
to payment of dividends and amounts upon liquidation, dissolution or winding up.
While any shares of Series A Preferred Stock are outstanding, the Company
may not authorize, create or increase the authorized amount of any class or
series of stock that ranks senior to the Series A Preferred Stock with respect
to the payment of dividends or amounts upon liquidation, dissolution or winding
up without the consent of the holders of two-thirds of the outstanding shares of
Series A Preferred Stock and all other shares of Voting Preferred Shares
(defined below), voting as a single class. However, the Company may create
additional classes of stock, increase the authorized number of shares of
Preferred Stock or issue series of Preferred Stock ranking on a parity with the
Series A Preferred Stock with respect, in each case, to the payment of dividends
and amounts upon liquidation, dissolution and winding up (a "Parity Stock")
without the consent of any holder of Series A Preferred Stock. See "Voting
Rights" below.
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<PAGE>
Dividends
Holders of shares of Series A Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
of the Company legally available for payment, cumulative cash dividends at the
rate per annum of 6.50% per share on the liquidation preference thereof or $3.25
per share of Series A Preferred Stock. Dividends on the Series A Preferred
Stock are payable quarterly on the first calendar day of January, April, July
and October of each year (and, in the case of any accrued but unpaid dividends,
at such additional times and for such interim periods, if any, as determined by
the Board of Directors), at such annual rate. Each such dividend is payable to
holders of record as they appear on the stock records of the Company at the
close of business on such record dates, not exceeding 60 days preceding the
payment dates thereof as shall be fixed by the Board of Directors of the
Company. Dividends have accrued from the date of the original issuance of the
Series A Preferred Stock. Dividends are cumulative from the most recent
dividend payment date to which dividends have been paid, whether or not in any
dividend period or periods there shall be funds of the Company legally available
for the payment of such dividends. Accumulations of dividends on shares of
Series A Preferred Stock will not bear interest. Dividends payable on the
Series A Preferred Stock for any period greater or less than a full dividend
period will be computed on the basis of a 360-day year consisting of twelve 30-
day months. Dividends payable on the Series A Preferred Stock for each full
dividend period will be computed by dividing the annual dividend rate by four.
Except as provided in the next sentence, no dividend will be declared or
paid on any Parity Stock unless full cumulative dividends have been declared and
paid or are contemporaneously declared and funds sufficient for payment set
aside on the Series A Preferred Stock for all prior dividend periods. If
accrued dividends on the Series A Preferred Stock for all prior dividend periods
have not been paid in full then any dividend declared on the Series A Preferred
Stock for any dividend period and on any Parity Stock will be declared ratably
in proportion to accrued and unpaid dividends on the Series A Preferred Stock
and such Parity Stock.
The Company will not (i) declare, pay or set apart funds for the payment of
any dividend or other distribution with respect to any Junior Stock (as defined
below) or (ii) redeem, purchase or otherwise acquire for consideration any
Junior Stock through a sinking fund or otherwise (other than a redemption or
purchase or other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Company or any subsidiary), unless (A)
all cumulative dividends with respect to the Series A Preferred Stock and any
Parity Stock at the time such dividends are payable have been paid or funds have
been set apart for payment of such dividends and (B) sufficient funds have been
paid or set apart for the payment of the dividend for the current dividend
period with respect to the Series A Preferred Stock and any Parity Stock. The
foregoing limitations do not restrict the Company's ability to take the
foregoing actions with respect to any Parity Stock.
-7-
<PAGE>
As used herein, (i) the term "dividend" does not include dividends payable
solely in shares of Junior Stock on Junior Stock, or in options, warrants or
rights to holders of Junior Stock to subscribe for or purchase any Junior Stock,
and (ii) the term "Junior Stock" means the Common Stock, and any other class of
capital stock of the Company now or hereafter issued and outstanding that ranks
junior as to the payment of dividends or amounts upon liquidation, dissolution
and winding up to the Series A Preferred Stock.
Redemption
Shares of Series A Preferred Stock are not redeemable by the Company prior
to March 1, 1996, and at no time will the Series A Preferred Stock be redeemable
for cash. On and after March 1, 1996, the shares of Series A Preferred Stock
will be redeemable at the option of the Company, in whole or in part, for such
number of shares of Common Stock as equals the liquidation preference of the
Series A Preferred Stock to be redeemed divided by the Conversion Price (as
defined below under "Conversion Rights") as of the opening of business on the
date set for such redemption (equivalent to a conversion rate of 2.3529 shares
of Common Stock for each share of Series A Preferred Stock), subject to
adjustment in certain circumstances. The Company may exercise this option only
if for 20 trading days, within any period of 30 consecutive trading days,
including the last trading day of such period, the closing price of the Common
Stock on NASDAQ exceeds $25.50, subject to adjustment in certain circumstances.
In order to exercise its redemption option, the Company must issue a press
release announcing the redemption prior to the opening of business on the second
trading day after the conditions in the preceding sentences have, from time to
time, been met, but in no event prior to March 1, 1996.
Notice of redemption will be given by mail or by publication (with
subsequent prompt notice by mail) to the holders of the Series A Preferred Stock
not more than four business days after the Company issues the press release.
The redemption date will be a date selected by the Company not less than 30 nor
more than 60 days after the date on which the Company issues the press release
announcing its intention to redeem the Series A Preferred Stock. If fewer than
all of the shares of Series A Preferred Stock are to be redeemed, the shares to
be redeemed shall be selected by lot or pro rata or in some other equitable
manner determined by the Company.
On the redemption date, the Company must pay on each share of Series A
Preferred Stock to be redeemed any accrued and unpaid dividends, in arrears, for
any dividend period ending on or prior to the redemption date. In the case of a
redemption date falling after a dividend payment record date and prior to the
related payment date, the holders of the Series A Preferred Stock at the close
of business on such record date will be entitled to receive the dividend payable
on such shares on the corresponding dividend payment date, notwithstanding the
redemption of such shares following such dividend payment record date. In the
case of any redemption of the Series A Preferred Stock prior to the record date
for the April 1, 1996 dividend payment date, the holders of the Series A
Preferred Stock to be redeemed will be entitled to accrued and unpaid dividends
until March 1, 1996, but not thereafter. Except as provided for in the
preceding
-8-
<PAGE>
sentences, no payment or allowance will be made for accrued dividends on any
shares of Series A Preferred Stock called for redemption or on the shares of
Common Stock issuable upon such redemption.
In the event that full cumulative dividends on the Series A Preferred Stock
and any Parity Stock have not been paid or declared and set apart for payment,
the Series A Preferred Stock may not be redeemed in part and the Company may not
purchase or acquire shares of Series A Preferred Stock otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of shares
of Series A Preferred Stock.
On and after the date fixed for redemption, provided that the Company has
made available at the office of the Registrar and Transfer Agent a sufficient
number of shares of Common Stock and an amount of cash to effect the redemption,
dividends will cease to accrue on the Series A Preferred Stock called for
redemption (except that, in the case of a redemption date after a dividend
payment record date and prior to the related dividend payment date, holders of
Series A Preferred Stock on the dividend payment record date will be entitled on
such dividend payment date to receive the dividend payable on such shares), such
shares shall no longer be deemed to be outstanding and all rights of the holders
of such shares as holders of Series A Preferred Stock shall cease except the
right to receive the shares of Common Stock upon such redemption and any cash
payable upon such redemption, without interest from the date of such redemption.
At the close of business on the redemption date, each holder of Series A
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series A Preferred Stock is
redeemable.
Fractional shares of Common Stock are not to be issued upon redemption of
the Series A Preferred Stock, but, in lieu thereof, the Company will pay a cash
adjustment based on the current market price of the Common Stock on the day
prior to the redemption date.
Liquidation Preference
The holders of shares of Series A Preferred Stock will be entitled to
receive in the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, $50.00 per share of Series A
Preferred Stock plus an amount per share of Series A Preferred Stock equal to
all dividends (whether or not earned or declared) accrued and unpaid thereon to
the date of final distribution to such holders (the "Liquidation Preference"),
and no more.
Until the holders of the Series A Preferred Stock have been paid the
Liquidation Preference in full, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Company. If, upon
any liquidation, dissolution or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of the shares of
Series A Preferred Stock are insufficient to pay in full the Liquidation
Preference and the liquidation preference with respect to any other shares of
Parity Stock, then such assets,
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<PAGE>
or the proceeds thereof, will be distributed among the holders of shares of
Series A Preferred Stock and any such Parity Stock ratably in accordance with
the respective amounts which would be payable on such shares of Series A
Preferred Stock and any such Parity Stock if all amounts payable thereon were
paid in full. Neither a consolidation or merger of the Company with another
corporation, a statutory share exchange by the Company nor a sale or transfer of
all or substantially all of the Company's assets will be considered a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Company.
Voting Rights
Except as indicated below, or except as otherwise from time to time
required by applicable law, the holders of shares of Series A Preferred Stock
have no voting rights.
If and whenever six quarterly dividends (whether or not consecutive)
payable on the Series A Preferred Stock or any other Parity Stock are in
arrears, whether or not earned or declared, the number of directors then
constituting the Board of Directors of the Company will be increased by two and
the holders of shares of Series A Preferred Stock, voting together as a class
with the holders of any other series of Parity Stock (any such other series, the
"Voting Preferred Shares"), will have the right to elect two additional
directors to serve on the Company's Board of Directors at an annual meeting of
stockholders or a properly called special meeting of the holders of the Series A
Preferred Stock and such Voting Preferred Shares and at each subsequent annual
meeting of stockholders until all such dividends and dividends for the current
quarterly period on the Series A Preferred Stock and such other Voting Preferred
Shares have been paid or declared and set aside for payment.
The approval of two-thirds of the outstanding shares of Series A Preferred
Stock and all other series of Voting Preferred Shares, acting as a single class
regardless of series either at a meeting of shareholders or by written consent,
is required in order to amend the Charter and Articles Supplementary to affect
materially and adversely the rights, preferences or voting powers of the holders
of the Series A Preferred Stock or the Voting Preferred Shares or to authorize,
create, or increase the authorized amount of, any class of stock having rights
senior to the Series A Preferred Stock with respect to the payment of dividends
or amounts upon liquidation, dissolution or winding up. However, the Company
may create additional classes of Parity and Junior Stock, increase the
authorized number of shares of Parity and Junior Stock and issue additional
series of Parity and Junior Stock without the consent of any holder of Series A
Preferred Stock.
Except as required by law, the holders of Series A Preferred Stock are not
entitled to vote on any merger or consolidation involving the Company or a sale
of all or substantially all of the assets of the Company. See "Conversion Price
Adjustments" below.
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<PAGE>
Conversion Rights
Shares of Series A Preferred Stock are convertible, in whole or in part, at
any time, at the option of the holders thereof, into shares of Common Stock at a
conversion price of $21.25 per share of Common Stock (equivalent to a conversion
rate of 2.3529 shares of Common Stock for each share of Series A Preferred
Stock), subject to adjustment as described below ("Conversion Price"). The
right to convert shares of Series A Preferred Stock called for redemption will
terminate at the close of business on a redemption date. For information as to
notices of redemption, see "Redemption" above.
Conversion of shares of Series A Preferred Stock, or a specified portion
thereof, may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and a proper assignment of such
certificates to the Company or in blank, to the office or agency to be
maintained by the Company for that purpose. Currently such office is the
principal corporate trust office of The First National Bank of Maryland,
Baltimore, Maryland.
Each conversion will be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
A Preferred Stock shall have been surrendered and notice shall have been
received by the Company as aforesaid (and if applicable, payment of any amount
equal to the dividend payable on such shares shall have been received by the
Company as described below) and the conversion shall be at the Conversion Price
in effect at such time and on such date.
Holders of shares of Series A Preferred Stock at the close of business on a
dividend payment record date are entitled to receive the dividend payable on
such shares on the corresponding dividend payment date notwithstanding the
conversion of such shares following such dividend payment record date and prior
to such dividend payment date. However, shares of Series A Preferred Stock
surrendered for conversion during the period between the close of business on
any dividend payment record date and the opening of business on the
corresponding dividend payment date (except shares converted after the issuance
of a notice of redemption with respect to a redemption date during such period,
which will be entitled to such dividend) must be accompanied by payment of an
amount equal to the dividend payable on such shares on such dividend payment
date. A holder of shares of Series A Preferred Stock on a dividend record date
who (or whose transferee) tenders any such shares for conversion into shares of
Common Stock on such dividend payment date will receive the dividend payable by
the Company on such shares of Series A Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of shares of Series A Preferred Stock for conversion. Except as
provided above, the Company will make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon such conversion.
Fractional shares of Common Stock are not to be issued upon conversion but,
in lieu thereof, the Company will pay a cash adjustment based on the current
market price of the Common Stock on the day prior to the conversion date.
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<PAGE>
Conversion Price Adjustments
The Conversion Price is subject to adjustment upon certain events,
including (i) dividends (and other distributions) payable in Common Stock or any
class of capital stock of the Company, (ii) the issuance to all holders of
Common Stock of certain rights or warrants entitling them to subscribe for or
purchase Common Stock at a price per share less than the fair market value per
share of Common Stock, (iii) subdivisions, combinations and reclassifications of
Common Stock, and (iv) distributions to all holders of Common Stock of evidences
of indebtedness of the Company or assets (including securities, but excluding
those dividends, rights, warrants and distributions referred to above and
dividends and distributions paid in cash out of equity, including revaluation
equity, applicable to Common Stock). In addition to the foregoing adjustments,
the Company will be permitted to make such reductions in the Conversion Price as
it considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
holders of the Common Stock.
In case the Company shall be a party to any transaction (including without
limitation a merger, consolidation, statutory share exchange, tender offer for
all or substantially all of the shares of Common Stock or sale of all or
substantially all of the Company's assets), in each case as a result of which
shares of Common Stock will be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series A Preferred Stock, if convertible after the consummation of the
transaction, will thereafter be convertible into the kind and amount of shares
of stock and other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction by a holder of
that number of shares or fraction thereof of Common Stock into which one share
of Series A Preferred Stock was convertible immediately prior to such
transaction (assuming such holder of Common Stock failed to exercise any rights
of election and received per share the kind and amount received per share by a
plurality of non-electing shares). The Company may not become a party to any
such transaction unless the terms thereof are consistent with the foregoing.
No adjustment of the Conversion Price is required to be made in any case
until cumulative adjustments amount to 1% or more of the Conversion Price. Any
adjustments not so required to be made will be carried forward and taken into
account in subsequent adjustments.
Transfer Agent, Registrar, Dividend Disbursing Agent and Redemption Agent
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the shares of Series A Preferred Stock is The First National Bank of
Maryland, Baltimore, Maryland.
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<PAGE>
DESCRIPTION OF COMMON STOCK
The summary of certain terms and provisions of the Common Stock contained
in this Prospectus does not purport to be complete and is subject to, and
qualified in its entirety by reference to the terms and provisions of the
Company's Charter and By-Laws, as amended, copies of which are filed as exhibits
to the Registration Statement.
The Company has 250 million shares of Common Stock authorized and, as of
February 13, 1995, 47,579,796 shares of Common Stock were issued. All
outstanding shares of Common Stock are fully paid and non-assessable.
The Company has outstanding 500,000 warrants to purchase Common Stock (the
"Warrants"). Each Warrant allows the holder thereof to purchase one share of
Common Stock at an exercise price of $18.00 per share of Common Stock, subject
to adjustment in certain circumstances. The Warrants expire on September 23,
1997.
The Company also has outstanding $130,000,000 aggregate principal amount of
5-3/4% Convertible Subordinated Debentures due 2002. The Convertible
Subordinated Debentures are convertible into Common Stock at a conversion price
equal to $28.625 principal amount of each debenture for each share of Common
Stock (subject to adjustment in certain circumstances).
Dividend Rights
The holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors, after payment of, or provision for, full
cumulative dividends for outstanding Preferred Stock.
Voting Rights
Each share of Common Stock is entitled to one vote on all matters submitted
to a vote of stockholders, including the election of directors. Cumulative
voting for directors is not permitted. Holders of Common Stock and Preferred
Stock, when outstanding and when entitled to vote, vote as a class, except with
respect to matters that relate only to the rights, terms or conditions of the
Preferred Stock, that affect only the holders of the Preferred Stock, or that
relate to the rights of the holders of the Preferred Stock if the Company fails
to fulfill any of its obligations regarding the Preferred Stock.
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<PAGE>
Liquidation Rights
Upon any dissolution, liquidation or winding up of the Company, the holders
of Common Stock are entitled to receive pro rata all of the Company's assets and
funds remaining after payment of, or provision for, creditors and distribution
of, or provision for, preferential amounts and unpaid accumulated dividends to
holders of Preferred Stock, including the Series A Preferred Stock.
Preemptive Rights
Holders of Common Stock have no preemptive right to purchase or subscribe
for any shares of capital stock of the Company.
Special Statutory Requirements for Certain Transactions
Business Combination Statute. The Maryland General Corporation Law
establishes special requirements with respect to "business combinations" between
Maryland corporations and "interested stockholders" unless exemptions are
applicable. Among other things, the law prohibits for a period of five years a
merger or other specified transactions between a company and an interested
stockholder and requires a super-majority vote for such transactions after the
end of such five-year period.
