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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 9, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CRESCENT REAL ESTATE EQUITIES COMPANY
(Exact Name of Registrant as Specified in Its Charter)
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TEXAS 52-1862813
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
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777 MAIN STREET, SUITE 2100
FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-0477
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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GERALD W. HADDOCK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CRESCENT REAL ESTATE EQUITIES COMPANY
777 MAIN STREET, SUITE 2100
FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-0477
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copies to:
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ROBERT B. ROBBINS, ESQ. DAVID M. DEAN, ESQ.
SYLVIA M. MAHAFFEY, ESQ. CRESCENT REAL ESTATE EQUITIES COMPANY
SHAW, PITTMAN, POTTS & TROWBRIDGE 777 MAIN STREET, SUITE 2100
2300 N STREET, N.W. FORT WORTH, TEXAS 76102
WASHINGTON, D.C. 20037
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of the Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be 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, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
of the Securities Act of 1933, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
====================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Shares, par value $.01...... 250,310 $33.5938(1) $8,408,864.08(1) $2,480.61
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 and based upon prices on the
New York Stock Exchange on March 3, 1998.
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.
================================================================================
<PAGE> 2
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 ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 9, 1998
PROSPECTUS
250,310 SHARES
[CRESCENT LOGO]
COMMON SHARES
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All of the common shares of beneficial interest, par value $.01 per share
(the "Common Shares"), of Crescent Real Estate Equities Company ("Crescent
Equities") offered hereby (the "Offering") are being offered by the Selling
Shareholders identified herein. See "Selling Shareholders." Crescent Equities
will not receive any of the proceeds from the sale of the Common Shares offered
hereby. The Common Shares are listed and traded on the New York Stock Exchange
(the "NYSE") under the symbol "CEI."
The sale or distribution of all or any portion of the Common Shares offered
hereby may be effected from time to time by the Selling Shareholders directly,
indirectly through brokers or dealers or in a distribution by one or more
underwriters on a firm commitment or best efforts basis, on the NYSE, in the
over-the-counter market, on any national securities exchange on which the Common
Shares are listed or traded, in privately negotiated transactions or otherwise,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. See "Plan of Distribution."
SEE "RISK FACTORS" AT PAGE 6 HEREIN FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMPANY.
------------------------
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.
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THE DATE OF THIS PROSPECTUS IS MARCH , 1998
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THE COMPANY
On December 31, 1996, Crescent Real Estate Equities Company, a Texas real
estate investment trust ("Crescent Equities"), became the successor to Crescent
Real Estate Equities, Inc., a Maryland corporation (the "Predecessor
Corporation"), through the merger of the Predecessor Corporation and CRE Limited
Partner, Inc., a subsidiary of the Predecessor Corporation, into Crescent
Equities. The term "Company" includes, unless the context otherwise requires,
Crescent Equities, the Predecessor Corporation, Crescent Real Estate Equities
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and the other subsidiaries of Crescent Equities.
The Company is a fully integrated real estate company, operated as a real
estate investment trust for federal income tax purposes (a "REIT"), which owns a
portfolio of real estate assets (the "Properties") located primarily in 21
metropolitan submarkets in Texas and Colorado. The Properties include 85 office
properties (the "Office Properties") with an aggregate of approximately 30.8
million net rentable square feet, 90 behavioral healthcare facilities (the
"Behavioral Healthcare Facilities"), seven full-service hotels with a total of
2,276 rooms and two destination health and fitness resorts that can accommodate
up to 452 guests daily (collectively, the "Hotel Properties"), the real estate
mortgages relating to and non-voting common stock in five residential
development corporations (the "Residential Development Corporations"), which in
turn, through joint venture or partnership arrangements, own interests in 12
residential development properties (the "Residential Development Properties")
and seven retail properties with an aggregate of approximately 771,000 net
rentable square feet (the "Retail Properties"). The Company also owns an
indirect 38% interest in each of two partnerships that currently own and operate
approximately 79 refrigerated warehouses with an aggregate of approximately 368
million cubic feet (the "Refrigerated Warehouse Investment"). In addition, the
Pending Investment (as defined in "Recent Developments -- Pending Investment")
includes the proposed acquisition of a corporation that owns four full-service
casino/hotels and two riverboat casinos (collectively, the "Casino/Hotel
Properties").
Upon completion of the Pending Investment, the Company will have completed
over $6.0 billion of real estate investments since the closing of the initial
public offering of its Common Shares on May 5, 1994, approximately $2.8 billion
of which will have been completed since the closing of the public offering of
its Common Shares on October 15, 1997.
The Company owns its assets and carries on its operations and other
activities, including providing management, leasing and development services for
certain of its Properties, through the Operating Partnership and its other
subsidiaries. The Company also has an economic interest in the development
activities of the Residential Development Corporations and the operating
activities of the Refrigerated Warehouse Investment. The structure of the
Company is designed to facilitate and maintain its qualification as a REIT and
to permit persons contributing Properties (or interests therein) to the Company
to defer some or all of the tax liability that they otherwise might incur.
As of March 6, 1998, 118,717,805 common shares of beneficial interest of
the Company, par value $.01 per share (the "Common Shares"), 6,416,642 units of
ownership interest in the Operating Partnership ("Units") and 8,000,000 Series A
Preferred Shares (as defined in "Recent Developments -- Completed
Investments -- Series A Preferred Stock Offering") were outstanding.
The Company's executive offices are located at 777 Main Street, Suite 2100,
Fort Worth, Texas 76102, and its telephone number is (817) 877-0477.
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RECENT DEVELOPMENTS
PENDING INVESTMENT
The following briefly describes the Company's pending investment (the
"Pending Investment"). The Pending Investment is subject to various closing
conditions. There is no assurance that this investment will be completed.
Station Casinos, Inc. On January 16, 1998, the Company entered into an
agreement and plan of merger (the "Merger Agreement") under which Station
Casinos, Inc. ("Station") will merge (the "Merger") with and into the Company.
Station is an established multi-jurisdictional casino/hotel company that owns
and operates, through wholly-owned subsidiaries, six distinctly-themed
Casino/Hotel properties, four of which are located in Las Vegas, Nevada, one of
which is located in Kansas City, Missouri and one of which is located in St.
Charles, Missouri. The Merger Agreement also provides for certain alternative
structures to facilitate the combinations of the businesses of the Company and
Station. As a result of the Merger, the Company will acquire the real estate and
other assets of Station, except to the extent operating assets are transferred
immediately prior to the Merger, as described below.
As part of the transactions associated with the Merger, it is presently
anticipated that, certain operating assets and the employees of Station will be
transferred to the Station Lessee immediately prior to the Merger. The Station
Lessee will be owned 50% by Crescent Operating, Inc. ("Crescent Operating") or
another affiliate established by the Company, 24.9% by an entity (the
"Management Entity") owned by three of the existing directors of Station
(including its Chairman, President and Chief Executive Officer) and 25.1% by a
separate entity (the "Secondary Management Entity") owned by other members of
Station management. It is anticipated that the Station Lessee will operate the
six Casino/Hotel Properties currently operated by Station pursuant to a lease
with the Company. The lease will have a 10-year term, with one five-year renewal
option. The Station Lessee will be required to maintain the Casino/Hotel
Properties in good condition at its expense. The Company will establish and
maintain a reserve account to be used under certain circumstances for the
purchase of furniture, fixtures and equipment with respect to the Casino/Hotel
Properties, to be used from time to time to replace furniture, fixtures and
equipment. Under the lease, the Company also will have a right of first refusal
to acquire, and thereafter to include under the lease, any additional casino
and/or hotel properties which the Station Lessee desires to acquire or operate.
The lease will provide for base and percentage rent but the amount of rent
has not yet been finally determined. It is anticipated, however, that total
rental payments under the lease will exceed 20% of total rental revenues on an
annualized basis. As a result of the percentage rent payments, the Operating
Partnership will participate in the economic operations of the Casino/Hotel
Properties only through its indirect participation in gross revenues. To the
extent that operations of the Casino/Hotel Properties may affect the ability of
the Station Lessee to pay rent, the Operating Partnership also may indirectly
bear the risks associated with any increases in expenses or decreases in
revenues. The amount of rent payable to the Operating Partnership under the
leases with respect to the Casino/Hotel Properties will depend on the ability of
the Station Lessee to maintain and increase revenues from the Casino/Hotel
Properties. Accordingly, the Operating Partnership's results of operations and
its ability to meet its obligations will be affected by such factors as changes
in general and local economic conditions, the level of demand for the services
of the Casino/Hotel Properties, competition in the hotel/casino industry and
other factors related to the operation of the Casino/Hotel Properties.
In order to effect the Merger, the Company will issue 0.466 Common Shares
of the Company for each share of common stock of Station (including each
restricted share) that is issued and outstanding immediately prior to the
Merger. In addition, the Company will create a new class of Preferred Shares
which will be exchanged, upon consummation of the Merger, for the shares of
$3.50 Convertible Preferred Stock of Station outstanding immediately prior to
the Merger. The new class of Preferred Shares will rank pari passu with the
Series A Preferred Shares offered hereby as to rights to receive distributions
and to participate in distributions or payments upon any liquidation,
dissolution or winding up of the Company.
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The total value of the Merger transaction, including the Company's issuance
of Common Shares and Preferred Shares in connection with consummation of the
Merger and the Company's assumption and/or refinancing of approximately $919
million in existing indebtedness of Station and its subsidiaries, is
approximately $1.75 billion.
In connection with the transaction, the Company will also enter into a
Right of First Refusal and Noncompetition Agreement with the Station Lessee.
Under the agreement, the Company will grant the Station Lessee a right of first
refusal as to any lease arrangement (a "master lease") for a casino/hotel
property (defined as real estate on which hotel and casino or other
gaming-related operations are conducted) in which the operators of the business
conducted at the property prior to the date the property is owned or acquired by
the Company will cease to operate such business. The Station Lessee will grant
the Company a right of first refusal to invest, directly or indirectly, (i) in
casino/hotel properties (including the opportunity to provide services related
to real estate or to invest in a hotel property), real estate mortgages, real
estate derivatives, or entities that invest primarily in or have a substantial
portion of their assets in such types of real estate assets or (ii) any other
casino/hotel-related investments that can be structured as REIT-suitable
investments. In addition, without the prior written consent of the Management
Entity, the Company, Crescent Operating and their affiliates may not own,
operate or otherwise engage in activities related to any casino/hotel properties
other than casino/hotel properties operated and leased by the Station Lessee or
an entity under its control, provided that the Company may own a casino/hotel
property if a master lease arrangement already exists at the property, if
casino/hotel activities conducted at the property are incidental to the primary
business operations at the property or if the sellers or operators desire to
enter into a master lease arrangement with the Company. Under the agreement,
without the prior written consent of the Company, neither the Management Entity,
the Secondary Management Entity, nor any of the affiliates of either, may own,
operate or otherwise engage in any activities related to casino/hotel properties
that are not operated and leased by the Station Lessee or an entity under its
control.
