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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission File Number 1-13762
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RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
MARYLAND 11-3233650
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 BROADHOLLOW ROAD,
MELVILLE, NY 11747
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (631) 694-6900
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Each Exchange on Which Registered
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Common Stock, $.01 par value New York Stock Exchange
Class B Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K. [ ]
The aggregate market value of the shares of common stock and Class B Common
Stock held by non-affiliates was approximately $894.5 million based on the
closing prices on the New York Stock Exchange for such shares on March 15, 2000.
The Company has two class' of common stock, issued at $.01 par value per
share with 40,378,846 and 10,283,763 shares of common stock and Class B Common
Stock outstanding, respectively as of March 15, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Shareholder's
Meeting to be held May 18, 2000 are incorporated by reference into Part III.
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TABLE OF CONTENTS
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ITEM
NO. PAGE
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PART I
1. Business ..................................................................... I-1
2. Properties ................................................................... I-8
3. Legal Proceedings ............................................................ I-17
4. Submission of Matters to a Vote of Security Holders .......................... I-17
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters ........ II-1
6. Selected Financial Data ...................................................... II-2
7. Management's Discussion and Analysis of Financial Condition and Results of II-3
Operations ...................................................................
7(a). Quantitative and Qualitative Disclosures about Market Risk ................... II-12
8. Financial Statements and Supplementary Data .................................. II-12
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................... II-12
PART III
10. Directors and Executive Officers of the Registrant ........................... III-1
11. Executive Compensation ....................................................... III-1
12. Security Ownership of Certain Beneficial Owners and Management ............... III-1
13. Certain Relationships and Related Transactions ............................... III-1
PART IV
14. Financial Statements and Schedules, Exhibits and Reports on Form 8-K ......... IV-1
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PART I
ITEM 1. BUSINESS
GENERAL
Reckson Associates Realty Corp. was incorporated in September 1994 and
commenced operations effective with the completion of its initial public
offering on June 2, 1995. Reckson Associates Realty Corp., together with Reckson
Operating Partnership, L.P. (the "Operating Partnership"), and their affiliates
(collectively, the "Company") were formed for the purpose of continuing the
commercial real estate business of Reckson Associates, its affiliated
partnerships and other entities ("Reckson"). For more than 40 years, Reckson has
been engaged in the business of owning, developing, acquiring, constructing,
managing and leasing office and industrial properties in the New York tri-state
area (the "Tri-State Area"). Based on industry surveys, management believes that
the Company is one of the largest owners and operators of Class A office
properties and industrial properties in the Tri-State Area. The Company operates
as a fully-integrated, self-administered and self-managed real estate investment
trust ("REIT"). As of December 31, 1999, the Company owned 189 properties (the
"Properties") (including two joint venture properties) in the Tri-State Area
encompassing approximately 21.4 million rentable square feet, all of which are
managed by the Company. The Properties consist of 77 Class A office properties
(the "Office Properties") encompassing approximately 13.1 million square feet,
110 industrial properties (the "Industrial Properties") encompassing
approximately 8.3 million square feet and two 10,000 square foot retail
properties. The Company also owns a 357,000 square foot office building located
in Orlando, Florida. In addition, as of December 31, 1999, the Company had
approximately $315.6 million invested in certain mortgage indebtedness
encumbering three Class A Office Properties encompassing approximately 1.6
million square feet, approximately 472 acres of land located in New Jersey and
in a note receivable secured by a partnership interest in Omni Partners, L. P.,
owner of the Omni, a 575,000 square foot Class A Office Property located in
Uniondale, New York (the "Mortgage Note Investments"). As of December 31, 1999,
the Company also owned approximately 346 acres of land in 16 separate parcels of
which the Company can develop approximately 1.9 million square feet of office
space and approximately 300,000 square feet of industrial space. During 1998 and
1999, the Company made investments in joint ventures with Reckson Strategic
Venture Partners, LLC ("RSVP"), a venture capital fund created as a research and
development vehicle for the Company to invest in alternative real estate sectors
(see Corporate Strategies and Growth Opportunities). RSVP is managed by an
affiliate of Reckson Service Industries, Inc. currently D/B/A FrontLine Capital
Group ("FrontLine"). The Company has committed up to $100 million for
investments in the form of either (i) joint ventures with RSVP or (ii) loans to
FrontLine for FrontLine's investment in RSVP. To date, the Company has invested
$24.8 million in RSVP joint venture investments. During 1998, the Company spun
off FrontLine, its commercial service business, to its shareholders and has
provided FrontLine with a $100 million line of credit. As of December 31, 1999,
$79.5 million had been drawn and is outstanding on this line.
The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes or have been modernized to successfully compete with
newer buildings and achieve among the highest rent, occupancy and tenant
retention rates within their markets. The majority of the Office Properties are
located in twelve planned office parks and are tenanted by a diverse industry
group of national firms which include consumer products, telecommunication,
health care, insurance and professional service firms such as accounting firms
and securities brokerage houses. The Industrial Properties are utilized for
distribution, warehousing, research and development and light manufacturing /
assembly activities and are located primarily in three planned industrial parks
developed by Reckson.
All of the Company's interests in the Properties, the Mortgage Note
Investments and land are held directly or indirectly by, and all of its
operations are conducted through, the Operating Partnership. Reckson Associates
Realty Corp. controls the Operating Partnership as the sole general partner and
as of December 31, 1999, owned approximately 87% of the Operating Partnership's
outstanding common units of limited partnership ("Units") and Class B common
units of limited partnership interest.
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The Company seeks to maintain cash reserves for normal repairs,
replacements, improvements, working capital and other contingencies. The
Operating Partnership has established an unsecured credit facility (the "Credit
Facility") with a maximum borrowing amount of $500 million scheduled to mature
on July 23, 2001 and an unsecured term loan ("the "Term Loan") with a maximum
borrowing capacity of $75 million scheduled to mature on June 16, 2001. The
Credit Facility and the Term Loan require the Company to comply with a number of
financial and other covenants on an ongoing basis.
During 1999, the Operating Partnership issued $300 million of five year and
ten year senior unsecured notes and the Company issued six million shares of
Series B Convertible Cumulative Preferred Stock for proceeds of $150 million.
The combined net proceeds of approximately $447.4 million were used to repay
outstanding borrowings under the Credit Facility and as partial consideration in
the acquisition of the first mortgage note secured by 919 Third Avenue located
in New York City.
On May 24, 1999, in conjunction with the Tower portfolio acquisition (see
Corporate Strategies and Growth Opportunities below), the Company issued
11,694,567 shares of Class B Exchangeable Common Stock, par value $.01 per
share, of the Company (the "Class B Common Stock") which were valued for
purposes under generally accepted accounting principals ("GAAP") at $26 per
share for total consideration of approximately $304.1 million.
There are numerous commercial properties that compete with the Company in
attracting tenants and numerous companies that compete in selecting land for
development and properties for acquisition.
The Company's executive offices are located at 225 Broadhollow Road,
Melville, New York 11747 and its telephone number at that location is (631)
694-6900. At December 31, 1999, the Company had approximately 300 employees.
RECENT DEVELOPMENTS
Acquisition Activity.
Set forth below is a brief description of the Company's major acquisition
activity during 1999.
On May 24, 1999, the Tower portfolio acquisition was completed with the
Company obtaining title to all of Tower's real estate assets. Simultaneously
with the closing of the Tower portfolio acquisition the Company arranged for the
sale of four of Tower's Class B New York City office properties. In addition,
the Company sold, with the exception of one Class A, 357,000 square foot office
building located in Orlando, Florida, all of the assets located outside of the
Tri-State Area. In addition to the aforementioned property in Orlando, Florida,
the Company's remaining assets from the Tower portfolio acquisition include
three Class A New York City Office Properties encompassing approximately 1.6
million square feet and one Class A Office Property on Long Island encompassing
approximately 101,000 square feet.
On June 15, 1999, the Company acquired the first mortgage note secured by
919 Third Avenue, a 47 story, 1.4 million square foot Class A Office Property
located in New York City for approximately $277.5 million. The first mortgage
note entitles the Company to all the net cash flow of the property and to
substantial rights regarding the operations of the property.
In addition, as of December 31, 1999, the Company has invested
approximately $15.7 million in certain mortgage indebtedness encumbering one
Class A Office Property encompassing approximately 177,000 square feet and
approximately 472 acres of land located in New Jersey. The Company has also
loaned approximately $17 million to its minority partner in Omni, its 575,000
square foot flagship Long Island Office Property, and effectively increased its
economic interest in the property owning partnership.
On January 13, 2000, the Company acquired 1350 Avenue of the Americas, a
540,000 square foot, 35 story, Class A office property, located in New York
City, for a purchase price of approximately $126.5 million. This acquisition was
financed through a $70 million secured debt financing and a draw under the
Company's Credit Facility.
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On January 6, 1998, the Company made an initial investment in the Morris
Companies, a New Jersey developer and owner of "Big Box" warehouse facilities.
In connection with the transaction the Morris Companies contributed 100% of
their interests in certain industrial properties to Reckson Morris Operating
Partnership, L.P. ("RMI") in exchange for operating partnership units in RMI.
During 1999, the Company executed a contract for the sale, which will take
place in three stages, of its interest in RMI which consisted of 28 properties,
comprising approximately 6.1 million square feet and three other big box
Industrial Properties. The combined total sale price is approximately $298
million (approximately $42 million of which is payable to the Morris Companies
and its affiliates).
During 1999, the first stage of the RMI closing occurred and stages two and
three are scheduled for April 2000.
Leasing Activity
During the year ended December 31, 1999, the Company leased 1.7 million
square feet at the Office Properties at an average effective rent (i.e.,base
rent adjusted on a straight-line basis for free rent periods, tenant
improvements and leasing commissions) of $24.14 per square foot and 1.3 million
square feet at the Industrial Properties at an average effective rent of $6.71
per square foot. Included in this leasing data is 388,531 square feet at the
Long Island Office Properties at an average effective rent of $24.87; 707,731
square feet at the Westchester Office Properties at an average effective rent of
$22.04; 109,006 square feet at the Connecticut Office Properties at an average
effective rent of $26.57; 413,072 square feet at the New Jersey Office
Properties at an average effective rent of $22.63 and 86,476 square feet of the
New York City office properties at an average effective rent of $42.27. Also
included in this leasing data is 940,315 square feet at the Long Island
Industrial Properties at an average effective rent of $7.16 and 373,497 square
feet at the New Jersey Industrial Properties at an average effective rent of
$5.60.
Financing Activities
On July 23, 1998, the Company obtained its three year $500 million
unsecured revolving Credit Facility from Chase Manhattan Bank, Union Bank of
Switzerland and PNC Bank as co-managers of the Credit Facility bank group.
Interest rates on borrowings under the Credit Facility are priced off of LIBOR
plus a sliding scale ranging from 65 basis points to 90 basis points based on
the Company's investment grade rating on its senior unsecured debt. On March 16,
1999, the Company received its investment grade rating on its senior unsecured
debt. As a result, the pricing under the Credit Facility was adjusted to LIBOR
plus 90 basis points.
The Company utilizes the Credit Facility primarily to finance the
acquisitions of Properties and other real estate investments, fund its
development activities and for working capital purposes. At December 31, 1999,
the Company had availability under the Credit Facility to borrow an additional
$150.1 million (net of $52.3 million of outstanding undrawn letters of credit).
As of December 31, 1999, the Company had outstanding its 18 month, $75
million unsecured Term Loan from Chase Manhattan Bank. Interest rates on
borrowings under the Term Loan are priced off of LIBOR plus 150 basis points.
The Term Loan replaced the Company's previous term loan which matured on
December 17, 1999.
Other Financing Activities
On March 26, 1999, the Operating Partnership issued $100 million of 7.4%
senior unsecured notes due March 15, 2004 and $200 million of 7.75% senior
unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million
were used to repay outstanding borrowings under the Company's Credit Facility.
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On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company obtained a $130 million unsecured bridge facility (The "Bridge
Facility") from USB AG. Interest rates on borrowings under the Bridge Facility
were priced off of LIBOR plus approximately 214 basis points. On July 23, 1999,
the Bridge Facility was repaid through a long term fixed rate secured borrowing
and an advance under the Credit Facility. The new mortgage note, in the amount
of $125 million, is secured by two Office Properties with an aggregate carrying
value of approximately $261 million, is for a term of ten years and bears
interest at the rate of 7.73% per annum.
Stock Offerings
On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company issued 11,694,567 shares of Class B Common Stock which were valued for
GAAP purposes at $26 per share for total consideration of approximately $304.1
million. The shares of Class B Common Stock are entitled to receive an initial
annual dividend of $2.24 per share, which dividend is subject to adjustment
annually commencing on July 1, 2000. The shares of Class B Common Stock are
exchangeable at any time, at the option of the holder, into an equal number of
shares of common stock, par value $.01 per share, of the Company subject to
customary antidilution adjustments. The Company, at its option, may redeem any
or all of the Class B Common Stock in exchange for an equal number of shares of
the Company's common stock at any time following the four year, six-month
anniversary of the issuance of the Class B Common Stock.
On June 2, 1999 the Company issued six million shares of its Series B
Preferred Stock for total proceeds of $150 million. The Series B Preferred Stock
accumulate dividends at an initial rate of 7.85% per annum with such rate
increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and
after April 30, 2001. The Series B Preferred Stock is convertible into the
Company's common stock at a price of $26.05 per share. Proceeds from the stock
offering were used as partial consideration in the acquisition of the first
mortgage note secured by 919 Third Avenue located in New York City.
CORPORATE STRATEGIES AND GROWTH OPPORTUNITIES
The Company's primary business objectives are to maximize current return to
stockholders through increases in distributable cash flow per share and to
increase stockholders' long-term total return through the appreciation in value
of its common stock. The Company plans to achieve these objectives by continuing
Reckson's corporate strategies and capitalizing on the internal and external
growth opportunities as described below.
Corporate Strategies. Management believes that throughout its 40-year
operating history, Reckson has created value in its properties through a variety
of market cycles by implementing the operating strategies described below. These
operating strategies include the implementation of: (i) a multidisciplinary
leasing approach that involves architectural design and construction personnel
as well as leasing professionals, (ii) innovative property marketing programs
such as the broker frequent leasing points program which was established by the
Company to enhance relationships with the brokerage community and which allows
brokers to accumulate points for leasing space in the Company's portfolio which
can be redeemed for luxurious prizes, (iii) a comprehensive tenant service
program and property amenities designed to maximize tenant satisfaction and
retention, (iv) cost control management and systems that take advantage of
economies of scale that arise from the Company's market position and
efficiencies attributable to the state-of-the-art energy control systems at many
of the Office Properties and (v) an acquisition and development strategy that is
continuously adjusted in light of anticipated changes in market conditions and
that seeks to capitalize on management's multidisciplinary expertise and market
knowledge to modify, upgrade and reposition a property in its marketplace in
order to maximize value.
The Company also intends to adhere to a policy of maintaining a debt ratio
(defined as the total debt of the Company as a percentage of the sum of the
Company's total debt and the market value of its equity) of less than 50%. As of
December 31, 1999, the Company's debt ratio was approximately 42.3%. This
calculation is net of minority partners' proportionate share of debt and
including the Company's share of unconsolidated joint venture debt. This debt
ratio is intended to provide the Company with financial flexibility to select
the optimal source of capital (whether debt or equity) with which to finance
external growth.
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Growth Opportunities. The Company intends to achieve its primary business
objectives by applying its corporate strategies to the internal and external
growth opportunities described below.
Internal Growth. To the extent Long Island, Westchester, New Jersey and
Southern Connecticut suburban office and industrial markets continue to improve,
management believes the Company is well positioned to benefit from rental
revenue growth through: (i) contractual annual compounding 4% Base Rent
increases (defined as fixed gross rental amounts that excludes payments on
account of real estate tax, operating expense escalations and base electrical
charges) on approximately 85% of existing leases at the Long Island Properties,
(ii) periodic contractual increases in Base Rent on existing leases at the
Westchester Properties, the New Jersey Properties and the Southern Connecticut
Properties and (iii) the potential for increases to Base Rents as leases expire
as a result of continued tightening of the office and industrial markets with
limited new supply.
In connection with the Company's acquisition and merger transaction with
Tower Realty Trust, Inc. (see External Growth below) the Company entered the New
York City office market. The Manhattan office market is currently experiencing
favorable supply and demand characteristics similar to those currently in the
Company's suburban markets and also is characterized by its similar lack of
available land supply and other barriers to entry that limit our competition.
The Tower portfolio includes Manhattan office buildings that offer similar
potential for increase in Base Rents as described in (iii) above.