"Interested stockholders" are all persons owning beneficially, directly or
indirectly, 10% or more of the outstanding voting stock of a Maryland
corporation. "Business combinations" include any merger or similar transaction
subject to a statutory vote and additional transactions involving transfers of
assets or securities in specified amounts to interested stockholders or their
affiliates. Unless an exemption is available, transactions of these types may
not be consummated between a Maryland corporation and an interested stockholder
or its affiliates for a period of five years after the date on which the
stockholder first became an interested stockholder and thereafter may not be
consummated unless recommended by the board of directors of the Maryland
corporation and approved by the affirmative vote of at least 80% of the votes
entitled to be cast by all holders of outstanding shares of voting stock and 66-
2/3% of the votes entitled to be cast by all holders of outstanding shares of
voting stock other than the interested stockholder. A business combination with
an interested stockholder which is approved by the board of directors of a
Maryland corporation at any time before an interested stockholder first becomes
an interested stockholder is not subject to the five-year moratorium or special
voting requirements. An amendment to a Maryland corporation charter electing
not to be subject to the foregoing requirements must be approved by the
affirmative vote of at least 80% of the votes entitled to be cast by all holders
of outstanding shares of voting stock and 66-2/3% of the votes entitled to be
cast by all holders of outstanding shares of voting stock who are not interested
stockholders. Any such amendment is not effective until 18 months after the
vote of stockholders and does not apply to any business combination of a
corporation with a stockholder who was an interested
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<PAGE>
stockholder on the date of the stockholder vote. The Company has not adopted
any such amendment to its Restated Articles of Incorporation, and this statute
is applicable to the Company.
Control Share Acquisition Statute. The Maryland General Corporation law
imposes limitations on the voting rights of shares acquired in a "control share
acquisition," but the Company has elected not to be subject to such provisions.
The Maryland statute defines a "control share acquisition" at the 20%, 33-1/3%
and 50% acquisition levels, and requires a two-thirds stockholder vote
(excluding shares owned by the acquiring person and certain members of
management) to accord voting rights to stock acquired in a control share
acquisition. The statute also requires Maryland corporations to hold a special
meeting at the request of an actual or proposed control share acquirer generally
within 50 days after a request is made with the submission of an "acquiring
person statement," but only if the acquiring person (a) posts a bond for the
cost of the meeting and (b) submits a definitive financing agreement to the
extent that financing is not provided by the acquiring person. In addition,
unless the charter or bylaws provide otherwise, the statute gives the Maryland
corporation, within certain time limitations, various redemption rights if there
is a stockholder vote on the issue and the grant of voting rights is not
approved, or if an "acquiring person statement" is not delivered to the target
within 10 days following a control share acquisition. Moreover, unless the
charter or bylaws provide otherwise, the statute provides that if, before a
control share acquisition occurs, voting rights are accorded to control shares
which result in the acquiring person having majority voting power, then minority
stockholders have appraisal rights. An acquisition of shares may be exempted
from the control share statute provided that a charter or bylaw provision is
adopted for such purpose prior to the control share acquisition. The Company
has elected through a bylaw provision not to be subject to the control share
statute.
Reference is made to the full text of the foregoing statutes for their
entire terms, and the partial summary contained in this Prospectus is not
intended to be complete.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is The First National
Bank of Maryland, Baltimore, Maryland.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences to holders of the Series A Preferred Stock. This summary does not
purport to discuss all of the federal income tax consequences that may be
applicable to particular categories of investors (such as broker-dealers,
foreign persons, non-resident alien individuals, insurance companies, tax exempt
organizations, persons subject to the alternative minimum tax, and financial
institutions) and does not discuss foreign, state or local tax consequences.
This summary is based upon the
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<PAGE>
Internal Revenue Code of 1986, as amended (the "Code"), regulations promulgated
thereunder ("Regulations"), court decisions and administrative rulings and
practice, all as in effect on the date of this Prospectus. Future legislative,
judicial or administrative changes, which might or might not have retroactive
application, could modify significantly the statements and conclusions expressed
in this summary. The Company will not request any rulings from the Internal
Revenue Service regarding the tax consequences of an investment in shares of the
Series A Preferred Stock. Each potential investor is advised to consult its own
tax advisor concerning the federal, state, local and foreign tax consequences of
an investment in shares of the Series A Preferred Stock.
The following discussion is based on the assumption that shares of the
Series A Preferred Stock are held as capital assets within the meaning of
Section 1221 of the Code.
Distributions on Series A Preferred Stock
Distributions paid on the Series A Preferred Stock will be treated as
dividends taxable as ordinary income to the holders to the extent of the
Company's current or accumulated earnings and profits as determined under
federal income tax principles. The Company does not at present have any current
or accumulated earnings and profits for federal income tax purposes. There can
be no assurance that in any taxable year the Company will have current or
accumulated earnings and profits such that distributions with respect to the
Series A Preferred Stock will qualify in whole or in part as dividends for
federal income tax purposes. To the extent that the amount of distributions
paid on the Series A Preferred Stock exceeds the Company's current or
accumulated earnings and profits, such distributions will be treated as a
nontaxable return of capital and will be applied against and reduce the adjusted
tax basis of the Series A Preferred Stock in the hands of each holder (but not
below zero). The amount of any such distribution which exceeds the adjusted tax
basis of the Series A Preferred Stock in the hands of the holder will be treated
as capital gain and will be long-term capital gain if the holder's holding
period for the Series A Preferred Stock exceeds one year. Under current law,
long-term capital gains of noncorporate taxpayers are generally taxed at rates
more favorable than those applicable to other types of income. There are
currently pending before the U.S. Congress certain legislative proposals that
would affect the manner in which capital gains are taxed; whether any such
proposals will be enacted into law and, if so, in what form they will be
enacted, is currently unknown. Under Section 243 of the Code, corporate
stockholders generally will be able, subject to certain exceptions and
restrictions, to deduct 70% of the amount of any distribution qualifying as a
dividend.
Redemption or Conversion of Series A Preferred Stock for or into Common Stock
The discussion in this paragraph assumes that shares of the Series A
Preferred Stock will not be redeemed or converted at a time when there are
dividends in arrears. Generally, no gain or loss will be recognized for federal
income tax purposes on redemption or conversion of the Series A Preferred Stock
into or for shares of Common Stock (except that cash paid in lieu of
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<PAGE>
fractional shares of Common Stock will be taxed as though such cash had been
received in redemption of such fractional share interest). The tax basis of the
shares of Common Stock received upon redemption or conversion will be equal to
the adjusted tax basis of the Series A Preferred Stock redeemed or converted,
less any amount of basis allocable to the fractional shares, and the holding
period of such shares of Common Stock will include the holding period of the
Series A Preferred Stock redeemed or converted.
Adjustment of Conversion Price
Certain adjustments to the conversion price of the Series A Preferred Stock
may, under certain circumstances, be treated as constructive distributions that
are taxable to holders of the Series A Preferred Stock at the time of adjustment
under Sections 301 and 305 of the Code.
Backup Withholding
Under Section 3406 of the Code and applicable Regulations, a noncorporate
holder of the Series A Preferred Stock or Common Stock may be subject to backup
withholding at the rate of 31% with respect to reportable payments of dividends
accrued with respect to, or the proceeds of a sale, exchange or redemption of,
the Series A Preferred Stock or Common Stock, as the case may be. The payor
will be required to deduct and withhold the prescribed amount with respect to
all such reportable payments if (i) the payee fails to furnish a taxpayer
identification number ("TIN") to the payor; or (ii) the Secretary of the
Treasury notifies the payor that the TIN furnished by the payee is incorrect.
In addition, the payor will also be required to deduct and withhold the
prescribed amount with respect to dividend payments if (iii) there has been a
"notified payee underreporting," as described in Section 3406(c) of the Code; or
(iv) there has been a failure of the payee to certify to the payor under the
penalty of perjury that such payee is not subject to withholding, as described
in Section 3406(d) of the Code. Amounts paid as backup withholding do not
constitute an additional tax and will be credited against the holder's federal
income tax liabilities.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS OWN TAX ADVISOR AS TO
PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF THE SERIES A
PREFERRED STOCK, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL OR FOREIGN
TAX LAWS.
LEGAL OPINION
The validity of the Series A Preferred Stock and of the shares of Common
Stock into which it is convertible to which this Prospectus relates is being
passed upon for the Company by Richard G. McCauley, Esq., Senior Vice-President,
General Counsel and Secretary of the
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<PAGE>
Company. As of December 31, 1994, Mr. McCauley was the direct owner of 105,037
shares of the Company's Common Stock (excluding shares of the Company's Common
Stock held in his account under the Company's 401(k) Savings Plan), certain
family members owned 21,295 shares (as to which shares he disclaims beneficial
ownership) and he held options to purchase 112,500 shares, of which options to
purchase 39,500 shares were presently exercisable.
EXPERTS
The audited consolidated financial statements and schedules incorporated in
this Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 have been so incorporated in reliance upon (1) the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and the authority of that firm as experts in
accounting and auditing, and (2) with respect to the current value basis
financial statements, the report of Landauer Associates, Inc., real estate
counselors and consultants, incorporated by reference herein, and upon the
authority of that firm as experts in real estate consultation. The report of
KPMG Peat Marwick LLP covering the December 31, 1991 financial statements refers
to a change in the Company's method of accounting for income taxes.
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<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or any Prospectus Supplement in connection with the offer made by
this Prospectus or any Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any of the Selling Stockholders. This Prospectus or any
Prospectus Supplement does not constitute an offer to sell or a solicitation of
an offer to buy any of these securities in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation. Except where otherwise
indicated, this Prospectus or any Prospectus Supplement speaks as of the date of
this Prospectus or any Prospectus Supplement. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or thereof.
-------------------------
TABLE OF CONTENTS
Page
Available Information.....................................
Incorporation of Certain
Documents by Reference..................................
Background................................................
The Company...............................................
Use of Proceeds...........................................
Selling Stockholders......................................
Plan of Distribution......................................
Description of Series A Convertible
Preferred Stock.........................................
Description of Common Stock...............................
Certain Federal Income
Tax Considerations......................................
Legal Opinion.............................................
Experts...................................................
================================================================================
================================================================================
480,168 Shares
THE ROUSE COMPANY
Series A Convertible
Preferred Stock
--------------
PROSPECTUS
--------------
February , 1995
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the Company's expenses in connection
with the offering described in this Registration Statement. Except for the
registration fee, the amounts listed below are estimates.
<TABLE>
<S> <C>
Registration Fee - Securities and Exchange Commission $ 8,155
Legal fees and disbursements 15,000
Accounting fees and disbursements 7,000
Blue Sky fees and expenses (including legal fees) 2,000
Miscellaneous 5,000
-------
Total $37,155
</TABLE>
All of the foregoing expenses will be borne by the Company.
Item 15. Indemnification of Directors and Officers.
Article XIII of the Bylaws of the Company provides that directors and
officers of the Company shall be indemnified by the Company to the fullest
extent permitted by Maryland law as now or hereafter in force, including the
advance of related expenses. If any determination is required under applicable
law as to whether a director or officer is entitled to indemnification, such
determination shall be made by independent legal counsel retained by the Company
and appointed by either the Board of Directors or the Chief Executive Officer.
A copy of Section 2-418 of the Corporations and Associations Article of the
Annotated Code of Maryland is included as an Exhibit to this Registration
Statement.
The Company maintains directors and officers insurance on behalf of its
directors, officers and certain other persons against any liability asserted
against them in any such capacity. The Series A Convertible Preferred Stock
Exchange Agreement contained in Exhibit 99.2 provides for indemnification of the
directors and officers signing the Registration Statement and certain
controlling persons of the Company against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended, in certain
instances by each Selling Stockholder participating in the offering of Series A
Preferred Stock.
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<PAGE>
Item 16. Exhibits.
The following exhibits are filed as part of this Registration Statement
(including by incorporation by reference):
4.1 Amended and Restated Articles of Incorporation of The Rouse
Company, dated May 27, 1988 (which are incorporated by
reference from the Exhibits to the Company's Form 10-K Annual
Report for the fiscal year ended December 31, 1988).
4.2 Articles of Amendment to the Amended and Restated Articles of
Incorporation of The Rouse Company, effective January 10, 1991
(which are incorporated by reference from the Exhibits to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1990).
4.3 Articles Supplementary to the Charter of The Rouse Company
dated February 17, 1993 (which are incorporated by reference
from the Exhibits to the Company's Form 10-K Annual Report for
the fiscal year ended December 31, 1992).
4.4 Articles Supplementary to the Charter of The Rouse Company,
dated September 26, 1994.
4.5 Articles Supplementary to the Charter of The Rouse Company,
dated December 27, 1994.
4.6 Bylaws of The Rouse Company, as amended September 22, 1994
(which are incorporated by reference from the Exhibits to the
Company's Form 10-Q Quarterly Report for the quarter ended
September 30, 1994).
5.1 Opinion and Consent of Richard G. McCauley, Esq.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Landauer Associates, Inc.
23.3 Consent of Richard G. McCauley, Esq. (included in Exhibit 5.1
above).
24.1 Power of Attorney, dated March 16, 1993 (which is incorporated
by reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-57347)).
24.2 Power of Attorney, dated September 24, 1992 (which is
incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-52458)).
24.3 Power of Attorney, dated December 3, 1992 (which is
incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-52458)).
99.1 Section 2-418 of the Corporations and Associations Article of
the Annotated Code of Maryland (which is incorporated by
reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-56646)).
99.2 Series A Convertible Preferred Stock Exchange Agreement, dated
as of December 31, 1994, by and among the Company and the
Selling Stockholders.
II-2
<PAGE>
Item 17. Undertakings.
Undertakings to Update Annually. The undersigned registrant hereby
undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any Prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
Incorporation of Subsequent Exchange Act Documents. The undersigned
registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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<PAGE>
Indemnification. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions referred to in
Item 15 of this Registration Statement, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Howard and the State of Maryland, on the 14th day
of February, 1995.
THE ROUSE COMPANY
By: /s/ Mathias J. DeVito
-------------------------------------------
Mathias J. DeVito
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal Executive Officers:
/s/ Mathias J. DeVito Chairman of the Board, February 14, 1995
- ------------------------------ Chief Executive Officer
Mathias J. DeVito and Director
/s/ Anthony W. Deering President, February 14, 1995
- ------------------------------ Chief Operating Officer
Anthony W. Deering and Director
Principal Financial Officer:
/s/ Jeffrey H. Donahue Senior Vice-President February 14, 1995
- ------------------------------ and Chief Financial Officer
Jeffrey H. Donahue
Principal Accounting Officer:
/s/ George L. Yungmann Senior Vice-President February 14, 1995
- ------------------------------ and Controller
George L. Yungmann
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<PAGE>
The Board of Directors
David H. Benson, Jeremiah E. Casey, Anthony W. Deering, Rohit M. Desai, Mathias
J. DeVito, Juanita T. James, Thomas J. McHugh, Hanne M. Merriman, Roger W.
Schipke and Alexander B. Trowbridge.
By: /s/ Mathias J. DeVito For himself and as February 14, 1995
----------------------------- Attorney-in-Fact
Mathias J. DeVito for the above-named
members of the Board
of Directors.
II-6
<PAGE>
Exhibit Index
4.1 Amended and Restated Articles of Incorporation of The Rouse
Company, dated May 27, 1988 (which are incorporated by reference
from the Exhibits to the Company's Form 10-K Annual Report for
the fiscal year ended December 31, 1988).
4.2 Articles of Amendment to the Amended and Restated Articles of
Incorporation of The Rouse Company, effective January 10, 1991
(which are incorporated by reference from the Exhibits to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1990).
4.3 Articles Supplementary to the Charter of The Rouse Company dated
February 17, 1993 (which are incorporated by reference from the
Exhibits to the Company's Form 10-K Annual Report for the fiscal
year ended December 31, 1992).
4.4 Articles Supplementary to the Charter of The Rouse Company,
dated September 26, 1994.
4.5 Articles Supplementary to the Charter of The Rouse Company,
dated December 27, 1994.
4.6 Bylaws of The Rouse Company, as amended September 22, 1994
(which are incorporated by reference from the Exhibits to the
Company's Form 10-Q Quarterly Report for the quarter ended
September 30, 1994).
5.1 Opinion and Consent of Richard G. McCauley, Esq.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Landauer Associates, Inc.
23.3 Consent of Richard G. McCauley, Esq. (included in Exhibit 5.1
above).
24.1 Power of Attorney, dated March 16, 1993 (which is incorporated
by reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-57347)).
24.2 Power of Attorney, dated September 24, 1992 (which is
incorporated by reference from the Exhibits to the Company's
Form S-3 Registration Statement (No. 33-52458)).
24.3 Power of Attorney, dated December 3, 1992 (which is incorporated
by reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-52458)).
99.1 Section 2-418 of the Corporations and Associations Article of
the Annotated Code of Maryland (which is incorporated by
reference from the Exhibits to the Company's Form S-3
Registration Statement (No. 33-56646)).
99.2 Series A Convertible Preferred Stock Exchange Agreement, dated
as of December 31, 1994, by and among the Company and the
Selling Stockholders.
-1-
<PAGE>
Exhibit 4.4.
THE ROUSE COMPANY
ARTICLES SUPPLEMENTARY
The Rouse Company, a Maryland corporation (hereinafter called the
"Company") having its principal office in Howard County, Maryland, certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the requirements of Section 3-603(d)(4)
of the Maryland General Corporation Law, the Board of Directors of the Company,
at a meeting duly held on September 22, 1994 (the "Meeting"), adopted the
following resolutions:
RESOLVED, that effective September 22, 1994, the provisions of
Section 3-602, as amended from time to time, of the Corporations and
Associations Article of the Annotated Code of Maryland (the "Code")
shall apply to any "business combination" (as the term is defined in
Section 3-601, as amended from time to time, of the Code) with the
Company; and
RESOLVED, that the election made by the immediately preceding
resolution shall be included as a new Article XI, Applicability of
Maryland Business Combination Provisions, of the Bylaws of the
Corporation adopted effective September 22, 1994.
SECOND: The foregoing resolution and amendment to the Company's
Bylaws were approved by a majority of the entire Board of Directors of the
Company at the Meeting.
IN WITNESS WHEREOF, The Rouse Company has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary on September 26, 1994.
