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Exhibit 2.1
Agreement and
Plan of Reorganization
Whereas, this Agreement and Plan of Reorganization ("Agreement"), dated as
of December 26, 2000, between The Rouse Company, a Maryland corporation
("Rouse"), and The Rouse Company Incentive Compensation Statutory Trust
("Shareholder"), being the owner of record of ninety-one (91) shares of the
issued and outstanding Class A Common Stock of each of Howard Research and
Development Corporation, The Hughes Corporation, and Rouse Property Management,
Inc., individually hereinafter referred to a (PSS) and collectively as ("PSSs").
Whereas, Rouse wishes to acquire and the Shareholder wishes to transfer all
of the Shareholder's stock in PSSs in a transaction intended to qualify as a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code, as amended.
Now, Therefore, Rouse and the Shareholder adopt this plan of reorganization
and agree as follows:
Section 1 -- Exchange of Stock
1.1 Number of Shares. The Shareholder agrees to transfer to Rouse at the
Closing the number of shares of Class A Common Stock of the PSSs, $0.01 par
value per share, shown in Exhibit A, in exchange for an aggregate of
approximately 120,790 shares (exact number of shares to be determined based on
closing Rouse stock price on December 29, 2000) of voting common stock of Rouse,
$0.01 par value per share, to be delivered at the Closing to the Shareholder.
The transfer of the voting common stock by Rouse shall be effected by the
delivery to the Shareholder at Closing of certificates representing the
transferred shares endorsed in blank or accompanied by stock powers executed in
blank, with all necessary transfer tax and other revenue stamps, acquired at
Rouse's expense, affixed.
1.2 Delivery of Certificates by Shareholder. The transfer of PSS shares
by the Shareholder shall be effected by the delivery to Rouse at the Closing of
certificates representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with all necessary transfer tax
and other revenue stamps, acquired at the Shareholder's expense, affixed.
1.3 Further Assurances. At the Closing and from time to time thereafter,
the Shareholder and Rouse shall execute such additional instruments and take
such other action as either party may request in order more effectively to sell,
transfer, and assign the transferred stock to the Shareholder and Rouse and to
confirm such party's title thereto.
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1.4 Changes in Rouse's Capitalization. If between the date of this
Agreement and the Closing, the outstanding shares of Rouse common stock are,
without the receipt of new consideration by Rouse, increased, decreased, changed
into, or exchanged for a different number or kind of shares or securities of
Rouse through reorganization, reclassification, stock dividend, stock split,
reverse stock split, or similar change in Rouse's capitalization, Rouse will
issue and deliver to the Shareholder in addition to or in lieu of the Rouse
Shares specified in Section 1.1, voting stock of Rouse in equitably adjusted
amounts. In the event of any such change in Rouse's capitalization, all
references to Rouse shares herein shall refer to the number of Rouse shares at
thus adjusted.
Section 2 -- Closing
The Closing contemplated by Section 1.1 shall be held at the principal
offices of Rouse, 10275 Little Patuxent Parkway, Columbia, Maryland, on January
2, 2001, unless another place or time is agreed upon writing by the parties.
Section 3--Representations and Warranties of the Shareholder
The Shareholder represents and warrants to Rouse as follows:
3.1 Corporate Status. The PSSs are each a corporation duly organized,
validly existing, and in good standing under the laws of the state(s) of their
incorporation and are licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
3.2 Capitalization. The authorized capital stock of each PSS consists of
one hundred (100) shares of Class A Common Stock, having a par value of $0.01
per share, of which one hundred (100) shares are issued and outstanding, all
fully paid and nonassessable, and nine thousand (9,000) shares of Class B Common
Stock, having a par value of $0.01 per share, of which nine thousand (9,000)
shares are issued and outstanding, all fully paid and nonassessable.
3.3 Financial Statements. The audited financial statements of each PSS
furnished to Rouse, consisting of balance sheets as of December 31, 1999 and
1998, and related statements of income for the periods then ended, and the
unaudited balance sheet as of September 30, 2000 ("PSS' Latest Balance Sheet"),
and the related statement of income, are correct and fairly present the
financial condition of each PSS as of the dates and for the periods involved,
and such statements were prepared in accordance with generally accepted
accounting principles consistently applied.