External Growth. The Company seeks to acquire multi-tenant suburban Class A
office and industrial properties located in the Tri-State Area. Management
believes that the Tri-State Area presents opportunities to acquire or invest in
properties at attractive yields. The Company believes that its (i) capital
structure, in particular its Credit Facility providing for a maximum borrowing
amount of up to $500 million, (ii) ability to acquire a property for Units of
the Operating Partnership and thereby defer the seller's income tax on gain,
(iii) operating economies of scale, (iv) relationships with financial
institutions and private real estate owners, (v) fully integrated operations in
its five existing divisions and (vi) its dominant position and franchise in the
submarkets in which it owns properties will enhance the Company's ability to
identify and capitalize on acquisition opportunities. The Company also intends
to selectively develop new Class A suburban office and industrial properties and
to continue to redevelop existing Office and Industrial Properties as these
opportunities arise. In the near future, the Company will concentrate its
development activities on industrial and Class A office properties within the
Tri-State Area. The Company's expansion into the Manhattan office market and the
opening of its New York City division provides it with additional opportunities
to acquire an interest in properties at attractive yields. The Company also
believes that the addition of its New York City division provides additional
leasing and operational facilities and enhances its overall franchise value by
being the only real estate operating company in the Tri-State Area with
significant presence in both Manhattan and each of the surrounding sub-markets.
During 1997, the Company formed FrontLine and RSVP. On June 11, 1998, the
Operating Partnership distributed its 95% common stock interest in FrontLine of
approximately $3 million to its owners, including the Company which, in turn,
distributed the common stock of FrontLine received from the Operating
Partnership to its stockholders. Additionally, during June 1998, the Operating
Partnership established a credit facility with FrontLine (the "FrontLine
Facility") in the amount of $100 million for FrontLine's e-commerce and
e-services operations and other general corporate purposes. As of December 31,
1999, the Company had advanced $79.5 million under the FrontLine Facility. In
addition, the Operating Partnership has approved the funding of investments of
up to $100 million with or in RSVP (the "RSVP Commitment"), through
RSVP-controlled joint venture REIT-qualified investments or advances made to
FrontLine under terms similar to the FrontLine Facility. As of December 31,
1999, approximately $67.2 million had been invested through the RSVP Commitment,
of which $24.8 million represents RSVP-controlled joint venture REIT-qualified
investments and $42.4 million represents advances to FrontLine under the RSVP
Commitment.
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FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Company with a research and development
vehicle to invest in alternative real estate sectors. RSVP invests primarily in
real estate and real estate related operating companies generally outside of the
Company's core office and industrial focus. RSVP's strategy is to identify and
acquire interests in established entrepreneurial enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique circumstances for attractive investments as well as a
platform for future growth.
On August 27, 1998 the Company announced the formation of a joint venture
with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of
companies that focuses on the development, acquisition and ownership of
government occupied office buildings and correctional facilities. The new
venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion
Venture Group LLC, and by a subsidiary of the Company. The Dominion Venture is
primarily engaged in acquiring, developing and/or owning government-occupied
office buildings and privately operated correctional facilities. Under the
Dominion Venture's operating agreement, RSVP is to invest up to $100 million,
some of which may be invested by the Company (the "RSVP Capital"). The initial
contribution of RSVP Capital was approximately $39 million of which
approximately $10.1 million was invested by a subsidiary of the Company. The
Company's investment was funded through the RSVP Commitment. In addition, the
Company advanced approximately $2.9 million to FrontLine through the RSVP
Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 1999, the Company had invested
approximately $17.6 million in the Dominion Venture which had investments in 13
government office buildings and three correctional facilities.
In 1999, the Company invested approximately $7.2 million, through a
subsidiary, in RAP Student Housing Properties, LLC ("RAP -- SHP"), a company
that engages primarily in the acquisition and development of off-campus student
housing projects. The Company's investment was funded through the RSVP
Commitment. In addition, the Company has advanced approximately $3.2 million to
FrontLine through the RSVP Commitment for an additional investment in RSVP which
was invested in certain service business activities related to student housing.
As of December 31, 1999, RAP -- SHP had investments in four off-campus student
housing projects.
In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real
Estate Equities Company, a Texas real estate investment trust.
On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger") into Metropolitan, with Metropolitan surviving the Merger.
Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was
merged with and into a subsidiary of Metropolitan. The consideration issued in
the mergers was comprised of (i) 25% cash (approximately $107.2 million) and
(ii) 75% of shares of Class B Common Stock (valued for GAAP purposes at
approximately $304.1 million).
The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity interest in Metropolitan.
Crescent's interest accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
common stock at a conversion price of $24.61 per share.
The Tower portfolio acquired in the Merger consists of three Office
Properties comprising approximately 1.6 million square feet located in New York
City, one Office Property located on Long Island and certain office properties
and other real estate assets located outside the Tri-State Area.
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Prior to the closing of the Merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the Merger, the Company has sold a real estate joint venture interest and all
of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Credit Facility. As a result
of incurring certain sales and closing costs in connection with the sale of the
assets located outside the Tri-State Area, the Company has incurred a loss of
approximately $4.4 million which has been included in gain on sales of real
estate on the accompanying consolidated statements of income.
ENVIRONMENTAL MATTERS
Under various Federal, state and local laws, ordinances and regulations, an
owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. These laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic substances. The cost of
any required remediation and the owner's liability therefore as to any property
is generally not limited under such enactments and could exceed the value of the
property and/or the aggregate assets of the owner. The presence of such
substances, or the failure to properly remediate such substances, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at a disposal or treatment facility, whether or
not such facility is owned or operated by such person. Certain environmental
laws govern the removal, encapsulation or disturbance of asbestos-containing
materials ("ACMs") when such materials are in poor condition, or in the event of
renovation or demolition. Such laws impose liability for release of ACMs into
the air and third parties may seek recovery from owners or operators of real
properties for personal injury associated with ACMs. In connection with the
ownership (direct or indirect), operation, management and development of real
properties, the Company may be considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous or
toxic substances and, therefore, potentially liable for removal or remediation
costs, as well as certain other related costs, including governmental fines and
injuries to persons and property.
All of the Office Properties and all of the Industrial Properties have been
subjected to a Phase I or similar environmental audit after April 1, 1994 (which
involved general inspections without soil sampling, ground water analysis or
radon testing and, for the Properties constructed in 1978 or earlier, survey
inspections to ascertain the existence of ACMs were conducted) completed by
independent environmental consultant companies (except for 35 Pinelawn Road
which was originally developed by Reckson and subjected to a Phase 1 in April
1992). These environmental audits have not revealed any environmental liability
that would have a material adverse effect on the Company's business.
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ITEM 2. PROPERTIES
GENERAL
As of December 31, 1999, the Company owned and operated 189 Properties
(including two joint venture office properties but excluding the RSVP --
controlled joint ventures) in the Tri-State Area encompassing approximately 21.4
million square feet. These properties consist of 77 Class A Office Properties
encompassing approximately 13.1 million rentable square feet, 110 Industrial
Properties encompassing approximately 8.3 million rentable square feet and two
free-standing 10,000 square foot retail properties. The Company also owns a
357,000 square foot Class A office building in Orlando, Florida. The rentable
square feet of each property has been determined for these purposes based on the
aggregate leased square footage specified in currently effective leases and,
with respect to vacant space, management's estimate. In addition, as of December
31, 1999, the Company owned approximately 346 acres of land in 16 separate
parcels of which the Company can develop approximately 1.9 million square feet
of office space and approximately 300,000 square feet of industrial space.
Reckson has historically emphasized the development and acquisition of
properties that are part of large scale office and industrial parks and
approximately 54% of the Office Properties and approximately 46% of the
Industrial Properties are located in such parks (measured by rentable square
footage). The Company believes that owning properties in planned office and
industrial parks provides certain strategic advantages, including the following:
(i) certain tenants prefer being located in a park with other high quality
companies to enhance their corporate image, (ii) parks afford tenants certain
aesthetic amenities such as a common landscaping plan, standardization of
signage and common dining and recreational facilities, (iii) tenants may expand
(or contract) their business within a park, enabling them to centralize business
functions and (iv) a park provides tenants with access to other tenants and may
facilitate business relationships between tenants.
Also, as of December 31, 1999, the Company had invested approximately
$298.6 million in certain mortgage indebtedness encumbering three Class A Office
Properties encompassing approximately 1.6 million square feet and approximately
472 acres of land located in New Jersey. In addition, the Company has loaned
approximately $17 million to its minority partner in Omni, its flagship Long
Island Office Property and effectively increased its economic interest in the
property owning partnership.
Set forth below is a summary of certain information relating to the
Properties, categorized by Office and Industrial Properties, as of December 31,
1999.
OFFICE PROPERTIES
General
As of December 31, 1999, the Company owned or had an interest in 77
Tri-State Area Class A Office Properties encompassing approximately 13.1 million
rentable square feet. As of December 31, 1999, these Office Properties were
approximately 95% leased to approximately 1,000 tenants.
The Office Properties are Class A office buildings and are well-located,
well-maintained and professionally managed. In addition, these properties are
modern with high finishes and achieve among the highest rent, occupancy and
tenant retention rates within their sub-markets. Forty-nine of the 73 suburban
Office Properties are located in the following twelve planned office parks: the
North Shore Atrium, the Huntington Melville Corporate Center, the Nassau West
Corporate Center, the Tarrytown Corporate Center, the Landmark Square Office
Complex, the Executive Hill Office Park, the Reckson Executive Park, the
University Square Office Complex, the Summit at Valhalla, the Mt. Pleasant
Corporate Center, the Stamford Towers Office Center, and the Short Hills Office
Complex. The buildings in these office parks offer a full array of amenities
including health clubs, racquetball courts, sun decks, restaurants, computer
controlled HVAC access systems and conference centers. Management believes that
the location, quality of construction and amenities as well as the Company's
reputation for providing a high level of tenant service have enabled the Company
to attract and retain a national tenant base. The office tenants include
national service companies, such as telecommunications firms, "Big Five"
accounting firms, securities brokerage houses, insurance companies and health
care providers.
I-8
<PAGE>
The Office Properties are leased to both national and local tenants. Leases
on the Office Properties are typically written for terms ranging from five to
ten years and require: (i) payment of a fixed gross rental amount that excludes
payments on account of real estate tax, operating expense escalations and base
electrical charges ("Base Rent"), (ii) payment of a base electrical charge,
(iii) payment of real estate tax escalations over a base year, (iv) payment of
compounded annual increases to Base Rent and/or payment of operating expense
escalations over a base year, (v) payment of overtime HVAC and electric and (vi)
payment of electric escalations over a base year. In virtually all leases, the
landlord is responsible for structural repairs. Renewal provisions typically
provide for renewal rates at market rates or a percentage thereof, provided that
such rates are not less than the most recent renewal rates.
The following table sets forth certain information as of December 31, 1999
for each of the Office Properties.
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- --------------------------------- ------------ ------------ --------------- ---------
<S> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate
Center, Melville, NY
Leasehold
395 North Service Rd ............ 100% (2081) 1988 7.5
200 Broadhollow Rd. ............. 100% Fee 1981 4.6
48 South Service Rd. ............ 100% Fee 1986 7.3
35 Pinelawn Rd .................. 100% Fee 1980 6.0
275 Broadhollow Rd .............. 100% Fee 1970 5.8
1305 Old Walt Whitman Rd (3) .... 100% Fee 1998 (5) 18.1
----
Total--Huntington Melville
Corporate Center (4) ........... 49.3
----
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike (North
Shore Atrium I) ................ 100% Fee 1977 13.0
6900 Jericho Turnpike (North
Shore Atrium II) ............... 100% Fee 1982 5.0
----
Total--North Shore Atrium ....... 18.0
----
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Center Leasehold
II) ............................ 100% (2082) 1984 9.1
60 Charles Lindbergh Blvd.
(Nassau West Corporate Center Leasehold
I) ............................. 100% (2082) 1989 7.8
Leasehold
51 Charles Lindbergh Blvd. ...... 100% (2084) 1989 6.6
Leasehold
55 Charles Lindbergh Blvd. ...... 100% (2082) 1982 10.0
333 Earl Ovington Blvd. (The Leasehold
Omni) .......................... 60% (2088) 1991 30.6
Leasehold
90 Merrick Ave. ................. 100% (2084) 1985 13.2
----
Total--Nassau West Corporate
Center ......................... 77.3
----
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road ........... 100% Fee 1974 1.4
520 White Plains Road ........... 60% Fee (6) 1981 6.8
555 White Plains Road ........... 100% Fee 1972 4.2
560 White Plains Road ........... 100% Fee 1980 4.0
580 White Plains Road ........... 100% Fee 1977 6.1
660 White Plains Road ........... 100% Fee 1983 10.9
----
Total--Tarrytown Corporate
Center ......................... 33.4
----
Reckson Executive Park
Rye Brook, NY
1 International Dr. ............. 100% Fee 1983 N/A
2 International Dr. ............. 100% Fee 1983 N/A
3 International Dr. ............. 100% Fee 1983 N/A
4 International Dr. ............. 100% Fee 1986 N/A
5 International Dr. ............. 100% Fee 1986 N/A
6 International Dr. ............. 100% Fee 1986 N/A
Total--Reckson Executive Park ... 44.4
----
<CAPTION>
ANNUAL
BASE
RENT NUMBER
NUMBER RENTABLE PER OF
OF SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- --------------------------------- -------- ------------ ----------- ------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate
Center, Melville, NY
395 North Service Rd ............ 4 187,393 100.0% $ 4,620,998 $ 24.66 5
200 Broadhollow Rd. ............. 4 67,432 88.8% $ 1,298,934 $ 21.68 11
48 South Service Rd. ............ 4 125,372 95.1% $ 2,850,902 $ 23.91 7
35 Pinelawn Rd .................. 2 105,241 94.3% $ 2,088,736 $ 21.05 26
275 Broadhollow Rd .............. 4 124,441 100.0% $ 2,764,076 $ 21.39 17
1305 Old Walt Whitman Rd (3) .... 3 167,400 92.7% $ 3,649,827 $ 23.52 5
------- ----------- --
Total--Huntington Melville
Corporate Center (4) ........... 777,279 96.5% $17,273,473 $ 23.03 71
------- ----------- --
North Shore Atrium, Syosset, NY
6800 Jericho Turnpike (North
Shore Atrium I) ................ 2 209,028 79.0% $ 3,355,388 $ 20.31 37
6900 Jericho Turnpike (North
Shore Atrium II) ............... 4 101,036 92.2% $ 2,054,157 $ 22.05 13
------- ----------- --
Total--North Shore Atrium ....... 310,064 83.3% $ 5,409,545 $ 20.94 50
------- ----------- --
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Center
II) ............................ 6 211,845 100.0% $ 4,831,982 $ 22.64 22
60 Charles Lindbergh Blvd.
(Nassau West Corporate Center
I) ............................. 2 186,889 100.0% $ 4,004,079 $ 21.37 7
51 Charles Lindbergh Blvd. ...... 1 108,000 100.0% $ 2,167,285 $ 20.07 1
55 Charles Lindbergh Blvd. ...... 2 214,581 100.0% $ 2,535,051 $ 11,81 2
333 Earl Ovington Blvd. (The
Omni) .......................... 10 575,000 87.8% $14,987,850 $ 29.68 28
90 Merrick Ave. ................. 9 221,839 96.4% $ 4,859,277 $ 22.73 21
------- ----------- --
Total--Nassau West Corporate
Center ......................... 1,518,154 95.0% $33,385,524 $ 23.15 81
--------- ----------- --
Tarrytown Corporate Center
Tarrytown, NY
505 White Plains Road ........... 2 26,468 91.5% $ 461,589 $ 19.05 20
520 White Plains Road ........... 6 171,761 100.0% $ 3,192,362 $ 18.59 1
555 White Plains Road ........... 5 121,585 86.5% $ 2,274,121 $ 21.62 6
560 White Plains Road ........... 6 126,471 100.0% $ 1,758,933 $ 13.89 16
580 White Plains Road ........... 6 170,726 100.0% $ 3,236,652 $ 18.92 19
660 White Plains Road ........... 6 258,715 94.7% $ 4,728,353 $ 19.29 45
--------- ----------- --
Total--Tarrytown Corporate
Center ......................... 875,726 96.4% $15,652,010 $ 18.55 107
--------- ----------- ---
Reckson Executive Park
Rye Brook, NY
1 International Dr. ............. 3 90,000 100.0% $ 1,170,000 $ 13.00 1
2 International Dr. ............. 3 90,000 100.0% $ 1,170,000 $ 13.00 1
3 International Dr. ............. 3 91,174 100.0% $ 1,718,469 $ 18.84 5
4 International Dr. ............. 3 86,694 83.8% $ 1,572,288 $ 21.65 9
5 International Dr. ............. 3 90,000 100.0% $ 2,416,482 $ 26.85 1
6 International Dr. ............. 3 94,016 100.0% $ 1,423,951 $ 15.15 8
--------- ----------- ---
Total--Reckson Executive Park ... 541,884 97.4% $ 9,471,190 $ 17.94 25
--------- ----------- ---
</TABLE>
I-9
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- ------------------------------------ ------------ ------------ --------------- ---------