ATTEST: THE ROUSE COMPANY
_________________________ By:___________________________
Richard G. McCauley Anthony W. Deering
Senior Vice-President, President and
General Counsel and Secretary Chief Operating Officer
<PAGE>
THE UNDERSIGNED, President and Chief Operating Officer of The Rouse
Company, who executed on behalf of the Company Articles Supplementary of which
this Certificate is made a part, acknowledges in the name and on behalf of the
Company the foregoing Articles Supplementary to be the corporate act of the
Company and certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
______________________________
Anthony W. Deering
President and
Chief Operating Officer
-2-
<PAGE>
Exhibit 4.5
THE ROUSE COMPANY
ARTICLES SUPPLEMENTARY
The Rouse Company, a Maryland corporation, having its principal office
in Columbia, Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Articles of Incorporation,
as amended and restated in the Articles of Amendment and Restatement of the
Corporation, which were filed with the State Department of Assessments and
Taxation of Maryland on May 27, 1988, and as further amended by the Articles of
Amendment of the Corporation, which were filed with the State Department of
Assessments and Taxation of Maryland on January 10, 1991, and as supplemented by
the Articles Supplementary to the Charter of The Rouse Company (the "Articles
Supplementary") creating the class of Series A Convertible Preferred Stock and
filed with the State Department of Assessments and Taxation of Maryland on
February 17, 1993 (collectively, the "Charter"), the Board of Directors has duly
divided and classified 480,168 additional shares of the Preferred Stock of the
Corporation, par value $.01 per share, into shares of the class designated as
Series A Convertible Preferred Stock, and provided for the issuance of such
Preferred Stock.
SECOND: The terms of the Series A Convertible Preferred Stock
established by the Board of Directors are as set forth in the Articles
Supplementary in addition to those set forth in Article FIFTH of the Charter of
the Corporation applicable to all classes of Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
Chief Operating Officer and attested by its Secretary on December 27, 1994.
ATTEST: THE ROUSE COMPANY
______________________________ By:___________________________
Richard G. McCauley Anthony W. Deering
Senior Vice President, President and
General Counsel and Secretary Chief Operating Officer
<PAGE>
THE UNDERSIGNED, President and Chief Operating Officer of The Rouse
Company, who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, acknowledges in the name
and on behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
______________________________
Anthony W. Deering
President and
Chief Operating Officer
-2-
<PAGE>
Exhibit 5.1
February 14, 1995
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I have acted as counsel for The Rouse Company (the "Company") in connection
with the Registration Statement on Form S-3 which was filed by the Company under
the Securities Act of 1933, as amended (the "Registration Statement"), and which
registers 480,168 shares of the Series A Convertible Preferred Stock of the
Company, par value $0.01 per share (the "Stock") and the Common Stock
issuable upon its conversion to be sold from time to time by the Selling
Stockholders specified therein.
In that capacity, I have examined the originals, or certified, conformed or
reproduction copies, of the Articles of Incorporation of the Company, as amended
and restated, the Bylaws of the Company, as amended, the Registration Statement,
all corporate proceedings, records, agreements, instruments and documents, and
such statutory, constitutional and other material as I have deemed relevant or
necessary as the basis for the opinions hereinafter expressed. In connection
therewith, I have assumed the genuineness of all signatures on original or
certified copies and the conformity to original or certified copies of all
copies submitted to me as conformed or reproduction copies. As to various
questions of fact relevant to such opinions, I have relied upon certificates and
statements of public officials and officers or representatives of the Company
and others.
Based upon the foregoing, and subject to the limitations set forth herein, I
am of the opinion that the shares of the Stock have been, and when issued on
conversion thereof the shares of Common Stock so issued will have been, duly and
validly authorized and are or will be, as the case may be, legally issued, fully
paid and nonassessable under the general corporate laws of the State of
Maryland.
I wish to advise you that I am a member of the Maryland Bar and accordingly
limit the opinions expressed herein to matters of the laws of the State of
Maryland.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to my opinion in the Registration Statement and
Prospectus. Except as specifically provided above, this opinion may not be
quoted or relied upon by any other person without my prior consent.
Very truly yours,
/s/ Richard G. McCauley
Richard G. McCauley
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
The Board of Directors
The Rouse Company:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
-------------------------------------------
KPMG PEAT MARWICK LLP
Baltimore, Maryland
February 14, 1995
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT REAL ESTATE CONSULTANTS
----------------------------------------------
The Board of Directors of The Rouse Company:
We consent to the incorporation by reference in the Registration
Statement on Form S-3 (Registration No. 33-____) of The Rouse Company (the
"Company") of our report dated February 23, 1994, on our concurrence with the
Company's estimates of the market value of its equity and other interests in
certain real property owned and/or managed by the Company and its subsidiaries
as of December 31, 1992 and 1993, which report appears on page 21 of the 1993
Annual Report to Shareholders that is incorporated by reference in the Annual
Report on Form 10-K of the Company for the year ended December 31, 1993, and to
the reference to our firm under the heading "Experts" in the Prospectus that is
a part of such Registration Statement.
/s/ LANDAUER ASSOCIATES, INC.
----------------------------------------
LANDAUER ASSOCIATES, INC.
New York, New York
February 14, 1995
<PAGE>
EXHIBIT 99.2
SERIES A CONVERTIBLE PREFERRED STOCK
EXCHANGE AGREEMENT
by and among
THE ROUSE COMPANY
FRONT REALTY HOLDING COMPANY, INC.
PEARL REALTY HOLDING COMPANY, INC.
and
PIER 17 REALTY HOLDING COMPANY, INC.
Dated as of December 31, 1994
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. AUTHORIZATION OF ISSUE OF SERIES A PREFERRED STOCK.......... 2
SECTION 2. EXCHANGE OF SERIES A PREFERRED STOCK FOR THE DEBT........... 2
SECTION 3. THE CLOSING................................................. 3
SECTION 4. CONDITIONS TO PURCHASERS' OBLIGATIONS....................... 3
4.1 Opinion of Company's Counsel................................ 3
4.2 Representations and Warranties.............................. 3
4.3 Covenants................................................... 4
4.4 Classification of Additional Series A Preferred Shares...... 4
4.5 Proceedings of the Company.................................. 4
4.6 Refinancing Transaction..................................... 4
SECTION 5. CONDITIONS TO COMPANY'S OBLIGATIONS......................... 4
5.1 Opinion of Purchasers' Counsel.............................. 4
5.2 Representations and Warranties.............................. 4
5.3 Covenants................................................... 4
5.4 Blue Sky.................................................... 5
5.5 Refinancing Transaction..................................... 5
SECTION 6. COVENANTS OF THE COMPANY.................................... 5
6.1 Financial Statements and Other Reports...................... 5
6.2 Corporate Existence, Licenses and Permits; Maintenance of
Properties................................................. 5
6.3 Listing of Series A Preferred Stock on NASDAQ............... 5
6.4 Rule 144A Reporting......................................... 5
6.5 Private Placement Status.................................... 6
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... 6
7.1 Corporate Authority......................................... 6
7.2 Financial and Other Information on the Company.............. 7
7.3 Actions Pending............................................. 7
7.4 No Defaults or Conflicts.................................... 7
7.5 Governmental Consent........................................ 8
7.6 Investment Company Status................................... 9
7.7 Disclosure.................................................. 9
7.8 Capitalization.............................................. 9
7.9 ERISA....................................................... 9
-i-
<PAGE>
SECTION 8. REPRESENTATIONS OF THE PURCHASERS........................... 10
8.1 Investment Purpose; Restrictions on Resale.................. 10
8.2 No Registration............................................. 10
8.3 Access to Certain Information............................... 10
8.4 Status...................................................... 10
8.5 Authority................................................... 11
8.6 Good Title.................................................. 11
SECTION 9. RESTRICTIONS ON TRANSFER.................................... 11
9.1 Applicability of Restrictions............................... 11
9.2 Restrictive Legends......................................... 11
9.3 Notice of Proposed Transfer; Opinions of Counsel............ 12
9.4 Termination of Restrictions................................. 13
SECTION 10. REGISTRATION RIGHTS......................................... 13
10.1 Securities Subject to Registration Rights................... 13
10.2 Shelf Registration of Registrable Securities................ 14
10.3 Registration Procedures..................................... 15
10.4 Registration Expenses....................................... 17
10.5 Indemnification............................................. 18
SECTION 11. CERTAIN DEFINITIONS........................................ 20
SECTION 12. MISCELLANEOUS.............................................. 22
12.1 Consent to Amendments...................................... 22
12.2 Lost Certificates.......................................... 23
12.3 Notice to Subsequent Holder................................ 23
12.4 Survival of Representations, Warranties, and Indemnities... 23
12.5 Successors and Assigns..................................... 23
12.6 Notices.................................................... 23
12.7 Accounting Terms........................................... 24
12.8 Governing Law.............................................. 24
12.9 Severability............................................... 24
12.10 Headings; Table of Contents................................ 25
12.11 Counterparts............................................... 25
12.12 Non-Business Days.......................................... 25
12.13 Entire Agreement........................................... 25
-ii-
<PAGE>
______________________
Schedules and Exhibits
Schedule I Purchasers - Debt Ownership and Shares to be Issued
Exhibit A New Articles Supplementary
Exhibit B Original Articles Supplementary
Exhibit 4.1 Opinion of David R. Schwiesow, Vice President and Associate
General Counsel of The Rouse Company
Exhibit 4.2 Officer's Certificate
Exhibit 5.1 Opinion of Purchasers' Counsel
Exhibit 7.9 Collective Investment Fund Ownership
Exhibit 10.2(b) Marketing of Registrable Securities
-iii-
<PAGE>
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
EXCHANGE AGREEMENT
------------------
SERIES A CONVERTIBLE PREFERRED STOCK EXCHANGE AGREEMENT, dated as of
December 31, 1994 (the "Agreement"), by and among The Rouse Company, a Maryland
corporation (the "Company"), and Front Realty Holding Company, Inc., a New York
not-for-profit corporation, Pearl Realty Holding Company, Inc., a New York not-
for-profit corporation, and Pier 17 Realty Holding Company, Inc., a New York
not-for-profit corporation (individually a "Purchaser" and collectively the
"Purchasers").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, South Street Seaport Limited Partnership, a Maryland limited
partnership comprising solely of subsidiaries of the Company ("SSSLP"), and the
Purchasers are parties to that certain Restated Permanent Loan Agreement dated
as of May 16, 1985 (and executed and delivered on or about December 17, 1985),
as amended by that certain First Amendment to Restated Permanent Loan Agreement
and First Amendment to Permanent Loan Note dated as of December 11, 1989 (the
"Prior Loan Agreement"), pursuant to which the Purchasers have heretofore made
loans to SSSLP in the aggregate principal amount of $89,500,000 with respect to
the South Street Seaport project (the "Project") owned by SSSLP; and
WHEREAS, SSSLP and the Purchasers are parties to that certain Sublease (as
such term is defined in the Prior Loan Agreement); and
WHEREAS, SSSLP and the Purchasers have agreed to a modification of the
Prior Loan Agreement and Sublease (the "Refinancing Transaction"); and
WHEREAS, simultaneously with the execution of this Agreement, SSSLP is
entering into a Second Amended and Restated Permanent Loan Agreement (the
"Restated Loan Agreement") with the Purchasers with respect to the $89.5 million
loan described in the Prior Loan Agreement; and
WHEREAS, the terms of the Restated Loan Agreement and the related
documentation provide for (i) the splitting of the single indebtedness under the
Prior Loan Agreement into two loans, one in the principal sum of $52 million
(the "$52 Million Loan") and the other in the principal sum of $37.5 million
(the "$37.5 Million Loan" or the "Debt") and (ii) the modification and
restatement of the documentation governing the $52 Million Loan and the $37.5
Million Loan, including, but not limited to, a mortgage for each loan, a non-
recourse note with respect to the $52 Million Loan and a recourse note with
respect to the $37.5 Million Loan, on the terms and conditions set forth
therein; and
WHEREAS, in connection with the modification of the Prior Loan Agreement,
the Purchasers have agreed to exchange the $37.5 Million Loan (including an
assignment of certain documentation related to such loan) for a number of shares
(not less than 450,000 shares) of
<PAGE>
authorized but unissued Series A Convertible Preferred Stock, par value $.01 per
share, of the Company (the "Series A Preferred Stock"), valued at no less than
$23,000,000, determined as herein provided, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. AUTHORIZATION OF ISSUE OF SERIES A PREFERRED STOCK
The Company has taken all necessary corporate action to divide and classify
the number of shares of the Preferred Stock of the Company, par value $.01 per
share (the "Preferred Stock"), required to be delivered under this Agreement
into shares of Series A Preferred Stock, pursuant to the form of Articles
Supplementary (the "New Articles Supplementary") to be filed with the State
Department of Assessments and Taxation of Maryland (the "SDAT") attached hereto
as Exhibit A, and has duly authorized the issuance of such shares of Series A
---------
Preferred Stock pursuant to the terms and conditions of this Agreement. As
provided in the New Articles Supplementary, the terms of the Series A Preferred
Stock are as set forth in the Articles Supplementary (the "Original Articles
Supplementary") creating the class of the Company's Series A Convertible
Preferred Stock and filed with the SDAT on February 17, 1993, a copy of which is
attached hereto as Exhibit B.
---------
SECTION 2. EXCHANGE OF SERIES A PREFERRED STOCK FOR THE DEBT
Subject to the terms and conditions set forth hereinafter, the Company
agrees to issue an aggregate of $23,000,000 in Fair Market Value of Series A
Preferred Stock (but not less than 450,000 shares) to the Purchasers, and the
Purchasers severally, and not jointly, agree to exchange therefor all of their
right, title and interest in and to the $37.5 Million Loan and to assign the
recourse note evidencing the $37.5 Million Loan (the "$37.5 Million Recourse
Note") and the mortgage securing the $37.5 Million Recourse Note (the "$37.5
Million Mortgage"), but not any of the Purchasers' rights under any other
documents pertaining to the debt outstanding under the Prior Loan Agreement or
the $37.5 Million Loan (collectively, the "Loan Documents"), without recourse,
as set forth in the documentation relating to the Refinancing Transaction. It
is understood and agreed that the foregoing assignment without recourse shall
not affect the Purchasers' obligations with respect to their representations and
warranties under this Agreement. The aggregate number of shares of Series A
Preferred Stock to be issued to the Purchasers pursuant to the terms of this
Section 2 shall be the greater of (x) 450,000 or (y) the number of shares
determined by dividing $23,000,000 by the Fair Market Value (as hereinafter
defined) of a share of Series A Preferred Stock. For purposes hereof, the "Fair
Market Value" of a share of Series A Preferred Stock shall mean $47.90, which is
the average of the daily closing sale prices of the Series A Preferred Stock on
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") National Market System as reported in the Wall Street Journal for
-------------------
December 15, 16, 19, 20 and 21, 1994. The number of shares of Series A
Preferred Stock to be issued to each Purchaser pursuant to the exchange
contemplated hereby shall be as set forth opposite such Purchaser's name on
Schedule I hereto, as determined based on each Purchaser's
- ----------
-2-
<PAGE>
pro rata interest in the principal amount of the $37.5 Million Loan set forth
opposite such Purchaser's name on Schedule I hereto that is to be exchanged for
----------
shares of Series A Preferred Stock.
SECTION 3. THE CLOSING
(a) Subject to the terms and conditions hereof, the closing (the "Closing")
of the issuance and exchange of the shares of Series A Preferred Stock for the
Debt will take place at the offices of Haythe & Curley at 10:00 A.M., New York,
New York time, on December 31, 1994 or such other location, time and date as
shall be mutually agreed to by the Company and the Purchasers. Such time and
date are herein referred to as the "Closing Date."
(b) Subject to the terms and conditions hereof, on the Closing Date (i) the
Company will deliver to each of the Purchasers one or more stock certificates,
as each Purchaser shall request, registered in the name of each Purchaser or
otherwise as such Purchaser may direct, evidencing the number of shares of
Series A Preferred Stock to be issued to each Purchaser, and (ii) each Purchaser
shall execute and deliver to the Company any and all instruments and documents
as the Company may reasonably request to assign, free and clear of all liens,
encumbrances, equities and claims, except as set forth in the documentation
relating to the Refinancing Transaction, the $37.5 Million Loan and the Loan
Documents to the Company.
(c) The Company and each of the Purchasers agree to use their best efforts
to complete the Closing on the Closing Date and to fulfill any conditions to
such Closing that are within their reasonable control.
SECTION 4. CONDITIONS TO PURCHASERS' OBLIGATIONS
Each Purchaser's obligation to exchange its right, title and interest in
the $37.5 Million Loan and to assign its right, title and interest in the Loan
Documents to the Company for the shares of Series A Preferred Stock on the
Closing Date is subject to the satisfaction, on or before the Closing Date, of
the following conditions, any of which may be waived by Purchasers in their sole
discretion:
4.1 Opinion of Company's Counsel. On the Closing Date, the Purchasers
----------------------------
shall have received from David R. Schwiesow, Vice-President and Associate
General Counsel of the Company, a favorable opinion, dated the Closing Date,
reasonably satisfactory to the Purchasers, substantially in the form set forth
in Exhibit 4.1 hereto.
-----------
4.2 Representations and Warranties. Each of the representations and
------------------------------
warranties contained in Section 7 shall be true on and as of the Closing Date
with the same effect as though
-3-
<PAGE>
made on the Closing Date and after giving effect to the transactions
contemplated hereby; and the Company shall have delivered to the Purchasers an
Officer's Certificate, substantially in the form set forth in Exhibit 4.2
-----------
hereto, dated the Closing Date, to such effect.
4.3 Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with.
4.4 Classification of Additional Series A Preferred Shares. The Company
------------------------------------------------------
shall have filed with the SDAT, and the SDAT shall have accepted for record, the
New Articles Supplementary substantially in the form attached hereto as Exhibit
-------
A, classifying the number of shares of Series A Preferred Stock determined to be
- -
deliverable under Section 2.