In connection with the Merger, the Company also has agreed to purchase up
to $115 million of a new class of convertible preferred stock of Station prior
to consummation of the Merger. The purchase will be made in increments, or in a
single transaction upon call by Station subject to certain conditions, whether
or not the Merger is consummated.
Consummation of the Merger is subject to various conditions, including
Station's receipt of the approval of two-thirds of the holders of both its
common stock and its preferred stock, expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1974, and the
receipt by the Company and certain of its officers, trust managers and
affiliates of the approvals required under applicable gaming laws. The Company
anticipates that the Merger and the associated transactions will be consummated
in the third quarter of 1998. Certain individuals who own in the aggregate
approximately 41% of the outstanding capital stock of Station have agreed to
vote in favor of the Merger. There can be no assurance that the Merger will be
consummated on the terms described in this Prospectus Supplement or at all.
The Company will be entitled to receive a break-up fee of $54 million if
the Merger Agreement is terminated (i) by either the Company or the Board of
Directors of Station if any required approval of the Merger by the holders of
each class of capital stock of Station shall not have been obtained by reason of
the failure to obtain the required vote of stockholders, (ii) by the Company if
the Board of Directors of Station shall not recommend the Merger or shall
recommend a superior proposal or (iii) by the Board of Directors of Station if
it receives a superior proposal that the Company does not match or exceed.
COMPLETED INVESTMENTS
Ventana Country Inn. On December 19, 1997, the Company acquired for
approximately $30 million the Ventana Country Inn, a 62-room resort Hotel
Property located in Big Sur, California. The Ventana Country Inn is situated on
a 243-acre wooded site in the foothills of the Santa Lucia Mountains overlooking
the Pacific Ocean. The purchase also included an adjacent 72-acre parcel of
undeveloped land offering the potential for single-family residential
development. A subsidiary of Crescent Operating will market and operate the
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Ventana Country Inn jointly with the Company's Sonoma Mission Inn & Spa Hotel
Property pursuant to a lease with the Company.
Energy Centre. On December 22, 1997, the Company acquired Energy Centre, a
39-story Class A office building located in the CBD submarket of New Orleans,
Louisiana. Built in 1984, the building, located on approximately 1.28 acres,
contains approximately 762,000 net rentable square feet. Energy Centre was
acquired for approximately $75 million.
Austin Centre. On January 23, 1998, the Company acquired Austin Centre, a
mixed-use property developed in 1986, including a Class A office building
containing approximately 344,000 net rentable square feet, the 314-room Omni
Austin Hotel Property and 61 apartments located on approximately 1.75 acres. The
property is located in the CBD submarket of Austin, Texas, four blocks from the
state capitol building and was acquired for approximately $96.9 million. A
subsidiary of Crescent Operating will oversee the marketing and operations of
the Omni Austin Hotel Property pursuant to a lease with the Company.
Post Oak Central. On February 13, 1998, the Company acquired Post Oak
Central, a three-building Class A office complex located in the West
Loop/Galleria suburban office submarket of Houston, Texas. Built between 1974
and 1981 and designed by renowned architects Philip Johnson and John Burgee, the
buildings are located on approximately 17.3 acres and contain approximately 1.3
million net rentable square feet. Post Oak Central was acquired for
approximately $155.3 million.
Washington Harbour. On February 25, 1998, the Company acquired Washington
Harbour, a two-building Class A office complex located in the Georgetown/West
End submarket in Washington, D.C. Built in 1986, the complex is located on
approximately 5.04 acres and contains approximately 536,000 net rentable square
feet. Washington Harbour was acquired for approximately $161 million.
FINANCING ACTIVITIES
On December 19, 1997, the Company's line of credit from a consortium of
banks led by BankBoston, N.A. (the "Credit Facility") was increased to $550
million. The Credit Facility is unsecured and expires in June 2000.
On February 13, 1998, the Company increased the maximum borrowings
available under its bridge loan with BankBoston, N.A. to $250 million. The
increase in the maximum borrowings available and the additional borrowings
thereunder were made in connection with the funding of the purchase price of
Post Oak Central. The bridge loan is unsecured and expires in March 1998.
TRANSACTIONS WITH MERRILL LYNCH INTERNATIONAL
On December 12, 1997, the Company entered into two transactions with
Merrill Lynch International. In one transaction, the Company sold 5,375,000
Common Shares to Merrill Lynch International for approximately $205 million and
received approximately $199.9 million in net proceeds. In the other transaction,
the Company entered into a swap agreement (the "Swap Agreement") with Merrill
Lynch International relating to 5,375,000 Common Shares (the "Settlement
Shares"), pursuant to which Merrill Lynch International will sell, as directed
by the Company on or before December 12, 1998, a sufficient number of Common
Shares to achieve net sales proceeds equal to the market value of the Settlement
Shares on December 12, 1997 (approximately $204.9 million), plus a forward
accretion component, minus an adjustment for the Company's distribution rate.
The precise number of Common Shares that will be required to be sold pursuant to
the Swap Agreement will depend primarily on the market price of the Common
Shares at the time of settlement. If such number of Common Shares is greater
than the number of Settlement Shares as a result of a decrease in the market
price of the Common Shares, the Company will deliver additional Common Shares to
Merrill Lynch International. If such number of Common Shares is less than the
number of Settlement Shares as a result of an increase in the market price of
the Common Shares, Merrill Lynch International will deliver Common Shares or, at
the option of the Company, cash to the Company.
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SERIES A PREFERRED STOCK OFFERING
On February 19, 1998, the Company completed a public offering of 8,000,000
shares of 6 3/4% Series A Convertible Cumulative Preferred Shares of beneficial
interest, par value $.01 per share (the "Series A Preferred Shares") in an
aggregate principal amount of $200 million. The Company used the net proceeds
from the offering, equal to approximately $191.3 million, to repay certain
amounts outstanding under the Credit Facility.
Distributions on the Series A Preferred Shares are cumulative from the date
of original issue and are payable quarterly in arrears on or about the fifteenth
day of February, May, August and November of each year, commencing May 15, 1998,
at the rate of 6 3/4% of the liquidation preference per annum (equivalent to
$1.6875 per annum per Series A Preferred Share).
The Series A Preferred Shares are convertible at any time, in whole or in
part, at the option of the holders thereof, into Common Shares at a conversion
price of $40.86 per Common Share (equivalent to a conversion rate of .6119
Common Shares per Series A Preferred Share), subject to adjustment in certain
circumstances. The Series A Preferred Shares generally are not redeemable prior
to February 18, 2003. On and after February 18, 2003, the Series A Preferred
Shares will be redeemable, in whole or in part, at the option of the Company, at
a redemption price of $25.00 per share, plus accrued and unpaid distributions,
if any. The Series A Preferred Shares have no stated maturity date and will not
be entitled to the benefit of any sinking fund or mandatory redemption
provisions.
The Series A Preferred Shares rank senior to the Common Shares as to rights
to receive distributions and to participate in distributions or payments upon
any liquidation, dissolution or winding up of the Company.
The Series A Preferred Shares have been listed on the NYSE under the symbol
"CEIPrA."
RISK FACTORS
Prospective investors should carefully consider the following summary
information in conjunction with the other information contained in this
Prospectus before purchasing Securities.
CONCENTRATION OF ASSETS
A significant portion of the Company's assets are, and revenues are derived
from, Properties located in the metropolitan areas of Dallas-Fort Worth and
Houston, Texas. Due to this geographic concentration, any deterioration in
economic conditions in the Dallas-Fort Worth or Houston metropolitan areas or
other geographic markets in which the Company in the future may acquire
substantial assets could have a substantial effect on the financial condition
and results of operations of the Company.
RISKS ASSOCIATED WITH THE ACQUISITION OF SUBSTANTIAL NEW ASSETS
From the closing of the Company's initial public offering in May 1994
through September 30, 1997, the Company has experienced rapid growth, increasing
its total assets by approximately 940 percent. There can be no assurance that
the Company will be able to manage its growth effectively, or that the Company
will be able to maintain its current rate of growth in the future, and the
failure to do so may have a material adverse effect on the financial condition
and results of operations of the Company.
PURCHASES FROM FINANCIALLY DISTRESSED SELLERS
Implementation of the Company's strategy of investing in real estate assets
in distressed circumstances has resulted in the acquisition of certain
Properties from owners that were in poor financial condition, and such strategy
is expected to result in the purchase of additional properties under similar
circumstances in the future. In addition to general real estate risks,
properties acquired in distress situations present risks related to inadequate
maintenance, negative market perception and continuation of circumstances which
precipitated the distress originally.
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CHANGE IN POLICIES
The Board of Trust Managers provides guidance to the senior management of
the Operating Partnership regarding the Company's operating and financial
policies and strategies, including its policies and strategies with respect to
acquisitions, growth, operations, indebtedness, capitalization and
distributions. These policies and strategies may be revised, from time to time,
without shareholder approval. Changes in the Company's policies and strategies
could adversely affect the Company's financial condition and results of
operations. In addition, the Company has the right and intends to acquire
additional real estate assets pursuant to and consistent with its investment
strategies and policies without shareholder approval.
POSSIBLE ADVERSE CONSEQUENCES OF OWNERSHIP LIMIT
The limitation on ownership of Common Shares set forth in the Company's
Restated Declaration of Trust (the "Declaration of Trust") could have the effect
of discouraging offers to acquire the Company and of inhibiting or impeding a
change in control and, therefore, could adversely affect the shareholders'
ability to realize a premium over the then-prevailing market price for the
Common Shares in connection with such a transaction.
RELIANCE ON KEY PERSONNEL
The Company is dependent on the efforts of Mr. Richard E. Rainwater,
Chairman of the Board of Trust Managers, and other senior management personnel.
While the Company believes that it could find replacements for these key
executives, the loss of their services could have an adverse effect on the
operations of the Company. Mr. Rainwater has no employment agreement with the
Company and, therefore, is not obligated to remain with the Company for any
specified term. John C. Goff, Trust Manager and Vice Chairman of the Board of
Trust Managers, and Gerald W. Haddock, President, Chief Executive Officer and
Trust Manager, have entered into employment agreements with the Company, and
each of Messrs. Rainwater, Goff and Haddock has entered into a noncompetition
agreement with the Company. The Company has not obtained key-man insurance for
any of its senior management personnel.