<S> <C> <C> <C> <C>
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 100% Fee 1988 11.3
200 Summit Dr. ..................... 100% Fee 1990 18.0
500 Summit Dr. ..................... 100% Fee 1986 29.1
----
Total--Summit at Valhalla .......... 58.4
----
Mt. Pleasant Corporate Center
115/117 Stevens Ave. ............... 100% Fee 1984 5.0
----
Total--Mt Pleasant Corporate
Center ............................ 5.0
----
Landmark Square
Stamford, CT
One Landmark Square ................ 100% Fee 1973 N/A
Two Landmark Square ................ 100% Fee 1976 N/A
Three Landmark Square .............. 100% Fee 1978 N/A
Four Landmark Square ............... 100% Fee 1977 N/A
Five Landmark Square ............... 100% Fee 1976 N/A
Six Landmark Square ................ 100% Fee 1984 N/A
Total--Landmark Square ............. 7.2
-----
Stamford Towers
Stamford, CT
680 Washington Blvd. ............... 100% Fee 1989 1.3
750 Washington Blvd. ............... 100% Fee 1989 2.4
-----
Total--Stamford Towers ............. 3.7
-----
Stand-alone Long Island Properties
400 Garden City Plaza
Garden City, NY ................... 100% Fee 1989 5.7
88 Duryea Rd.
Melville, NY ...................... 100% Fee 1986 1.5
310 East Shore Rd.
Great Neck, NY .................... 100% Fee 1981 1.5
333 East Shore Rd. Leasehold
Great Neck, NY .................... 100% (2030) 1976 1.5
520 Broadhollow Rd
Melville, NY ...................... 100% Fee 1978 7.0
1660 Walt Whitman Rd.
Melville, NY ...................... 100% Fee 1980 6.5
125 Baylis Rd.
Melville, NY ...................... 100% Fee 1980 8.2
150 Motor Parkway
Hauppauge, NY ..................... 100% Fee 1984 11.3
1979 Marcus Ave.
Lake Success, NY .................. 100% Fee 1987 8.6
120 Mineola Blvd
Mineola, New York ................. 100% Fee 1989 0.7
-----
Total--Stand-alone Long Island
Properties ........................ 52.5
-----
Stand-alone
Westchester Properties ............
155 White Plains Road,
Tarrytown, NY ..................... 100% Fee 1963 13.2
235 Main Street,
White Plains, NY .................. 100% Fee 1974 (5) .4
245 Main Street
White Plains, NY .................. 100% Fee 1983 .4
120 White Plains Rd.
Tarrytown, NY ..................... 100% Fee 1984 9.7
80 Grasslands
Elmsford, NY ...................... 100% Fee 1989 4.9
360 Hamilton Avenue
White Plains, NY (3) .............. 100% Fee 1977 1.5
140 Grand Street
White Plains, NY .................. 100% Fee 1991 2.2
-----
Total--Stand-alone Westchester
Properties(4) ..................... 32.3
-----
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ................... 100% Fee 1978 10.1
200 Executive Dr ................... 100% Fee 1980 8.2
300 Executive Dr ................... 100% Fee 1984 8.7
10 Rooney Circle ................... 100% Fee 1971 5.2
-----
Total--Executive Hill Office Park .. 32.2
-----
<CAPTION>
ANNUAL
BASE
RENT NUMBER
NUMBER RENTABLE PER OF
OF SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------------ -------- ------------ --------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Summit at Valhalla
Valhalla, NY
100 Summit Dr. ..................... 4 249,551 72.0% $ 1,745,495 $ 9.72 8
200 Summit Dr. ..................... 4 240,834 84.9% $ 4,890,463 $ 23.92 12
500 Summit Dr. ..................... 4 208,660 100.0% $ 5,633,820 $ 27.00 1
------- ----------- --
Total--Summit at Valhalla .......... 699,045 84.8% $12,269,778 $ 20.70 21
------- ----------- --
Mt. Pleasant Corporate Center
115/117 Stevens Ave. ............... 3 162,004 97.7% $ 3,029,965 $ 19.14 17
------- ----------- --
Total--Mt Pleasant Corporate
Center ............................ 162,004 97.7% $ 3,029,965 $ 19.14 17
------- ----------- --
Landmark Square
Stamford, CT
One Landmark Square ................ 22 296,716 85.5% $ 5,248,069 $ 20.69 62
Two Landmark Square ................ 3 39,701 69.4% $ 588,845 $ 21.38 7
Three Landmark Square .............. 6 128,286 96.5% $ 2,119,202 $ 17.12 22
Four Landmark Square ............... 5 104,446 91.5% $ 2,243,662 $ 23.48 15
Five Landmark Square ............... 3 57,273 92.9% $ 230,185 $ 4.32 2
Six Landmark Square ................ 10 171,899 91.3% $ 3,895,234 $ 24.81 6
------- ----------- --
Total--Landmark Square ............. 798,321 89.0% $14,325,197 $ 20.15 114
------- ----------- ---
Stamford Towers
Stamford, CT
680 Washington Blvd. ............... 11 132,759 99.5% $ 3,634,757 $ 27.52 6
750 Washington Blvd. ............... 11 192,108 99.6% $ 4,565,587 $ 23.87 11
------- ----------- ---
Total--Stamford Towers ............. 324,867 99.5% $ 8,200,344 $ 25.36 17
------- ----------- ---
Stand-alone Long Island Properties
400 Garden City Plaza
Garden City, NY ................... 5 176,073 98.3% $ 3,805,459 $ 21.99 25
88 Duryea Rd.
Melville, NY ...................... 2 25,061 96.2% $ 489,154 $ 20.29 4
310 East Shore Rd.
Great Neck, NY .................... 4 50,000 100.0% $ 1,265,128 $ 25.25 21
333 East Shore Rd.
Great Neck, NY .................... 2 17,715 99.6% $ 483,504 $ 27.39 9
520 Broadhollow Rd
Melville, NY ...................... 1 83,176 87.3% $ 1,486,300 $ 20.48 3
1660 Walt Whitman Rd.
Melville, NY ...................... 1 73,115 99.9% $ 1,420,754 $ 19.45 5
125 Baylis Rd.
Melville, NY ...................... 2 98,329 68.5% $ 1,285,253 $ 19.08 11
150 Motor Parkway
Hauppauge, NY ..................... 4 191,447 96.0% $ 4,028,593 $ 21.92 23
1979 Marcus Ave.
Lake Success, NY .................. 4 326,612 98.0% $ 6,313,637 $ 19.73 28
120 Mineola Blvd
Mineola, New York ................. 6 101,000 88.0% $ 1,826,277 $ 20.54 14
------- ----------- ---
Total--Stand-alone Long Island
Properties ........................ 1,142,528 93.7% $22,404,059 $ 20.93 143
--------- ----------- ---
Stand-alone
Westchester Properties ............
155 White Plains Road,
Tarrytown, NY ..................... 2 60,909 99.6% $ 1,073,536 $ 17.70 5
235 Main Street,
White Plains, NY .................. 6 83,237 89.2% $ 1,310,846 $ 17.66 28
245 Main Street
White Plains, NY .................. 6 73,543 92.0% $ 1,275,897 $ 18.85 17
120 White Plains Rd.
Tarrytown, NY ..................... 6 197,785 100.0% $ 4,404,079 $ 22.25 10
80 Grasslands
Elmsford, NY ...................... 3 85,104 92.9% $ 1,649,669 $ 20.87 5
360 Hamilton Avenue
White Plains, NY (3) .............. 12 382,000 120% $ 1,054,477 $ 22.96 2
140 Grand Street
White Plains, NY .................. 9 130,136 90.9% $ 2,690,489 $ 22.74 16
--------- ----------- ---
Total--Stand-alone Westchester
Properties(4) ..................... 1,012,714 94.8% $13,458,993 $ 20.91 83
--------- ----------- ---
Executive Hill Office Park
West Orange, NJ
100 Executive Dr ................... 3 92,872 97.1% $ 1,609,173 $ 17.85 10
200 Executive Dr ................... 4 102,630 99.3% $ 1,974,468 $ 19.37 17
300 Executive Dr ................... 4 126,196 100.0% $ 2,409,573 $ 19.07 11
10 Rooney Circle ................... 3 69,684 100.0% $ 1,367,232 $ 19.62 2
--------- ----------- ---
Total--Executive Hill Office Park .. 391,382 99.2% $ 7,360,446 $ 18.96 40
--------- ----------- ---
</TABLE>
I-10
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND
PERCENTAGE EXPIRATION YEAR AREA
PROPERTY OWNERSHIP DATE) (1) CONSTRUCTED (ACRES)
- -------------------------------------- ------------ ------------ ------------- ---------
<S> <C> <C> <C> <C>
University Square
Princeton, NJ
100 Campus Dr. ....................... 100% Fee 1987 N/A
104 Campus Dr. ....................... 100% Fee 1987 N/A
115 Campus Dr. ....................... 100% Fee 1987 N/A
Total--University Square ............. 11.0
-----
Short Hills Office Complex
Short Hills, NJ .....................
101 West John F. Kennedy
Parkway ............................. 100% Fee 1981 9.0
101 East John F. Kennedy Parkway 100% Fee 1981 6.0
51 John F Kennedy Parkway ............ 100% Fee 1988 11.0
-----
Total--Short Hills Office Complex 26.0
-----
Stand-alone New Jersey Properties
1 Paragon Drive
Montvale, NJ ........................ 100% Fee 1980 11.0
99 Cherry Hill Road
Parsippany, NJ ...................... 100% Fee 1982 8.8
119 Cherry Hill Road
Parsippany, NJ ...................... 100% Fee 1982 9.3
One Eagle Rock
Hanover, NJ ......................... 100% Fee 1986 10.4
155 Passaic Ave.
Fairfield, NJ ....................... 100% Fee 1984 3.6
3 University Plaza
Hackensack, NJ ...................... 100% Fee 1985 10.6
1255 Broad Street
Clifton, NJ (3) ..................... 100% Fee 1968 11.1
-----
Total--Stand-alone New Jersey
Properties (4) ...................... 64.8
-----
New York City Properties .............
120 W. 45th Street
New York, NY ........................ 100% Fee 1989 0.4
100 Wall Street
New York, NY ........................ 100% Fee 1969 0.5
810 Seventh Avenue
New York, NY ........................ 100% Fee 1970 0.6
919 Third Avenue
New York, NY (7) .................... 100% Fee 1971 1.5
-----
Total--New York City Office
Properties .......................... 3.0
-----
Total--Office Properties (4) ......... 518.5
=====
<CAPTION>
ANNUAL
BASE
RENT NUMBER
NUMBER RENTABLE PER OF
OF SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FLOORS FEET LEASED RENT (2) SQ. FT. LEASES
- -------------------------------------- -------- ------------ --------- --------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
University Square
Princeton, NJ
100 Campus Dr. ....................... 1 27,350 99.7% $ 416,230 $ 15.27 3
104 Campus Dr. ....................... 1 70,155 100.0% $ 1,110,829 $ 15.83 1
115 Campus Dr. ....................... 1 33,600 99.9% $ 574,589 $ 17.12 2
------ ------------ -
Total--University Square ............. 131,105 99.9% $ 2,101,648 $ 16.05 6
------- ------------ -
Short Hills Office Complex
Short Hills, NJ .....................
101 West John F. Kennedy
Parkway ............................. 6 185,233 100.0% $ 2,963,700 $ 16.00 1
101 East John F. Kennedy Parkway 4 122,841 100.0% $ 1,965,482 $ 16.00 1
51 John F Kennedy Parkway ............ 5 248,962 96.3% $ 7,680,763 $ 32.04 19
------- ------------ --
Total--Short Hills Office Complex 557,036 98.4% $ 12,609,945 $ 23.02 21
------- ------------ --
Stand-alone New Jersey Properties
1 Paragon Drive
Montvale, NJ ........................ 2 104,599 89.6% $ 1,547,948 $ 16.51 15
99 Cherry Hill Road
Parsippany, NJ ...................... 3 93,250 99.0% $ 1,650,526 $ 17.88 16
119 Cherry Hill Road
Parsippany, NJ ...................... 3 95,724 98.1% $ 1,547,521 $ 16.47 17
One Eagle Rock
Hanover, NJ ......................... 3 140,000 68.2% $ 2,031,710 $ 21.28 7
155 Passaic Ave.
Fairfield, NJ ....................... 4 84,500 29.4% $ 486,739 $ 19.57 3
3 University Plaza
Hackensack, NJ ...................... 6 216,403 97.2% $ 3,495,272 $ 16.61 22
1255 Broad Street
Clifton, NJ (3) ..................... 2 180,000 80.2% $ 4,070,161 $ 28.20 3
------- ------------ --
Total--Stand-alone New Jersey
Properties (4) ...................... 914,476 92.0% $ 14,829,877 $ 19.64 83
------- ------------ --
New York City Properties .............
120 W. 45th Street
New York, NY ........................ 40 443,109 99.6% $ 16,734,846 $ 37.92 42
100 Wall Street
New York, NY ........................ 29 458,626 97.7% $ 8,887,657 $ 19.84 31
810 Seventh Avenue
New York, NY ........................ 42 692,060 95.4% $ 19,935,279 $ 30.20 35
919 Third Avenue
New York, NY (7) .................... 47 1,374,966 99.1% $ 16,876,544 $ 12.38 23
--------- ------------ --
Total--New York City Office
Properties .......................... 2,968,761 98.1% $ 62,434,326 $ 21.44 131
--------- ------------ ---
Total--Office Properties (4) ......... 13,125,346 94.8% $254,216,320 $ 21.09 1,010
========== ============ =====
</TABLE>
- ------------------
(1) Ground lease expirations assume exercise of renewal options by the lessee.
(2) Represents Base Rent of signed leases at December 31, 1999 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2000. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12-month period ending December 31, 2000.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.
(3) Property is currently under redevelopment.
(4) Percent leases excludes properties under development.
(5) Year renovated.
(6) The actual fee interest in 520 White Plains Road is held by the County of
Westchester Industrial Development Agency. The fee interest in 520 White
Plains Road may be acquired if the outstanding principal under certain loan
agreements and annual basic installments are prepaid in full.
(7) The Company currently holds the first mortgage note secured by this
property. There is a ground lease in place on a small portion of the land
which expires in 2066.
I-11
<PAGE>
INDUSTRIAL PROPERTIES
General.
As of December 31, 1999, the Company owned or had an interest in 110
Industrial Properties that encompass approximately 8.3 million rentable square
feet. As of December 31, 1999, the Industrial Properties were approximately 98%
leased to approximately 250 tenants. Many of the Industrial Properties have been
constructed with high ceiling heights (i.e., above 18 feet), upscale office
building facades, parking in excess of zoning requirements, drive-in and/or
loading dock facilities and other features which permit them to be leased for
industrial and/or office purposes.
The Industrial Properties are leased to both national and local tenants.
These tenants utilize the Industrial Properties for distribution, warehousing,
research and development and light manufacturing/assembly activities. Leases on
the Industrial Properties are typically written for terms ranging from three to
seven years and require: (i) payment of a Base Rent, (ii) payments of real
estate tax escalations over a base year, (iii) payments of compounded annual
increases to Base Rent and (iv) reimbursement of all operating expenses.
Electric costs are borne and paid directly by the tenant. Certain leases are
"triple net" (i.e., the tenant is required to pay in addition to annual Base
Rent, all operating expenses and real estate taxes). In virtually all leases,
the landlord is responsible for structural repairs. Renewal provisions typically
provide for renewal rents at market rates, provided that such rates are not less
than the most recent rental rates.
Approximately 71% of the Industrial Properties measured by square footage
are located on Long Island. Sixty five percent of these properties as measured
by square footage were located in the following three Industrial Parks developed
by Reckson: (i) Vanderbilt Industrial Park, (ii) Airport International Plaza and
(iii) County Line Industrial Center.
In addition to the Industrial Properties on Long Island, the Company owns
15 Industrial Properties in the other suburban markets. These properties
encompass approximately 2.4 million square feet and were approximately 97%
leased (excluding properties under redevelopment) as of December 31, 1999.
The following table sets forth certain information as of December 31, 1999
for each of the Industrial Properties.