4.5 Proceedings of the Company. On or prior to the Closing Date, all
--------------------------
corporate and other proceedings taken or to be taken by the Company in
connection with, or which are required to consummate, the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchasers and counsel to the
Purchasers, and the Purchasers and counsel to the Purchasers shall have received
all such counterpart originals or certified or other copies of such documents as
the Purchasers or such counsel may reasonably request to establish compliance
with this condition.
4.6 Refinancing Transaction. The entire Refinancing Transaction shall be
-----------------------
consummated simultaneously with the Closing under this Agreement.
SECTION 5. CONDITIONS TO COMPANY'S OBLIGATIONS
The Company's obligation to issue the shares of Series A Preferred Stock
hereunder in exchange for all of the Purchasers' right, title and interest in
the $37.5 Million Loan and the assignment of the Loan Documents to the Company
on the Closing Date is subject to the satisfaction, on or before the Closing
Date, of the following conditions, any of which may be waived by the Company in
its sole discretion:
5.1 Opinion of Purchasers' Counsel. On the Closing Date, the Company
------------------------------
shall have received from Haythe & Curley, acting as counsel for the Purchasers
in connection with this transaction, a favorable opinion, dated the Closing
Date, reasonably satisfactory to the Company, substantially in the form set
forth in Exhibit 5.1 hereto.
-----------
5.2 Representations and Warranties. Each of the representations and
------------------------------
warranties contained in Section 8 shall be true on and as of the Closing Date
with the same effect as though made on the Closing Date and after giving effect
to the transactions contemplated hereby.
5.3 Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with.
-4-
<PAGE>
5.4 Blue Sky. The Company shall have obtained all necessary Blue Sky law
--------
permits and qualifications, or established exemptions therefrom, required by any
state for the offer and sale of the shares of Series A Preferred Stock. No stop
order or other order enjoining the sale of the shares of Series A Preferred
Stock shall have been issued and, to the knowledge of the Company, no
proceedings for such purpose shall be pending or threatened.
5.5 Refinancing Transaction. The entire Refinancing Transaction shall be
-----------------------
consummated simultaneously with the Closing under this Agreement.
SECTION 6. COVENANTS OF THE COMPANY
6.1 Financial Statements and Other Reports. So long as any Purchaser
--------------------------------------
shall be the holder of $250,000 or more in aggregate Liquidation Value of Series
A Preferred Stock, until the end of the Applicable Period as defined in Section
10.2 (a) hereof, the Company will deliver to such Purchaser any Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
definitive proxy statements or any other reports or filings filed by the Company
with the Commission under the Exchange Act within fifteen (15) days of the
filing of such reports or filings with the Commission.
6.2 Corporate Existence, Licenses and Permits; Maintenance of Properties.
--------------------------------------------------------------------
So long as any Series A Preferred Stock issued pursuant to this Agreement shall
be beneficially owned by any Purchaser, the Company will at all times cause to
be done all things necessary to maintain and preserve its corporate existence,
provided that the foregoing shall not prevent the Company from reorganizing as
another legal entity for the purpose of qualifying as a real estate investment
trust or other similar entity, and its right to carry on its business and will
preserve and keep in force and effect, all licenses and permits deemed by
management of the Company to be necessary and material to the conduct of its
business, and will remain in compliance with respect to all applicable material
regulatory requirements, so that any business material to the Company carried on
in connection therewith may be properly and advantageously conducted at all
times.
6.3 Listing of Series A Preferred Stock on NASDAQ. The Company will use
---------------------------------------------
its best efforts to maintain the listing of the Series A Preferred Stock on the
NASDAQ National Market System so long as the standards for the listing thereof
on NASDAQ are met.
6.4 Rule 144A Reporting. The Company agrees to make available, promptly
-------------------
upon request of a holder or a prospective purchaser of any Series A Preferred
Stock from a Purchaser, such information required by Rule 144A under the
Securities Act, if then applicable to the Company, to enable resales of such
shares of Series A Preferred Stock to be made pursuant to Rule 144A; provided,
--------
however, that the Company shall not be required to provide materially more
- -------
information than was required by Rule 144A as in effect on the date hereof, but
may elect to do so if necessary under subsequent revisions of Rule 144A; and
provided further that the Company's obligation under this Section 6.4 shall be
- -------- -------
suspended during the effectiveness of any registration statement filed under
Section 10 hereof and shall cease at the end of the Applicable Period as defined
in Section 10.2 (a).
-5-
<PAGE>
6.5 Private Placement Status. The Company will not do or cause to be done
------------------------
(or will not omit to do or cause to be done) any act which act (or which
omission) would result in bringing the issuance or sale of the shares of Series
A Preferred Stock under this Agreement within the provisions of Section 5 of the
Securities Act or the filing, notification or reporting requirements of any
state securities laws, except for filings, notices or reports pursuant to state
securities laws which have already been made or which are contemplated in
connection with the offering and sale of the shares of Series A Preferred Stock
under this Agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser as follows as of the
date hereof and as of the Closing Date:
7.1 Corporate Authority. (a) The Company is a corporation duly organized
-------------------
and validly existing in good standing under the laws of its jurisdiction of
incorporation, has the corporate power and authority to own its assets and to
carry on its business as now conducted and as proposed to be conducted, is duly
qualified and authorized to do business under the laws of each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole, and has all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted which are material to the Company and its Subsidiaries
taken as whole. The execution and delivery by the Company of this Agreement and
the performance by the Company of all transactions and obligations contemplated
hereby are within its corporate authority. This Agreement constitutes the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and the application of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and with respect to indemnification provisions
contained herein, by applicable securities laws or principles of public policy.
(b) The Company has delivered to each Purchaser true, complete and correct
copies of the Articles of Incorporation and Bylaws, as amended and supplemented
and in full force and effect as of the date hereof, of the Company. The
execution, delivery and performance of this Agreement and the issuance of the
Series A Preferred Stock have been duly authorized by all necessary corporate
proceedings on the part of the Company.
(c) The shares of Series A Preferred Stock to be issued pursuant to this
Agreement, when issued in compliance with the provisions hereof, will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances created by or as a result of action by the Company; provided,
however, that the shares of Series A Preferred Stock to be issued hereunder (and
any shares of Common Stock issued upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein. Upon conversion of the shares of Series A Preferred Stock into shares
of Common Stock, such shares of Common Stock will be duly authorized and validly
issued, fully paid and nonassessable.
-6-
<PAGE>
7.2 Financial and Other Information on the Company. (a) The Company has
----------------------------------------------
furnished each Purchaser with the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 Form 10-K") and all other periodic
reports filed by the Company with the Commission since the filing of the 1993
Form 10-K pursuant to the Exchange Act (collectively, the "Exchange Act
Reports").
(b) The audited and unaudited financial statements contained in the
Exchange Act Reports fairly present in all material respects the financial
condition of the Company as of the respective dates thereof and the results of
operations of the Company for such periods and, (except in the case of the
Current Value Basis balance sheet) have been prepared in accordance with
generally accepted accounting principles consistently applied, except as
disclosed in the financial statements and related notes, and, except that any
such unaudited statements omit notes as permitted by the Exchange Act and may be
subject to normal year-end adjustments.
(c) To the best of the Company's knowledge, the Exchange Act Reports, as of
the date that they were prepared and filed with the Commission, do not contain a
false or misleading statement of a material fact or omit to state any material
fact necessary in order to make the statements made in such reports, in light of
the circumstances under which they were made, not misleading.
(d) The Exchange Act Reports comply as to form in all material respects
with the requirements of the Exchange Act.
(e) There has been no Material Adverse Change in the financial condition or
results of operations of the Company and its consolidated Subsidiaries, taken as
a whole, since the date of the balance sheet in the most recent Form 10-Q
contained in the Exchange Act Reports, except as disclosed in the Exchange Act
Reports or as otherwise disclosed to the Purchasers in writing.
7.3 Actions Pending. There is no action, suit, proceeding, investigation
---------------
or claim pending against the Company or any Subsidiary or involving any of their
respective properties or interests or, to the best knowledge of the Company,
threatened against the Company or any Subsidiary or in respect of any of their
respective properties or interests, at law or in equity, before any federal,
state, municipal or local court, administrative agency, commission, board,
bureau, instrumentality or arbitrator which is likely to adversely affect the
power of the Company to execute and deliver, or the ability of the Company to
perform its obligations under, this Agreement, or to result in any Material
Adverse Change in the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole, except as otherwise disclosed in
the Exchange Act Reports or otherwise disclosed to the Purchasers in writing.
7.4 No Defaults or Conflicts. (a) Except as disclosed in the Exchange
------------------------
Act Reports or otherwise disclosed to the Purchasers in writing, neither the
Company nor any of its Subsidiaries is in violation of, or in default under, nor
has there been any waiver given with respect to, any term or provision of any
charter, bylaw, mortgage, indenture, agreement, instrument, statute, rule,
regulation, judgment, decree, order, writ or injunction applicable to it,
-7-
<PAGE>
such that such violations and defaults in the aggregate are likely to result in
any Material Adverse Change in the financial condition or results of operations
of the Company and its Subsidiaries taken as a whole, or materially adversely
affect the ability of the Company to perform in any material respect its
obligations under this Agreement.
(b) Except as otherwise disclosed in writing to the Purchasers, the
execution, delivery and performance by the Company of this Agreement and any of
the transactions contemplated hereby (including, without limitation, the
issuance of the shares of Series A Preferred Stock as contemplated herein) does
not and will not (i) violate or conflict with, with or without the giving of
notice or the passage of time or both, any provision of (A) the charter or
bylaws of the Company or (B) any law, rule, regulation or order of any federal,
state, county, municipal or other governmental authority, or any judgment, writ,
injunction, decree, award or other action of any court or governmental authority
or arbitrator(s), or any agreement, indenture or other instrument applicable to
the Company or its Subsidiaries or any of its or their properties, except in the
case of this clause (B) for such violations or conflicts that will not
individually or in the aggregate result in a Material Adverse Change in the
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, (ii) result in the creation of any lien upon any of the
Company's or its Subsidiaries' properties, assets or revenues, or (iii) require
the consent, waiver, approval, order or authorization of, or declaration,
registration, qualification or filing with, any Person (whether or not a
governmental authority and including, without limitation, any shareholder
approval) except for required securities law filings.
7.5 Governmental Consent. Except for the conditions required in
--------------------
connection with the Refinancing Transaction required to satisfy the conditions
of Sections 4.6, 5.4 and 5.5, neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person of which
it is aware, nor any circumstance involving the Company of which it is aware in
connection with the offer, issue, sale or delivery of the Series A Preferred
Stock hereunder is such as to require the Company to obtain any consent,
approval or authorization of, or any notice to, or filing, registration or
qualification with, any court or administrative or governmental body in
connection with the execution and delivery of this Agreement or the offer,
issue, sale or delivery of the Series A Preferred Stock, or (except as may be
required in connection with fulfillment of, or compliance with, the provisions
of Sections 9 and 10 hereof) fulfillment of, or compliance with, the terms and
provisions of this Agreement or of the Series A Preferred Stock, or is such as
to require or give rise to any limitation on any Purchaser's ownership of any
equity securities of the Company other than by reason of the restricted status
of those securities under applicable securities laws or regulatory approvals or
filings required by the Maryland General Corporation Law or the Exchange Act.
7.6 Investment Company Status. The Company is not an "investment company"
-------------------------
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
-8-
<PAGE>
7.7 Disclosure. Neither this Agreement and the Schedules and Exhibits
----------
attached hereto nor any other document or certificate furnished to the
Purchasers by or on behalf of the Company in connection herewith taken as a
whole contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not materially misleading, except that no warranty is made or given with
respect to the information set forth in Section 8.
7.8 Capitalization. As of December 15, 1994, the equity capitalization of
--------------
the Company consisted of (i) Common Stock, par value $.01 per share; 250,000,000
shares authorized and 47,571,046 shares issued and outstanding; and (ii)
Preferred Stock, par value $.01 per share; 50,000,000 shares authorized and
4,024,873 shares (all of which were Series A Preferred Stock) issued and
outstanding.
7.9 ERISA. Neither the Company nor any of its Subsidiaries has engaged in
-----
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) which is likely to subject the Company to any material tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA. Each
Employee Benefit Plan and Pension Plan is administered in accordance with its
terms in all material respects and is in compliance in all material respects
with all applicable law. There is no lien outstanding or security interest
given in connection with a Pension Plan. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Pension Plan. No member of the ERISA Group has
incurred or expects to incur any material liability under Title IV of ERISA
(other than the payment of premiums) or material withdrawal liability
(contingent or otherwise) under a Multiemployer Plan. The execution, delivery
and performance by the Company of this Agreement and all of the documents and
agreements contemplated hereby does not involve any nonexempt prohibited
transaction with respect to the Company and any employee benefit plan which the
Purchasers have disclosed as having a more than ten percent (10%) interest in
the collective investment fund identified in Exhibit 7.9 hereto (a "10% Plan" of
-----------
the "Fund"). The Company is not a party in interest with respect to any 10%
Plan, other than by reason of providing services to such 10% Plan (including
services as a fiduciary) or by reason of a relationship to a service provider
(including a fiduciary) described in Section 3(14)(F), (G), (H) or (I) of ERISA,
or both, and, to the best knowledge of the Company, the Company is not an
affiliate of Morgan Guaranty Trust Company of New York. In making the
representations described in this Section 7.9, the Company is relying upon
Prohibited Transaction Class Exemption 91-38 ("PTE 91-38") (or upon any other
applicable exemption) and upon the accuracy and completeness of the disclosures
on Exhibit 7.9 of this Agreement regarding 10% Plans, and such representations
-----------
by the Company are expressly conditioned thereupon. For purposes of this
Section 7.9 and Exhibit 7.9 hereto, the terms "affiliate," "collective
-----------
investment fund" and "interest of any employee benefit plan" in the Fund shall
have the meanings ascribed to them by PTE 91-38, the term "employee benefit
plan" shall have the meaning ascribed to it in Section 3(3) of ERISA, the term
"prohibited transaction" shall have the meaning ascribed to it in Section 406 of
ERISA and Section 4975(c) of the Code, and the term "party in interest" shall
have the meaning ascribed to it in Section 3(14) of ERISA and the meaning
ascribed to the term "disqualified person" in Section 4975(e)(2) of the Code.
-9-
<PAGE>
SECTION 8. REPRESENTATIONS OF THE PURCHASERS
8.1 Investment Purpose; Restrictions on Resale. Each Purchaser as to
------------------------------------------
itself represents that such Purchaser is acquiring the shares of Series A
Preferred Stock for its own account for the purpose of investment and not with a
view to any distribution; provided, however, that the disposition of each
-------- -------
Purchaser's shares of Series A Preferred Stock shall at all times be and remain
within such Purchaser's control.
8.2 No Registration. Each Purchaser understands and acknowledges that the
---------------
offering of the shares of Series A Preferred Stock pursuant to this Agreement
will not be registered under the Securities Act on the grounds that the offering
and sale of securities contemplated by this Agreement are exempt from
registration pursuant to Section 4(2) of the Securities Act, and that the
Company's reliance upon such exemption is predicated upon such Purchaser's
representations set forth in this Agreement. Each Purchaser acknowledges and
understands that the shares of Series A Preferred Stock must be held
indefinitely unless the shares of Series A Preferred Stock are subsequently
registered under the Securities Act or an exemption from such registration is
available.
8.3 Access to Certain Information. In connection with the investment
-----------------------------
representations made herein, each Purchaser represents that: (i) such Purchaser
is able to fend for itself in the transactions contemplated by this Agreement;
(ii) such Purchaser has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of such Purchaser's
prospective investment in the shares of Series A Preferred Stock; (iii) such
Purchaser has the ability to bear the economic risks of such Purchaser's
prospective investment, including a complete loss of the investment; (iv) such
Purchaser has been furnished with and has had access to such information as such
Purchaser has considered necessary to make a determination as to whether to
purchase the shares of Series A Preferred Stock together with such additional
information as is necessary to verify the accuracy of the information supplied;
(v) such Purchaser has had all questions which have been asked by such Purchaser
satisfactorily answered by the Company; and (vi) such Purchaser has not been
offered the shares of Series A Preferred Stock by any form of general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
8.4 Status. Each Purchaser as to itself represents that it is a
------
"qualified institutional buyer" or an "accredited investor," as such terms are
defined pursuant to Rule 144A or 501, respectively, of the Securities Act.
8.5 Authority. Each Purchaser as to itself represents that it has all
---------
requisite power, authority and legal right to execute, deliver, enter into,
consummate and perform this Agreement. The execution, delivery and performance
of this Agreement by each Purchaser has been duly authorized by all required
corporate, partnership or other actions on the part of each Purchaser. Each
Purchaser has duly executed and delivered this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of each Purchaser
enforceable against such
-10-
<PAGE>
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and with respect to indemnification provisions contained
herein, by applicable securities laws or principles of public policy.
8.6 Good Title. (a) Each Purchaser as to itself represents that it owns
----------
the entire pro rata beneficial interest of the Debt that is the subject of this
Agreement specified in Schedule I and has not encumbered, assigned or sold any
----------
portion of or interest in such beneficial interest, and that it is a party to
the Loan Documents and has the legal capacity to assign its interest therein to
the Company.
(b) Each Purchaser as to itself represents that it has good title to its
interest in the Debt.
SECTION 9. RESTRICTIONS ON TRANSFER
9.1 Applicability of Restrictions. Notwithstanding any provisions to the
-----------------------------
contrary contained in this Agreement, any Restricted Securities or the Company's
charter, the provisions of this Section 9 shall apply to: (a) the direct or
indirect sale, transfer, encumbrance or other disposition of any shares of
Series A Preferred Stock (other than by conversion or redemption) and (b) the
direct or indirect sale, transfer, encumbrance or other disposition of any
Restricted Securities (each such transfer being herein called a "Restricted
Action"). The holder of any shares of Series A Preferred Stock or Restricted
Securities, by its acceptance thereof, agrees that it will not take any
Restricted Action prior to the delivery to the Company of the opinion or
opinions of counsel referred to in, and to the effect described in, Section 9.3
hereof (or clause (z) of the penultimate sentence of Section 9.3), or until
registration under the Securities Act of the shares of Series A Preferred Stock
or the Restricted Securities involved in, or issuable upon conversion of the
Series A Preferred Stock involved in, such Restricted Action has become
effective.