RISKS RELATING TO QUALIFICATION AND OPERATION AS A REIT
The Company intends to continue to operate in a manner so as to qualify as
a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). A
qualified REIT generally is not taxed at the corporate level on income it
currently distributes to its shareholders, so long as it distributes at least 95
percent of its taxable income currently and satisfies certain other highly
technical and complex requirements. Unlike many REITs, which tend to make only
one or two types of real estate investment, the Company invests in a broad range
of real estate products, and certain of its investments are more complicated
than those of other REITs. As a result, the Company is likely to encounter a
greater number of interpretative issues under the REIT qualification rules, and
more such issues which lack clear guidance, than are other REITs. The Company,
as a matter of policy, regularly consults with outside tax counsel in
structuring its new investments. The Company has received an opinion from Shaw,
Pittman, Potts & Trowbridge ("Tax Counsel") that the Company qualified as a REIT
under the Code for its taxable years ending on or before December 31, 1996, is
organized in conformity with the requirements for qualification as a REIT under
the Code and its proposed manner of operation will enable it to continue to meet
the requirements for qualification as a REIT. However, this opinion is based
upon certain representations made by the Company and the Operating Partnership
and upon existing law, which is subject to change, both retroactively and
prospectively, and to possibly different interpretations. Furthermore, Tax
Counsel's opinion is not binding upon either the Internal Revenue Service or the
courts. Because the Company's qualification as a REIT in its current and future
taxable years depends upon its meeting the requirements of the Code in future
periods, no assurance can be given that the Company will continue to qualify as
a REIT in the future. If, in any taxable year, the Company were to fail to
qualify as a REIT for federal income tax purposes, it would not be allowed a
deduction for distributions to shareholders in computing taxable income and
would be subject to federal income tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates. In addition,
unless entitled to relief under certain statutory provisions, the Company would
be disqualified from treatment as a REIT for federal income
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tax purposes for the four taxable years following the year during which the
qualification was lost. The additional tax liability resulting from the failure
to so qualify would significantly reduce the amount of funds available for
distribution to shareholders.
RISKS RELATING TO DEBT
The Company's organizational documents do not limit the level or amount of
debt that it may incur. It is the Company's current policy to pursue a strategy
of conservative use of leverage, generally with a ratio of debt to total market
capitalization targeted at approximately 40 percent, although this policy is
subject to reevaluation and modification by the Company and could be increased
above 40 percent. The Company has based its debt policy on the relationship
between its debt and its total market capitalization, rather than the book value
of its assets or other historical measures that typically have been employed by
publicly traded REITs, because management believes that market capitalization
more accurately reflects the Company's ability to borrow money and meet its debt
service requirements. Market capitalization is, however, more variable than book
value of assets or other historical measures. There can be no assurance that the
ratio of indebtedness to market capitalization (or any other measure of asset
value) or the incurrence of debt at any particular level would not adversely
affect the financial condition and results of operations of the Company.
RISKS RELATING TO CONTROL OF CERTAIN INVESTMENTS
Hotel Risks. The Company has leased the Hotel Properties to subsidiaries of
Crescent Operating, and such subsidiaries, rather than the Company, are entitled
to exercise all rights of the owner of the respective hotel. The Company will
receive both base rent and a percentage of gross sales above a certain minimum
level pursuant to the leases, which expire between 2004 and 2012. As a result,
the Company will participate in the economic operations of the Hotel Properties
only through its indirect participation in gross sales. To the extent that
operations of the Hotel Properties may affect the ability of such subsidiaries
to pay rent, the Company also may indirectly bear the risks associated with any
increases in expenses. Each of the Hotel Properties is managed pursuant to a
management agreement. The amount of rent payable to the Company under the leases
with respect to the Hotel Properties will depend on the ability of such
subsidiaries and the managers of the Hotel Properties to maintain and increase
revenues from the Hotel Properties. Accordingly, the Company's results of
operations will be affected by such factors as changes in general economic
conditions, the level of demand for rooms and related services at the Hotel
Properties, the ability of the subsidiaries and the managers of the Hotel
Properties to maintain and increase gross revenues at the Hotel Properties,
competition in the hotel industry and other factors relating to the operation of
the Hotel Properties. In addition, the Company expects, in accordance with the
terms of an intercompany agreement between the Company and Crescent Operating
(the "Intercompany Agreement"), to lease any hotel properties that it may
acquire in the future to Crescent Operating (or a subsidiary or subsidiaries)
which, as lessees of any such hotel properties, will be entitled to exercise all
rights of the owner. See "-- Real Estate Risks Specific to the Company's
Business -- Potential Conflicts of Interest."
Lack of Control of Residential Development Corporations. The Company is not
able to elect the boards of directors of the Residential Development
Corporations, and does not have the authority to control the management and
operation of the Residential Development Corporations. As a result, the Company
does not have the right to control the timing or amount of dividends paid by the
Residential Development Corporations and, therefore, does not have the authority
to require that funds be distributed to it by any of these entities.
Lack of Control of Americold and URS. The Company owns, through two
subsidiaries, a 38% interest in each of two partnerships, one of which owns
Americold Corporation ("Americold") and the other of which owns URS Logistics,
Inc. ("URS"). Two subsidiaries of Vornado Realty Trust (collectively, "Vornado")
own a 60% interest in the partnerships. In addition, Crescent Operating owns the
remaining 2% interest in the partnerships through its ownership of all of the
voting stock of the two subsidiaries of the Company that hold the Company's
interests in the partnerships (representing an approximately 5% economic
interest in each of the subsidiaries of the Company). Thus, Crescent Operating,
as owner of the voting stock of the two subsidiaries, rather than the Company,
is entitled to approve certain major decisions relating to the partnerships.
Under the terms of the existing partnership agreements for each of the
partnerships, Vornado has
8
<PAGE> 10
the right to make all decisions relating to the management and operation of the
partnerships other than certain major decisions that require the approval of
both Crescent Operating and Vornado. The partnership agreement for each of the
partnerships provides for a buy-sell arrangement upon a failure of Crescent
Operating and Vornado to agree on any of the specified major decisions which,
until November 1, 2000, can only be exercised by Vornado. See "-- Real Estate
Risks Specific to the Company's Business -- Risks of Joint Ownership of Assets."
Risks Associated with Proposed Casino/Hotel Properties Investment. In
connection with the Merger, the Company intends to lease the Casino/Hotel
Properties to the Station Lessee, which will be owned 50% by former management
of Station and 50% by Crescent Operating or one of its affiliates. The Company
expects that it will receive both base rent and a percentage of gross revenues
above a certain minimum level pursuant to the leases, which will expire in 2008,
subject to one, five-year renewal option. Although the rental payments have not
yet been finally determined, it is anticipated that base rental payments will
exceed 20% of current base rental revenues on an annual basis. As a result of
the percentage rent payments, the Company will participate in the economic
operations of the Casino/Hotel Properties only through its indirect
participation in gross revenues. To the extent that operations of the
Casino/Hotel Properties may affect the ability of the Station Lessee to pay
rent, the Company also may indirectly bear the risks associated with any
increases in expenses or decreases in revenues. The amount of rent payable to
the Company under the leases with respect to the Casino/Hotel Properties will
depend on the ability of the Station Lessee to maintain and increase revenues
from the Casino/Hotel Properties. Accordingly, the Company's results of
operations and its ability to meet its obligations will be affected by such
factors as changes in general and local economic conditions, the level of demand
for the services by the Casino/Hotel Properties, competition in the casino/hotel
industry and other factors related to the operation of the Casino/Hotel
Properties.
GENERAL REAL ESTATE RISKS
Uncontrollable Factors Affecting Performance and Value. The economic
performance and value of the Company's real estate assets will be subject to all
of the risks incident to the ownership and operation of real estate. These
include the risks normally associated with changes in general national, regional
and local economic and market conditions. Such local real estate market
conditions may include excess supply and competition for tenants, including
competition based on rental rates, attractiveness and location of the property
and quality of maintenance, insurance and management services. In addition,
other factors may affect the performance and value of a property adversely,
including changes in laws and governmental regulations (including those
governing usage, zoning and taxes), changes in interest rates (including the
risk that increased interest rates may result in decreased sales of lots in the
Residential Development Properties) and the availability of financing.
Illiquidity of Real Estate Investments. Because real estate investments are
relatively illiquid, the Company's ability to vary its portfolio promptly in
response to economic or other conditions will be limited. In addition, certain
significant expenditures, such as debt service (if any), real estate taxes, and
operating and maintenance costs, generally are not reduced in circumstances
resulting in a reduction in income from the investment. The foregoing and any
other factor or event that would impede the ability of the Company to respond to
adverse changes in the performance of its investments could have an adverse
effect on the Company's financial condition and results of operations.
Environmental Matters. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property may become
liable for the costs of removal or remediation of certain hazardous or toxic
substances released on or in its property, as well as certain other costs
relating to hazardous or toxic substances. Such liability may be imposed without
regard to whether the owner or operator knew of, or was responsible for, the
release of such substances. The presence of, or the failure to remediate
properly, such substances, when released, may adversely affect the owner's
ability to sell the affected real estate or to borrow using such real estate as
collateral. Such costs or liabilities could exceed the value of the affected
real estate. The Company has not been notified by any governmental authority of
any non-compliance, liability or other claim in connection with any of the
Properties and the Company is not aware of any other environmental condition
with respect to any of the Properties that management believes would have a
material adverse effect
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<PAGE> 11
on the Company's business, assets or results of operations. Prior to the
Company's acquisition of its Properties, independent environmental consultants
conducted or updated Phase I environmental assessments (which generally do not
involve invasive techniques such as soil or ground water sampling) on the
Properties. None of these Phase I assessments or updates revealed any materially
adverse environmental condition not known to the Company or the independent
consultants preparing the assessments. There can be no assurance, however, that
environmental liabilities have not developed since such environmental
assessments were prepared, or that future uses or conditions (including, without
limitation, changes in applicable environmental laws and regulations) will not
result in imposition of environmental liability.
REAL ESTATE RISKS SPECIFIC TO THE COMPANY'S BUSINESS
Investment Risks. In implementing its investment strategies, the Company
has invested in a broad range of real estate assets, and in the future, may
invest in additional types of real estate assets not currently included in its
portfolio. There can be no assurance, however, that the Operating Partnership
will be able to implement its investment strategies successfully in the future.