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3.4 Undisclosed Liabilities. Each PSS had no liabilities of any nature
except to the extent reflected or reserved against in its PSS' Latest Balance
Sheet, whether accrued, absolute, contingent, or otherwise, including, without
limitation, tax liabilities and interest due or to become due, and each PSS'
accounts receivable are collectible in accordance with the terms of such
accounts, except to the extent of the reserve therefor in each PSS' Latest
Balance Sheet.
3.5 Interim Changes. Between January 2, 2000, and the date of this
Agreement, there have not been, except as set forth in a list certified by the
president of each PSS and delivered to Rouse, (1) any changes in each PSS'
financial condition, assets, liabilities, or business which, in the aggregate,
have been materially adverse; (2) any damage, destruction, or loss of or to each
PSS' property, whether or not covered by insurance; (3) any declaration or
payment of any dividend or other distribution in respect of each PSS' capital
stock (other than Year 2000 common stock dividends), or any direct or indirect
redemption, purchase, or other acquisition of any such stock; or (4) any
increase paid or agreed to in the compensation, retirement benefits, or other
commitments to employees.
3.6 Title to Property. Each PSS has good and marketable title to all
properties and assets, real and personal, reflected in each PSS' Latest Balance
Sheet, except as since sold or otherwise disposed of in the ordinary course of
business, and each PSS' properties and assets are subject to no mortgage,
pledge, lien, or encumbrance, except for liens shown therein, with respect to
which no default exists.
3.7 Access to Records, and So Forth. From the date of this Agreement to
the Closing, the Shareholder will cause the PSSs (1) to give to Rouse and its
representatives full access during normal business hours to all of its offices,
books, records, contracts, and other corporate documents and properties so that
Rouse may inspect and audit them and (2) to furnish such information concerning
the PSS' properties and affairs as Rouse may reasonably request.
3.8 Title to Shares. The Shareholder is the owner, free and clear of any
liens and encumbrances, of the number of each of the PSS shares which the
Shareholder has contracted to exchange.
3.9 General Release. As of the date of the Closing, PSSs and the
Shareholder will execute a mutual release of all claims in the form attached
hereto as Exhibit B.
Section 4 -- Representations, Warranties, and Covenants of Rouse
Rouse represents and warrants to, and covenants with, the Shareholder as
follows:
4.1 Corporate Status. Rouse is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland and is
licensed or qualified
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as a foreign corporation in all states in which the nature of its business or
the character or ownership of its properties makes such licensing or
qualification necessary.
4.2 Capitalization. The authorized capital stock of Rouse consists of
those shares of capital stock which are set forth as issued and outstanding in
filings made with the Securities and Exchange Commission.
4.3 Financial Statements. The audited financial statements of Rouse
furnished to the Shareholder, consisting of balance sheets as of December 31,
1999, 1998 and 1997, and related statements of income for the periods then
ended, and the unaudited balance sheet as of September 30, 2000 ("Rouse's Latest
Balance Sheet"), and the related statement of income, are correct and fairly
present the financial condition of Rouse as of the dates and for the periods
involved, and such statements were prepared in accordance with generally
accepted accounting principles consistently applied.
4.4 Investment Intent. Rouse is acquiring the PSSs shares to be
transferred to it under this Agreement for investment and not with a view to the
sale or distribution thereof, and Rouse has no commitment or present intention
to liquidate PSSs or to sell or otherwise dispose of this stock.
4.5 Corporate Authority. Rouse has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder, and will
deliver to the Shareholder at the Closing a certified copy of resolutions of its
board of directors authorizing execution of this Agreement by its officers and
performance thereunder.
4.6 Due Authorization. Execution of this Agreement and performance by
Rouse hereunder has been duly authorized by all requisite corporate action on
the part of Rouse, and this Agreement constitutes a valid and binding obligation
of Rouse; performance hereunder will not violate any provision of Rouse's
Articles of Incorporation, Bylaws, agreements, mortgages, or other commitments.
4.7 Title to Shares. Rouse is the owner, free and clear of any liens and
encumbrances, of the number of Rouse shares which Rouse has contracted to
exchange.
4.8 General Release. As of the date of Closing, PSS and the Shareholder
will execute a mutual release of all claims in the form attached hereto as
Exhibit B.
Section 5 -- Conduct of PSS Pending the Closing
The Shareholder agrees that PSSs will conduct itself in the following
manner pending the closing:
5.1 Certificate of Incorporation and Bylaws. No change will be made in
individual PSS' certificate of incorporation or bylaws.