9.2 Restrictive Legends. Each certificate of Series A Preferred Stock
-------------------
issued pursuant to this Agreement and each certificate for Restricted Securities
(unless at the time of issuance such Restricted Securities are registered under
the Securities Act), and each certificate of Series A Preferred Stock and each
certificate issued upon the transfer or exchange of any such certificate of
Series A Preferred Stock or certificate for Restricted Securities (except as
otherwise permitted by this Section 9), shall be stamped or otherwise imprinted
with a legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and neither the securities
nor any interest therein may be sold, distributed, transferred, pledged or
otherwise disposed of in the absence of such registration or an exemption
under such Act and the rules and regulations thereunder. The transfer of
such securities is subject to the restrictions, terms and conditions set
forth in Section 9 of the Exchange Agreement, dated
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<PAGE>
December 31, 1994, among The Rouse Company and certain Purchasers listed
therein, copies of which are available for inspection at the office of The
Rouse Company, and such securities may be transferred only in compliance
with the terms and conditions of Section 9 of such Exchange Agreement,
which among other matters, requires compliance with Blue Sky and state
securities laws under certain circumstances.
9.3 Notice of Proposed Transfer; Opinions of Counsel. Each holder of
------------------------------------------------
Series A Preferred Stock issued pursuant to this Agreement agrees to transfer
such Series A Preferred Stock only in compliance with Section 9 hereof. Each
holder of any Series A Preferred Stock issued pursuant to this Agreement or of
any Restricted Securities, by its acceptance thereof, agrees that, except as
otherwise expressly provided below in this Section 9, prior to the taking of any
Restricted Action, such holder will give written notice to the Company of such
holder's intention to take such Restricted Action and to comply in all other
respects with this Section 9. Each such notice (i) shall describe the manner
and circumstances of the proposed Restricted Action in sufficient detail to
enable counsel to render the opinions referred to below and (ii) shall designate
counsel for the holder giving such notice (who may be in-house counsel for such
holder). The holder giving such notice will submit a copy thereof to the
counsel designated in such notice, and the Company will promptly submit a copy
thereof to its counsel (who may be in-house counsel for the Company), and the
following provisions shall apply:
(a) If in the opinion of each such counsel the proposed Restricted
Action may be effected without registration under the Securities Act or any
applicable state securities or Blue Sky laws relating to any Series A
Preferred Stock or Restricted Securities involved in, or issuable upon
conversion of any Series A Preferred Stock involved in, such Restricted
Action, then the Company will promptly notify the holder thereof, and such
holder shall thereupon be entitled to effect such Restricted Action in
accordance with the terms of the notice delivered by such holder to the
Company, and the Company will promptly effect any transfer of any Series A
Preferred Stock or Restricted Securities involved in such Restricted Action
and either deliver new Series A Preferred Stock, or certificates for
Restricted Securities, bearing (or not bearing, if in the opinion of each
such counsel such legend is no longer required to insure compliance with
the Securities Act) the legend set forth in Section 9.2, or both, as the
case may be. If for any reason counsel for the Company (after having been
furnished with the information required to be furnished by clause (i) of
this Section 9.3) shall fail to deliver an opinion to the Company (with a
copy to such holder), or the Company shall fail to notify such holder
thereof as aforesaid, within 15 days after counsel for such holder shall
have delivered its opinion to such holder (with a copy to the Company),
then for all purposes hereof the opinion of counsel for the Company shall
be deemed to be the same as the opinion of counsel for such holder.
(b) If in the opinion of either or both of such counsel (such opinion
or opinions to state the basis of the legal conclusions reached therein)
the proposed Restricted Action may not legally be effected without
registration under the Securities Act or any applicable state securities or
Blue Sky laws of any Series A Preferred Stock or Restricted Securities
-12-
<PAGE>
involved in, or issuable upon conversion of any Series A Preferred Stock
involved in, such Restricted Action, the Company shall promptly so notify
the holder thereof and thereafter such holder shall not be entitled to
effect such Restricted Action until receipt of a further notice from the
Company under clause (a) of this Section 9.3 or until such registration
under the Securities Act or any applicable state securities or Blue Sky
laws has become effective.
Notwithstanding the foregoing, each holder shall be permitted to transfer
any share or shares of Series A Preferred Stock issued pursuant to this
Agreement or any Restricted Security or Restricted Securities attributable to
Series A Preferred Stock in one or more transactions to institutional investors
or "accredited investors" as defined in Rule 501 under the Securities Act;
provided, however, that (x) each such investor shall represent in writing that
- -------- -------
it is acquiring such Series A Preferred Stock or Restricted Security for
investment and not with a view to the distribution thereof (subject, however, to
any requirement of law that the disposition thereof shall at all times be within
the control of such transferee), (y) each such investor shall agree in writing
to be bound by all the restrictions on transfer of such Series A Preferred Stock
or Restricted Security contained in this Section 9 and (z) such holder shall
deliver to the Company an opinion of counsel (who shall be reasonably
satisfactory to the Company) stating that such transfer may be effected without
registration under the Securities Act or any applicable state securities or Blue
Sky laws. The Company and each holder will pay the respective fees and
disbursements of their own counsel in connection with any opinions rendered by
them pursuant to this Section 9.3.
9.4 Termination of Restrictions. The restrictions imposed by this
---------------------------
Section 9 upon the transferability of the Series A Preferred Stock and
Restricted Securities shall cease and terminate as to any such securities (a)
when such securities shall have been effectively registered under the Securities
Act, provided such securities are disposed of in accordance with the
Registration Statement covering such securities or (b) when in the opinions of
both counsel for the holder thereof and counsel for the Company, such
restrictions are no longer required in order to insure compliance with the
Securities Act. Whenever such restrictions shall terminate as to any such
securities, the holder thereof shall be entitled to receive from the Company
without expense a new certificate or certificates representing such securities
not bearing the legend set forth in Section 9.2 hereof.
SECTION 10. REGISTRATION RIGHTS
10.1 Securities Subject to Registration Rights. The securities entitled to
-----------------------------------------
the benefit of the registration provisions of this Section 10 (the "Registrable
Securities") are all shares of Series A Preferred Stock issued hereunder, any
shares of Common Stock issued upon conversion of such Series A Preferred Stock
and any shares of Common Stock that are Restricted Securities and that are
issued subsequent to the conversion of any of the Series A Preferred Stock as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock issued upon such conversion.
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<PAGE>
10.2 Shelf Registration of Registrable Securities.
--------------------------------------------
(a) The Company agrees to file with the Commission a "shelf" registration
statement on Form S-3 pursuant to Rule 415 (or any similar rule that may be
adopted by the Commission) under the Securities Act, providing for the resale of
all of the Registrable Securities on or before February 15, 1995 (the
"Registration"). The Company shall use its reasonable efforts to cause such
Registration to become effective as promptly as possible after such filing and
thereafter to keep such Registration continuously effective, and (subject to the
Company's rights under Section 10.2(c)) to prevent the happening of any event of
the kind described in Section 10.3(c)(2)-(4) hereof that requires the Company to
give notice pursuant to the last paragraph of Section 10.3 hereof, for a period
(the "Applicable Period") of three (3) years from the date on which the
Commission declares the Registration effective or such shorter period that will
terminate when all of the Registrable Securities covered by the Registration
have been sold pursuant to such Registration or under Rule 144.
(b) The holders of Registrable Securities shall advise the Company by
written notice of their intention to include the Registrable Securities held by
them in such Registration and the proposed method of distribution, which shall
conform to the method set forth in Exhibit 10.2(b).
(c) Notwithstanding the foregoing, the Company may postpone the filing of a
registration statement, or require any holders to suspend sales of Registrable
Securities pursuant to an effective registration statement, in either case for a
period not exceeding ninety (90) days, if its Chief Executive Officer, Board of
Directors or the Executive Committee or other duly constituted Committee of the
Board of Directors determines that the filing or the distribution of the
Registrable Securities will materially adversely interfere with, or be
inadvisable in light of a public offering by the Company (for such time, not to
exceed twenty (20) business days, during the distribution period as the
underwriters in good faith deem advisable) or with a financing, acquisition,
corporate reorganization or other material or potentially material corporate
transaction of the Company or any Subsidiary of the Company.
(d) In the event that the Registration shall not become effective by
January 2, 1996, the Purchasers shall have the option, exercisable by delivering
written notice (the "Sale Notice") to the Company to such effect at any time
within 30 days after January 2, 1996, to require the Company to purchase all
(but not less than all) the shares of Series A Preferred Stock purchased under
this Agreement for an aggregate cash purchase price of $23,000,000, plus accrued
but unpaid dividends on such Series A Preferred Stock. At the closing of such
purchase and sale, which shall take place at the offices of the Company on a
mutually agreed date (or if no such date is agreed to, on the fifteenth Business
Day after the delivery of the Sale Notice), the Purchasers shall deliver to the
Company the certificates representing the Series A Preferred Stock, duly
endorsed in blank, against payment of the purchase price therefor by wire
transfer of same day funds to an account or accounts designated in writing by
the Purchasers at least one Business Day prior to the date of such closing.
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<PAGE>
10.3 Registration Procedures.
-----------------------
In connection with the registration of Registrable Securities pursuant to
Section 10.2, the Company will use its reasonable efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of distribution by the selling holders
thereof and accordingly will:
(a) prepare and file with the Commission a Registration Statement or
Registration Statements on any appropriate form under the Securities Act, which
form shall be available for the sale of the Registrable Securities to be covered
thereby in accordance with the intended method or methods of distribution by the
selling holders thereof and shall include all financial statements required by
the Commission to be filed therewith; provided that before filing a Registration
--------
Statement or any amendments or supplements thereto or Prospectus, the Company
will furnish to the holders of the Registrable Securities covered by such
Registration Statement copies of all such documents at least five (5) Business
Days prior to the day they are proposed to be filed, which documents will be
subject to the reasonable review of the selling holders, and the Company will
not file any Registration Statement or any amendment or supplement thereto or
any Prospectus to which the selling holders shall reasonably object;
(b) prepare and file with the Commission such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the Applicable Period; cause the Prospectus
used in connection therewith to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the Applicable Period in accordance with the intended method or
methods of distribution by the selling holders thereof set forth in such
Registration Statement as amended or supplement to the Prospectus used in
connection therewith;
(c) notify the selling holders of Registrable Securities promptly, and (if
requested by any such Person) confirm such advice in writing, (1) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus, (3) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, and (4) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceedings for such purpose;
(d) prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable
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<PAGE>
Securities, the Prospectus will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading;
(e) use its reasonable efforts to obtain the withdrawal at the earliest
possible time of any order suspending or preventing the use of any Prospectus or
suspending the effectiveness of the Registration Statement or any amendment or
supplement thereto or suspending the qualification of any Registrable Securities
included in such Registration Statement for sale in any jurisdiction;
(f) furnish each selling holder of Registrable Securities, without charge,
at least one copy of the filed Registration Statement and every post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference, and all exhibits (including those
incorporated by reference);
(g) deliver to each selling holder of Registrable Securities, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request;
and, subject to the provisions of Section 10.2(c), consent to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(h) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities on a
reasonable efforts basis to register or qualify such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
any selling holder reasonably requests in writing and do any and all other
reasonable acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided that the Company will not be required to qualify generally
--------
to do business in any jurisdiction where it is not then so qualified;
(i) cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as the selling holders may request at least five (5) Business Days
prior to any sale of Registrable Securities;
(j) use its best efforts to list the Registrable Securities on the NASDAQ
National Market System or any securities exchange on which other shares of
Series A Preferred Stock or Common Stock are listed;
(k) make available for inspection by the selling holders of the Registrable
Securities all financial statements and pertinent corporate documents of the
Company reasonably requested by any such selling holder that are reasonably
necessary in connection with the Registration; provided, however, that any
-------- -------
financial statements, information or documents that are designated by the
Company in writing as confidential shall be kept confidential by such
-16-
<PAGE>
Persons unless disclosure of such records, information or documents is required
by court or administrative order to become publicly available or becomes
publicly available; and
(l) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission with respect to the disposition of the
Registrable Securities covered by the Registration Statement, and make generally
available to its security holders, as soon as reasonably practical, an earnings
statement covering the period of at least twelve (12) months, but no more than
eighteen (18) months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
The Company may require such holder of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing.
Each holder of Registrable Securities agrees by reason of its acquisition and
holding of such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 10.3(c)
(2)-(4) or any event requiring action by the Company under Section 10.3(d)
hereof, or exercising its right of suspension under Section 10.2(c), such holder
will forthwith discontinue disposition of Registrable Securities until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 10.3(d) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and, if
so directed by the Company in writing, such holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
10.4 Registration Expenses.
---------------------
(a) Except as such expenses provided in Section 10.4(b) regarding the
expenses incident to the Company's performance of or compliance with Section
10.2 of this Agreement are to be borne by the Company, all expenses,
commissions, fees or discounts of selling brokers, dealers or similar securities
industry professionals relating to the distribution of the Registrable
Securities and legal expenses of any Person other than the Company will be borne
by the holders of the Registrable Securities, regardless of whether the
Registration Statement becomes effective, provided, however, that the Company
-------- -------
will reimburse the Purchasers for the reasonable attorneys' fees (not to exceed
$7,500) of one law firm in connection with the Purchasers' review of the
Registration Statement before it becomes effective.
(b) All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees with respect to listings or filings required to be made with the
NASDAQ National Market System, fees and expenses of compliance with securities
or Blue Sky laws, printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company and of all
-17-
<PAGE>
independent certified public accountants of the Company (including the expenses
of any "cold comfort" letters required by or incidental to such performance),
and securities acts liability insurance if the Company so desires, and
reasonable fees and expenses of other Persons retained by the Company in
connection with the registration, will be borne by the Company.
10.5 Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees to indemnify and
------------------------------
hold harmless each holder of Registrable Securities, its directors and officers
and each Person who controls such holder (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and disbursements) caused by (i) any violation of law
by the Company in connection with this Agreement or any breach by the Company of
its undertakings under this Agreement or (ii) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or any
amendment or supplement thereto, Prospectus, preliminary Prospectus or amendment
or supplement thereto, or any omission or alleged omission of 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, except
insofar as the same are caused by or contained in any information furnished to
the Company in writing by such holder expressly for use in connection therewith
or by such holder's failure to deliver a copy of the Registration Statement or
Prospectus or any amendment or supplement thereto as provided by the Company in
compliance with Section 10.3.
(b) Indemnification by Holders of Registrable Securities. In connection
----------------------------------------------------
with the Registration, each holder of Registrable Securities will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests in connection with any Registration Statement or Prospectus and agrees
to indemnify and hold harmless the Company, its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and disbursements) resulting from (i) any untrue
statement of a material fact contained in the Registration Statement,
Prospectus, preliminary Prospectus, amendment or supplement thereto, or any
omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary Prospectus, or any omission of a material fact
necessary to make the statements therein not misleading, to the extent, but only
the extent, that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder to the Company,
or (ii) any failure of such holder of the Registrable Securities to comply with
the Securities Act or any Blue Sky or other state securities law in connection
with taking any Restricted Action.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claims with counsel reasonably
satisfactory to the indemnified party, provided, however, that any Person
--------- -------
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claims, but the fees and
expense of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed
-18-
<PAGE>
to pay such fees or expenses, or (b) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
such Person, or (c) in the reasonable judgment of any such Person, based upon
advice of its counsel, a conflict of interest may exist between such Person and
the indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). No indemnifying party shall, without the prior written
consent of the indemnified party, consent to the entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the indemnified party of a release from
all liability in respect to such claim or litigation. An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel in any one
jurisdiction for all parties indemnified by such indemnifying party with respect
to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. All such fees and expenses shall be reimbursed
as they are incurred.
(d) Contribution. If for any reason the indemnification provided for in
------------
Sections 10.5(a) and (b) is unavailable to an indemnified party or insufficient
to hold it harmless as contemplated by Sections 10.5(a) and (b), then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
considerations, provided that no selling holder shall be required to contribute
an amount greater than the dollar amount of the proceeds received by such
selling holder with respect to the sale of the shares of Registrable Securities
giving rise to the claim.
(e) Survival of Indemnification Obligation. The indemnifications provided
--------------------------------------
for under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or the controlling
Person of each indemnified party and will survive the transfer of the
Registrable Securities.
SECTION 11. CERTAIN DEFINITIONS
For the purpose of this Agreement, capitalized terms shall have the meanings
defined in the sections of this Agreement defining those terms and the following
terms, that are not defined elsewhere herein, shall have the following
respective meanings:
"Agreement" shall mean this Exchange Agreement, dated the date hereof, by and
---------
between the Company and each of the Purchasers, including the Schedules and
Exhibits attached hereto.
-19-
<PAGE>
"Business Day" means a day other than a Saturday, Sunday or legal holiday or a
------------
day on which banking institutions in New York are required or authorized by law
to close.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" shall mean the Securities and Exchange Commission or any other
----------
governmental authority at the time administering the Securities Act or the
Exchange Act.
"Common Stock" shall mean the common stock of the Company, par value $.01 per
------------
share.
"Current Value Basis" shall mean the method for estimating the current value
-------------------
of the Company's balance sheet items set forth in the current value basis
balance sheet included in the Company's Annual Report to Shareholders.
"Current Value Net Worth" shall mean, as to the Company and its consolidated
-----------------------
Subsidiaries, for any period, the "total shareholders' equity" for that period,
as reported on a Current Value Basis in the consolidated cost basis and current
value basis balance sheets contained in the Company's most recent Annual Report
to Shareholders.