As a result of its real estate investments, the Operating Partnership will be
subject to risks, in addition to general real estate risks, relating to the
specific assets and asset types in which it invests. For example, the Operating
Partnership is subject to risks that, upon expiration, leases for space in the
Office Properties and Retail Properties may not be renewed, the space may not be
re-leased, or the terms of renewal or re-lease (including the cost of required
renovations or concessions to tenants) may be less favorable than current lease
terms. In addition, the Company is subject to risks relating to the Behavioral
Healthcare Facilities, including the effect of any failure of the tenant to make
required lease payments (which equal more than 10% of the Company's current base
rental revenues), the effects of factors, such as regulation of the healthcare
industry and limitations on government disbursement programs, on the ability of
the tenant to make the required lease payments, and the limited number of
replacement tenants in the event of default under, or non-renewal of, the lease.
Similarly, the Company is subject to the risk that the success of its investment
in the Hotel Properties will be highly dependent upon the ability of the Hotel
Properties to compete in such features as access, location, quality of
accommodations, room rate structure and, to a lesser extent, the quality and
scope of other amenities such as food and beverage facilities.
Risks of Joint Ownership of Assets. The Company has the right to invest in
properties and assets jointly with other persons or entities. Joint ownership of
properties, under certain circumstances, may involve risks not otherwise
present, including the possibility that the Company's partners or co-investors
might become bankrupt, that such partners or co-investors might at any time have
economic or other business interests or goals which are inconsistent with the
business interests or goals of the Company, and that such partners or co-
investors may be in a position to take action contrary to the instructions or
the requests of the Company or contrary to the Company's policies or objectives,
including the Company's policy with respect to maintaining its qualification as
a REIT. See "-- Risks Relating to Control of Certain Investments -- Lack of
Control of Americold and URS."
Potential Conflicts of Interest. The Company has entered into the
Intercompany Agreement with Crescent Operating pursuant to which each has agreed
to provide the other with rights to participate in certain transactions. The
certificate of incorporation of Crescent Operating, as amended and restated,
generally prohibits Crescent Operating, for so long as the Intercompany
Agreement remains in effect, from engaging in activities or making investments
that a REIT could make, unless the Operating Partnership was first given the
opportunity but elected not to pursue such activities or investments. In
addition, subsidiaries of Crescent Operating are the lessees of each of the
Hotel Properties, and Crescent Operating owns a 50% interest in the entity which
is the lessee of the Behavioral Healthcare Facilities and the Company's largest
tenant in terms of current base rent. Richard E. Rainwater and John C. Goff are,
respectively, the Chairman of the Board and the Vice Chairman of the Board of
both the Company and Crescent Operating, and Gerald W. Haddock also serves as
President, Chief Executive Officer and a director of Crescent Operating, and
serves as President, Chief Executive Officer and a trust manager of the Company.
As of September 30, 1997, senior management and the trust managers of the
Company beneficially owned approximately 17.2% of the Company's common equity
(consisting of Common Shares and Units, including vested options to purchase
Common Shares and Units) and approximately the same percentage of the
outstanding common stock of Crescent Operating. The
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<PAGE> 12
common management and ownership among these entities may lead to conflicts of
interest in connection with transactions between the Operating Partnership and
Crescent Operating.
USE OF PROCEEDS
This Prospectus relates to Common Shares being offered and sold for the
account of the Selling Shareholders. The Company will not receive any proceeds
from the sale of the Common Shares but will pay all expenses related to the
registration of the Common Shares offered hereby. See "Plan of Distribution."
SELLING SHAREHOLDERS
GENERAL
This Prospectus relates to the offer and sale from time to time of up to
250,310 Common Shares (the "Shares") by Senterra Corporation, a Texas
Corporation ("Senterra"), Myron G. Blalock, III ("Blalock") and Neil H. Tofsky
("Tofsky," and, together with Senterra and Blalock, the "Selling Shareholders"),
which are the members of Senterra Real Estate Group, L.L.C., a Texas limited
liability company (formerly known as Senterra Development, L.L.C.) ("Senterra
Real Estate"). It is unknown if, when or in what amounts each of the Selling
Shareholders may offer the Shares for sale. There is no assurance that any of
the Selling Shareholders will sell any or all of the Shares offered hereby.
Senterra Real Estate formerly owned certain assets (the "Greenway
Operations") which it employed in its business operations of providing property
and asset management services to Greenway Plaza, a mixed-use development located
in Houston, Texas, consisting of 10 office buildings, retail and storage space,
a hotel, a private athletic club, a central plant and six parking garages.
Pursuant to an Asset Contribution Agreement dated as of October 7, 1996, as
amended on December 31, 1997 and on March 2, 1998, by and among the Operating
Partnership, Senterra Real Estate, Senterra, Blalock and Tofsky, Senterra Real
Estate contributed to the Operating Partnership all of its right, title and
interest in and to the properties, contracts, rights and other assets used in or
attributable to the Greenway Operations in exchange for a limited partnership
interest in the Operating Partnership and 125,155 Units having a fair market
value at the date of closing equal to $8,521,500. Immediately upon issuance,
Senterra Real Estate distributed 83,441, 20,857 and 20,857 Units to Senterra,
Blalock and Tofsky, respectively.
This Prospectus has been prepared pursuant to the Company's obligations
under that certain Registration Rights Agreement, dated as of March 2, 1998, by
and among Crescent Equities, the Operating Partnership and the Selling
Shareholders (the "Registration Rights Agreement"). In accordance with the
Registration Rights Agreement, which contains customary representations and
warranties relating to the Company, this Prospectus (and the registration
statement of which it is a part) relates to sales of the Shares by the Selling
Shareholders, subject to the terms and conditions set forth in the Registration
Rights Agreement.
In addition, in the Registration Rights Agreement, the Company has agreed
to indemnify the Selling Shareholders against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), or to contribute to payments the Selling Shareholders may be
required to make in respect thereof. Insofar as indemnification of the Selling
Shareholders for liabilities arising under the Securities Act may be permitted
pursuant to such agreements, the Company has been informed that, in the opinion
of the Securities and Exchange Commission (the "Commission"), such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
Because the Selling Shareholders may offer all or some of the Shares
pursuant to the Offering, and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the Shares
that will be held by the Selling Shareholders after completion of the Offering,
no estimate can be given as to the number of Shares that will be held by each
Selling Shareholder after completion of the Offering.
The Selling Shareholders and any broker or dealer to or through whom any of
the Shares are sold may be deemed to be underwriters within the meaning of the
Securities Act with respect to the Shares offered hereby,
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<PAGE> 13
and any profits realized by the Selling Shareholders or such brokers or dealers
may be deemed to be underwriting commissions. Brokers' commissions and dealers'
discounts, taxes and other selling expenses to be borne by the Selling
Shareholders are not expected to exceed normal selling expenses for sales. The
registration of the Shares under the Securities Act shall not be deemed an
admission by any of the Selling Shareholders or the Company that the Selling
Shareholders are underwriters for purposes of the Securities Act of any Shares
offered under this Prospectus.
CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND CERTAIN SELLING SHAREHOLDERS
Senterra Real Estate is the property manager and marketing and leasing
agent for Greenway Plaza, which was acquired by the Operating Partnership on
August 15, 1996. On October 7, 1996, Senterra Real Estate and Crescent Real
Estate Funding III, L.P. ("Funding III"), Crescent Real Estate Funding IV, L.P.
("Funding IV") and Crescent Real Estate Funding V, L.P. ("Funding V"),
affiliates of the Company, entered into management and marketing and leasing
agreements extending the term during which Senterra Real Estate would provide
management, construction management and marketing services for Greenway Plaza
for two, three and five years following such acquisition, respectively. Senterra
Real Estate is providing similar services to the Operating Partnership for a
building in Houston, Texas known as "1800 West Loop South."
In addition to the transactions relating to the Greenway Operations
described above under "General," the Company assumed certain obligations of the
Operating Partnership to Senterra Real Estate set forth in an agreement entered
into as of December 13, 1996 between the Operating Partnership and Senterra Real
Estate, which obligations the Pricing Committee of the Board of Trust Managers
of the Company valued at $1,200,200. On January 6, 1998, the Company issued
30,933 Common Shares to Senterra Real Estate pursuant to an existing
registration statement, in exchange for the release by Senterra Real Estate of
such obligations.
COMMON SHARES OFFERED
The following chart shows, according to the Company's records, the number
of Common Shares currently held by each Selling Shareholder and the number of
Shares of each Selling Shareholder being offered hereby.
<TABLE>
<CAPTION>
COMMON
SHARES
BENEFICIALLY NUMBER OF
NAME OF OWNED PRIOR TO SHARES OFFERED
SELLING SHAREHOLDER OFFERING(1)(2) HEREBY
------------------- -------------- --------------
<S> <C> <C>
Senterra Corporation............................. 166,882 166,882
Myron G. Blalock, III............................ 41,714 41,714
Neil H. Tofsky................................... 41,714 41,714
------- -------
Total.................................. 250,310 250,310(3)
</TABLE>
- ---------------
(1) Excludes 30,933 Common Shares in which Senterra, Tofsky and Blalock have a
63.33%, 26.67% and 10% interest, respectively. Such Common Shares are held
of record by Senterra Real Estate.
(2) The number of Common Shares beneficially owned prior to the Offering
represents Units exchangeable for Common Shares, subject to certain
exceptions, on a one-for-two basis. Alternatively, the Units are
exchangeable, at the option of the Company, for cash.
(3) Based on the number of Units and Common Shares owned as of the date hereof
(but excluding the 30,933 Common Shares held of record by Senterra Real
Estate), none of the Selling Shareholders will own any Common Shares or
Units upon completion of the Offering.
12
<PAGE> 14
PLAN OF DISTRIBUTION
The sale or distribution of all or any portion of the Shares may be
effected from time to time by the Selling Shareholders directly, indirectly
through brokers or dealers or in a distribution by one or more underwriters on a
firm commitment or best efforts basis, on the NYSE, in the over-the-counter
market, on any other national securities exchange on which the Common Shares are
listed or traded, in privately negotiated transactions or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Company will not receive any of the
proceeds from the sale of the Shares.
The methods by which the Shares may be sold or distributed include, without
limitation, (i) a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction, (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus, (iii) exchange distributions and/or
secondary distributions in accordance with the rules of the NYSE, (iv) ordinary
brokerage transactions and transactions in which the broker solicits purchasers,
(v) pro rata distributions as part of the liquidation and winding up of the
affairs of the Selling Shareholders, and (vi) privately negotiated transactions.
The Selling Shareholders may from time to time deliver all or a portion of the
Shares to cover a short sale or sales or upon the exercise, settlement or
closing of a call equivalent position or a put equivalent position. The Selling
Shareholders and the broker-dealers participating in the distribution of the
Shares may be deemed "underwriters" within the meaning of the Securities Act and
any profit on the sale of the Shares by the Selling Shareholders and any
commissions received by any such broker-dealers may be regarded as underwriting
commissions under the Securities Act. Underwriters, brokers, dealers or agents
may be entitled, under agreements with the Company, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act. The Shares may be sold from time to time at varying prices
determined at the time of sale or at negotiated prices.