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- ------------------------------ ------------ ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Industrial Properties:
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway ..................... 100% Fee 1967 4.2 16
410 Vanderbilt Motor
Parkway ..................... 100% Fee 1965 3.0 15
595 Old Willets Path ......... 100% Fee 1968 3.5 14
611 Old Willets Path ......... 100% Fee 1963 3.0 14
631/641 Old Willets Path ..... 100% Fee 1965 1.9 14
651/661 Old Willets Path ..... 100% Fee 1966 2.0 14
681 Old Willets Path ......... 100% Fee 1961 1.3 14
740 Old Willets Path ......... 100% Fee 1965 3.5 14
325 Rabro Dr. ................ 100% Fee 1967 2.7 14
250 Kennedy Dr. .............. 100% Fee 1979 7.0 16
90 Plant Ave. ................ 100% Fee 1972 4.3 16
110 Plant Ave. ............... 100% Fee 1974 6.8 18
55 Engineers Rd. ............. 100% Fee 1968 3.0 18
65 Engineers Rd. ............. 100% Fee 1969 1.8 22
85 Engineers Rd. ............. 100% Fee 1968 2.3 18
100 Engineers Rd. ............ 100% Fee 1968 5.0 14
150 Engineers Rd. ............ 100% Fee 1969 6.8 22
20 Oser Ave. ................. 100% Fee 1979 5.0 16
30 Oser Ave. ................. 100% Fee 1978 4.4 16
40 Oser Ave. ................. 100% Fee 1974 3.1 16
50 Oser Ave. ................. 100% Fee 1975 4.1 21
60 Oser Ave. ................. 100% Fee 1975 3.3 21
63 Oser Ave. ................. 100% Fee 1974 1.2 20
65 Oser Ave. ................. 100% Fee 1975 1.2 18
73 Oser Ave. ................. 100% Fee 1974 1.2 20
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------ ------------- ---------- ----------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Industrial Properties:
Vanderbilt Industrial Park
Hauppauge, NY
360 Vanderbilt Motor
Parkway ..................... 62% 54,000 100.0% $500,580 $ 9.27 1
410 Vanderbilt Motor
Parkway ..................... 7% 41,784 100.0% $207,672 $ 4.97 4
595 Old Willets Path ......... 14% 31,670 100.0% $162,100 $ 5.12 4
611 Old Willets Path ......... 11% 20,000 100.0% $147,601 $ 7.38 2
631/641 Old Willets Path ..... 31% 25,000 100.0% $161,405 $ 6.46 4
651/661 Old Willets Path ..... 45% 25,000 100.0% $156,243 $ 6.25 7
681 Old Willets Path ......... 10% 15,000 100.0% $ 98,475 $ 6.57 1
740 Old Willets Path ......... 5% 30,000 100.0% $ 2,473 $ 0.08 1
325 Rabro Dr. ................ 10% 35,000 100.0% $214,749 $ 6.05 2
250 Kennedy Dr. .............. 9% 127,980 100.0% $455,298 $ 3.56 1
90 Plant Ave. ................ 13% 75,000 99.9% $418,834 $ 5.59 3
110 Plant Ave. ............... 8% 125,000 100.0% $540,000 $ 4.32 1
55 Engineers Rd. ............. 8% 36,000 0% $ 0 $ 0.00 0
65 Engineers Rd. ............. 10% 23,000 100.0% $136,733 $ 5.94 1
85 Engineers Rd. ............. 5% 40,800 100.0% $202,785 $ 4.97 2
100 Engineers Rd. ............ 11% 88,000 100.0% $379,476 $ 4.31 1
150 Engineers Rd. ............ 11% 135,000 100.0% $407,883 $ 3.02 1
20 Oser Ave. ................. 18% 42,000 98.7% $347,517 $ 8.39 2
30 Oser Ave. ................. 21% 42,000 82.1% $221,289 $ 6.41 4
40 Oser Ave. ................. 33% 59,800 85.3% $342,103 $ 6.71 12
50 Oser Ave. ................. 15% 60,000 100.0% $240,000 $ 4.00 1
60 Oser Ave. ................. 19% 48,000 100.0% $192,000 $ 4.00 1
63 Oser Ave. ................. 9% 22,000 100.0% $112,846 $ 5.13 1
65 Oser Ave. ................. 10% 20,000 100.0% $105,263 $ 5.26 1
73 Oser Ave. ................. 15% 20,000 100.0% $113,463 $ 5.67 1
</TABLE>
I-12
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- ------------------------------- ------------ ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
80 Oser Ave. .................. 100% Fee 1974 1.1 18
85 Nicon Ct. .................. 100% Fee 1978 6.1 30
90 Oser Ave. .................. 100% Fee 1973 1.1 16
104 Parkway Dr. ............... 100% Fee 1985 1.8 15
110 Ricefield Ln. ............. 100% Fee 1980 2.0 15
120 Ricefield Ln. ............. 100% Fee 1983 2.0 15
125 Ricefield Ln. ............. 100% Fee 1973 2.0 14
135 Ricefield Ln. ............. 100% Fee 1981 2.1 15
85 Adams Dr. .................. 100% Fee 1980 1.8 15
395 Oser Ave .................. 100% Fee 1980 6.1 14
185 Oser Ave .................. 100% Fee 1974 2.0 18
25 Davids Dr. ................. 100% Fee 1975 3.2 20
45 Adams Ave .................. 100% Fee 1979 2.1 18
225 Oser Ave .................. 100% Fee 1977 1.2 14
180 Oser Ave .................. 100% Fee 1978 3.4 16
360 Oser Ave .................. 100% Fee 1981 1.3 18
400 Oser Ave .................. 100% Fee 1982 9.5 16
375 Oser Ave .................. 100% Fee 1981 1.2 18
425 Rabro Drive ............... 100% Fee 1980 4.0 16
390 Motor Parkway (3) ......... 100% Fee 1980 10.0 14
600 Old Willets Path .......... 100% Fee 1965 4.5 14
400 Moreland Road(3) .......... 100% Fee 1967 6.3 17
-----
Total--Vanderbilt
Industrial Park (4) .......... 160.4
-----
Airport International Plaza
Islip, NY
20 Orville Dr. ................ 100% Fee 1978 1.0 16
25 Orville Dr. ................ 100% Fee 1970 2.2 16
50 Orville Dr. ................ 100% Fee 1976 1.6 15
65 Orville Dr. ................ 100% Fee 1971 2.2 14
70 Orville Dr. ................ 100% Fee 1975 2.3 22
80 Orville Dr. ................ 100% Fee 1988 6.5 16
85 Orville Dr. ................ 100% Fee 1974 1.9 14
95 Orville Dr. ................ 100% Fee 1974 1.8 14
110 Orville Dr. ............... 100% Fee 1979 6.4 24
180 Orville Dr. ............... 100% Fee 1982 2.3 16
1101 Lakeland Ave. ............ 100% Fee 1983 4.9 20
1385 Lakeland Ave. ............ 100% Fee 1973 2.4 16
125 Wilbur Place .............. 100% Fee 1977 4.0 16
140 Wilbur Place .............. 100% Fee 1973 3.1 20
160 Wilbur Place .............. 100% Fee 1978 3.9 16
170 Wilbur Place .............. 100% Fee 1979 4.9 16
4040 Veterans Highway ......... 100% Fee 1972 1.0 14
120 Wilbur Place .............. 100% Fee 1972 2.8 16
2004 Orville Dr ............... 100% Fee 1998 7.4 24
2005 Orville Drive ............ 100% Fee 1999 8.7 24
-----
Total--Airport
International Plaza .......... 71.3
-----
County Line Industrial
Center
Melville, NY
5 Hub Dr. ..................... 100% Fee 1979 6.9 20
10 Hub Dr. .................... 100% Fee 1975 6.6 20
30 Hub Drive .................. 100% Fee 1976 5.1 20
265 Spagnoli Rd. .............. 100% Fee 1978 6.0 20
-----
Total--County Line
Industrial Center ............ 24.6
-----
Standalone Long Island
Properties
32 Windsor Pl.
Islip, NY .................... 100% Fee 1971 2.5 18
42 Windsor Pl.
Islip, NY .................... 100% Fee 1972 2.4 18
208 Blydenburgh Rd.
Islandia, NY ................. 100% Fee 1969 2.4 14
210 Blydenburgh Rd.
Islandia, NY ................. 100% Fee 1969 1.2 14
71 Hoffman Ln.
Islandia, NY ................. 100% Fee 1970 5.8 16
135 Fell Ct.
Islip, NY .................... 100% Fee 1965 3.2 16
-----
Subtotal Islip/Islandia ...... 17.5
-----
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------- ------------- ------------ ----------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
80 Oser Ave. .................. 25% 19,500 100.0% $ 64,599 $ 3.31 1
85 Nicon Ct. .................. 10% 104,000 100.0% $ 500,189 $ 4.81 1
90 Oser Ave. .................. 26% 37,500 100.0% $ 125,160 $ 3.34 1
104 Parkway Dr. ............... 50% 27,600 100.0% $ 199,091 $ 7.21 1
110 Ricefield Ln. ............. 25% 32,264 100.0% $ 160,599 $ 4.98 1
120 Ricefield Ln. ............. 24% 33,060 100.0% $ 112,000 $ 3.39 1
125 Ricefield Ln. ............. 20% 30,495 100.0% $ 199,983 $ 6.56 1
135 Ricefield Ln. ............. 10% 32,340 100.0% $ 204,037 $ 6.31 1
85 Adams Dr. .................. 90% 20,000 100.0% $ 260,000 $ 13.00 1
395 Oser Ave .................. 100% 50,000 99.0% $ 429,165 $ 8.67 1
185 Oser Ave .................. 40% 30,000 100.0% $ 190,021 $ 6.33 1
25 Davids Dr. ................. 90% 40,000 100.0% $ 340,000 $ 8.50 1
45 Adams Ave .................. 90% 28,000 100.0% $ 212,333 $ 7.58 1
225 Oser Ave .................. 80% 10,000 99.6% $ 111,706 $ 11.22 1
180 Oser Ave .................. 35% 61,868 89.9% $ 379,208 $ 6.82 8
360 Oser Ave .................. 35% 23,000 100.0% $ 128,800 $ 5.60 1
400 Oser Ave .................. 30% 164,936 97.0% $ 1,090,261 $ 6.82 25
375 Oser Ave .................. 40% 20,000 100.0% $ 148,450 $ 7.42 1
425 Rabro Drive ............... 25% 65,641 99.2% $ 586,080 $ 9.00 1
390 Motor Parkway (3) ......... 4% 181,155 27.7% $ 173,916 $ 3.47 1
600 Old Willets Path .......... 25% 69,627 100.0% $ 394,590 $ 5.67 1
400 Moreland Road(3) .......... 10% 56,875 0.0% $ 0 $ 0.00 0
------- -----------
Total--Vanderbilt
Industrial Park (4) .......... 2,379,895 97.0% $11,876,976 $ 5.72 111
--------- ----------- ---
Airport International Plaza
Islip, NY
20 Orville Dr. ................ 50% 12,852 100.0% $ 174,731 $ 13.55 1
25 Orville Dr. ................ 100% 32,300 100.0% $ 475,065 $ 14.12 2
50 Orville Dr. ................ 20% 28,000 99.8% $ 244,538 $ 8.75 3
65 Orville Dr. ................ 13% 32,000 96.9% $ 145,018 $ 4.68 2
70 Orville Dr. ................ 7% 41,508 100.0% $ 301,684 $ 7.27 2
80 Orville Dr. ................ 21% 92,544 100.0% $ 678,929 $ 7.34 9
85 Orville Dr. ................ 20% 25,000 100.0% $ 154,393 $ 6.15 2
95 Orville Dr. ................ 10% 25,000 100.0% $ 120,875 $ 4.84 1
110 Orville Dr. ............... 15% 110,000 100.0% $ 627,733 $ 5.71 1
180 Orville Dr. ............... 18% 37,612 100.0% $ 233,291 $ 6.20 2
1101 Lakeland Ave. ............ 8% 90,411 100.0% $ 515,945 $ 5.71 1
1385 Lakeland Ave. ............ 18% 35,000 100.0% $ 178,398 $ 5.10 3
125 Wilbur Place .............. 31% 62,686 87.1% $ 279,880 $ 5.13 12
140 Wilbur Place .............. 37% 48,500 100.0% $ 290,747 $ 5.99 2
160 Wilbur Place .............. 30% 62,710 100.0% $ 501,034 $ 7.99 2
170 Wilbur Place .............. 28% 72,062 96.5% $ 230,971 $ 3.32 8
4040 Veterans Highway ......... 100% 2,800 100.0% $ 54,061 $ 19.31 1
120 Wilbur Place .............. 15% 35,000 100.0% $ 269,608 $ 7.70 4
2004 Orville Dr ............... 20% 106,515 100.0% $ 703,887 $ 6.61 1
2005 Orville Drive ............ 20% 130,010 100.0% $ 909,593 $ 7.00 1
--------- ----------- ---
Total--Airport
International Plaza .......... 1,082,510 99.1% $ 7,090,381 6.61 60
--------- ----------- ---
County Line Industrial
Center
Melville, NY
5 Hub Dr. ..................... 20% 88,001 100.0% $ 403,596 $ 4.59 2
10 Hub Dr. .................... 15% 95,546 100.0% $ 585,288 $ 6.12 4
30 Hub Drive .................. 18% 73,127 100.0% $ 467,684 $ 6.40 2
265 Spagnoli Rd. .............. 28% 85,500 100.0% $ 647,702 $ 7.57 3
--------- ----------- ---
Total--County Line
Industrial Center ............ 342,174 100.0% $ 2,104,270 $ 6.15 11
--------- ----------- ---
Standalone Long Island
Properties
32 Windsor Pl.
Islip, NY .................... 10% 43,000 100.0% $ 138,583 $ 3.22 1
42 Windsor Pl.
Islip, NY .................... 8% 65,000 100.0% $ 230,315 $ 3.54 1
208 Blydenburgh Rd.
Islandia, NY ................. 17% 24,000 100.0% $ 102,302 $ 4.26 4
210 Blydenburgh Rd.
Islandia, NY ................. 16% 20,000 100.0% $ 110,922 $ 5.55 2
71 Hoffman Ln.
Islandia, NY ................. 10% 30,400 100.0% $ 182,293 $ 6.00 1
135 Fell Ct.
Islip, NY .................... 20% 30,000 100.0% $ 222,750 $ 7.43 1
--------- ----------- ---
Subtotal Islip/Islandia ...... 212,400 100.0% $ 987,165 $ 4.65 10
--------- ----------- ---
</TABLE>
I-13
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- ------------------------------ ------------ -------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
70 Schmitt Boulevard,
Farmingdale, NY ............. 100% Fee 1975 4.4 18
105 Price Parkway,
Farmingdale, NY ............. 100% Fee 1969 12.0 26
110 Bi County Blvd.
Farmingdale, L.I, ........... 100% Fee 1984 9.5 19
-----
Subtotal Farmingdale ........ 25.9
-----
70 Maxess Rd,
Melville, NY ................ 100% Fee 1969 9.3 15
20 Melville Park Rd,
Melville, NY ................ 100% Fee 1965 4.0 23
45 Melville Park Drive,
Melville, NY ................ 100% Fee 1998 4.2 24
65 Marcus Drive.
Melville, L.I., ............. 100% Fee 1968 5.0 16
50 Marcus Drive, (3)
Melville, NY ................ 100% Fee 1967 7.1 22
-----
Subtotal Melville(4) ........ 29.6
-----
300 Motor Parkway,
Hauppauge, NY ............... 100% Fee 1979 4.2 14
1516 Motor Parkway,
Hauppauge, NY ............... 100% Fee 1981 7.9 24
-----
Subtotal Hauppauge .......... 12.1
-----
933 Motor Parkway
Smithtown, NY ............... 100% Fee 1973 5.6 20
65 S. Service Rd. ,
Plainview, NY(5) ............ 100% Fee 1961 1.6 14
85 S. Service Rd.
Plainview, NY ............... 100% Fee 1961 1.6 14
19 Nicholas Dr.,
Yaphank, NY (6) ............. 100% Fee 1989 29.6 24
48 Harbor Park Dr.,
Port Washington, NY ......... 100% Fee 1976 2.7 16
110 Marcus Dr.,
Huntington, NY .............. 100% Fee 1980 6.1 20
35 Engle St., (3)
Hicksville, NY .............. 100% Leasehold(7) 1966 4.0 24
100 Andrews Rd.,
Hicksville, L.I.,(1) ........ 100% Fee 1954 11.7 25
-----
Subtotal other (4) .......... 62.9
-----
Total Standalone Long
Island Properties (4) ...... 148.0
-----
Standalone Westchester
Properties ..................