"EBDT" shall mean Earnings Before Depreciation and Deferred Taxes from
----
Operations for the Company and its consolidated Subsidiaries based on the
accounting principles with respect to the year ended December 31, 1993 as
reflected in the Company's Five Year Summary of Earnings Before Depreciation and
Deferred Taxes from Operations and Net Earnings (Loss) contained in the
Company's most recent Annual Report to Shareholders.
"Employee Benefit Plan" means any plan, agreement, arrangement or commitment
---------------------
which is an employee benefit plan, as defined in Section 3(3) of ERISA,
maintained by the Company or any of its Subsidiaries.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Group" means the Company, its Subsidiaries and any entity required to
-----------
be aggregated with the Company or its Subsidiaries under Sections 414(b), (c),
(m) or (o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
------------
any similar or successor Federal statute, and the rules and regulations of the
Commission thereunder.
"Liquidation Value" shall mean the liquidation preference of the Series A
-----------------
Preferred Stock as specified in Section 4, Article SECOND of the Original
Articles Supplementary.
"Material Adverse Effect," "Material Adverse Change" or similar phrases shall
----------------------- -----------------------
mean, unless the context requires otherwise, a material adverse effect on, or a
material adverse change in, the business, financial condition (evaluated on the
basis of Current Value Net Worth) or
-20-
<PAGE>
results of operations (evaluated on the basis of EBDT) of the Company and its
Subsidiaries taken as a whole.
"Multiemployer Plan" means a plan which is a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA with respect to which any member of the ERISA Group
has any liability or an obligation to contribute.
"Officer's Certificate" shall mean a certificate signed in the name of the
---------------------
Company by its Chairman of the Board, its President, one of its Vice Presidents,
its Treasurer or its Chief Financial Officer.
"Pension Plan" means a single employer plan as defined in Section 4001(a)(15)
------------
of ERISA or an individual account plan which is subject to the funding standards
of Section 302 of ERISA with respect to which any member of the ERISA Group at
any relevant time has or may have any liability or obligation to contribute.
"Person" shall mean and include an individual, a corporation, an association,
------
a partnership, a trust or estate, a government or any department or agency
thereof.
"Prospectus" shall mean the prospectus included in any Registration Statement,
----------
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registration Statement" shall mean any registration statement of the Company
----------------------
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" shall mean (a) the Common Stock issued or, unless the
---------------------
context otherwise requires, issuable upon conversion of the Series A Preferred
Stock, and (b) any Common Stock issued subsequent to the conversion of any of
the Series A Preferred Stock as a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Common Stock issued upon such
conversion; provided, however, that immediately after the restrictions on the
-------- -------
transferability of such Common Stock shall have ceased and terminated in
accordance with Section 9, the same shall cease to be Restricted Securities.
Where the context so requires, "holders of Restricted Securities" shall include
holders of Series A Preferred Stock that is convertible into Restricted
Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended, and any
--------------
similar or successor Federal statute, and the rules and regulations of the
Commission thereunder.
-21-
<PAGE>
"Series A Preferred Stock" shall mean the Company's Series A Convertible
------------------------
Preferred Stock, par value $.01 per share, issued pursuant to this Agreement.
"Subsidiary" shall mean a corporation of which the Company owns, directly or
----------
indirectly, more than 50% of the shares of stock entitled to vote in the
election of Directors (excluding shares so entitled to vote only upon a failure
to pay dividends or other contingencies).
SECTION 12. MISCELLANEOUS
12.1 Consent to Amendments. This Agreement may be amended, and the Company
---------------------
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act given by the holder or holders of
at least 66-2/3% of the aggregate number of shares of the Series A Preferred
Stock purchased pursuant hereto at the time outstanding and held by the
Purchasers or their assigns in a transaction pursuant to Rule 144A of the
Securities Act except that the provisions of Sections 9 and 10 hereof may not be
amended without the consent of holders of at least 66-2/3% of the shares of
Series A Preferred Stock purchased pursuant hereto and then outstanding and of
at least 66-2/3% of the shares of Common Stock in each case constituting
Restricted Securities at the time issued or issuable upon conversion of all
Series A Preferred Stock purchased pursuant hereto then outstanding (which
aggregate number of shares shall at all times include the number of shares which
would be issuable if all then outstanding Series A Preferred Stock purchased
pursuant hereto were being converted at the Conversion Price (as defined in the
Original Articles Supplementary) then in effect, with such shares being deemed
to be held by the holders of such unconverted shares of Series A Preferred
Stock). Each holder of Series A Preferred Stock purchased pursuant hereto at
the time or thereafter outstanding shall be bound by any consent authorized by
this section, whether or not such Series A Preferred Stock shall have been
marked to indicate such consent, but any Series A Preferred Stock issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Series A Preferred Stock nor
any delay in exercising any rights hereunder or under any of the shares of
Series A Preferred Stock shall operate as a waiver of any rights of any holder
of such Series A Preferred Stock. As used herein, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
12.2 Lost Certificates. Upon receipt by the Company of evidence
-----------------
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate of Series A Preferred Stock or certificate for Restricted
Securities, and (in case of loss, theft or destruction) of indemnity reasonably
satisfactory to it, and upon surrender and cancellation of such certificate, if
mutilated, the Company will deliver in lieu of such certificate a new
certificate carrying the same rights and obligations as the original
certificate. In case of any loss, theft or destruction of such a certificate
while a Purchaser is the holder thereof, Purchaser's letter of indemnity shall
be accepted by the Company as satisfactory indemnity.
12.3 Notice to Subsequent Holder. If any Series A Preferred Stock
---------------------------
purchased pursuant hereto shall have been transferred to another holder and such
holder shall have
-22-
<PAGE>
designated in writing the address to which communications with respect to such
Series A Preferred Stock shall be mailed, all notices, certificates, requests,
statements and other documents required or permitted to be delivered to any
holder by any provision hereof shall also be delivered to each such holder.
12.4 Survival of Representations, Warranties, and Indemnities. All
--------------------------------------------------------
representations, warranties and indemnities contained herein or made in writing
by the Company or the Purchasers in connection herewith shall survive the
execution and delivery of this Agreement and the issuance and sale of the Series
A Preferred Stock contemplated hereby, regardless of any investigation made by
any Purchaser or on its behalf.
12.5 Successors and Assigns. Except as otherwise limited herein, all
----------------------
covenants and agreements in this Agreement contained by or on behalf of the
parties hereto shall bind and inure to the benefit of the respective successors
and assigns of the parties hereto whether so expressed or not.
12.6 Notices. Except as otherwise set forth herein, all notices and other
-------
communications provided for or given or made hereunder shall be effective when
delivered by hand or sent by overnight courier or by confirmed facsimile
transmission and, if to a Purchaser at the following address, or in any case to
such other address with respect to any such party as such party shall give
notice in writing:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Attention: Chief Financial Officer,
with a copy to the General Counsel
To the Purchasers:
Pier 17 Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Front Realty Holding Company, Inc.
c/o Morgan Guaranty Trust Company
of New York
522 Fifth Avenue
New York, New York 10036
Attention: Mr. James Walsh
President
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Miroslav M. Fajt, Esquire
-23-
<PAGE>
12.7 Accounting Terms. Unless otherwise set forth herein, all
----------------
accounting terms and provisions in this Agreement shall be construed to be as
determined in accordance with generally accepted accounting principles then in
effect.
12.8 Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Maryland that are applicable to contracts between Maryland
residents entered into and to be performed entirely in Maryland. This Agreement
may not be changed orally, but (subject to the provisions of Section 12.1) only
by an agreement in writing signed by the party against whom enforcement is
sought.
12.9 Severability. If any clause, sentence, paragraph or part of this
------------
Agreement, or the application thereof to any Person, shall for any reason be
adjudged by a court of competent jurisdiction to be invalid, or determined to be
in violation or contravention of any applicable statutory legislation, then such
clause, sentence, paragraph or part of this Agreement shall be deemed to be
automatically amended only to the extent necessary to bring this Agreement
within said judgment or determination, as applicable effective as of the date
thereof, and such judgment or determination shall not affect the remainder of
this Agreement, which shall continue in full force and effect.
12.10 Headings; Table of Contents. The descriptive headings of the
---------------------------
several sections and paragraphs of this Agreement and the table of contents are
inserted for convenience only and do not constitute a part of this Agreement.
12.11 Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, all of which shall be deemed but one and the same
instrument and each of which shall be deemed an original.
12.12 Non-Business Days. If the date for making any payment or the
-----------------
last date for performance of any act or the exercising of any right, as provided
in this Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day, with the same
force and effect as if done on the nominal date provided in this Agreement.
12.13 Entire Agreement. This Agreement, including its Schedules and
----------------
Exhibits, supersedes all prior written or oral agreements of the parties as to
the subject matter hereof.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE ROUSE COMPANY
By:____________________________
Name:
Title:
PIER 17 REALTY HOLDING COMPANY, INC.,
a New York not-for-profit corporation
By:____________________________
Name:
Title:
PEARL REALTY HOLDING COMPANY, INC.,
a New York not-for-profit corporation
By:____________________________
Name:
Title:
FRONT REALTY HOLDING COMPANY, INC.,
a New York not-for-profit corporation
By:____________________________
Name:
Title:
-25-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount Shares to
Name of Purchaser of Debt Held be Issued
- ----------------- ---------------- ---------
<S> <C> <C>
Pier 17 Realty Holding Company, Inc. $35,625,000 456,159
Pearl Realty Holding Company, Inc. 625,000 8,003
Front Realty Holding Company, Inc. 1,250,000 16,006
</TABLE>
-26-
<PAGE>
EXHIBIT A
---------
THE ROUSE COMPANY
ARTICLES SUPPLEMENTARY
The Rouse Company, a Maryland corporation, having its principal office
in Columbia, Maryland (hereinafter called the "Corporation"), hereby certifies
to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article FIFTH of the Articles of Incorporation,
as amended and restated in the Articles of Amendment and Restatement of the
Corporation, which were filed with the State Department of Assessments and
Taxation of Maryland on May 27, 1988, and as further amended by the Articles of
Amendment of the Corporation, which were filed with the State Department of
Assessments and Taxation of Maryland on January 10, 1991, and as supplemented by
the Articles Supplementary to the Charter of The Rouse Company (the "Articles
Supplementary") creating the class of Series A Convertible Preferred Stock and
filed with the State Department of Assessments and Taxation of Maryland on
February 17, 1993 (collectively, the "Charter"), the Board of Directors has duly
divided and classified _______________ additional shares of the Preferred Stock
of the Corporation, par value $.01 per share, into shares of the class
designated as Series A Convertible Preferred Stock, and provided for the
issuance of such Preferred Stock.
SECOND: The terms of the Series A Convertible Preferred Stock
established by the Board of Directors are as set forth in the Articles
Supplementary in addition to those set forth in Article FIFTH of the Charter of
the Corporation applicable to all classes of Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
Chief Operating Officer and attested by its Secretary on December , 1994.
ATTEST: THE ROUSE COMPANY
______________________________ By:___________________________
Richard G. McCauley Anthony W. Deering
Senior Vice President, President and
General Counsel and Secretary Chief Operating Officer
<PAGE>
THE UNDERSIGNED, President and Chief Operating Officer of The Rouse
Company, who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, acknowledges in the name
and on behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
______________________________
Anthony W. Deering
President and
Chief Operating Officer
-2-
<PAGE>
ARTICLES SUPPLEMENTARY TO THE CHARTER OF
THE ROUSE COMPANY
The Rouse Company, a Maryland corporation, having its principal office in
Columbia, Maryland (hereinafter called the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article FIFTH of the Articles of Incorporation, as amended
and restated in the Articles of Amendment and Restatement of the Corporation
(the "Charter"), the Board of Directors has duly divided and classified
4,025,000 shares of the Preferred Stock of the Corporation, par value $.01 per
share, into a class designated Series A Convertible Preferred Stock, and
provided for the issuance of such Preferred Stock.
SECOND: The terms of the Series A Convertible Preferred Stock established
by the Board of Directors, in addition to those set forth in Article FIFTH of
the Charter of the Corporation applicable to all classes of Preferred Stock, are
as follows:
Section 1. Number of Shares and Designation. This class of Preferred
--------------------------------
Stock shall be designated as Series A Convertible Preferred Stock (the "Series A
Preferred Stock") and 4,025,000 shall be the number of shares of Preferred Stock
constituting such class.
Section 2. Definitions. For purposes of the Series A Preferred Stock, the
-----------
following terms shall have the meanings indicated:
"Act" shall have the meaning set forth in paragraph (g) of Section 5
hereof.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A Preferred
Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in Columbia,
Maryland or New York, New York are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (c) of
Section 5 hereof.
"Common Stock" shall mean the common stock of the Corporation, par
value $.01 per share.
-3-
<PAGE>
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which the Series A Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to Section 7. The initial
conversion price shall be $21.25 (equivalent to a conversion rate of 2.3529
shares of Common Stock for each share of Series A Preferred Stock).
"Current Market Price" of publicly traded shares of common stock or
any other class of capital stock or other security of the Corporation or
any other issuer for any day shall mean the last reported sales price,
regular way on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular
way, in either case as reported on the New York Stock Exchange or, if such
security is not listed or admitted for trading on the New York Stock
Exchange ("NYSE"), on the principal national securities exchange on which
such security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, if such security is not quoted
on such National Market System, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by NASDAQ or,
if bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on such
day as furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or the
Board of Directors.
"Dividend Payment Date" shall mean the first calendar day of January,
April, July and October, in each year, commencing on April 1, 1993;
provided, however, that if any Dividend Payment Date falls on any day other
-------- -------
than a Business Day, the dividend payment due on such Dividend Payment Date
shall be paid on the Business Day immediately following such Dividend
Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period, which shall commence on the
Issue Date and end on and include March 31, 1993).
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during the five (5) consecutive Trading
Days selected by the Corporation commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and
the day before the "ex" date with respect to the issuance or distribution
requiring such computation. The term "'ex' date," when used with respect
to any issuance or distribution, means the first
-4-
<PAGE>
day on which the Common Stock trades regular way, without the right to
receive such issuance or distribution, on the exchange or in the market, as
the case may be, used to determine that day's Current Market Price.
"Issue Date" shall mean the first date on which shares of Series A
Preferred Stock are issued and sold.
"Junior Stock" shall mean the Common Stock and any other class or
series of shares of the Corporation over which the Series A Preferred Stock
has preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"Non-Electing Share" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8.
"Person" shall mean any individual, firm, partnership, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
"Press Release" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section 7 hereof.
"Series A Preferred Stock" shall have the meaning set forth in Section
1 hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; provided, however, that if any funds
-------- -------
for any class or series of Junior Stock or any class or series of stock
ranking on a parity with the Series A Preferred Stock as to the payment of
dividends are placed in a separate account of the Corporation or delivered
to a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Series A Preferred Stock shall mean placing
such funds in a separate account or delivering such funds to a disbursing,
paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted
for trading on the NYSE, on the principal national securities exchange on
which such securities are
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<PAGE>
listed or admitted, or if not listed or admitted for trading on any
national securities exchange, on the National Market System of NASDAQ, or
if such securities are not quoted on such National Market System, in the
applicable securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section 7 hereof.
"Transfer Agent" means Security Trust Company, N.A., Baltimore,
Maryland, or such other agent or agents of the Corporation as may be
designated by the Board of Directors or their designee as the transfer
agent for the Series A Preferred Stock.
"Voting Preferred Shares" shall have the meaning set forth in Section
9 hereof.
Section 3. Dividends. (a) The holders of shares of the Series A
---------
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for that purpose, dividends
payable in cash at the rate per annum of $3.25 per share of Series A Preferred
Stock. Such dividends shall be cumulative from the Issue Date, whether or not
in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly, when, as and if declared by the Board of Directors, in arrears on
Dividend Payment Dates, commencing on the first Dividend Payment Date after the
Issue Date. Each such dividend shall be payable in arrears to the holders of
record of shares of the Series A Preferred Stock, as they appear on the stock
records of the Corporation at the close of business on such record dates, not
more than 60 days preceding such Dividend Payment Dates thereof, as shall be
fixed by the Board of Directors. Accrued and unpaid dividends for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, not exceeding
45 days preceding the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable for each full Dividend Period for the
Series A Preferred Stock shall be computed by dividing the annual dividend rate
by four. The amount of dividends payable for the initial Dividend Period, or
any other period shorter or longer than a full Dividend Period, on the Series A
Preferred Stock shall be computed on the basis of twelve 30-day months and a
360-day year. Holders of shares of Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided, on the Series A Preferred Stock.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series A Preferred Stock that may be in
arrears.
(c) So long as any shares of the Series A Preferred Stock are outstanding,
no dividends, except as described in the immediately following sentence, shall
be declared or paid or set apart for payment on any class or series of Parity
Stock for any period unless full
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<PAGE>
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series A Preferred Stock for all Dividend Periods terminating on or prior
to the Dividend Payment Date on such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon shares of the Series A
Preferred Stock and all dividends declared upon any other class or series of
Parity Stock shall be declared ratably in proportion to the respective amounts
of dividends accumulated and unpaid on the Series A Preferred Stock and
accumulated and unpaid on such Parity Stock.
(d) So long as any shares of the Series A Preferred Stock are outstanding,
no dividends (other than dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Junior
Stock) shall be declared or paid or set apart for payment or other distribution
declared or made upon Junior Stock, nor shall any Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of shares of Common Stock made for purposes of an employee incentive
or benefit plan of the Corporation or any subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by the Corporation, directly or indirectly (except
by conversion into or exchange for Junior Stock), unless in each case (i) the
full cumulative dividends on all outstanding shares of the Series A Preferred
Stock and any other Parity Stock of the Corporation shall have been paid or set
apart for payment for all past Dividend Periods with respect to the Series A
Preferred Stock and all past dividend periods with respect to such Parity Stock
and (ii) sufficient funds shall have been paid or set apart for the payment of
the dividend for the current Dividend Period with respect to the Series A
Preferred Stock and the current dividend period with respect to such Parity
Stock.