The Company will pay all expenses in connection with the registration of
the Shares. The Selling Shareholders will pay for any brokerage or underwriting
commissions and taxes of any kind (including, without limitation, transfer
taxes) with respect to any disposition, sale or transfer of the Shares.
Shares not sold pursuant to the registration statement on Form S-3 of which
this Prospectus is a part (the "Registration Statement") may be subject to
certain restrictions under the Securities Act and could be sold, if at all, only
pursuant to Rule 144 or another exemption from the registration requirements of
the Securities Act. In general, under Rule 144, a person (or persons whose
Shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of Shares
which does not exceed the greater of one percent of the Company's outstanding
Common Shares or the average weekly reported trading volume of the Company's
Common Shares during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of Shares by a person who is not
an affiliate of the Company and who has satisfied a two-year holding period
without any volume limitation. Therefore, both during and after the
effectiveness of the Registration Statement, sales of the Shares may be made by
the Selling Shareholders pursuant to Rule 144.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Such
reports, proxy statements and other information can be inspected at the Public
Reference Section maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and the following regional
offices of the Commission: Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a Web
site (http://www.sec.gov) that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
In addition, the Company's Common
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<PAGE> 15
Shares are listed on the NYSE and such reports, proxy statements and other
information concerning the Company can be inspected at the offices of the NYSE,
20 Broad Street, New York, New York 10005.
The Company has filed with the Commission the Registration Statement, of
which this Prospectus is a part, under the Securities Act, with respect to the
Shares. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or documents filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules thereto. For further information regarding the Company
and the Shares, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed under the Exchange Act by the
Company (Exchange Act file number 1-13038) with the Commission and are
incorporated herein by reference:
(1) The Registration Statement on Form 8-B filed on March 24, 1997 registering
the Common Shares of the Company under Section 12(b) of the Exchange Act.
(2) The Proxy Statement in connection with the Company's 1997 Annual Meeting
of Stockholders.
(3) The Company's Annual Report on Form 10-K for the year ended December 31,
1996, as amended on April 30, 1997 and May 16, 1997.
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
(5) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, as amended on August 28, 1997.
(6) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, as amended on December 5, 1997.
(7) The Company's Current Report on Form 8-K dated January 29, 1997 and filed
March 24, 1997, as amended on April 9, 1997, April 24, 1997, May 23, 1997
and July 2, 1997.
(8) The Company's Current Report on Form 8-K dated February 28, 1997 and filed
March 17, 1997, as amended on March 21, 1997.
(9) The Company's Current Report on Form 8-K dated April 9, 1997 and filed
April 10, 1997, as amended on April 24, 1997.
(10) The Company's Current Report on Form 8-K dated April 22, 1997 and filed
April 24, 1997.
(11) The Company's Current Report on Form 8-K dated May 8, 1997 and filed May
12, 1997.
(12) The Company's Current Report on Form 8-K dated June 20, 1997 and filed
September 30, 1997, as amended on October 1, 1997.
(13) The Company's Current Report on Form 8-K dated July 22, 1997 and filed
July 23, 1997.
(14) The Company's Current Report on Form 8-K dated August 11, 1997 and filed
August 13, 1997.
(15) The Company's Current Report on Form 8-K dated September 22, 1997 and
filed September 22, 1997.
(16) The Company's Current Report on Form 8-K dated September 22, 1997 and
filed September 30, 1997, as amended on October 1, 1997.
(17) The Company's Current Report on Form 8-K dated September 28, 1997 and
filed October 27, 1997, as amended on November 25, 1997.
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<PAGE> 16
(18) The Company's Current Report on Form 8-K dated September 30, 1997 and
filed September 30, 1997, as amended on October 1, 1997.
(19) The Company's Current Report on Form 8-K dated September 30, 1997 and
filed October 1, 1997, as amended on October 9, 1997.
(20) The Company's Current Report on Form 8-K dated October 8, 1997 and filed
October 14, 1997.
(21) The Company's Current Report on Form 8-K dated October 22, 1997 and filed
October 28, 1997.
(22) The Company's Current Report on Form 8-K dated December 12, 1997 and filed
December 18, 1997, as amended on December 19, 1997.
(23) The Company's Current Report on Form 8-K dated December 22, 1997 and filed
March 4, 1998.
(24) The Company's Current Report on Form 8-K dated January 6, 1998 and filed
January 6, 1998.
(25) The Company's Current Report on Form 8-K dated January 16, 1998 and filed
January 27, 1998, as amended on February 13, 1998.
(26) The Company's Current Report on Form 8-K dated February 12, 1998 and filed
February 23, 1998.
(27) The Company's Current Report on Form 8-K dated February 13, 1998 and filed
February 18, 1998.
(28) The Company's Current Report on Form 8-K dated February 13, 1998 and filed
February 18, 1998.
All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of Shares to which this Prospectus relates shall be deemed to be
incorporated by reference in this Prospectus and shall be part hereof from the
date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), or in any other
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. Subject to the
foregoing, all information appearing in this Prospectus is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
in this Prospectus (other than exhibits and schedules thereto, unless such
exhibits or schedules are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or telephonic requests
for copies should be directed to Crescent Real Estate Equities Company, 777 Main
Street, Suite 2100, Fort Worth, Texas, 76102, Attention: Company Secretary
(telephone number: (817) 877-0477).
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<PAGE> 17
EXPERTS
The financial statements and schedule incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements incorporated in this Prospectus by reference to
the Company's Current Reports on Form 8-K (i) dated January 29, 1997 and filed
on March 24, 1997, as amended on April 9, 1997, April 24, 1997, May 23, 1997 and
July 2, 1997, (ii) dated February 28, 1997 and filed on March 17, 1997, as
amended on March 21, 1997, (iii) dated June 20, 1997 and filed on September 30,
1997, as amended on October 1, 1997, (iv) dated September 22, 1997 and filed on
September 30, 1997, as amended on October 1, 1997, (v) dated September 30, 1997
and filed on September 30, 1997, as amended on October 1, 1997, (vi) dated
October 22, 1997 and filed on October 28, 1997,(vii) dated December 22, 1997 and
filed on March 4, 1998, and (viii) dated January 16, 1998 and filed on January
27, 1998, as amended on February 13, 1998, respectively, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
LEGAL MATTERS
The legality of the issuance of the Shares will be passed upon for the
Company by Shaw, Pittman, Potts & Trowbridge.
16
<PAGE> 18
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Company........................... 2
Recent Developments................... 2
Risk Factors.......................... 5
Use of Proceeds....................... 9
Selling Shareholders.................. 9
Plan of Distribution.................. 11
Available Information................. 11
Incorporation of Certain Documents by
Reference........................... 12
Experts............................... 14
Legal Matters......................... 14
</TABLE>
======================================================
======================================================
250,310 SHARES
[CRESCENT LOGO]
COMMON SHARES
PROSPECTUS
MARCH , 1998
======================================================
<PAGE> 19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with the issuance and
distribution of the Common Shares covered by this Registration Statement, all of
which will be paid by the Registrant, are as follows:
<TABLE>
<S> <C>
Registration Fee............................................ $ 2,480.61
Printing, Engraving and Filing Expenses..................... $ 10,000
Accounting Fees and Expenses................................ $ 5,000
Legal Fees and Expenses..................................... $ 10,000
Miscellaneous............................................... $ 1,500
----------
Total....................................................... $28,980.61
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUST MANAGERS AND OFFICERS.
The Company's Restated Declaration of Trust (the "Declaration of Trust")
provides that no trust manager shall be liable to the Company for any act,
omission, loss, damage, or expense arising from the performance of his duties to
the Company save only for his own willful misfeasance or willful malfeasance or
gross negligence. In addition to, but in no respect whatsoever in limitation of
the foregoing, the liability of each trust manager for monetary damages shall be
eliminated to the fullest extent permitted by applicable law. The Declaration of
Trust also provides that no amendment thereto may limit or eliminate this
limitation of liability with respect to events occurring prior to the effective
date of such amendment.
The Company's Declaration of Trust provides that the trust managers and
officers shall be indemnified to the maximum extent permitted by Texas law.
Under current Texas law, the trust will indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding because
the person is or was a trust manager or officer if it is determined that the
person (i) conducted himself in good faith; (ii) reasonably believed: (a) in the
case of conduct in his official capacity as a trust manager or officer of the
real estate investment trust, that his conduct was in the real estate investment
trust's best interests; and (b) in all other cases, that his conduct was at
least not opposed to the real estate investment trust's best interests; and
(iii) in the case of any criminal proceeding, had no reasonable cause to believe
that his conduct was unlawful. Except to the extent provided in the following
sentence, a trust manager or officer may not be indemnified (i) in respect of a
proceeding in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or (ii) in which the person
is found liable to the real estate investment trust. Notwithstanding the
foregoing, a person may be indemnified against judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses actually
incurred by the person in connection with the proceeding; provided that if the
person is found liable to the real estate investment trust or is found liable on
the basis that personal benefit was improperly received by the person, the
indemnification (i) is limited to reasonable expenses actually incurred by the
person in connection with the proceeding, and (ii) shall not be made in respect
of any proceeding in which the person shall have been found liable for willful
or intentional misconduct in the performance of his duty to the real estate
investment trust. In addition, the Company's Declaration of Trust and Bylaws
require it to pay or reimburse, in advance of the final disposition of a
proceeding, reasonable expenses incurred by a present or former trust manager or
officer made a party to a proceeding by reason of his status as a trust manager
or officer, provided that the Company shall have received (i) a written
affirmation by the trust manager or officer of his good faith belief that he has
met the standard of conduct necessary for indemnification by the Company as
authorized by the Bylaws and (ii) a written undertaking by or on his behalf to
repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met. The Company's Declaration
of Trust and Bylaws also permit the Company to provide indemnification, payment
or reimbursement of expenses to any employee or agent of the Company in such
capacity. The Company's Declaration of Trust and Bylaws also permit the Company
to indemnify a
II-1
<PAGE> 20
person who was or who agreed to appear as a witness or other participant in a
proceeding at a time when he is not named a defendant or respondent in the
proceeding. Any indemnification, payment or reimbursement of the expenses
permitted by the Declaration of Trust and Bylaws shall be furnished in
accordance with the procedures provided for indemnification and payment or
reimbursement of expenses under Texas Real Estate Investment Trust Act for trust
managers.