100 Grasslands Rd., (3)
Elmsford, NY ................ 100% Fee 1964 3.6 16
2 Macy Rd.,
Harrison, NY ................ 100% Fee 1962 5.7 16
500 Saw Mill Rd.,
Elmsford, NY ................ 100% Fee 1968 7.3 22
-----
Total--Standalone
Westchester Industrial
Properties (4) .............. 16.6
-----
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ........ 100% Fee 1965 13.5 16
400 Cabot Dr.,
Hamilton Township, NJ........ 100% Fee 1989 44.8 30
100 Forge Way,
Rockaway, NJ ................ 100% Fee 1986 3.5 24
200 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 12.7 28
300 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 4.2 24
400 Forge Way,
Rockaway, NJ ................ 100% Fee 1989 12.8 28
5 Henderson Dr.,,
West Caldwell, NJ ........... 100% Fee 1967 15.2 14
492 River Rd,
Nutley, NJ (3) .............. 100% Fee 1952 17.3 13
4 Applegate Drive
Robbinsville, New Jersey 100% Fee 1999 10.0 30
30 Stultz Rd
So. Brunswick, NJ ........... 71.8% Fee 1978 12.6 18
6 Johanna Ct.,(3)
East Brunswick, NJ .......... 71.8% Fee 1978 18.4 18
-----
Total New Jersey
Standalone Industrial
Properties (4) .............. 165.0
-----
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- ------------------------------ ------------- ------------ ----------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
70 Schmitt Boulevard,
Farmingdale, NY ............. 10% 76,312 100.0% $ 538,147 $ 7.05 1
105 Price Parkway,
Farmingdale, NY ............. 8.5% 297,000 100.0% $ 1,388,515 $ 4.68 1
110 Bi County Blvd.
Farmingdale, L.I, ........... 45% 147,303 96.3% $ 1,285,683 $ 9.07 11
------- ----------- --
Subtotal Farmingdale ........ 520,615 98.9% $ 3,212,345 $ 6.24 13
------- ----------- --
70 Maxess Rd,
Melville, NY ................ 38% 78,000 100.0% $ 666,214 $ 8.48 1
20 Melville Park Rd,
Melville, NY ................ 66% 67,922 100.0% $ 385,625 $ 5.68 1
45 Melville Park Drive,
Melville, NY ................ 22% 40,247 100.0% $ 540,442 $ 13.43 1
65 Marcus Drive.
Melville, L.I., ............. 50% 60,000 100.0% $ 596,328 $ 9.94 1
50 Marcus Drive, (3)
Melville, NY ................ 95% 165,000 0.0% $ 0 $ 0 0
------- ----------- --
Subtotal Melville(4) ........ 411,169 100.0% $ 2,188,609 $ 8.87 4
------- ----------- --
300 Motor Parkway,
Hauppauge, NY ............... 100% 55,942 96.9% $ 856,895 $ 15.81 10
1516 Motor Parkway,
Hauppauge, NY ............... 5% 140,000 100.0% $ 863,800 $ 6.17 1
------- ----------- --
Subtotal Hauppauge .......... 195,942 99.1% $ 1,720,695 $ 8.86 11
------- ----------- --
933 Motor Parkway
Smithtown, NY ............... 26% 48,000 100.0% $ 32,153 $ 0.67 1
65 S. Service Rd. ,
Plainview, NY(5) ............ 10% 10,000 100.0% $ 69,911 $ 6.99 1
85 S. Service Rd.
Plainview, NY ............... 60% 20,000 100.0% $ 79,526 $ 3.98 2
19 Nicholas Dr.,
Yaphank, NY (6) ............. 5% 230,000 100.0% $ 1,222,649 $ 5.32 1
48 Harbor Park Dr.,
Port Washington, NY ......... 100% 35,000 100.0% $ 707,352 $ 20.21 1
110 Marcus Dr.,
Huntington, NY .............. 39% 78,240 100.0% $ 486,653 $ 6.22 1
35 Engle St., (3)
Hicksville, NY .............. 8% 120,000 0.0% $ 0 $ 0.00 0
100 Andrews Rd.,
Hicksville, L.I.,(1) ........ 12% 167,500 100.0% $ 1,105,727 $ 6.59 2
------- ----------- --
Subtotal other (4) .......... 708,740 100.0% $ 3,703,971 $ 6.29 9
------- ----------- --
Total Standalone Long
Island Properties (4) ...... 2,048,866 99.6% $11,812,785 $ 6.29 47
--------- ----------- --
Standalone Westchester
Properties ..................
100 Grasslands Rd., (3)
Elmsford, NY ................ 100% 45,000 0.0% $ 0 $ 0.00 0
2 Macy Rd.,
Harrison, NY ................ 100% 26,000 100.0% $ 422,500 $ 16.25 1
500 Saw Mill Rd.,
Elmsford, NY ................ 17% 92,000 100.0% $ 846,400 $ 9.20 1
--------- ----------- --
Total--Standalone
Westchester Industrial
Properties (4) .............. 163,000 100.0% $ 1,268,900 $ 10.75 2
--------- ----------- --
Standalone New Jersey
Industrial Properties
40 Cragwood Rd,
South Plainfield, NJ ........ 49% 135,000 57.5% $ 1,265,304 $ 16.30 3
400 Cabot Dr.,
Hamilton Township, NJ........ 10% 585,510 100.0% $ 2,739,377 $ 4.68 1
100 Forge Way,
Rockaway, NJ ................ 12% 20,136 100.0% $ 166,775 $ 8.28 5
200 Forge Way,
Rockaway, NJ ................ 23% 72,118 100.0% $ 453,367 $ 6.29 2
300 Forge Way,
Rockaway, NJ ................ 37% 24,000 100.0% $ 180,050 $ 7.44 2
400 Forge Way,
Rockaway, NJ ................ 20% 73,000 100.0% $ 407,666 $ 5.58 2
5 Henderson Dr.,,
West Caldwell, NJ ........... 10% 210,000 100.0% $ 1,324,234 $ 6.29 1
492 River Rd,
Nutley, NJ (3) .............. 100% 128,000 0.00% $ 0 $ 0 0
4 Applegate Drive
Robbinsville, New Jersey 10% 265,000 100.0% $ 1,364,750 $ 5.15 1
30 Stultz Rd
So. Brunswick, NJ ........... 10% 60,617 100.0% $ 200,248 $ 3.12 1
6 Johanna Ct.,(3)
East Brunswick, NJ .......... 10% 214,000 0.0% $ 0 $ 0.00 0
--------- ----------- --
Total New Jersey
Standalone Industrial
Properties (4) .............. 1,787,381 94.9% $ 8,101,771 $ 5.95 18
--------- ----------- --
</TABLE>
I-14
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST
(GROUND
LEASE LAND CLEARANCE
PERCENTAGE EXPIRATION YEAR AREA HEIGHT
PROPERTY OWNERSHIP DATE) CONSTRUCTED (ACRES) (FEET) (1)
- -------------------------- ------------ ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT ............. 100% Fee 1971-1979 36.1 22
-----
Total Connecticut
Standalone Industrial
Property ................ 36.1
-----
Total-Industrial
Properties (4) .......... 622.0
=====
<CAPTION>
PERCENTAGE ANNUAL
OFFICE/ BASE
RESEARCH RENT NUMBER
AND RENTABLE PER OF
DEVELOPMENT SQUARE PERCENT ANNUAL BASE LEASED TENANT
PROPERTY FINISH FEET LEASED RENT (2) SQ. FT. LEASES
- -------------------------- ------------- ------------ ----------- ------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT ............. 30% 452,414 100.0% $ 2,911,020 $ 6.43 2
------- ----------- -
Total Connecticut
Standalone Industrial
Property ................ 452,414 100.0% $ 2,911,020 $ 6.43 2
------- ----------- -
Total-Industrial
Properties (4) .......... 8,256,240 98.2% $45,166,103 $ 6.26 251
========= =========== ===
</TABLE>
- ----------------
(1) Calculated as the difference from the lowest beam to floor.
(2) Represents Base Rent of signed leases at December 31, 1999 adjusted for
scheduled contractual increases during the 12 months ending December 31,
2000. Total Base Rent for these purposes reflects the effect of any lease
expirations that occur during the 12 month period ending December 31, 2000.
Amounts included in rental revenue for financial reporting purposes have
been determined on a straight-line basis rather than on the basis of
contractual rent as set forth in the foregoing table.
(3) Property under redevelopment.
(4) Percent leased excludes properties under redevelopment.
(5) A tenant has been granted an option exercisable after April 30, 1997 and
prior to October 31, 2002 to purchase this property for $600,000.
(6) The actual fee interest in 19 Nicholas Drive is currently held by the Town
of Brookhaven Industrial Development Agency. The Company may acquire such
fee interest by making a nominal payment to the Town of Brookhaven
Industrial Development Agency.
(7) The Company has entered into a 20 year lease agreement in which it has the
right to sublease the premises.
RETAIL PROPERTIES
As of December 31, 1999, the Company owned two free-standing 10,000 square
foot retail properties located in Great Neck and Huntington, New York and were
100% leased as of December 31, 1999.
DEVELOPMENTS IN PROGRESS
As of December 31, 1999, the Company had invested approximately $130
million in developments in progress. This amount includes approximately $64
million relating to existing buildings encompassing approximately 1.1 million
square feet. The Company estimates that if these projects were to be completed,
total additional development costs would be approximately $25.3 million. In
addition, the Company has also invested approximately $66 million relating to
approximately 346 acres of land which it can develop approximately 2.2 million
square feet. The Company estimates that if these projects were to be completed,
total additional development costs would be approximately $270 million.
THE OPTION PROPERTIES
In connection with the IPO, the Company was granted a ten year option to
acquire ten properties (the "Option Properties") which were not contributed to
the Operating Partnership and are either owned by Reckson or in which Reckson
owns a non controlling minority interest.
As of December 31, 1999, the Company has acquired four of the Option
Properties for an aggregate purchase price of approximately $35 million and the
issuance of approximately 475,000 Units. In addition, during 1998, one of the
Option Properties was sold by Reckson to a third party.
The remaining Option Properties consist of three Class A office properties
encompassing approximately 311,000 square feet and two industrial properties
encompassing approximately 69,000 square feet.
I-15
<PAGE>
HISTORICAL NON-INCREMENTAL REVENUE-GENERATING CAPITAL EXPENDITURES, TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS
The following table sets forth annual and per square foot recurring,
non-incremental revenue-generating capital expenditures and non-incremental
revenue-generating tenant improvement costs and leasing commissions incurred by
the Company to retain revenues attributable to existing leased space for the
period 1995 through 1999 for the Office Properties and the Industrial
Properties. As noted, incremental revenue-generating tenant improvement costs
and leasing commissions are excluded from the table set forth immediately below.
The historical capital expenditures, tenant improvement costs and leasing
commissions set forth below are not necessarily indicative of future recurring,
non-incremental revenue-generating capital expenditures or non-incremental
revenue-generating tenant improvement costs and leasing commissions.
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
CAPITAL EXPENDITURES
Office Properties
Total .................................... $ 364,545 $ 375,026 $ 1,108,675 $ 2,004,976 $ 2,298,899
Per square foot .......................... $ .19 $ .13 $ .22 $ .23 $ .23
Industrial Properties
Total .................................... $ 290,457 $ 670,751 $ 733,233 $ 1,205,266 $ 1,048,688
Per square foot .......................... $ .08 $ .18 $ .15 $ .12 $ .11
NON-INCREMENTAL REVENUE-GENERATING TENANT
IMPROVEMENT COSTS AND LEASING COMMISSIONS
Long Island Office Properties
Annual Tenant Improvement Costs .......... $ 452,057 $ 523,574 $ 784,044 $ 1,140,251 $ 1,009,357
Per square foot improved ................ 4.44 4.28 7.00 3.98 4.73
Annual Leasing Commissions .............. 144,925 119,047 415,822 418,191 551,762
Per square foot leased .................. 1.42 .97 4.83 1.46 2.59
Total per square foot ................... $ 5.86 $ 5.25 $ 11.83 $ 5.44 $ 7.32
Westchester Office Properties
Annual Tenant Improvement Costs ......... N/A $ 834,764 $ 1,211,665 $ 711,160 $ 1,316,611
Per square foot improved ................ N/A 6.33 8.90 4.45 5.62
Annual Leasing Commissions .............. N/A 264,388 366,257 286,150 457,730
Per square foot leased .................. N/A 2.00 2.69 1.79 1.96
Total per square foot ................... N/A $ 8.33 $ 11.59 $ 6.24 $ 7.58
Connecticut Office Properties
Annual Tenant Improvement Costs ......... N/A $ 58,000 $ 1,022,421 $ 202,880 $ 179,043
Per square foot improved ................ N/A 12.45 13.39 5.92 4.88
Annual Leasing Commissions .............. N/A 0 256,615 151,063 110,252
Per square foot leased .................. N/A 0 3.36 4.41 3.00
Total per square foot ................... N/A $ 12.45 $ 16.75 $ 10.33 $ 7.88
New Jersey Office Properties
Annual Tenant Improvement Costs ......... N/A N/A N/A $ 654,877 $ 454,054
Per square foot improved ................ N/A N/A N/A 3.78 2.29
Annual Leasing Commissions .............. N/A N/A N/A 396,127 787,065
Per square foot leased .................. N/A N/A N/A 2.08 3.96
Total per square foot ................... N/A N/A N/A $ 5.86 $ 6.25
Industrial Properties
Annual Tenant Improvement Costs ......... $ 210,496 $ 380,334 $ 230,466 $ 283,842 $ 375,646
Per square foot improved ................ .90 .72 .55 .76 .25
Annual Leasing Commissions .............. 107,351 436,213 81,013 200,154 835,108
Per square foot leased .................. .46 .82 .19 .44 .56
Total per square foot ................... $ 1.36 $ 1.54 $ .74 $ 1.20 $ .81
</TABLE>
I-16
<PAGE>
MORTGAGE INDEBTEDNESS
The following table sets forth certain information regarding the mortgage
debt of the Company, as of December 31, 1999.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AMORTIZATION
PROPERTY OUTSTANDING INTEREST RATE MATURITY DATE SCHEDULE
- ------------------------------------ ------------------ ----------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
6800 Jericho Turnpike
(North Shore Atrium I) ............ $ 15,001 7.25% 6/10/00 --
6900 Jericho Turnpike
(North Shore Atrium II) ........... 5,279 7.25% 6/10/00 --
200 Broadhollow Road. .............. 6,560 7.75% 6/02/02 30 year
395 North Service Road ............. 20,933 6.45% 10/26/05 (3)
50 Charles Lindbergh Blvd. ......... 15,479 7.50% 7/10/01 --
333 Earl Ovington Blvd.
(The Omni) (1) .................... 56,367 7.72% 08/14/07 25 year
310 East Shore Road. ............... 2,322 8.00% 7/01/02 --
80 Orville Drive ................... 2,616 7.50% (2) 2/01/04 --
580 White Plains Road .............. 8,172 7.375% 9/01/00 20 year
Landmark Square .................... 47,809 8.02% 10/07/06 25 year
110 Bi-County Blvd. ................ 4,221 9.125% 11/30/12 20 year
100 Summit Lake Drive .............. 22,614 8.50% 4/01/07 15 year
200 Summit Lake Drive .............. 20,463 9.25% 1/01/06 25 year
120 West 45th Street ............... 66,933 6.82% 11/01/27 28 year
810 7th Avenue ..................... 86,822 7.73% 8/1/09 25 year
100 Wall Street .................... 37,623 7.73% 8/1/09 25 year
One Orlando Center ................. 39,960 6.82% 11/01/27 28 year
---------
Total .............................. $ 459,174
=========
</TABLE>
- ----------
(1) The Company has a 60% general partnership interest in the Omni Partnership.
The Company's proportionate share of the aggregate principal amount of the
mortgage debt on the Omni is approximately $33.8 million.
(2) Interest rate increases to 10.1% at June 2000.
(3) Principal payments of $34,000 per month.
ITEM 3. LEGAL PROCEEDINGS
The Company is not presently subject to any material litigation nor, to the
Company's knowledge, is any litigation threatened against the Company, other
than routine actions for negligence or other claims and administrative
proceedings arising in the ordinary course of business, some of which are
expected to be covered by liability insurance and all of which collectively are
not expected to have a material adverse effect on the liquidity, results of
operations or business or financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth
quarter of the year ended December 31, 1999.
I-17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
COMMON STOCK
The Company's common stock began trading on the New York Stock Exchange
("NYSE") on May 25, 1995, under the symbol "RA". The following table sets forth
the quarterly high and low closing sales prices per share of the Company's
common stock as reported on the NYSE and the distributions paid by the Company
for each respective quarter ended.