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5.2 Capitalization, and So Forth. PSSs will not make any change in its
authorized or issued capital stock, declare or pay any dividend or other
distribution (other than Year 2000 common stock dividends), or issue, encumber,
purchase, or otherwise acquire any of its capital stock.
5.3 Conduct of Business. PSSs will use its best efforts to maintain and
preserve its business organization, employee relationships, and goodwill intact,
and will not, without the written consent of Rouse, enter into any material
commitment except in the ordinary course of business.
Section 6 -- Conduct of Rouse Pending the Closing
Rouse agrees that between the date hereof and the Closing:
Issue of Rouse Common Stock. Rouse will provide for the transfer as of the
Closing Date of approximately 120,790 shares (exact number of shares to be
determined based on the closing price of Rouse common stock on December 29,
2000) of Rouse Common Stock in exchange for the shares of PSSs Common Stock.
Section 7 -- Conditions Precedent -- Rouse
All obligations of Rouse under this Agreement are subject, at Rouse's
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
7.1 Representations and Warranties True at Closing. The Shareholder's
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true in all
material respects.
7.2 Due Performance. The Shareholder shall have performed and complied
with all the terms and conditions required by this Agreement to be performed or
complied with by it before the Closing.
7.3 Books and Records. The Shareholder shall have caused each PSS to make
available to Rouse all books and records of each PSS, including minute books and
stock transfer records.
7.4 Revocation of Prior Authorizations. The Shareholder shall have
delivered to Rouse certified copies of resolutions of each PSS' board of
directors revoking as of the Closing all prior authorizations, powers of
attorney, designations, and appointments relating to the signing of checks,
borrowing of funds, access to corporate safe-deposit boxes and other similar
matters, to the extent requested by Rouse.
7.5 Resignations. There shall have been delivered to Rouse the signed
resignations of such directors of each PSS as Rouse shall request, dated as of
the Closing.
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Section 8 -- Conditions Precedent; The Shareholder
All obligations of the Shareholder under this Agreement are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
8.1 Representations and Warranties True at Closing. Rouse's
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true in all
material respects.
8.2 Due Performance. Rouse shall have performed and complied with all the
terms and conditions required by this Agreement to be performed or complied with
by it before the Closing.
8.3 Officers' Certificate. The Shareholder shall have been furnished with
a certificate signed by an officer and secretary (or assistant secretary) of
Rouse, dated as of the Closing, certifying (1) to the effects set out in
Sections 6.1 and 11.10 and (2) that since December 26, 2000, there has been no
material adverse change in the financial condition, business, or properties of
Rouse and its subsidiaries taken as a whole.
Section 9 -- Indemnification
9.1 Indemnification of Rouse. Each Shareholder agrees to indemnify Rouse
against any loss, damage, or expense (including reasonable attorney fees)
suffered by Rouse from (1) any breach by the Shareholder of this Agreement or
(2) any inaccuracy in or breach of any of the representations, warranties, or
covenants by the Shareholder herein, provided, however, that (a) Rouse shall be
entitled to assert rights of indemnification hereunder only if and to the extent
that it suffers losses, damages, and expenses (including reasonable attorney
fees) exceeding $50,000 in the aggregate and (b) Rouse shall give notice of any
claims hereunder within twenty-four months beginning on the date of the Closing.
No loss, damage, or expense shall be deemed to have been sustained by Rouse to
the extent of insurance proceeds paid to, or tax benefits realizable by, Rouse
or any PSS as a result of the event giving rise to such right to
indemnification.
9.2 Indemnification of Shareholder. Rouse agrees to indemnify each
Shareholder against any loss, damage, or expense (including reasonable attorney
fees) suffered by any of the Shareholder from (1) any breach by Rouse of this
Agreement or (2) any inaccuracy in or breach of any of Rouse's representations,
warranties, or covenants herein.
9.3 Defense of Claims. Upon obtaining knowledge thereof, the indemnified
party shall promptly notify the indemnifying party of any claim which has given
or could give rise to a right of indemnification under this Agreement. If the
right of indemnification relates to a claim asserted by a third party against
the indemnified party, the indemnifying party shall have the right to employ
counsel acceptable to the
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indemnified party to cooperate in the defense of any such claim. As long as the
indemnifying party is defending any such claim in good faith, the indemnified
party will not settle such claim. If the indemnifying party does not elect to
defend any such claim, the indemnified party shall have no obligation to do so.