The limited partnership agreement of the Operating Partnership contains
indemnification provisions comparable to those contained in the Declaration of
Trust.
The Company carries insurance that purports to insure officers and trust
managers of the Company against certain liabilities incurred by them in the
discharge of their official functions.
ITEM 16. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4.01 Restated Declaration of Trust of the Registrant (filed as Exhibit No. 4.01 to the
Registrant's Registration Statement on Form S-3 (File No. 333-21905) (the "1997 Form
S-3") and incorporated herein by reference)
4.02 Amended and Restated Bylaws of the Registrant (filed as Exhibit 4.02 to the
Registrant's Registration Statement on Form S-3 (File No. 333-23005) and incorporated
herein by reference)
4.03 Form of Common Share Certificate (filed as Exhibit No. 4.03 to the 1997 Form S-3 and
incorporated herein by reference)
4.04 Second Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated November 1, 1997 (filed as Exhibit 4.06 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-3 (File No. 333-41049) and
incorporated herein by reference)
4.05 Registration Rights Agreement dated as of March 2, 1998 by and among Crescent Equities,
the Operating Partnership and the Selling Shareholders (filed herewith)
*5.01 Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the securities being
registered by Crescent Real Estate Equities Company
23.01 Consent of Shaw, Pittman, Potts & Trowbridge (included in its opinion filed as Exhibit
5.01 to this Registration Statement)
23.02 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 4, 1998
(filed herewith)
23.03 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 3, 1998
(filed herewith)
23.04 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 3, 1998
(filed herewith)
24.01 Powers of Attorney (filed herewith)
</TABLE>
- ---------------
* To be filed by amendment.
II-2
<PAGE> 21
ITEM 17. UNDERTAKINGS.
(a) 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;
(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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(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 (a)(1)(i) and (a)(1)(ii) do not
apply if 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 Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities 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 Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 City of Fort Worth, State of Texas, on the 6th day of March,
1998.
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ GERALD W. HADDOCK
-------------------------------------
Gerald W. Haddock
President 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 date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ RICHARD E. RAINWATER* Trust Manager and Chairman of the March 6, 1998
- ----------------------------------------------------- Board
Richard E. Rainwater
/s/ JOHN C. GOFF* Trust Manager and Vice Chairman of March 6, 1998
- ----------------------------------------------------- the Board
John C. Goff
/s/ GERALD W. HADDOCK Trust Manager, President and Chief March 6, 1998
- ----------------------------------------------------- Executive Officer (Principal
Gerald W. Haddock Executive Officer)
/s/ DALLAS E. LUCAS Senior Vice President and Chief March 6, 1998
- ----------------------------------------------------- Financial Officer (Principal
Dallas E. Lucas Financial and Accounting
Officer)
/s/ ANTHONY M. FRANK* Trust Manager March 6, 1998
- -----------------------------------------------------
Anthony M. Frank
/s/ MORTON H. MEYERSON* Trust Manager March 6, 1998
- -----------------------------------------------------
Morton H. Meyerson
/s/ WILLIAM F. QUINN* Trust Manager March 6, 1998
- -----------------------------------------------------
William F. Quinn
/s/ PAUL E. ROWSEY, III* Trust Manager March 6, 1998
- -----------------------------------------------------
Paul E. Rowsey, III
/s/ MELVIN ZUCKERMAN* Trust Manager March 6, 1998
- -----------------------------------------------------
Melvin Zuckerman
</TABLE>
*By: /s/ GERALD W. HADDOCK
----------------------------------
Gerald W. Haddock
Attorney-In-Fact
II-4
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4.01 Restated Declaration of Trust of the Registrant (filed as Exhibit No. 4.01 to the
Registrant's Registration Statement on Form S-3 (File No. 333-21905) (the "1997 Form
S-3") and incorporated herein by reference)
4.02 Amended and Restated Bylaws of the Registrant (filed as Exhibit 4.02 to the
Registrant's Registration Statement on Form S-3 (File No. 333-23005) and incorporated
herein by reference)
4.03 Form of Common Share Certificate (filed as Exhibit No. 4.03 to the 1997 Form S-3 and
incorporated herein by reference)
4.04 Second Amended and Restated Agreement of Limited Partnership of Crescent Real Estate
Equities Limited Partnership dated November 1, 1997 (filed as Exhibit 4.06 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-3 (File No. 333-41049) and
incorporated herein by reference)
4.05 Registration Rights Agreement dated as of March 2, 1998 by and among Crescent Equities,
the Operating Partnership and the Selling Shareholders (filed herewith)
*5.01 Opinion of Shaw, Pittman, Potts & Trowbridge as to the legality of the securities being
registered by Crescent Real Estate Equities Company
23.01 Consent of Shaw, Pittman, Potts & Trowbridge (included in its opinion filed as Exhibit
5.01 to this Registration Statement)
23.02 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 4, 1998
(filed herewith)
23.03 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 3, 1998
(filed herewith)
23.04 Consent of Arthur Andersen LLP, Certified Public Accountants, dated March 3, 1998
(filed herewith)
24.01 Powers of Attorney (filed herewith)
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 4.05
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into
effective as of this 2nd day of March, 1998 by and among Crescent Real Estate
Equities Company, a Texas real estate investment trust (the "Company"), Crescent
Real Estate Equities Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), Senterra Corporation, a Texas corporation (the
"Corporation"), Myron G. Blalock, III ("Blalock") and Neil H. Tofsky ("Tofsky"
and, together with the Corporation and Blalock, the "Senterra Designees").
WHEREAS, the Senterra Real Estate Group, L.L.C. (formerly known as Senterra
Development, L.L.C.), a Texas limited liability company ("Senterra"), obtained
limited partnership interests (the "Partnership Interests") and Partnership
Units ("Units") in the Operating Partnership, all of which were conveyed
pursuant to one or more exemptions from registration under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to an offering by the
Operating Partnership of such Partnership Interests and Units to Senterra;
WHEREAS, Senterra subsequently assigned the Partnership Interests and
Partnership Units to the Senterra Designees;
WHEREAS, pursuant to the Operating Partnership Agreement (as defined
below), the Senterra Designees have obtained certain rights (the "Exchange
Rights") to exchange their Partnership Interests and Units, in whole or in part,
for an aggregate number of common shares of beneficial interest in the Company,
$0.01 par value per share (the "Common Shares"), equal to two times the
aggregate number of Units owned by the Senterra Designees, on the terms and
conditions specified in the Operating Partnership Agreement, and pursuant to
which the Company shall have the option to deliver cash in lieu of Common
Shares;
WHEREAS, in consideration of the purchase of the Partnership Interests and
Units by Senterra, the Company has agreed to provide the Senterra Designees and
certain of their assignees, as described herein, with the registration rights
set forth in Section 2 hereof;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as set forth herein.
1. Certain Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings.
"Blalock" shall have the meaning set forth in the recitals hereto.
"Common Shares" shall have the meaning set forth above in the recitals
hereto.
"Company" shall have the meaning set forth above in the recitals hereto.
<PAGE> 2
"Corporation" shall have the meaning set forth in the recitals hereto.
"Exchange Rights" shall have the meaning set forth above in the recitals
hereto.
"Holders" shall mean (i) the Senterra Designees, (ii) any Person who
succeeds to the rights of the Corporation by instrument of merger,
consolidation, or similar instrument, and who executes this Agreement in
connection therewith, (iii) any Person who is a beneficial owner of the equity
securities of the Corporation as of the date first above written, to whom the
Corporation assigns its rights hereunder, and who executes this Agreement in
connection with such assignment, (iv) family members of Blalock, Tofsky or any
beneficial owner specified in clause (iii) (which, for purposes hereof, shall
mean any spouse, child, or grandchild, or a trust for the benefit of any one or
more of the foregoing, and, in the case of a trust, the grantor or beneficial
owner(s) thereof) to whom Blalock, Tofsky or such beneficial owner assigns the
rights hereunder and who execute this Agreement in connection with such
assignment, and (v) any Person who succeeds to the rights of any Holder by will
or intestate succession and who executes this Agreement in connection therewith.
No Person shall be considered a Holder for purposes hereof unless and until such
Person shall have executed this Agreement, as the same may be amended in
accordance with the provisions hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Operating Partnership" shall have the meaning set forth above in the
recitals hereto and also shall include the Operating Partnership's successors
and subsidiaries.
"Operating Partnership Agreement" shall mean the Second Amended and
Restated Agreement of Limited Partnership of the Operating Partnership, as
amended through and following the date hereof, including the amendment thereto
that, among other matters, admits the Senterra Designees to the Operating
Partnership as Limited Partners and as holders of Units.
"Partnership Interests" shall have the meaning set forth above in the
recitals hereto.
"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and by
all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Registrable Shares" shall mean any Common Shares issued to the Holders
pursuant to the exercise of Exchange Rights by any of such Holders in exchange
for the Units received by the Holders on the date hereof but shall not include
any Common Shares issued to the Holders in exchange for the Units and
subsequently transferred to any Person other than (i) another Holder or (ii) a
Person who becomes a Holder pursuant hereto within 20 days following any such
transfer.
-2-
<PAGE> 3
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Shares on any
securities exchange or exchanges pursuant to Section 2(c) hereof, and (v) the
fees and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any "cold comfort" letters
required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude those items specified in Section 4 as
expenses to be paid by a Holder.
"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers any of the Registrable Shares, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
materials incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Senterra Designees" shall have the meaning set forth above in the recitals
hereto.
"Tofsky" shall have the meaning set forth above in the recitals hereto.
"Units" shall have the meaning set forth above in the recitals hereto.
2. Registration of Shares. The provisions relating to a Holder's and the
Company's rights and obligations with regard to registration of Common Shares
are set forth in this Section 2.
(a) Within five (5) business days after the date defined as the Closing
Date in that certain Asset Contribution Agreement among Senterra, the Senterra
Designees and the Partnership, the Company shall file, and shall use its best
efforts to cause to become effective as soon thereafter as practicable, a
Registration Statement for all Registrable Shares. The Company shall use its
best efforts to maintain the effectiveness of such Registration Statement until
there are no longer any Registrable Shares held by any Holder.
In addition, notwithstanding the foregoing, the Company shall not be
obligated, but shall have the right, to take any action to effect any such
registration, qualification or compliance pursuant to this Section 2(a):
(i) in any particular jurisdiction in which either the Company or the
Operating Partnership would be required to execute a general consent to
service of process in effecting such registration, qualification or
compliance,
-3-
<PAGE> 4
unless the Company or the Operating Partnership is already subject to
service in such jurisdiction, and except as may be required by the
Securities Act; or
(ii) if such Registration Statement cannot be filed on Form S-3 or a
successor form substantially similar and with filing requirements similar
to such Form.