Section 4. Liquidation Preference. (a) In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Stock, the holders of the shares of Series A Preferred Stock shall be entitled
to receive Fifty Dollars ($50.00) per share of Series A Preferred Stock plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of Series A
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of shares of Series A Preferred Stock and any such other
Parity Stock ratably in accordance with the respective amounts that would be
payable on such shares of Series A Preferred Stock and any such other Parity
Stock if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of the
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<PAGE>
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to the Series A Preferred
Stock upon liquidation, dissolution or winding up, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall have been made
in full to the holders of the Series A Preferred Stock, as provided in this
Section 4, any other series or class or classes of Junior Stock shall, subject
to the respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series A Preferred Stock shall not be entitled to share therein.
Section 5. Redemption at the Option of the Corporation. (a) The Series A
-------------------------------------------
Preferred Stock shall not be redeemable by the Corporation prior to March 1,
1996. On and after March 1, 1996, the Corporation, at its option, may redeem
the shares of Series A Preferred Stock, in whole or in part, as set forth
herein, subject to the provisions described below.
(b) The Series A Preferred Stock may be redeemed, in whole or in part, at
the option of the Corporation, at any time, only if for 20 Trading Days, within
any period of 30 consecutive Trading Days, including the last Trading Day of
such period, the Current Market Price of the Common Stock on each of such 20
Trading Days exceeds 120% of the Conversion Price in effect on such Trading Day.
In order to exercise its redemption option, the Corporation must issue a press
release announcing the redemption (the "Press Release") prior to the opening of
business on the second Trading Day after the condition in the preceding sentence
has, from time to time, been met. The Corporation may not issue a Press Release
prior to March 1, 1996. The Press Release shall announce the redemption and set
forth the number of shares of Series A Preferred Stock which the Corporation
intends to redeem. The Call Date shall be selected by the Corporation, shall be
specified in the notice of redemption and shall be not less than 30 days or more
than 60 days after the date on which the Corporation issues the Press Release.
(c) Upon redemption of Series A Preferred Stock by the Corporation on the
date specified in the notice to holders required under subparagraph (e) of this
Section 5 (the "Call Date"), each share of Series A Preferred Stock so redeemed
shall be converted into a number of shares of Common Stock equal to the
liquidation preference of the shares of Series A Preferred Stock being redeemed
divided by the Conversion Price as of the opening of business on the Call Date.
Upon any redemption of Series A Preferred Stock, the Corporation shall pay
any accrued and unpaid dividends in arrears for any Dividend Period ending on or
prior to the Call Date. If the Call Date falls after a dividend payment record
date and prior to the corresponding Dividend Payment Date, then each holder of
Series A Preferred Stock at the close of business on such dividend payment
record date shall be entitled to the dividend payable on such shares on the
corresponding dividend payment date notwithstanding the
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<PAGE>
redemption of such shares before such Dividend Payment Date. In the case of any
Call Date occurring prior to the record date for the April 1, 1996 Dividend
Payment Date, the holders of the Series A Preferred Stock to be redeemed on such
Call Date shall be entitled to any accrued and unpaid dividends through March 1,
1996, but not thereafter. Except as provided above, the Corporation shall make
no payment or allowance for unpaid dividends, whether or not in arrears, on
shares of Series A Preferred Stock called for redemption or on the shares of
Common Stock issued upon such redemption.
(d) If full cumulative dividends on the Series A Preferred Stock and any
other class or series of Parity Stock of the Corporation have not been paid or
declared and set apart for payment, the Series A Preferred Stock may not be
redeemed in part and the Corporation may not purchase or acquire shares of
Series A Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Series A Preferred
Stock.
(e) If the Corporation shall redeem shares of Series A Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given not more than four Business Days after the date on which the Corporation
issues the Press Release to each holder of record of the shares to be redeemed.
Such notice shall be provided by first class mail, postage prepaid, at such
holder's address as the same appears on the stock records of the Corporation, or
by publication in The Wall Street Journal or The New York Times, or if neither
----------------------- ------------------
such newspaper is then being published, any other daily newspaper of national
circulation. If the Corporation elects to provide such notice by publication,
it shall also promptly mail notice of such redemption to the holders of the
Series A Preferred Stock to be redeemed. Neither the failure to mail any notice
required by this paragraph (e), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice or
the validity of the proceedings for redemption with respect to the other
holders. Any notice which was mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date mailed whether or not
the holder receives the notice. Each such mailed or published notice shall
state, as appropriate: (1) the Call Date; (2) the number of shares of Series A
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the number of shares of Common Stock to be issued with respect to
each share of Series A Preferred Stock; (4) the place or places at which
certificates for such shares are to be surrendered for certificates representing
shares of Common Stock; (5) the then-current Conversion Price; and (6) that
dividends on the shares to be redeemed shall cease to accrue on such Call Date
except as otherwise provided herein. Notice having been published or mailed as
aforesaid, from and after the Call Date (unless the Corporation shall fail to
make available a number of shares of Common Stock or amount of cash necessary to
effect such redemption), (i) except as otherwise provided herein, dividends on
the shares of the Series A Preferred Stock so called for redemption shall cease
to accrue, (ii) said shares shall no longer be deemed to be outstanding, and
(iii) all rights of the holders thereof as holders of Series A Preferred Stock
of the Corporation shall cease (except the rights to receive the shares of
Common Stock and cash payable upon such redemption,
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<PAGE>
without interest thereon, upon surrender and endorsement of their certificates
if so required and to receive any dividends payable thereon). The Corporation's
obligation to provide shares of Common Stock and cash in accordance with the
preceding sentence shall be deemed fulfilled if, on or before the Call Date, the
Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation) that has an office in the Borough of Manhattan,
City of New York, or in Baltimore, Maryland and that has, or is an affiliate of
a bank or trust company that has, a capital and surplus of at least $50,000,000,
shares of Common Stock and any cash necessary for such redemption, in trust,
with irrevocable instructions that such shares of Common Stock and cash be
applied to the redemption of the shares of Series A Preferred Stock so called
for redemption. At the close of business on the Call Date, each holder of
Series A Preferred Stock to be redeemed (unless the Company defaults in the
delivery of the shares of Common Stock or cash payable on such Call Date) shall
be deemed to be the record holder of the number of shares of Common Stock into
which such Series A Preferred Stock is to be redeemed, regardless of whether
such holder has surrendered the certificates representing the Series A Preferred
Stock. No interest shall accrue for the benefit of the holders of Series A
Preferred Stock to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for certificates of shares of
Common Stock and any cash (without interest thereon) for which such shares have
been redeemed. If fewer than all the outstanding shares of Series A Preferred
Stock are to redeemed, shares to be redeemed shall be selected by the
Corporation from outstanding shares of Series A Preferred Stock not previously
called for redemption by lot or pro rata (as nearly as may be) or by any other
method determined by the Corporation in its sole discretion to be equitable. If
fewer than all the shares of Series A Preferred Stock represented by any
certificate are redeemed, then new certificates representing the unredeemed
shares shall be issued without cost to the holder thereof.
(f) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon redemption of the Series A Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the redemption of a share of Series A Preferred
Stock, the Corporation shall pay to the holder of such share an amount in cash
(computed to the nearest cent) based upon the Current Market Price of Common
Stock on the Trading Day immediately preceding the Call Date. If more than one
share shall be surrendered for redemption at one time by the same holder, the
number of full shares of Common Stock issuable upon redemption thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered.
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<PAGE>
(g) The Corporation covenants that any shares of Common Stock issued upon
redemption of the Series A Preferred Stock shall be validly issued, fully paid
and non-assessable. The Corporation shall endeavor to list the shares of Common
Stock required to be delivered upon redemption of the Series A Preferred Stock,
prior to such redemption, upon each national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such delivery.
The Corporation shall endeavor to take any action necessary to ensure that
any shares of Common Stock issued upon the redemption of Series A Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Securities Act of 1933, as amended (the "Act"), or any applicable state
securities or blue sky laws (other than any shares of Common Stock issued upon
redemption of any Series A Preferred Stock which are held by an "affiliate" (as
defined in Rule 144 under the Act) of the Corporation).
Section 6. Shares To Be Retired.
--------------------
All shares of Series A Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series.
Section 7. Conversion.
----------
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section 7, a
holder of shares of Series A Preferred Stock shall have the right, at his or her
option, at any time to convert such shares into the number of fully paid and
non-assessable shares of Common Stock obtained by dividing the aggregate
liquidation preference of such shares by the Conversion Price (as in effect at
the time and on the date provided for in the last paragraph of paragraph (b) of
this Section 7) by surrendering such shares to be converted, such surrender to
be made in the manner provided in paragraph (b) of this Section 7; provided,
--------
however, that the right to convert shares called for redemption pursuant to
- -------
Section 5 shall terminate at the close of business on the Call Date fixed for
such redemption, unless the Corporation shall default in making payment of the
shares of Common Stock and any cash payable upon such redemption under Section 5
hereof.
(b) In order to exercise the conversion right, the holder of each share of
Series A Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to the
Corporation that the holder thereof elects to convert such Series A Preferred
Stock. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such share of Series A Preferred Stock is registered,
each share surrendered for conversion shall be accompanied by instruments of
transfer, in
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<PAGE>
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to such
Dividend Payment Date. However, shares of Series A Preferred Stock surrendered
for conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of notice of redemption
with respect to a Call Date during such period, such shares of Series A
Preferred Stock being entitled to such dividend on the Dividend Payment Date)
must be accompanied by payment of an amount equal to the dividend payable on
such shares on such Dividend Payment Date. A holder of shares of Series A
Preferred Stock on a dividend payment record date who (or whose transferee)
tenders any such shares for conversion into shares of Common Stock on such
Dividend Payment Date will receive the dividend payable by the Corporation on
such shares of Series A Preferred Stock on such date, and the converting holder
need not include payment of the amount of such dividend upon surrender of shares
of Series A Preferred Stock for conversion. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for shares
of Series A Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 7, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in paragraph (c)
of this Section 7.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
A Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend payable on such shares)
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion
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<PAGE>
shall be at the Conversion Price in effect on the date on which such shares
shall have been surrendered and such notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series A Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Series A Preferred
Stock, the Corporation shall pay to the holder of such share an amount in cash
based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one share shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series A Preferred Stock so
surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its capital stock in shares of its Common Stock,
(B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of
shares or (D) issue any shares of capital stock by reclassification of its
Common Stock, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of stockholders
entitled to receive such dividend or distribution or at the opening of
business on the day following the day on which such subdivision,
combination or reclassification becomes effective, as the case may be,
shall be adjusted so that the holder of any share of Series A Preferred
Stock thereafter surrendered for conversion shall be entitled to receive
the number of shares of Common Stock that such holder would have owned or
have been entitled to receive after the happening of any of the events
described above had such have been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date
in the case of a subdivision, combination or reclassification. An
adjustment made pursuant to this subparagraph (i) shall become effective
immediately after the opening of business on the day next following the
record date (except as provided in paragraph (h) below) in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the
Fair Market Value per share of Common Stock on the record date for the
determination of stockholders entitled to receive such rights or warrants,
then the Conversion Price in effect at the opening of business on the day
next following such record date shall be adjusted to equal the price
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<PAGE>
determined by multiplying (I) the Conversion Price in effect immediately
prior to the opening of business on the day following the date fixed for
such determination by (II) a fraction, the numerator of which shall be the
sum of (A) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination and (B) the number of
shares that the aggregate proceeds to the Corporation from the exercise of
such rights or warrants for Common Stock would purchase at such Fair Market
Value, and the denominator of which shall be the sum of (A) the number of
shares of Common Stock outstanding on the close of business on the date
fixed for such determination and (B) the number of additional shares of
Common Stock offered for subscription or purchase pursuant to such rights
or warrants. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except as
provided in paragraph (h) below). In determining whether any rights or
warrants entitle the holders of Common Stock to subscribe for or purchase
shares of Common Stock at less than such Fair Market Value, there shall be
taken into account any consideration received by the Corporation upon
issuance and upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Chief Executive
Officer or the Board of Directors.
(iii) If the Corporation shall distribute to all holders of its
Common Stock any shares of capital stock of the Corporation (other than
Common Stock) or evidence of its indebtedness or assets (excluding cash
dividends or distributions paid out of the total equity applicable to
Common Stock, including revaluation equity, less the amount of stated
capital attributable to Common Stock, determined on the basis of the most
recent annual consolidated cost basis and current value basis and quarterly
consolidated balance sheets of the Corporation and its consolidated
subsidiaries available at the time of the declaration of the dividend or
distribution) or rights or warrants to subscribe for or purchase any of its
securities (excluding those rights and warrants issued to all holders of
Common Stock entitling them for a period expiring within 45 days after the
record date referred to in subparagraph (ii) above to subscribe for or
purchase Common Stock, which rights and warrants are referred to in and
treated under subparagraph (ii) above) (any of the foregoing being
hereinafter in this subparagraph (iii) called the "Securities"), then in
each such case the Conversion Price shall be adjusted so that it shall
equal the price determined by multiplying (I) the Conversion Price in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by (II)
a fraction, the numerator of which shall be the Fair Market Value per share
of the Common Stock on the record date mentioned below less the then fair
market value (as determined by the Chief Executive Officer or the Board of
Directors, whose determination shall be conclusive), of the portion of the
capital stock or assets or evidences of indebtedness so distributed or of
such rights or warrants applicable to one share of Common Stock, and the
denominator of which shall be the Fair Market Value per share of the Common
Stock on the record date mentioned below. Such adjustment shall become
effective immediately at the opening of
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<PAGE>
business on the Business Day next following (except as provided in
paragraph (h) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this clause
(iii), the distribution of a Security, which is distributed not only to the
holders of the Common Stock on the date fixed for the determination of
stockholders entitled to such distribution of such Security, but also is
distributed with each share of Common Stock delivered to a Person
converting a share of Series A Preferred Stock after such determination
date, shall not require an adjustment of the Conversion Price pursuant to
this clause (iii); provided that on the date, if any, on which a person
--------
converting a share of Series A Preferred Stock would no longer be entitled
to receive such Security with a share of Common Stock (other than as a
result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Price shall
be adjusted as provided in this clause (iii) (and such day shall be deemed
to be "the date fixed for the determination of the stockholders entitled to
receive such distribution" and "the record date" within the meaning of the
two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in such price; provided, however, that any adjustments that by reason of
-------- -------
this subparagraph (iv) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in
-------- -------
accordance with the provisions of this Section 7 (other than this
subparagraph (iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of shares of
Common Stock. Notwithstanding any other provisions of this Section 7, the
Corporation shall not be required to make any adjustment of the Conversion
Price for the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under such plan. All calculations under
this Section 7 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a share being
rounded upward), as the case may be. Anything in this paragraph (d) to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this paragraph (d), as it in its discretion
shall determine to be advisable in order that any stock dividends,
subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase stock or securities, or a
distribution of other assets (other than cash dividends) hereafter made by
the Corporation to its stockholders shall not be taxable.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for all or substantially all shares of Common Stock, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Stock and excluding any transaction as to which
-15-
<PAGE>
subparagraph (d)(i) of this Section 7 applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which shares
of Common Stock shall be converted into the right to receive stock, securities
or other property (including cash or any combination thereof), each share of
Series A Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares of stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of shares of Common Stock into which one share of Series A Preferred Stock was
convertible immediately prior to such Transaction, assuming such holder of
Common Stock (i) is not a Person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation or to which
such sale or transfer was made, as the case may be ("Constituent Person"), or an
affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each share of Common Stock
of the Corporation held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Share"), then for the
purpose of this paragraph (e) the kind and amount of stock, securities and other
property (including cash) receivable upon such Transaction by each Non-Electing
Share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series A Preferred Stock that will contain
provisions enabling the holders of the Series A Preferred Stock that remains
outstanding after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than in cash out of the total
equity applicable to Common Stock, including revaluation equity, less the
amount of stated capital attributable to Common Stock, determined on the
basis of the most recent annual consolidated cost basis and current value
basis and quarterly consolidated balance sheets of the Corporation and its
consolidated subsidiaries available at the time of the declaration of the
dividend or distribution); or
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<PAGE>
(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock (other
than an event to which subparagraph (d)(i) of this Section 7 applies) or
any consolidation or merger to which the Corporation is a party and for
which approval of any stockholders of the Corporation is required, or a
statutory share exchange, or a self tender offer by the Company for all or
substantially all of its outstanding shares of Common Stock or the sale or
transfer of all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the Series A Preferred Stock at
their addresses as shown on the stock records of the Corporation, as promptly as
possible, but at least 15 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights or warrants are
to be determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up. Failure to
give or receive such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment, which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of each share of Series A Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any
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<PAGE>
share of Series A Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount of cash in lieu of any
fraction pursuant to paragraph (c) of this Section 7.
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 7.
If any action or transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 7, only one adjustment shall
be made, and such adjustment shall be the amount of adjustment that has the
highest absolute value.
(j) If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 7, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of the shares of Series A Preferred Stock, the Conversion Price for the
Series A Preferred Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock, for the purpose of effecting conversion of
the Series A Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series A Preferred
Stock not theretofore converted. For purposes of this paragraph (l), the number
of shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series A Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Series A Preferred Stock shall be validly issued, fully paid
and non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the shares of Common
Stock deliverable upon conversion of the Series A Preferred Stock, the
Corporation will take any corporate action that, in the opinion of its counsel,
may be necessary in order that the Corporation may validly and legally issue
fully paid and non-assessable shares of Common Stock at such adjusted Conversion
Price.