<TABLE>
<CAPTION>
HIGH LOW DISTRIBUTION
------------ ------------ ------------------
<S> <C> <C> <C>
March 31, 1998 .............. $ 26.438 $ 24.125 $0.3125
June 30, 1998 ............... $ 26.375 $ 22.688 $0.4199 (1)
September 30, 1998 .......... $ 26.000 $ 19.000 $0.3375
December 31, 1998 ........... $ 24.563 $ 20.188 $0.3375
March 31, 1999 .............. $ 24.000 $ 20.375 $.33750
June 30, 1999 ............... $ 26.563 $ 20.438 $.37125 (2)
September 30, 1999 .......... $ 23.500 $ 19.375 $.37125
December 31, 1999 ........... $ 20.813 $ 18.000 $.37125
</TABLE>
(1) Commencing with the distribution for the quarter ending June 30, 1998, the
Board of Directors of the Company increased the quarterly distribution to
$.3375 per share, which is equivalent to an annual distribution of $1.35 per
share. In addition, on June 11, 1998, the Company paid a stock dividend
equivalent to $.0824 per share relating to the Operating Partnership's
distribution of its common stock interest in Reckson Service Industries,
Inc. currently D/B/A FrontLine Capital Group to the Company.
(2) Commencing with the distribution for the quarter ending June 30, 1999, the
Board of Directors of the Company increased the quarterly distribution to
$.37125 per share, which is equivalent to an annual distribution of $1.485
per share.
CLASS B COMMON STOCK
The Company's Class B Common Stock began trading on the NYSE on May 25,
1999 under the symbol "RAb". The following table sets forth the quarterly high
and low closing sales prices per share of the Comapny8's Class B Common Stock as
reported on the NYSE and the distributions paid by the Company for each
respective quarter ended.
<TABLE>
<CAPTION>
HIGH LOW DISTRIBUTION
------------ ------------ -----------------
<S> <C> <C> <C>
March 31, 1999 .............. N/A N/A N/A
June 30, 1999 ............... $ 27.688 $ 23.875 $ .2364 (1)
September 30, 1999 .......... $ 24.688 $ 20.500 $ .5600
December 31, 1999 ........... $ 22.750 $ 19.438 $ .5600
</TABLE>
(1) Represents the period May 24, 1999 through June 30, 1999
II-1
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (in thousands except share and properties data)
<TABLE>
<CAPTION>
RECKSON ASSOCIATES REALTY CORP.
-----------------------------------------------------------
FOR THE YEAR ENDED
-----------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATING DATA:
Revenues .................................................. $ 403,153 $ 266,373 $ 153,395 $ 96,141
Total expenses ............................................ 299,111 201,892 107,905 70,951
Income (before preferred dividends and distributions,
minority interests and extraordinary loss) ............... 104,042 64,481 45,490 25,190
Preferred dividends and distributions ..................... 27,001 14,244 -- --
Minority interests ........................................ 16,209 10,672 8,624 6,768
Extraordinary loss (net of minority interests' share) ..... (555) (1,670) (2,230) (895)
Net income available to common shareholders ............... 47,529 37,895 34,636 17,527
Net income available to Class B Common shareholders ....... 12,748 -- -- --
PER SHARE DATA -- COMMON SHAREHOLDERS:
Basic:
Income before extraordinary loss .......................... $ 1.19 $ 1.00 $ 1.13 $ .92
Extraordinary loss ........................................ (.01) (.04) (.07) (.04)
Net income ................................................ 1.18 0.96 1.06 .88
Weighted average shares outstanding ....................... 40,270,000 39,473,000 32,727,000 19,928,000
Diluted:
Income before extraordinary loss .......................... $ 1.18 $ .99 $ 1.11 $ .91
Extraordinary loss ........................................ (.01) (.04) (.07) (.04)
Diluted net income ........................................ 1.17 .95 1.04 .87
Diluted weighted shares outstanding ....................... 40,676,000 40,010,000 33,260,000 20,190,000
PER SHARE DATA -- CLASS B COMMON SHAREHOLDERS:
Basic:
Income before extraordinary loss .......................... $ 1.91 $ -- $ -- $ --
Extraordinary loss ........................................ (.02) -- -- --
Net income ................................................ 1.89 -- -- --
Weighted average shares outstanding ....................... 6,744,000 -- -- --
Diluted:
Income before extraordinary loss .......................... $ 1.26 $ -- $ -- $ --
Extraordinary loss ........................................ -- -- -- --
Diluted net income ........................................ 1.26 -- -- --
Diluted weighted shares outstanding ....................... 6,744,000 -- -- --
BALANCE SHEET DATA: (PERIOD END)
Commercial real estate properties, before accumulated
depreciation ............................................. $ 2,214,872 $ 1,743,223 $ 1,015,282 $ 519,504
Total assets .............................................. 2,724,235 1,854,816 1,113,257 543,758
Mortgage notes payable .................................... 459,174 253,463 180,023 161,513
Unsecured credit facility ................................. 297,600 465,850 210,250 108,500
Unsecured term loan ....................................... 75,000 20,000 -- --
Senior unsecured notes .................................... 449,313 150,000 150,000 --
Market value of equity (2) ................................ 1,726,845 1,332,882 1,141,592 653,606
Total market capitalization including debt (2 and 3) ...... 2,993,756 2,199,936 1,668,800 921,423
OTHER DATA:
Funds from operations (basic) (4) ......................... $ 130,820 $ 97,697 $ 69,548 $ 41,133
Funds from operations (diluted) (4) ....................... $ 161,681 $ 99,450 $ 69,548 $ 41,133
Total square feet (at end of period) ...................... 21,385 21,000 13,645 8,800
Number of properties (at end of period) ................... 189 204 155 110
<CAPTION>
RECKSON ASSOCIATES
REALTY CORP. RECKSON GROUP
----------------- -------------------
FOR THE PERIOD
JUNE 3, 1995 TO FOR THE PERIOD
DECEMBER 31, JANUARY 1, 1995 TO
1995 (1) JUNE 2, 1995 (1)
----------------- -------------------
<S> <C> <C>
OPERATING DATA:
Revenues .................................................. $ 38,455 $ 20,889
Total expenses ............................................ 27,901 20,695
Income (before preferred dividends and distributions,
minority interests and extraordinary loss) ............... 10,554 194
Preferred dividends and distributions ..................... -- --
Minority interests ........................................ 3,067 --
Extraordinary loss (net of minority interests' share) ..... (4,234) --
Net income available to common shareholders ............... 3,253 194
Net income available to Class B Common shareholders ....... -- --
PER SHARE DATA -- COMMON SHAREHOLDERS:
Basic:
Income before extraordinary loss .......................... $ .51 --
Extraordinary loss ........................................ (.29) --
Net income ................................................ .22 --
Weighted average shares outstanding ....................... 14,678,000 --
Diluted:
Income before extraordinary loss .......................... $ .51 --
Extraordinary loss ........................................ (.29) --
Diluted net income ........................................ .22 --
Diluted weighted shares outstanding ....................... 14,725,000 --
PER SHARE DATA -- CLASS B COMMON SHAREHOLDERS:
Basic:
Income before extraordinary loss .......................... $ -- --
Extraordinary loss ........................................ -- --
Net income ................................................ -- --
Weighted average shares outstanding ....................... -- --
Diluted:
Income before extraordinary loss .......................... $ -- --
Extraordinary loss ........................................ -- --
Diluted net income ........................................ -- --
Diluted weighted shares outstanding ....................... -- --
BALANCE SHEET DATA: (PERIOD END)
Commercial real estate properties, before accumulated
depreciation ............................................. $ 290,712 --
Total assets .............................................. 242,728 --
Mortgage notes payable .................................... 98,126 --
Unsecured credit facility ................................. 40,000 --
Unsecured term loan ....................................... -- --
Senior unsecured notes .................................... -- --
Market value of equity (2) ................................ 303,943 --
Total market capitalization including debt (2 and 3) ...... 426,798 --
OTHER DATA:
Funds from operations (basic) (4) ......................... $ 17,246 --
Funds from operations (diluted) (4) ....................... $ 17,246 --
Total square feet (at end of period) ...................... 5,430 4,529
Number of properties (at end of period) ................... 81 72
</TABLE>
(1) Represents certain financial information on a consolidated historical basis
for Reckson Associates Realty Corp. and on a combined historical basis for
the Reckson Group.
(2) Based on the sum of:
(i) the market value of the Company's common stock and operating
partnership units (assuming conversion) of 48,076,648, 47,800,049,
44,988,846, 31,119,364 and 20,690,448 at December 31, 1999, 1998,
1997, 1996 and 1995, respectively (based on a per share/unit price
of $20.50, $22.19, $25.38, $21.13 and $14.69 at December 31, 1999,
1998, 1997, 1996 and 1995, respectively),
(ii) the market value of the Company's Class B Common Stock of
10,283,763 shares at December 31,1999 (based on a per share price
of $22.75),
(iii) the liquidation preference value of 15,192,000 and 9,192,000 shares
of the Company's preferred stock at December 31, 1999 and 1998,
respectively (based on a per share value of $25.00),
(iv) the liquidation preference value of 42,518 of the operating
partnership's preferred units at December 31, 1999 and 1998 (based
on a per unit value of $1,000) and
(v) the contributed value of Metropolitan's preferred interest of $85
million at December 31, 1999
(3) Debt amount is net of minority partners' proportionate share plus the
Company's share of unconsolidated joint venture debt.
(4) See "Management's Discussion and Analysis" for a discussion of funds from
operations.
II-2
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the historical
financial statements of Reckson Associates Realty Corp. (the "Company") and
related notes.
The Company considers certain statements set forth herein to be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, with respect to the Company's expectations for future periods.
Certain forward-looking statements, including, without limitation, statements
relating to the timing and success of acquisitions, the financing of the
Company's operations, the ability to lease vacant space and the ability to renew
or relet space under expiring leases, involve certain risks and uncertainties.
Although the Company believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, the actual
results may differ materially from those set forth in the forward-looking
statements and the Company can give no assurance that its expectation will be
achieved. Certain factors that might cause the results of the Company to differ
materially from those indicated by such forward-looking statements include,
among other factors, general economic conditions, general real estate industry
risks, tenant default and bankruptcies, loss of major tenants, the impact of
competition and acquisition, redevelopment and development risks, the ability to
finance business opportunities and local real estate risks such as an oversupply
of space or a reduction in demand for real estate in the Company's real estate
markets. Consequently, such forward-looking statements should be regarded solely
as reflections of the Company's current operating and development plans and
estimates. These plans and estimates are subject to revisions from time to time
as additional information becomes available, and actual results may differ from
those indicated in the referenced statements.
OVERVIEW AND BACKGROUND
The Reckson Group, the predecessor to the Company, was engaged in the
ownership, management, operation, leasing and development of commercial real
estate properties, principally office and industrial buildings, and also owned
certain undeveloped land located primarily on Long Island, New York. In June
1995, the Company completed an Initial Public Offering (the "IPO"), succeeded to
the Reckson Group's real estate business and commenced operations.
The Company is a self-administered and self managed real estate investment
trust ("REIT") specializing in the acquisition, leasing, financing, management
and development of office and industrial properties. The Company's growth
strategy is focused on the real estate markets in and around the New York
tri-state area (the "Tri-State Area").
The Company owns all of the interests in its real estate properties through
Reckson Operating Partnership, L.P. (the "Operating Partnership"). At December
31, 1999, the Company owned and operated 189 properties (the "Properties"),
(including two joint venture properties) encompassing approximately 21.4 million
square feet in the Tri-State Area. The Properties include 77 office properties
(the "Office Properties") containing approximately 13.1 million square feet, 110
industrial properties (the "Industrial Properties") containing approximately 8.3
million square feet and two retail properties containing approximately 20,000
square feet. The Company also owns and operates a 357,000 square foot office
property located in Orlando Florida. In addition, the Company owned
approximately 346 acres of land in 16 separate parcels of which the Company can
develop approximately 1.9 million square feet of office space and approximately
300,000 square feet of industrial space. The Company also has invested
approximately $315.6 million in mortgage notes encumbering three Class A Office
Properties encompassing approximately 1.6 million square feet, approximately 472
acres of land located in New Jersey and in a note receivable secured by a
partnership interest in Omni Partners, L.P., owner of the Omni, a 575,000 square
foot Class A Office Property located in Uniondale, New York.
On January 6, 1998, the Company made its initial investment in the Morris
Companies, a New Jersey developer and owner of "Big Box" warehouse facilities.
In connection with the transaction the Morris Companies contributed 100% of
their interests in certain industrial properties to Reckson Morris Operating
Partnership, L. P. ("RMI") in exchange for operating partnership units in RMI.
II-3
<PAGE>
On August 9, 1999, the Company executed a contract for the sale, which will
take place in three stages, of its interest in RMI which consisted of 28
properties, comprising approximately 6.1 million square feet and three other big
box industrial properties to Keystone Property Trust ("KTR") (formerly American
Real Estate Investment Corporation). In addition, the Company also entered into
a sale agreement with the Matrix Development Group ("Matrix"), relating to a
first mortgage note and certain industrial land holdings (the "Matrix Sale").
The combined total sale price is $310 million (approximately $42 million of
which is payable to the Morris Companies and its affiliates) and consists of a
combination of (i) cash, (ii) convertible preferred and common stock of KTR,
(iii) preferred units of KTR's operating partnership, (iv) relief of debt and
(v) a purchase money mortgage note secured by certain land that is being sold to
Matrix.
During September 1999, the Matrix Sale and the first stage of the RMI
closing occurred whereby the Company sold its interest in RMI to KTR for a
combined sales price of approximately $164.7 million (net of minority partner's
interest). The combined consideration consisted of approximately (i) $86.3
million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5 million
in common stock of KTR, (iv) approximately $26.7 million of debt relief and (v)
approximately $10.2 million in purchase money mortgages. As a result, the
Company incurred a gain of approximately $10.1 million which has been included
in gain on sales of real estate on the Company's consolidated statements of
income. Cash proceeds from the sales were used primarily to repay borrowings
under the Credit Facility.
The second and third stages of the RMI closing are scheduled to be
completed in April 2000. The remaining stages consist of six industrial
buildings and are being sold for total consideration of approximately $98
million.
In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real
Estate Equities Company, a Texas real estate investment trust.
On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger") into Metropolitan, with Metropolitan surviving the Merger.
Concurrently with the Merger, Tower Realty Operating Partnership, L.P. was
merged with and into a subsidiary of Metropolitan. The consideration issued in
the mergers was comprised of (i) 25% cash (approximately $107.2 million) and
(ii) 75% of shares of Class B Exchangeable Common Stock, par value $.01 per
share, of the Company (the "Class B Common Stock") (valued for generally
accepted accounting principles ("GAAP") purposes at approximately $304.1
million).
The Tower portfolio acquired in the Merger consists of three Office
Properties comprising approximately 1.6 million square feet located in New York
City, one Office Property located on Long Island and certain office properties
and other real estate assets located outside the Tri-State Area.
Prior to the closing of the Merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the Merger, the Company has sold a real estate joint venture interest and all
of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Company's unsecured credit
facility. As a result of incurring certain sales and closing costs in connection
with the sale of the assets located outside the Tri-State Area, the Company has
incurred a loss of approximately $4.4 million which has been included in gain on
sales of real estate on the Company's consolidated statements of income.
During 1997, the Company formed Reckson Service Industries, Inc. currently
D/B/A FrontLine Capital Group ("FrontLine") and Reckson Strategic Venture
Partners, LLC ("RSVP"). On June 11, 1998, the Operating Partnership distributed
its 95% common stock interest in FrontLine of approximately $3 million to its
owners, including the Company which, in turn, distributed the common stock of
FrontLine received from the Operating Partnership to its stockholders.
Additionally, during June
II-4
<PAGE>
1998, the Operating Partnership established a credit facility with FrontLine
(the "FrontLine Facility") in the amount of $100 million for FrontLine's
e-commerce and e-services operations and other general corporate purposes. As of
December 31, 1999, the Company had advanced $79.5 million under the FrontLine
Facility. In addition, the Operating Partnership has approved the funding of
investments of up to $100 million with or in RSVP (the "RSVP Commitment"),
through RSVP-controlled joint venture REIT-qualified investments or advances
made to FrontLine under terms similar to the FrontLine Facility. As of December
31, 1999, approximately $67.2 million had been invested through the RSVP
Commitment, of which $24.8 million represents RSVP-controlled joint venture
REIT-qualified investments and $42.4 million represents advances to FrontLine
under the RSVP Commitment.
During November 1999, the Board of Directors of the Company approved an
amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine
to incur secured debt and to pay interest thereon. In consideration of the
amendments, FrontLine has paid the Operating Partnership a fee of approximately
$3.6 million in the form of shares of FrontLine common stock. Such fee is being
amortized in income over an estimated nine month benefit period.
FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Company with a research and development
vehicle to invest in alternative real estate sectors. RSVP invests primarily in
real estate and real estate related operating companies generally outside of the
Company's core office and industrial focus. RSVP's strategy is to identify and
acquire interests in established entrepreneurial enterprises with experienced
management teams in market sectors which are in the early stages of their growth
cycle or offer unique circumstances for attractive investments as well as a
platform for future growth.
The Operating Partnership and FrontLine have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their relationship
and to limit conflicts of interest. Under the Reckson Intercompany Agreement,
FrontLine granted the Operating Partnership a right of first opportunity to make
any REIT -qualified investment that becomes available to FrontLine. In addition,
if a REIT-qualified investment opportunity becomes available to an affiliate of
FrontLine, including RSVP, the Reckson Intercompany Agreement requires such
affiliate to allow the Operating Partnership to participate in such opportunity
to the extent of FrontLine's interest.
Under the Reckson Intercompany Agreement, the Operating Partnership granted
FrontLine a right of first opportunity to provide commercial services to the
Operating Partnership and its tenants. FrontLine will provide services to the
Operating Partnership at rates and on terms as attractive as either the best
available for comparable services in the market or those offered by FrontLine to
third parties. In addition, the Operating Partnership will give FrontLine access
to its tenants with respect to commercial services that may be provided to such
tenants and, under the Reckson Intercompany Agreement, subject to certain
conditions, the Operating Partnership granted FrontLine a right of first refusal
to become the lessee of any real property acquired by the Operating Partnership
if the Operating Partnership determines that, consistent with the Company's
status as a REIT, it is required to enter into a "master" lease agreement.
On August 27, 1998 the Company announced the formation of a joint venture
with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of
companies that focuses on the development, acquisition and ownership of
government occupied office buildings and correctional facilities. The new
venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion
Venture Group LLC, and by a subsidiary of the Company. The Dominion Venture is
primarily engaging in acquiring, developing and/or owning government-occupied
office buildings and privately operated correctional facilities. Under the
Dominion Venture's operating agreement, RSVP is to invest up to $100 million,
some of which may be invested by the Company ( the "RSVP Capital"). The initial
contribution of RSVP Capital was approximately $39 million of which
approximately $10.1 million was invested by a subsidiary of the Company. The
Company's investment was funded through the RSVP Commitment. In addition, the
Company advanced approximately $2.9 million to FrontLine through the RSVP
II-5
<PAGE>
Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 1999, the Company had invested
approximately $17.6 million in the Dominion Venture which had investments in 13
government office buildings and three correctional facilities.
In 1999 the Company invested approximately $7.2 million, through a
subsidiary, in RAP Student Housing Properties, LLC ("RAP -- SHP"), a company
that engages primarily in the acquisition and development of off-campus student
housing projects. The Company's investment was funded through the RSVP
Commitment. In addition, the Company has advanced approximately $3.2 million to
FrontLine through the RSVP Commitment for an additional investment in RSVP which
was invested in certain service business activities related to student housing.
As of December 31, 1999, RAP -- SHP had investments in four off -- campus
student housing projects.
The market capitalization of the Company at December 31, 1999 was
approximately $3 billion. The Company's market capitalization is based on the
sum of (i) the market value of the Company's common stock and common units of
limited partnership interest in the Operating Partnership ("OP Units") (assuming
conversion) of $20.50 per share/unit (based on the closing price of the
Company's common stock on December 31, 1999), (ii) the market value of the
Company's Class B Common Stock of $22.75 per share (based on the closing price
of the Company's Class B Common Stock on December 31, 1999), (iii) the
liquidation preference value of the Company's Series A preferred and Series B
preferred stock of $25 per share, (iv) the liquidation preference value of the
Operating Partnership's preferred units, (v) the contributed value of
Metropolitan's preferred interest of $85 million and (vi) the $1.3 billion
(including its share of joint venture debt and net of minority partners'
interests) of debt outstanding at December 31,1999. As a result, the Company's
total debt to total market capitalization ratio at December 31, 1999 equaled
approximately 42.3%.
RESULTS OF OPERATIONS
The Company's total revenues increased by $136.8 million or 51.4% from 1998
to 1999 and $113 million or 73.7% from 1997 to 1998. Property operating
revenues, which include base rents and tenant escalations and reimbursements
("Property Operating Revenues") increased by $116.7 million or 46.2% from 1998
to 1999 and $108.7 million or 75.6% from 1997 to 1998. The 1999 increase in
Property Operating Revenues is substantially attributable to the Tower portfolio
acquisition on May 24, 1999. The revenue generated from these assets generated
approximately $47.5 million of revenue in 1999. Additionally, approximately
$29.1 million of revenue was generated from the Company's acquisition of the
first mortgage note secured by 919 Third Avenue. Property Operating Revenues
were also positively effected by approximately $9.9 million from increases in
occupancies and rental rates in our "same store" properties and approximately
$27.2 million in additional revenue generated from properties acquired during
1998 and new development activity. The remaining balance of the increase in
total revenues in 1999 is primarily attributable to the gain on sales of real
estate of $10.1 million and approximately $8.7 million in other income related
to interest earned on advances made to FrontLine through the FrontLine Facility
and to RSVP through the RSVP Commitment. The 1998 increase in Property Operating
Revenues is comprised of $2.1 million attributable to increases in rental rates
and changes in occupancies and $106.6 million attributable to acquisitions of
properties. The remaining balance of the increase in total revenues in 1998 is
primarily attributable to increases in interest income on the Company's
investments in mortgage notes and notes receivable and income related to the
Company's interest in its service companies. The Company's base rent reflects
the positive impact of the straight-line rent adjustment of $ 10.7 million in
1999, $7.7 million in 1998 and $4.5 million in 1997.
Property operating expenses, real estate taxes and ground rents ("Property
Expenses") increased by $41.7 million or 49.5% from 1998 to 1999 and by $34.0
million or 67.5% from 1997 to 1998. These increases are primarily due to the
acquisition of the properties included in the Tower portfolio acquisition on May
24, 1999 and the acquisition of the first mortgage note secured by 919 Third
Avenue. Gross operating margins (defined as Property Operating Revenues less
Property Expenses, taken as a percentage of Property Operating Revenues) for
1999, 1998 and 1997 were 65.9%, 66.6% and 65.0%, respectively. The slight
decrease in the gross operating margin percentage from 1998 to 1999 resulted
II-6
<PAGE>
from a larger proportionate share of gross operating margin derived from office
properties, which has a lower gross margin percentage, in 1999 compared to 1998.
The higher proportionate share of the gross operating margin attributable to the
office properties was a result of the office properties acquired in the Tower
portfolio acquisition and the disposition of net leased industrial properties in
the "Big Box" industrial transaction. This shift in the composition of the
portfolio was offset by increases in rental rates and operating efficiencies
realized as a result of operating a larger portfolio of properties with
concentration on properties in office and industrial parks or in its established
sub-markets. The increase from 1997 to 1998 in the gross operating margin
percentage resulted from increases realized in rental rates, the Company's
ability to realize certain operating efficiencies as a result of operating a
larger portfolio of properties with concentrations of properties in office and
industrial parks or in its established sub-markets, a stable operating cost
environment and the increased ownership of net leased properties.
Marketing, general and administrative expenses were $24.3 million in 1999,
$16.9 million in 1998 and $8.8 million in 1997. The increase in marketing,
general and administrative expenses is due to the increased costs of opening and
maintaining the Company's New York City division and the increase in corporate
management and administrative costs associated with the growth of the Company.
The Company's business strategy has been to expand further into the Tri-State
Area suburban markets and the New York City market by applying its standards for
high quality office and industrial space and premier tenant service to its New
Jersey, Westchester, Southern Connecticut and New York City divisions. In doing
this, the Company seeks to create a superior franchise value that it enjoys in
its home base of Long Island. Over the past three years the Company has
supported this effort by increasing the marketing programs in the other
divisions and strengthening the resources and operating systems in these
divisions. The cost of these efforts are reflected in both marketing, general
and administrative expenses as well as the revenue growth of the Company.
Marketing, general and administrative expense as a percentage of total revenues
were 6.0% in 1999, 6.3% in 1998 and 5.7% in 1997.
Interest expense was $74.3 million in 1999, $47.8 million in 1998 and $21.6
million in 1997. The increase of $26.5 million from 1998 to 1999 is attributable
to (i)an increase in mortgage debt including approximately $232 million relating
to the Tower portfolio acquisition (ii) the issuance of $300 million of senior
unsecured notes in March 1999 and (iii) an increased average balance on the
Company's credit facilities and term loan. The weighted average balance
outstanding on the Company's credit facilities and term loan was $423.8 million
for 1999, $377.9 million for 1998 and $103.2 million for 1997.
Included in amortization expense is amortized financing costs of $3.4
million in 1999, $1.6 million in 1998 and $.8 million in 1997. The increase of
$1.8 million from 1998 to 1999 is primarily attributable to the increased loan
costs incurred in connection with the Company increasing its unsecured term loan
in January 1999 to $75 million, the issuance of $300 million of senior unsecured
notes in March 1999 and the Company's $130 million unsecured bridge facility
obtained in connection with the Tower portfolio acquisition in May 1999. The
increase of $.8 million from 1997 to 1998 is primarily attributable to loan
costs incurred in connection with the Company's obtaining a $500 million
unsecured credit facility and a $50 million unsecured term loan.
Extraordinary losses, net of minority interest resulted in a $555,000 loss
in 1999, a $1.7 million loss in 1998 and a $2.2 million loss in 1997. The
extraordinary losses were all attributed to the write-offs of certain deferred
loan costs incurred in connection with the Company's restructuring of its
unsecured bridge and credit facilities and term loans.
LIQUIDITY AND CAPITAL RESOURCES
Summary of Cash Flows
Net cash provided by operating activities totaled $154.6 million in 1999,
$117.5 million in 1998 and $75.8 million in 1997. Increases for each year were
primarily attributable to the growth in cash flow provided by the acquisition of
properties and to a lesser extent from interest income from mortgage notes and
notes receivable.
II-7
<PAGE>
Net cash used in investing activities totaled $392.9 million in 1999,
$612.6 million in 1998 and $549.3 million in 1997. Cash used in investing
activities related primarily to investments in real estate properties including
development costs and investments in mortgage notes and notes receivable. In
addition, during 1998, the Company purchased $40 million of preferred stock of
Tower Realty Trust, Inc. in connection with the Tower portfolio acquisition.
Net cash provided by financing activities totaled $257.4 million in 1999,
$475.6 million in 1998 and $482.7 million in 1997. Cash provided by financing
activities during 1999, 1998 and 1997 was primarily attributable to proceeds
from the issuances of preferred stock, common stock, senior unsecured notes and
advances under the Company's credit facilities and term loan. Additionally,
during 1999, approximately $126 million in proceeds from secured borrowings was
provided by financing activities.
Investing Activities
On May 24, 1999, the Tower portfolio acquisition was completed with the
Company obtaining title to all of Tower's real estate assets. Simultaneously
with the closing of the Tower acquisition the Company arranged for the sale of
four of Tower's Class B New York City office properties. In addition, the
Company sold, with the exception of one Class A, 357,000 square foot office
building located in Orlando, Florida, all of the assets located outside of the
Tri-State Area. In addition to the aforementioned property in Orlando, Florida,
the Company's remaining assets from the Tower acquisition include three Class A
New York City office properties encompassing approximately 1.6 million square
feet and one Class A office property on Long Island encompassing approximately
101,000 square feet.
On June 15, 1999, the Company acquired the first mortgage note secured by
919 Third Avenue, a 47 story, 1.4 million square foot Class A office property
located in New York City. The first mortgage note entitles the Company to all
the net cash flow of the property and to substantial rights regarding the
operations of the property.
On January 13, 2000, the Company acquired 1350 Avenue of the Americas, a
540,000 square foot, 35 story, Class A office property, located in New York
City, for a purchase price of approximately $126.5 million. This acquisition was
financed through a $70 million secured debt financing and a draw under the
Company's unsecured credit facility.
In June 1998, the Company established the FrontLine Facility in the amount
of $100 million for FrontLine's e-commerce and e-services operations and for
other general corporate purposes. As of December 31, 1999, approximately $79.5
million had been advanced to FrontLine under this facility. In addition, the
Company approved the commitment to fund investments of up to $100 million with
or in RSVP. As of December 31, 1999, the Company has invested approximately
$67.2 million under this commitment, of which $24.8 million represents RSVP --
controlled joint venture REIT -- qualified investments and $42.4 million
represents advances to FrontLine under the RSVP Commitment.
Financing Activities
During 1999, the Company paid cash dividends on its common stock of
approximately $1.42 per share and approximately $.98 per share (representing the
period from May 24, 1999 through October 31, 1999) on its Class B Common Stock.
On March 26, 1999, the Operating Partnership issued $100 million of 7.4%
senior unsecured notes due March 15, 2004 and $200 million of 7.75% senior
unsecured notes due March 15, 2009. Net proceeds of approximately $297.4 million
were used to repay outstanding borrowings under the Company's unsecured credit
facility.
On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company issued 11,694,567 shares of Class B Common Stock which were valued for
purposes under GAAP at $26 per share for total consideration of approximately
$304.1 million. The shares of Class B Common Stock are entitled to receive an
initial annual dividend of $2.24 per share, which dividend is subject to
adjustment annually commencing on July 1, 2000. The shares of Class B Common
Stock are exchangeable at any time, at the option of the holder, into an equal
number of shares of common stock, par value $.01 per
II-8
<PAGE>
share, of the Company subject to customary antidilution adjustments. The
Company, at its option, may redeem any or all of the Class B Common Stock in
exchange for an equal number of shares of the Company's common stock at any time
following the four year, six-month anniversary of the issuance of the Class B
Common Stock.
The Board of Directors of the Company has authorized the purchase of up to
three million shares of the Company's Class B Common Stock and has also
authorized the purchase of up to an additional three million shares of the
Company's Class B Common Stock and/or its common stock. The buy-back program
will be effected in accordance with the safe harbor provisions of the Securities
Exchange Act of 1934 and may be terminated by the Company at any time. As of
December 31, 1999, the Company purchased and retired 1,410,804 shares of Class B
Common Stock for approximately $30.3 million.
On June 2, 1999, the Company issued six million shares of Series B
Convertible Cumulative Preferred Stock (the "Series B Preferred Stock") for
aggregate proceeds of $150 million. The Series B Preferred Stock is redeemable
by the Company on or after March 2, 2002 and is convertible into the Company's
common stock at a price of $26.05 per share. The Series B Preferred Stock
accumulate dividends at an initial rate of 7.85% per annum with such rate
increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and
after April 30, 2001. Proceeds from the Series B Preferred Stock offering were
used as partial consideration in the acquisition of the first mortgage note
secured by 919 Third Avenue located in New York City.
As of December 31, 1999 the Company had a three year $500 million unsecured
revolving credit facility (the "Credit Facility") with Chase Manhattan Bank,
Union Bank of Switzerland and PNC Bank as co-managers of the Credit Facility
bank group. Interest rates on borrowings under the Credit Facility are priced
off of LIBOR plus a sliding scale ranging from 65 basis points to 90 basis
points based on the Company's investment grade rating on its senior unsecured
debt. On March 16, 1999, the Company received its investment grade rating on its
senior unsecured debt. As a result, the pricing under the Credit Facility was
adjusted to LIBOR plus 90 basis points.
The Company utilizes the Credit Facility primarily to finance the
acquisitions of properties and other real estate investments, fund its
development activities and for working capital purposes. At December 31, 1999,
the Company had availability under the Credit Facility to borrow an additional
$150.1 million (net of $52.3 million of outstanding undrawn letters of credit).
As of December 31, 1999, the Company had outstanding an 18 month, $75
million unsecured term loan (the "Term Loan") from Chase Manhattan Bank.
Interest rates on borrowings under the Term Loan are priced off of LIBOR plus
150 basis points. The Term Loan replaced the Company's previous term loan which
matured on December 17, 1999.
On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company obtained a $130 million unsecured bridge facility (The "Bridge
Facility") from UBS AG. Interest rates on borrowings under the Bridge Facility
were priced off of LIBOR plus approximately 214 basis points. On July 23, 1999,
the Bridge Facility was repaid through a long term fixed rate secured borrowing
and an advance under the Credit Facility. As a result, certain deferred loan
costs incurred in connection with the Bridge Facility were written off. Such
amount is reflected as an extraordinary loss in the Company's consolidated
statements of income. The new mortgage note, in the amount of $125 million, is
secured by two office properties with an aggregate carrying value of
approximately $261 million, is for a term of ten years and bears interest at the
rate of 7.73% per annum.