(b) Notice of Effectiveness. The Company shall notify each Holder of filing
status of the Registration Statement, whether or not the SEC will review the
Registration Statement and the effectiveness of the Registration Statement and
shall furnish to each Holder such number of copies of the Registration Statement
(including any amendments, supplements and exhibits), the Prospectus contained
therein (including each preliminary prospectus and all related amendments and
supplements), and any documents incorporated by reference in the Registration
Statement or such other documents as the Holder may reasonably request in order
to facilitate its sale of the Registrable Shares in the manner described in the
Registration Statement.
(c) Amendments and Supplements to Registration Statement; Listing. The
Company shall prepare and file with the SEC from time to time such amendments
and supplements to the Registration Statement and Prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all the Registrable Shares until such time as all of the
Registrable Shares have been disposed of in accordance with the intended methods
of disposition by the Holders as set forth in the Registration Statement. Upon
five business days' notice, the Company shall file any supplement or
post-effective amendment to the Registration Statement with respect to the plan
of distribution or such Holder's ownership interests in Registrable Shares that
is reasonably necessary to permit the sale of the Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Common Shares registered under any Registration Statement to be then listed or
quoted on the primary exchange or quotation system on which the Common Shares
are then listed or quoted.
(d) SEC Requests. The Company shall notify each Holder of any request by
the SEC for amendments or supplements to the Registration Statement or the
Prospectus related thereto or for additional information. In addition, the
Company shall notify each Holder of the filing of the Registration Statement or
any Prospectus, amendment or supplement related thereto or any post-effective
amendment to the Registration Statement and the effectiveness of any
post-effective amendment.
(e) Prospectus Delivery. At any time when a Prospectus relating to the
Registration Statement is required to be delivered under the Securities Act, the
Company shall immediately notify each Holder ("an Event Notice") of the
happening of any event as a result of which (i) the Prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
-4-
<PAGE> 5
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) an amendment
to the Registration Statement is required. In such event, the Company shall
promptly (and, in any event in which an amendment to the Prospectus is not
required, not later than 15 business days after such Event Notice is given to
each Holder) prepare and furnish to each Holder a reasonable number of copies of
a supplement to such Prospectus (or, after declaration of effectiveness by the
SEC, of any amendment to the Prospectus required to be filed as an amendment to
the Registration Statement) as may be necessary so that, as thereafter delivered
to the purchasers of Registrable Shares, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement and use its best efforts promptly to
obtain an effectiveness order for such amendment from the SEC. From and after
the date of any Event Notice, no Holder shall offer or sell any Registrable
Shares until such time as the Company delivers any such Prospectus supplement or
amendment to the Holder.
3. State Securities Laws.
Subject to the conditions set forth in this Agreement, the Company shall,
in connection with the filing of any Registration Statement hereunder, file such
documents as may be necessary to register or qualify the Registrable Shares
under the securities or "Blue Sky" laws of such states as any Holder may
reasonably request, and the Company shall use its best efforts to cause such
filings to become effective; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any such state in which it is not then qualified or to file any general consent
to service of process in any such state. Once effective, the Company shall use
its best efforts to keep such filings effective until the earliest of (i) such
time as the Registrable Shares have been sold, or (ii) in the case of a
particular state, a Holder has notified the Company that it no longer requires
an effective filing in such state in accordance with its original request for
filing. The Company shall promptly notify each Holder of, and confirm in
writing, the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Shares for sale under the
securities or "Blue Sky" laws of any jurisdiction or the initiation or threat of
any proceeding for such purpose.
4. Expenses.
The Company shall bear all Registration Expenses incurred in connection
with the registration of the Registrable Shares pursuant to this Agreement. Each
Holder shall be responsible for any brokerage or underwriting commissions and
taxes of any kind (including, without limitation, transfer taxes) with respect
to any disposition, sale or transfer of Registrable Shares sold by such Holder
and for any legal, accounting and other fees and expenses incurred by such
Holder in connection therewith.
5. Cooperation.
Each Holder hereby agrees (i) to cooperate with the Company and to furnish
to the Company in a timely manner all information that the Company may
reasonably request in
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<PAGE> 6
connection with the preparation of the Registration Statement and any filings
with any state securities commissions, including information concerning its plan
of distribution and ownership interests with respect to its Registrable Shares
or any other securities of the Company or any of the Company's affiliates and
(ii) to deliver or cause delivery of the Prospectus contained in the
Registration Statement to any purchaser of the shares covered by the
Registration Statement from the Holder except to the extent provided to the
contrary in Section 2(e) above.
6. Suspension of Registration Requirement.
The Company shall promptly notify each Holder of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Each Holder agrees not to effect
any sales from the date of any such notice until the Company obtains the
withdrawal of any such order suspending the effectiveness of the Registration
Statement. The Company shall use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement and shall
promptly notify each Holder of any such withdrawal.
7. Additional Shares.
The Company, at its option, may register, under any registration statement
and any filings with any state securities commissions filed pursuant to this
Agreement, any number of shares of unissued Common Shares or other securities of
the Company or any Common Shares or other securities of the Company owned by any
other shareholder or shareholders of the Company.
8. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and each person, if any, who controls any Holder
within the meaning of Section 15 of the Securities Act of 1933 as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
or any Prospectus (or any amendment thereto) pursuant to which the
Registrable Shares were registered or offered under the Securities Act,
including all documents incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
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<PAGE> 7
(iii) against any and all expense whatsoever, as incurred (including
reasonable fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, in each case whether or not a party, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not
paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section
8(a) shall not apply to any Holder with respect to any loss, liability, claim,
damage or expense which arises, in whole or in part, out of (x) any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by such
Holder expressly for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto) or (y) such
Holder's failure to deliver an amended or supplemental Prospectus if such loss,
liability, claim, damage or expense would not have arisen had such delivery
occurred.
(b) Indemnification by Holders. Each Holder severally agrees to indemnify
and hold harmless the Company and the other selling Holders, and each of their
respective directors and officers (including each director and officer of the
Company who signed the Registration Statement), and each person, if any, who
controls the Company or the other selling Holders within the meaning of Section
15 of the Securities Act, to the same extent as the indemnity contained in
Section (a) hereof (except that any settlement described in Section 8(a)(ii)
shall be effected with the written consent of such Holder), for any such loss,
claim, damage or expense that arises out of or is based, in whole or in part,
upon (x) any untrue statements or omissions made in the Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Holder for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto)
or (y) such Holder's failure to deliver an amended or supplemental Prospectus if
such loss, liability, claim, damage or expense would not have arisen had such
delivery occurred.
(c) Conduct of Indemnification Proceedings. The indemnified party shall
give reasonably prompt notice to the indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure so to notify the indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity agreement provided
in paragraphs (a) or (b) of this Section 8, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) shall not, in any event, relieve the indemnifying party from
any obligations to the indemnified party other than the indemnification
obligation provided under paragraphs (a) or (b) of this Section 8. If the
indemnifying party so elects within a reasonable time after receipt of such
notice, the indemnifying party may assume the defense of such action or
proceeding at such
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<PAGE> 8
indemnifying party's own expense with counsel chosen by the
indemnifying party and approved by the indemnified party, which approval shall
not be unreasonably withheld; provided, however, that, if the indemnified party
reasonably determines that a conflict of interest exists and that it is
necessary that the indemnified party be represented by separate counsel or that,
upon advice of counsel, there may be legal defenses available to it which are
different from or in addition to those available to the indemnifying party, then
the indemnifying party shall not be entitled to assume such defense, and the
indemnified party shall be entitled to separate counsel at the indemnifying
party's expense. If the indemnifying party is not entitled to assume the defense
of such action or proceeding as a result of the provisions of the preceding
sentence, the indemnifying party's counsel shall be entitled to conduct the
indemnifying party's defense and counsel for the indemnified party shall be
entitled to conduct the defense of the indemnified party, it being understood
that both such counsel will cooperate with each other to conduct the defense of
such action or proceeding as efficiently as possible. If the indemnifying party
is not so entitled to assume the defense of such action or does not assume such
defense, after having received the notice referred to in the first sentence of
this paragraph, the indemnifying party will pay the reasonable fees and expenses
of counsel for the indemnified party. In such event, however, the indemnifying
party will not be liable for any settlement effected without the written consent
of the indemnifying party, with such consent not to be unreasonably withheld. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, the indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
party incurred thereafter in connection with such action or proceeding, subject
to the proviso set forth in the second sentence of this paragraph (c).
9. Contribution.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 8 is for any reason held
to be unenforceable although applicable in accordance with its terms, the
Company and each Holder shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company and each such Holder, in such proportion as is
appropriate to reflect the relative fault of and benefits to the Company on the
one hand and such Holder on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits to the indemnifying party and indemnified party shall be determined by
reference to, among other things, the total proceeds received by the
indemnifying party and indemnified party in connection with the offering to
which such losses, claims, damages, liabilities or expenses relate. The relative
fault of the indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to, information
supplied by, the indemnifying party or the indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action.
-8-
<PAGE> 9
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9, each Holder shall be required
to contribute the amount of any damages which such Holder is required to pay by
reason of such untrue statement or omission.
Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if
any, who controls a Holder within the meaning of Section 15 of the Securities
Act shall have the same rights to contribution as such Holder, and each director
of the Company, each officer of the Company who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act shall have the same rights to contribution
as the Company.
10. No Obligation to Issue Common Shares to Holders; No Other Obligation to
Register.
(a) No Obligation to Issue Common Shares. The Holders hereby acknowledge
that, upon any exercise of their Exchange Rights, the Company has the option
pursuant to the Operating Partnership Agreement, in its sole discretion, to
deliver either cash, in the amount specified in the Operating Partnership
Agreement under such circumstances, or Common Shares in exchange for the Units
submitted for exchange.
(b) No Other Obligation to Register Shares. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to a Holder to
register the Registrable Shares under the Securities Act.