The Corporation shall endeavor to list the shares of Common Stock required
to be delivered upon conversion of the Series A Preferred Stock, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Corporation shall endeavor to
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<PAGE>
comply with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof by, any governmental authority.
(l) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common stock or other securities or property on conversion of the Series A
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
-------- -------
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the Series A Preferred
Stock to be converted, and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
Section 8. Ranking. Any class or series of stock of the Corporation shall
-------
be deemed to rank:
(a) prior to the Series A Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series A Preferred Stock;
(b) on a parity with the Series A Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those
of the Series A Preferred Stock, if the holders of such class of stock or
series and the Series A Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other ("Parity Stock"); and
(c) junior to the Series A Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such stock or series shall be Common Stock or if the
holders of Series A Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the holders of
shares of such stock or series.
Section 9. Voting. If and whenever six quarterly dividends (whether or
------
not consecutive) payable on the Series A Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any
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<PAGE>
such dividend has not been paid in full), whether or not earned or declared, the
number of directors then constituting the Board of Directors shall be increased
by two and the holders of shares of Series A Preferred Stock, together with the
holders of shares of every other series of Parity Stock (any such other series,
the "Voting Preferred Shares"), voting as a single class regardless of series,
shall be entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series A Preferred Stock
and the Voting Preferred Shares called as hereinafter provided. Whenever all
arrears in dividends on the Series A Preferred Stock and the Voting Preferred
Shares then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been paid or declared and set apart
for payment, then the right of the holders of the Series A Preferred Stock and
the Voting Preferred Shares to elect such additional two directors shall cease
(but subject always to the same provision for the vesting of such voting rights
in the case of any similar future arrearages in six quarterly dividends), and
the terms of office of all persons elected as directors by the holders of the
Series A Preferred Stock and the Voting Preferred Shares shall forthwith
terminate and the number of the Board of Directors shall be reduced accordingly.
At any time after such voting power shall have been so vested in the holders of
shares of Series A Preferred Stock and the Voting Preferred Shares, the
secretary of the Corporation may, and upon the written request of any holder of
Series A Preferred Stock (addressed to the secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Series A
Preferred Stock and of the Voting Preferred Shares for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the secretary
within 20 days after receipt of any such request, then any holder of shares of
Series A Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books of the Corporation.
The directors elected at any such special meeting shall hold office until the
next annual meeting of the stockholders or special meeting held in lieu thereof
if such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Series A
Preferred Stock and the Voting Preferred Shares, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Series A Preferred Stock and the Voting Preferred
Shares or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
So long as any shares of Series A Preferred Stock are outstanding, in
addition to any other vote or consent of stockholders required by law or by the
Charter, as amended, the affirmative vote of at least 66-2/3% of the votes
entitled to be cast by the holders of the shares of Series A Preferred Stock and
the Voting Preferred Shares, at the time outstanding, acting as a single class
regardless of series, given in person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating:
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<PAGE>
(a) Any amendment, alteration or repeal of any of the provisions of the
Charter or these Articles Supplementary that materially adversely affects
the voting powers, rights or preferences of the holders of the Series A
Preferred Stock or the Voting Preferred Shares; provided, however, that the
-------- -------
amendment of the provisions of the Charter so as to authorize or create or
to increase the authorized amount of, any Junior Stock or any shares of any
class ranking on a parity with the Series A Preferred Stock or the Voting
Preferred Shares shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Series A Preferred
Stock, and provided further, that if any such amendment, alteration or
-------- -------
repeal would materially adversely affect any voting powers, rights or
preferences of the Series A Preferred Stock or another series of Voting
Preferred Shares that are not enjoyed by some or all of the other series
otherwise entitled to vote in accordance herewith, the affirmative vote of
at least 66- 2/3% of the votes entitled to be cast by the holders of all
series similarly affected, similarly given, shall be required in lieu of
the affirmative vote of at least 66-2/3% of the votes entitled to be cast
by the holders of the shares of Series A Preferred Stock and the Voting
Preferred Shares otherwise entitled to vote in accordance herewith; or
(b) The authorization or creation of, or the increase in the
authorized amount of, any shares of any class or any security convertible
into shares of any class ranking prior to the Series A Preferred Stock in
the distribution of assets on any liquidation, dissolution or winding up of
the Corporation or in the payment of dividends;
provided, however, that no such vote of the holders of Series A Preferred Stock
- -------- -------
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such prior shares or
convertible security is to be made, as the case may be, provision is made for
the redemption of all shares of Series A Preferred Stock at the time
outstanding.
For purposes of the foregoing provisions of this Section 9, each share of
Series A Preferred Stock shall have one (1) vote per share, except that when any
other series of preferred stock shall have the right to vote with the Series A
Preferred Stock as a single class on any matter, then the Series A Preferred
Stock and such other series shall have with respect to such matters one (1) vote
per $50.00 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the shares of Series A Preferred Stock
shall not have any relative, participating, optional or other special voting
rights and powers other than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any corporate action.
Section 10. Record Holders. The Corporation and the Transfer Agent may
--------------
deem and treat the record holder of any shares of Series A Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Corporation
nor the Transfer Agent shall be affected by any notice to the contrary.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be made under the seal of the Corporation and signed in its name and attested
by its duly authorized officers this 17th day of February, 1993.
THE ROUSE COMPANY
By: ______________________________
Anthony W. Deering,
Executive Vice-President
and Chief Financial Officer
Attest:
- ------------------------------
Richard G. McCauley
Senior Vice-President,
General Counsel and Secretary
-22-
<PAGE>
THE UNDERSIGNED, Executive Vice-President and Chief Financial Officer
of The Rouse Company, who executed on behalf of the Corporation Articles
Supplementary of which this Certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
By: ____________________________
Anthony W. Deering,
Executive Vice-President
and Chief Financial Officer
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<PAGE>
EXHIBIT 4.1
-----------
[THE ROUSE COMPANY LETTERHEAD]
December __, 1994
Front Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Pier 17 Realty Holding Company, Inc.
c/o Morgan Guaranty Trust Company of New York
522 Fifth Avenue
New York, New York 10036
Ladies and Gentlemen:
I am Vice-President and Associate General Counsel of The Rouse
Company, a Maryland corporation (the "Company"), and render this opinion
pursuant to Section 4.1 of the Series A Convertible Preferred Stock Exchange
Agreement, dated as of December __, 1994 (the "Agreement"), by and among the
Company and you (individually a "Purchaser" and collectively the "Purchasers")
pursuant to which you have agreed to exchange the $37.5 Million Loan (including
an assignment of certain documentation related to such loan) for a number of
shares (not less than 450,000 shares) of authorized but unissued Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), of the Company, valued at $23,000,000.
In rendering this opinion, I have examined the originals, or
certified, conformed or reproduction copies, of the Charter and Bylaws of the
Company, the Agreement and all corporate proceedings, records, agreements,
instruments and documents as I have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In such examination, I have assumed
with respect to all parties other than the Company, the genuineness of all
signatures, the authenticity of all documents submitted to me as originals, the
due authorization, execution and delivery by all parties thereto (other than the
Company) of all documents examined by me and the conformity to the originals of
all documents submitted as copies.
All capitalized terms not otherwise defined herein have the
meanings given in the Agreement.
Based upon the foregoing, and subject to the limitations set forth
herein, I am of the opinion that:
1. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland, has the
corporate power and authority to own its assets and to carry on its business as
now conducted and as proposed to be conducted, is duly qualified and authorized
to do business under
<PAGE>
Front Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Pier 17 Realty Holding Company, Inc.
Page 2
December , 1994
the laws of each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole,
and has all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted which are material to the
Company and its Subsidiaries taken as whole.
2. The execution and delivery by the Company of the Agreement
and the performance by the Company of all transactions and obligations
contemplated thereby are within its corporate authority. The Agreement
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and with respect to indemnification
provisions contained therein, by applicable securities laws or principles of
public policy.
3. The execution, delivery and performance of the Agreement and
the issuance of the Series A Preferred Stock have been duly authorized by all
necessary corporate proceedings on the part of the Company.
4. The shares of Series A Preferred Stock to be issued pursuant
to the Agreement, when issued in compliance with the provisions thereof, will be
validly issued, fully paid and nonassessable, and will be free of any liens or
encumbrances created by or as a result of action by the Company; provided,
however, that the shares of Series A Preferred Stock to be issued thereunder
(and any shares of Common Stock issued upon conversion thereof) may be subject
to restrictions on transfer under state and/or federal securities laws. Upon
conversion of the shares of Series A Preferred Stock into shares of Common
Stock, such shares of Common Stock will be duly authorized and validly issued,
fully paid and nonassessable.
5. The Exchange Act Reports comply as to form in all material
respects with the requirements of the Exchange Act.
6. To the best of my knowledge, there is no action, suit,
proceeding, investigation or claim pending against the Company or any Subsidiary
or involving any of their respective properties or interests or threatened
against the Company or any Subsidiary or in respect of any of their respective
properties or
<PAGE>
Front Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Pier 17 Realty Holding Company, Inc.
Page 3
December , 1994
interests, at law or in equity, before any federal, state, municipal or local
court, administrative agency, commission, board, bureau, instrumentality or
arbitrator which is likely to adversely affect the power of the Company to
execute and deliver, or the ability of the Company to perform its obligations
under, the Agreement, or to result in any Material Adverse Change in the
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, except as otherwise disclosed in the Exchange Act Reports or
otherwise disclosed to the Purchasers in writing.
7. Except as disclosed in the Exchange Act Reports or otherwise
disclosed to the Purchasers in writing, neither the Company nor any of its
Subsidiaries is in violation of, or in default under, nor has there been any
waiver given with respect to, any term or provision of any charter, bylaw,
mortgage, indenture, agreement, instrument, statute, rule, regulation, judgment,
decree, order, writ or injunction applicable to it, such that such violations
and defaults in the aggregate are likely to result in any Material Adverse
Change in the financial condition or results of operations of the Company and
its Subsidiaries taken as a whole, or materially adversely affect the ability of
the Company to perform in any material respect its obligations under the
Agreement.
8. Except as otherwise disclosed in writing to the Purchasers,
the execution, delivery and performance by the Company of the Agreement and any
of the transactions contemplated thereby (including, without limitation, the
issuance of the shares of Series A Preferred Stock as contemplated therein) does
not and will not (i) violate or conflict with, with or without the giving of
notice or the passage of time or both, any provision of (A) the charter or
bylaws of the Company or (B) any law, rule, regulation or order of any federal,
state, county, municipal or other governmental authority, or any judgment, writ,
injunction, decree, award or other action of any court or governmental authority
or arbitrator(s), or any agreement, indenture or other instrument applicable to
the Company or its Subsidiaries or any of its or their properties, except in the
case of this clause (B) for such violations or conflicts that will not
individually or in the aggregate result in a Material Adverse Change in the
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, (ii) result in the creation of any lien upon any of the
Company's or its Subsidiaries' properties, assets or revenues, (iii) require the
consent, waiver, approval, order or authorization of, or declaration,
registration,
<PAGE>
Front Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Pier 17 Realty Holding Company, Inc.
Page 4
December , 1994
qualification or filing with, any Person (whether or not a governmental
authority and including, without limitation, any shareholder approval) except
for required securities law filings.
9. Except for the conditions required in connection with the
Refinancing Transactions required to satisfy the conditions of Sections 4.6, 5.4
and 5.5 of the Agreement, neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person of which
I am aware, nor any circumstance involving the Company of which I am aware in
connection with the offer, issue, sale or delivery of the Series A Preferred
Stock under the Agreement is such as to require the Company to obtain any
consent, approval or authorization of, or any notice to, or filing, registration
or qualification with, any court or administrative or governmental body in
connection with the execution and delivery of the Agreement or the offer, issue,
sale or delivery of the Series A Preferred Stock, or (except as may be required
in connection with fulfillment of, or compliance with, the provisions of
Sections 9 and 10 of the Agreement) fulfillment of, or compliance with, the
terms and provisions of the Agreement or of the Series A Preferred Stock, or is
such as to require or give rise to any limitation on any Purchaser's ownership
of any equity securities of the Company other than by reason of the restricted
status of those securities under applicable securities laws or regulatory
approvals or filings required by the Maryland General Corporation Law or the
Exchange Act.
10. The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
This opinion is furnished to you by the undersigned as Vice-President
and Associate General Counsel for the Company. I am a member of the Maryland
Bar, and I accordingly limit the applicability of the opinions contained herein
to matters of Maryland and Federal law. This opinion is solely for your benefit
as Purchasers, and is rendered solely in connection with the transaction to
which this opinion relates. This opinion may be relied upon only in connection
with the transaction contemplated by the Agreement and may not be relied upon by
any other person without my prior written consent.
Very truly yours,
<PAGE>
Front Realty Holding Company, Inc.
Pearl Realty Holding Company, Inc.
Pier 17 Realty Holding Company, Inc.
Page 5
December , 1994
David R. Schwiesow
Vice-President and
Associate General Counsel
<PAGE>
EXHIBIT 4.2
-----------
THE ROUSE COMPANY
Officer's Certificate
---------------------
Douglas A. McGregor, Executive Vice-President of The Rouse Company, a
Maryland corporation (the "Company"), pursuant to Section 4.2 of the Series A
Convertible Preferred Stock Exchange Agreement by and among The Rouse Company,
Front Realty Holding Company, Inc., Pearl Realty Holding Company, Inc. and Pier
17 Realty Holding Company, Inc. certifies that, to the best of his knowledge,
the representations and warranties of the Company in the Series A Convertible
Preferred Stock Exchange Agreement are true and correct as of the date hereof
and after giving effect to the transactions contemplated by the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Company.
Dated: December __, 1994
_________________________
Douglas A. McGregor
Executive Vice-President
<PAGE>
EXHIBIT 5.1
-----------
[HAYTHE & CURLEY LETTERHEAD]
December __, 1994
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044
Ladies and Gentlemen:
We have acted as counsel for Front Realty Holding Company, Inc., a New
York not-for-profit corporation, Pearl Realty Holding Company, Inc., a New York
not-for-profit corporation and Pier 17 Realty Holding Company, Inc., a New York
not-for-profit corporation (individually a "Purchaser" and collectively the
"Purchasers") in connection with the transactions contemplated by the Series A
Convertible Preferred Stock Exchange Agreement, dated as of December __, 1994
(the "Agreement"), by and among you and the Purchasers pursuant to which the
Purchasers have agreed to exchange the $37.5 Million Loan (including an
assignment of certain documentation related to such loan) for a number of shares
(not less than 450,000 shares) of authorized but unissued Series A Convertible
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"), of
the Company, valued at $23 million. This opinion is being delivered pursuant to
Section 5.1 of the Agreement.
In our capacity as counsel to the Purchasers, we have examined the
originals, or certified, conformed or reproduction copies, of the charter,
bylaws or other organizational documents of each of the Purchasers, the
Agreement, certificates of corporate officers of each of the Purchasers and all
corporate proceedings, records, agreements, instruments and documents as we have
deemed relevant or necessary as the basis for the opinions hereinafter
expressed. In such examination, we have assumed with respect to all parties
other than the Purchasers, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the due authorization, execution
and delivery by all parties thereto (other than the Purchasers) of all documents
examined by us and the conformity to the originals of all documents submitted as
copies.
All capitalized terms not otherwise defined herein have the meanings
given in the Agreement.
Based upon the foregoing, and subject to the limitations set forth
herein, we are of the opinion that:
1. Each Purchaser is a not-for-profit corporation validly existing in
good standing under the laws of the State of New York.
<PAGE>
The Rouse Company
Page 2
December , 1994
2. Each Purchaser has all requisite power, authority and legal right to
execute, deliver, enter into, consummate and perform the Agreement. The
execution, delivery and performance of the Agreement by each Purchaser has been
duly authorized by all required corporate action on the part of each Purchaser.
Each Purchaser has duly executed and delivered the Agreement and the Agreement
constitutes the legal, valid and binding obligation of each Purchaser
enforceable against such Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally and the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and with respect to indemnification
provisions contained therein, by applicable securities laws or principles of
public policy.
3. Each Purchaser has the legal capacity to assign to the Company its
entire interest in the Debt as specified in Schedule I to the Agreement.
4. Each Purchaser is a "qualified institutional buyer" or an
"accredited investor," as such terms are defined pursuant to Rule 144A or 501,
respectively, of the Securities Act of 1933, as amended.
This opinion is furnished to you by us as counsel for the Purchasers, is
solely for your benefit, and is rendered solely in connection with the
transaction to which this opinion relates. This opinion may be relied upon only
in connection with the transaction contemplated by the Agreement and may not be
relied upon by any other person without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT 7.9
COLLECTIVE INVESTMENT FUND OWNERSHIP
Name of Fund:
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Morgan Guaranty Trust Company
of New York, as Trustee under
Declaration of Trust dated
May 2, 1985 for the
Commingled Pension Trust Fund
(South Street Seaport Investment)
List of employee benefit plans having an interest in the foregoing Fund, which
together with the interests of other plans maintained by the same employer or
employee organization in the Fund, exceeds 10% of the total of all assets in the
Fund, as of December 31, 1994:
General Motors Corporation: General Motors Hourly-Rate Employees Pension Plan
and GM Frigidaire Special Pension Plan (Bankers Trust Master Trust) and General
Motors Retirement Plan for Salaried Employees (Bankers Trust Master Trust)
United States Steel and Carnegie Pension Fund, Inc.
<PAGE>
EXHIBIT 10.2(b)
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MARKETING OF REGISTRABLE SECURITIES
The Registrable Securities may be sold in one or more transactions (which
may involve one or more block transactions) through customary brokerage
channels, either (i) on the NASDAQ National Market System through brokers acting
as brokers or agents for the sellers or (ii) through dealers acting as
principals who may resell the Registrable Securities on the NASDAQ National
Market System, or in privately negotiated sales, or by a combination of such
methods of offering. Each sale may be made either at market prices prevailing
at the time of the sales or at negotiated prices.