Section 10 -- Termination
This Agreement may be terminated (1) by mutual consent in writing; (2) by
either the Shareholder or Rouse if there has been a material misrepresentation
or material breach of any warranty or covenant by the other party; or (3) by
either the Shareholder or Rouse if the Closing shall not have taken place,
unless adjourned to a later date by mutual consent in writing, by January 31,
2001.
Section 11 -- General Provisions
11.1 Further Assurances. At any time, and from time, after the Effective
Date, each party will execute such additional instruments and take such action
as may be reasonably requested by the other party to confirm or perfect title to
any property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
11.2 Waiver. Any failure on the part of either party hereto to comply with
any of its obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
11.3 Brokers. Each party represents to the other party that no broker or
finder has acted for it in connection with this Agreement and agrees to
indemnify and hold harmless the other party against any fee, loss, or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by it.
11.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class registered or certified mail, return receipt requested, as
follows:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland
Attn: General Counsel
Fax: 410-992-6392
The Rouse Company
Incentive Compensation Statutory Trust
10275 Little Patuxent Parkway
Columbia, Maryland
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Attn: Jeffrey H. Donahue
Fax: 410-964-3412
11.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
11.6 Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland.
11.8 Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this Agreement
without the written consent of the other party shall be void.
11.9 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Listing. Upon demand by Shareholder, Rouse will register the subject
shares of Rouse Common Stock pursuant to a customary rights and registration
agreement.
The Rouse Company
By:______________________________________________
Gordon H. Glenn, Vice President & General Counsel
The Rouse Company Incentive Compensation
Statutory Trust
By:______________________________________________
Jeremiah E. Casey, Trustee
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<PAGE>
By:______________________________________________
Rohit M. Desai, Trustee
By:______________________________________________
Jeffrey H. Donahue, Trustee
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Exhibit A
<TABLE>
<CAPTION>
No. of PSS No. of Rouse
Taxpayer Shares To be Shares To Be
Name of Shareholder Address ID No. Transferred Received
<S> <C> <C> <C> <C>
91 Class A
Common Shares
of Howard
The Rouse Company Research &
Incentive Compensation 10275 Little Patuxent Parkway Development 82,220
Statutory Trust Columbia, MD 21044 52-2069348 Corporation
91 Class A
The Rouse Company Common Shares
Incentive Compensation 10275 Little Patuxent Parkway of The Hughes 36,650
Statutory Trust Columbia, MD 21044 52-2069348 Corporation
91 Class A
Common Shares
The Rouse Company of Rouse
Incentive Compensation 10275 Little Patuxent Parkway Property 1,920
Statutory Trust Columbia, MD 21044 52-2069348 Management, Inc. ------
Total 120,790*
=======
</TABLE>
*Approximate. Exact number of shares to be determined using December 29, 2000
closing price of Rouse common stock.
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Exhibit B
Agreement made this 26th of December, 2000, between Howard Research and
Development Corporation, The Hughes Corporation, and Rouse Property Management,
Inc., individually hereinafter referred to as ("PSS") and collectively as
("PSSs"), and The Rouse Company Incentive Compensation Statutory Trust (the
"Shareholder"), being the owner of ninety-one (91) shares of the issued and
outstanding Class A Common Stock of each PSS.
As of the date hereof, each PSS hereby releases the Shareholder and the
Shareholder hereby releases each PSS from all claims of every kind and
description, known and unknown, without regard to the capacity in which such
claims may have arisen.
HOWARD RESEARCH & DEVELOPMENT
CORPORATION
By:______________________________________________
Gordon H. Glenn, Vice President & General Counsel
THE HUGHES CORPORATION
By:______________________________________________
Gordon H. Glenn, Vice President & General Counsel
ROUSE PROPERTY MANAGEMENT, INC.
By:______________________________________________
Gordon H. Glenn, Vice President & General Counsel
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The Rouse Company Incentive
Statutory Trust
By:______________________________________________
Jeremiah E. Casey, Trustee
By:______________________________________________
Rohit M. Desai, Trustee
By:______________________________________________
Jeffrey H. Donahue, Trustee
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