11. Holder Representations, Warranties and Agreements.
Each Holder, jointly and not severally, and solely on behalf of itself,
represents and warrants to, and agrees with, the Company, that:
(a) Such Holder, if not a natural person, is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Such Holder has all requisite power and authority to execute,
deliver and perform this Agreement. All necessary proceedings of such Holder,
if not a natural person, have been duly taken to authorize the execution,
delivery, and performance of this Agreement by such Holder. This Agreement has
been duly executed and delivered by such Holder, and is the legal, valid, and
binding obligation of such Holder, and is enforceable as to such Holder in
accordance with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal is
required by such Holder for the execution, delivery or performance of this
Agreement (except filings under the Securities Act which will be made and such
consents consisting only of consents under Blue Sky or state securities laws
which will be obtained) by such Holder. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or understanding
to which such Holder is a party, or to which any
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<PAGE> 10
of such Holder's properties or assets are subject, is required for the
execution, delivery and performance of this Agreement which has not been
obtained, and the execution, delivery and performance of this Agreement will not
violate, result in a breach of, conflict with or (with or without giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement or understanding, or, if such Holder is not a natural person,
violate or result in a breach of, or conflict with, any law, rule, regulation,
order, judgment, or decree binding on such Holder or to which any of such
Holder's operations, business, properties, or assets are subject, which, in any
of such events, would prohibit, impair, or restrict the ability of such Holder
to execute and deliver this Agreement, perform in accordance with the terms
hereof or consummate the transactions contemplated hereby, or would adversely
affect the rights or benefits, or both, hereunder of any other party hereto.
(b) Neither such Holder nor any of such Holder's affiliates (as defined in
the regulations under the Securities Act), will take, directly or indirectly,
during the term of this Agreement, any action designed to stabilize (except as
may be permitted by applicable law) or manipulate the price of any security of
the Company.
(c) Such Holder shall promptly furnish to the Company any and all
information as may be required by, or as may be necessary or advisable to comply
with the provisions of, the Securities Act, the Exchange Act, and the rules and
regulation of the SEC thereunder in connection with the preparation and filing
of any Registration Statement pursuant hereto, or any amendment or supplement
thereto, or any Preliminary Prospectus or Prospectus included therein. All
information to be furnished to the Company by or on behalf of such Holder
expressly for use in connection with the preparation of any Preliminary
Prospectus, the Prospectus, the Registration Statement, or any amendment or
supplement thereto, will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
12. Underwritten Registration.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (i) executes and delivers the
underwriting agreement or similar documents relating thereto pursuant to which
such Holder shall agree to sell, upon the reasonable terms and subject to the
reasonable conditions therein set forth, such Holder's Registrable Securities on
the basis provided therein, and (ii) completes and executes all usual and
customary questionnaires, powers of attorney, indemnities, custodial, or escrow
agreements and such other documents as may be reasonably necessary, advisable or
required pursuant to the terms thereof or as may be from time to time reasonably
requested by the underwriter or underwriters named therein, the Company, or
their respective legal counsel, in connection therewith.
In the event of any conflict between the indemnification and contribution
terms as herein set forth and as set forth in any underwriting agreement entered
pursuant hereto, the underwriting agreement shall control.
-10-
<PAGE> 11
13. Survival of Representations and Agreements.
All representations, warranties, covenants, and agreements contained in
this Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the effective date of each Registration Statement contemplated by
this Agreement, and such representations, warranties, covenants, and agreements,
including the indemnity and contribution agreements contained in Sections 8 and
9 hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Holder or any Person
which is entitled to be indemnified under Section 8 hereof, and shall survive
termination of this Agreement.
14. Amendments and Waivers.
The provisions of this Agreement may not be amended, modified,
supplemented, or waived without the prior written consent of the Company and the
Holders of Registrable Shares.
15. Notices.
Except as set forth below, all notices and other communications provided
for or permitted hereunder shall be in writing and shall be deemed to have been
duly given (i) upon receipt by the intended recipient if delivered personally or
sent by telex or telecopier, (ii) if mailed, three days after the mailing
thereof by registered or certified mail (return receipt requested), postage
prepaid, or (iii) upon receipt if transmitted by courier or overnight delivery
service to the respective parties at the following addresses (or at such other
address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof),
and further provided that in case of directions to amend the Registration
Statement pursuant to Section 2(c), a Holder must confirm such notice in writing
by overnight express delivery with confirmation of receipt:
If to the Company: Crescent Real Estate Equities Company
c/o Crescent Real Estate Equities Limited
Partnership
777 Main Street
Suite 2100
Fort Worth, Texas 76102
Attn: Gerald W. Haddock, CEO and President
Telephone: (817) 878-0444
Telecopier: (817) 878-0429
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<PAGE> 12
with a copy to: Crescent Real Estate Equities Company
c/o Crescent Real Estate Equities Limited
Partnership
777 Main Street
Suite 2100
Fort Worth, Texas 76102
Attn: David M. Dean, Senior Vice President-Law
Telephone: (817) 878-0442
Telecopier: (817) 878-0429
with a copy to: Sylvia M. Mahaffey, Esq.
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N. W.
Washington, D.C. 20037
Telephone: (202) 663-8360
Telecopier: (202) 663-8007
If to Senterra Corporation, Senterra Real Estate Group, L.L.C.
Blalock or Tofsky: 12 Greenway Plaza
Suite 1400
Houston, Texas 77046
with a copy to: Stephen C. Jacobs, Esq.
Liddell, Sapp, Zivley, Hill & LaBoon
600 Travis, Suite 3200
Houston, Texas 77002
Telephone: (713) 226-1382
Telecopier: (713) 223-3717
In addition to the manner of notice permitted above, notices given
pursuant to Sections 2 and 6 hereof may be effected telephonically and confirmed
in writing thereafter in the manner described above.
16. Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto. This Agreement may not be assigned by any Holder, except for an
assignment (i) by the Corporation to any Person who succeeds to the rights of
the Corporation by instrument of merger, consolidation, or similar instrument,
and who executes this Agreement in connection therewith, (ii) by the Corporation
to any Person who is a beneficial owner of the equity securities of the
Corporation as of the date first above written, and who executes this Agreement
in connection with such assignment, (iii) by Blalock, Tofsky or any beneficial
owner specified in clause (ii) to one or more family members (which, for
purposes hereof, shall mean any spouse, child, or grandchild, or a trust for the
benefit of any one or more of the foregoing, and, in the
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<PAGE> 13
case of a trust, the grantor or beneficial owner(s) thereof) of such Senterra
Designee or beneficial owner who execute this Agreement in connection with such
assignment, (iv) by any Holder to any Person who succeeds to the rights of any
Holder by gift, will or intestate succession and who executes this Agreement in
connection therewith, and (v) by any Holder to any other Holder. Any attempted
assignment hereof by any Holder to any Person other than pursuant to this
Section 16 will be void and of no effect, and the Company shall have no
obligations whatsoever with regard to such purported assignee. No Person shall
be considered a Holder for purposes hereof unless and until such Person shall
have executed this Agreement, as the same may be amended in accordance with the
provisions hereof.
17. Counterparts.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
18. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas applicable to contracts made and to be performed
wholly within said State.
19. No Shareholder Liability.
No shareholder or other equity owner of the Company assumes any
personal liability for the obligations listed herein or for the Company's
performance of such obligations.
20. Severability.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
21. Entire Agreement.
This Agreement is intended by the parties as a final expression of
their agreement and intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
such subject matter. This Agreement supersedes all prior agreements and
understandings (except the Operating Partnership Agreement, which is
incorporated by reference herein and hereby made a part of this Agreement)
between the parties with respect to such subject matter.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ DAVID M. DEAN
---------------------------------------
Name: David M. Dean
----------------------------------
Title: Senior Vice President Law
---------------------------------
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: CRESCENT REAL ESTATE EQUITIES,
LTD., its general partner
By: /s/ DAVID M. DEAN
---------------------------------------
Name: David M. Dean
----------------------------------
Title: Senior Vice President Law
---------------------------------
SENTERRA CORPORATION
By: /s/ DOUGLAS W. SCHNITZER
---------------------------------------
Name: Douglas W. Schnitzer
Title: President
/s/ MYRON G. BLALOCK, III
------------------------------------------
Myron G. Blalock, III
/s/ NEIL H. TOFSKY
------------------------------------------
Neil H. Tofsky
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<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement on Form S-3 of our report dated January 17, 1997 included
in Crescent Real Estate Equities Company's Form 10-K for the year ended December
31, 1996, and of our reports dated February 14, 1997 on Trammell Crow Center,
March 18, 1997 on Carter-Crowley Real Estate Portfolio, July 23, 1997 on
Fountain Place, August 21, 1997 on Miami Center, August 22, 1997 on Houston
Center, October 15, 1997 on Bank One Center, December 4, 1997 on Energy Centre,
January 16, 1998 on Post Oak Central, and January 16, 1998 on Washington Harbour
included in Crescent Real Estate Equities Company's Forms 8-K and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN, LLP
Dallas, Texas
March 4, 1998
<PAGE> 1
EXHIBIT 23.03
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
November 7, 1996 on the Provider Segment of Magellan Health Services, Inc.
included in Crescent Real Estate Equities Company's Form 8-K dated January 29,
1997, as amended by Form 8-K/A on July 2, 1997, and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN, LLP
Atlanta, Georgia
March 3, 1998
<PAGE> 1
EXHIBIT 23.04
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
April 23, 1997 (except for Note 5 as to which the date is June 27, 1997 and
Note 14 as to which the date is January 16, 1998), with respect to the
consolidated financial statements of Station Casinos, Inc. as of March 31,
1997 and 1996 and for each of the three years in the period ended March 31,
1997, included in Crescent Real Estate Equities Company's Form 8-K/A dated
February 13, 1998, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
March 4, 1998
<PAGE> 1
EXHIBIT 24.01
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ RICHARD E. RAINWATER
----------------------------------------------
Richard E. Rainwater
Trust Manager and Chairman of the Board
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ JOHN C. GOFF
----------------------------------------------
John C. Goff
Trust Manager and Vice Chairman of the Board
</TABLE>
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ GERALD W. HADDOCK
----------------------------------------------
Gerald W. Haddock
Trust Manager, President and
Chief Executive Officer
</TABLE>
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ DALLAS E. LUCAS
----------------------------------------------
Dallas E. Lucas
Senior Vice President and Chief Financial
Officer
</TABLE>
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ ANTHONY M. FRANK
----------------------------------------------
Anthony M. Frank
Trust Manager
</TABLE>
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ MORTON H. MEYERSON
----------------------------------------------
Morton H. Meyerson
Trust Manager
</TABLE>
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ WILLIAM F. QUINN
----------------------------------------------
William F. Quinn
Trust Manager
</TABLE>
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ PAUL E. ROWSEY, III
----------------------------------------------
Paul E. Rowsey, III
Trust Manager
</TABLE>
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each Gerald W. Haddock, John C. Goff and David M. Dean, and each of
them, as his true and lawful attorney-in-fact and agent, each with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any or all
documents (including both pre- and post-effective amendments to this
Registration Statement on Form S-3) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as each said attorney-in-fact and agent might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or any substitute or substitutes for any of them, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<S> <C>
Date: March 6, 1998 /s/ MELVIN ZUCKERMAN
----------------------------------------------
Melvin Zuckerman
Trust Manager
</TABLE>