Capitalization
The Company's indebtedness at December 31, 1999 totaled $1.3 billion
(including its share of joint venture debt and net of minority partners'
interests) and was comprised of $297.6 million outstanding under the Credit
Facility, $75 million outstanding under the Term Loan, approximately $449.3
million of senior unsecured notes and approximately $445 million of mortgage
indebtedness with a weighted average interest rate of approximately 7.6% and a
weighted average maturity of approximately 12.1 years. Based on the Company's
total market capitalization of approximately $3 billion at December 31, 1999
(calculated based on the market value of the Company's common stock and OP
Units, assuming
II-9
<PAGE>
conversion , the market value of the Company's Class B Common Stock, the
liquidation preference value of the Company's preferred stock, the liquidation
preference value of the Operating Partnership's preferred units, the contributed
value of Metropolitan's preferred interest of $85 million and the $1.3 billion
of debt), the Company's debt represented approximately 42.3% of its total market
capitalization.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures of the Company. In addition, the Company's
investments in mortgage notes, RSVP and advances under the FrontLine Facility
are expected to produce cash flows. The Company expects to meet its short term
liquidity requirements generally through its net cash provided by operating
activities along with the Credit Facility and Term Loan previously discussed.
The Company expects to meet certain of its financing requirements through
long-term secured and unsecured borrowings and the issuance of debt securities
and additional equity securities of the Company. The Company also expects
certain strategic dispositions of assets or interests in assets to generate cash
flows. The Company will refinance existing mortgage indebtedness or indebtedness
under the Credit Facility at maturity or retire such debt through the issuance
of additional debt securities or additional equity securities. The Company
anticipates that the current balance of cash and cash equivalents and cash flows
from operating activities, together with cash available from borrowings and debt
and equity offerings, will be adequate to meet the capital and liquidity
requirements of the Company in both the short and long-term.
In order to qualify as a REIT for federal income tax purposes, the Company
is required to make distributions to its stockholders of at least 95% of REIT
taxable income. The Company expects to use its cash flow from operating
activities for distributions to stockholders and for payment of expenditures.
The Company intends to invest amounts accumulated for distribution in short-term
investments.
INFLATION
Certain office leases provide for fixed base rent increases or indexed
escalations. In addition, certain office leases provide for separate escalations
of real estate taxes and electric costs over a base amount. The industrial
leases also generally provide for fixed base rent increases, direct pass through
of certain operating expenses and separate real estate tax escalation over a
base amount. The Company believes that inflationary increases in expenses will
generally be offset by contractual rent increases and expense escalations
described above.
The Credit Facility and the Term Loan bear interest at a variable rate,
which will be influenced by changes in short-term interest rates, and are
sensitive to inflation.
IMPACT OF YEAR 2000
During 1999, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In that regard, the Company has completed its
assessment, remediation and testing of its systems in order for those systems to
function properly with respect to dates occurring in the Year 2000 and
thereafter. As a result of those efforts, the Company experienced no significant
disruptions in connection with its building management, mechanical and computer
systems and believes that those systems successfully responded to the Year 2000
date change. The Company has expended approximately one million dollars with
upgrading, replacing or remediating its systems and is not aware of any material
problems resulting from Year 2000 issues. Further, the Company will continue to
monitor its critical building management, mechanical and computer systems
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed promptly.
II-10
<PAGE>
FUNDS FROM OPERATIONS
Management believes that funds from operations ("FFO") is an appropriate
measure of performance of an equity REIT. FFO is defined by the National
Association of Real Estate Investment Trusts (NAREIT) as net income or loss,
excluding gains or losses from debt restructurings and sales of properties, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with GAAP and is not indicative of cash
available to fund cash needs. FFO should not be considered as an alternative to
net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. (See Selected Financial
Data). In March 1995, NAREIT issued a "White Paper" analysis to address certain
interpretive issues under its definition of FFO. The White Paper provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income to arrive at FFO. In
October 1999, NAREIT revised the definition of FFO to include gains and losses
from sales of properties and non-recurring events. This revised definition is
effective for all periods beginning on or after January 1, 2000.
Since all companies and analysts do not calculate FFO in a similar fashion,
the Company's calculation of FFO presented herein may not be comparable to
similarly titled measures as reported by other companies.
The following table presents the Company's FFO calculation for the years
ended December 31, (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Income before preferred dividends and distributions, limited partners'
interest in the operating partnership and extraordinary loss ............. $ 97,240 $61,718 $44,683
Less:
Preferred dividends and distributions .................................... 27,001 14,244 --
Extraordinary loss, net of limited partners' interest in the operating
partnership of $74, $323 and $578, respectively ........................ 555 1,670 2,230
Limited Partners' minority interest in the operating partnership ......... 9,407 7,909 7,817
-------- ------- -------
Net Income available to common shareholders ............................... 60,277 37,895 34,636
Adjustments for Funds From Operations
Add:
Limited Partners' minority interest in the operating partnership ......... 9,407 7,909 7,817
Real estate depreciation and amortization 72,124 51,424 26,834
Minority interests' in consolidated partnerships ......................... 6,802 2,763 807
Extraordinary loss, net of limited partners' interest in the operating
partnership of $74, $323 and $578, respectively ........................ 555 1,670 2,230
Less:
Gain on sales of real estate ............................................. 10,052 -- 672
Amount distributed to minority partners in consolidated partnerships ..... 8,293 3,964 2,104
-------- ------- -------
Basic Funds From Operations ............................................... 130,820 97,697 69,548
Add:
Dilutive preferred dividends and distributions ........................... 30,861 1,753 --
-------- ------- -------
Diluted Fund From Operations .............................................. $161,681 $99,450 $69,548
======== ======= =======
Weighted Average Shares/Units outstanding (1) ............................. 54,719 47,201 39,743
======== ======= =======
Diluted Weighted Average Shares/Units outstanding (1) ..................... 70,013 48,651 40,276
======== ======= =======
</TABLE>
- ----------
(1) Assumes conversion of limited partnership units of the Operating
Partnership.
II-11
<PAGE>
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The primary market risk facing the Company is interest rate risk on its
long term debt, mortgage notes and notes receivable. The Company does not hedge
interest rate risk using financial instruments nor is the Company subject to
foreign currency risk.
The Company manages its exposure to interest rate risk on its variable rate
indebtedness by borrowing on a short-term basis under its Credit Facility or
Term Loan until such time as it is able to retire the short-term variable rate
debt with a long-term fixed rate debt offering or an equity offering through
accessing the capital markets on terms that are advantageous to the Company.
The following table sets forth the Company's long term debt obligations by
scheduled principal cash flow payments and maturity date, weighted average
interest rates and estimated fair market value ("FMV") at December 31, 1999
(dollars in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER TOTAL (1) FMV
------------ ------------ ------------ ----------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long term debt:
Fixed rate .......... $ 35,145 $ 22,751 $ 16,499 $ 8,350 $ 11,769 $ 814,660 $ 909,174 $909,174
Weighted average
interest rate ..... 7.37% 7.58% 7.79% 7.77% 7.73% 7.53% 7.53% --
Variable rate ....... $ -- $372,600 $ -- $ -- $ -- $ -- $ 372,600 $372,600
Weighted average
interest rate ..... -- 7.27% -- -- -- -- 7.27% --
</TABLE>
(1) Includes unamortized issuance discounts of $687,000 on the 5 and 10 year
senior unsecured notes issued on March 26, 1999 which are due at maturity.
In addition, the Company has assessed the market risk for its variable rate
debt, which is based upon LIBOR, and believes that a one percent increase in the
LIBOR rate would have an approximate $3.7 million annual increase in interest
expense based on approximately $372.6 million outstanding at December 31, 1999.
The following table sets forth the Company's mortgage notes and note
receivables by scheduled maturity date, weighted average interest rates and
estimated FMV at December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER TOTAL (2) F M V
------------- ---------- ------------ ------ ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage notes and notes receivable:
Fixed rate .............. $ 282,857 $ 15 $ 11,306 $-- $ 36,500 $ 16,990 $ 347,668 $347,668
Weighted average
interest rate ......... 9.42% 9.00% 10.35% -- 10.23% 11.65% 9.64% --
</TABLE>
(2) Excludes mortgage note receivable acquisition costs and interest receivables
aggregating approximately $4.8 million.
The fair value of the Company's long term debt, mortgage notes and notes
receivable is estimated based on discounting future cash flows at interest rates
that management believes reflects the risks associated with long term debt,
mortgage notes and notes receivable of similar risk and duration.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included in a separate section of this Form
10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
II-12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the section captioned "Proposal I: Election of
Directors" of the Company's definitive proxy statement for the 2000 annual
meeting of stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the section captioned "Executive Compensation"
of the Company's definitive proxy statement for the 2000 annual meeting of
stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the section captioned "Principal and
Management Stockholders" of the Company's definitive proxy statement for the
2000 annual meeting of stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the section captioned "Certain Relationships
and Related Transactions" of the Company's definitive proxy statement for the
2000 annual meeting of the stockholders is incorporated herein by reference.
III-1
<PAGE>
PART IV
ITEM 14. FINANCIAL STATEMENTS AND SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K
(a)(1 and 2) Financial Statements and Schedules
The following consolidated financial information is included as a separate
section of this annual report on Form 10-K:
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
RECKSON ASSOCIATES REALTY CORP.
Report of Independent Auditors ................................................ IV-5
Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998 ..... IV-6
Consolidated Statements of Income for the years ended December 31, 1999, 1998
and 1997 .................................................................... IV-7
Consolidated Statement of Stockholders' Equity for the years ended December 31,
1999, 1998 and 1997 ......................................................... IV-8
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997 ............................................................... IV-9
Notes to Financial Statements ................................................. IV-10
Schedule III - Real Estate and Accumulated Depreciation ....................... IV-30
</TABLE>
IV-1
<PAGE>
All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the financial statements and notes
thereto.
(3) Exhibits
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- --------- ---------- -----------
<S> <C> <C>
3.1 a Amended and Restated Articles of Incorporation
3.1 a Amended and Restated Articles of Incorporation
3.2 Amended and Restated By-Laws of Registrant
3.3 h Articles Supplementary of the Registrant Establishing and Fixing the Rights and Preferences of a Series of
Shares of Preferred Stock filed with the Maryland State Department of Assessments and Taxation on April 9, 1998
3.4 Articles Supplementary of the Registrant Establishing and Fixing the Rights and Preferences of a Class of
Shares of Common Stock filed with the Maryland State Department of Assessments and Taxation on May 24, 1999.
3.5 k Articles Supplementary of the Registrant Establishing and Fixing the Rights and Preferences of a Series of
Shares of Preferred Stock filed with the Maryland State Department of Assessments and Taxation on May 28, 1999
3.6 Articles of Amendment of the Registrant filed with the Maryland State Department of Assessments and Taxation on
January 4, 2000.
3.7 Articles Supplementary of the Registrant filed with the Maryland State Department of Assessments and Taxation
on January 11, 2000.
4.1 b Specimen Share Certificate of Common Stock
4.2 h Specimen Share Certificate of Series A Preferred Stock
4.3 j Form of 7.40% Notes due 2004 of Reckson Operating Partnership, L.P.
4.4 j Form of 7.75% Notes due 2009 of Reckson Operating Partnership, L.P.
4.5 j Indenture, dated March 26, 1999, among Reckson Operating Partnership, L.P., the Company, and The Bank of New
York, as trustee
10.1 a Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P.
10.2 h Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P.
10.3 h Establishing Series A Preferred Units of Limited Partnership Interest Supplement to the Amended and Restated
Agreement of Limited Partnership of Reckson Operating Partnership, L.P. Establishing Series B Preferred Units
of Limited Partnership Interest
10.4 Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership,
L.P. Establishing Series C Preferred Units of Limited Partnership Interest
10.5 h Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P.
Establishing Series D Preferred Units of Limited Partnership Interest
10.6 Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership,
L.P. Establishing Series B Common Units of Limited Partnership Interest
10.7 Supplement to the Amended and Restated Agreement of Limited Partnership of Reckson Operating Partnership, L.P.
Establishing Series E Preferred Partnership Units of Limited Partnership Interest
10.8 f Third Amended and Restated Agreement of Limited Partnership of Omni Partners, L.P.
10.9 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and Donald Rechler
10.10 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and Scott Rechler
10.11 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and Mitchell Rechler
10.12 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and Gregg Rechler
10.13 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and Roger Rechler
10.14 i Amendment and Restatement of Employment and Non-Competition Agreement between Registrant and J. Michael Maturo
10.15 a Purchase Option Agreements relating to the Reckson Option Properties
10.16 a Purchase Option Agreements relating to the Other Option Properties
10.17 c Amended 1995 Stock Option Plan
10.18 c 1996 Employee Stock Option Plan
10.19 b Ground Leases for certain of the properties
10.20 i Third Amended and Restated Agreement of Limited Partnership of Reckson FS Limited Partnership
10.21 a Indemnity Agreement relating to 100 Oser Avenue
10.22 f Amended and Restated 1997 Stock Option Plan
10.23 f 1998 Stock Option Plan
10.24 f Note Purchase Agreement for the Senior Unsecured Notes
10.25 i Amended and Restated Severance Agreement between Registrant and Donald Rechler
10.26 i Amended and Restated Severance Agreement between Registrant and Scott Rechler
10.27 i Amended and Restated Severance Agreement between Registrant and Mitchell Rechler
10.28 i Amended and Restated Severance Agreement between Registrant and Gregg Rechler
10.29 i Amended and Restated Severance Agreement between Registrant and Roger Rechler
10.30 i Amended and Restated Severance Agreement between Registrant and J. Michael Maturo
10.31 d $500 million Credit Agreement dated July 23, 1998 among Reckson Operating Partnership, L.P. and Reckson Morris
Operating Partnership, L.P. and the Chase Manhattan Bank, UBS AG and PNC Bank and other lenders party thereto
10.32 g Agreement and Plan of Merger by and among Tower Realty Trust, Inc., Reckson Associates Realty Corp., Reckson
Operating Partnership, L.P. and Metropolitan Partners LLC, dated December 8, 1998
10.33 g Stock Purchase Agreement by and between Tower Realty Trust, Inc. and Metropolitan Partners LLC, dated December
8, 1998
10.34 g Amended and Restated Operating Agreement of Metropolitan Partners LLC, dated December 8, 1998
</TABLE>
IV-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- --------- ---------- -----------
<S> <C> <C>
10.35 i Intercompany Agreement by and between Reckson Operating Partnership, L.P. and Reckson Service Industries, Inc.,
dated May 13, 1998
10.36 Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries, Inc., as
borrower and Reckson Operating Partnership, L.P., as Lender relating to Reckson Strategic Venture Partners, LLC
("RSVP Credit Agreement")
10.37 Amended and Restated Credit Agreement dated as of August 4, 1999 between Reckson Service Industries, Inc., as
borrower and Reckson Operating Partnership, L.P., as Lender relating to the operations of Reckson Service
Industries, Inc. ("RSI Credit Agreement")
10.38 Letter Agreement, dated November 30, 1999, amending the RSVP Credit Agreement and the RSI Credit Agreement
10.39 j Terms Agreement, dated March 23, 1999, between Reckson Operating Partnership, L.P. and Goldman, Sachs & Co.,
on behalf of itself and the other named underwriters
10.40 k $130 million Credit Agreement dated as of May 24, 1999 among Metropolitan Operating Partnership, L.P., Warburg
Dillon Read and UBS AG, Stamford Branch
10.41 k Guaranty Agreement dated as of May 24, 1999 among Metropolitan Operating Partnership, L.P., Warburg Dillon Read
and UBS AG, Stamford Branch
10.42 k Purchase Agreement dated as of May 27, 1999 among Stichting Pensioenfonds ABP, The Travelers Insurance Company,
The Travelers Life and Annuity Company, The Standard Fire Insurance Company, Travelers Casualty and Surety
Company, Reckson Associates Realty Corp. and Reckson Operating Partnership, L.P. relating to 6,000,000 shares
of Series B Convertible Cumulative Preferred Stock
10.43 k Registration Rights Agreement among Stichting Pensioenfonds ABP, The Travelers Insurance Company, The Travelers
Life and Annuity Company, The Standard Fire Insurance Company, Travelers Casualty and Surety Company and
Reckson Associates Realty Corp. relating to 6,000,000 shares of Series B Convertible Cumulative Preferred Stock
10.44 l Consolidated, Amended and Restated Fee and Leasehold Mortgage Note relating to 919 Third Avenue
10.45 o Agreement of Purchase and Sale, between NBBRE 919 Third Avenue Associates, L.P., as Seller, and Reckson
Operating Partnership, L.P., as Purchaser
10.46 l Side Letter to Agreement of Purchase and Sale, between NBBRE 919 Third Avenue Associates, L.P., as Seller, and
Reckson Operating Partnership, L.P., as Purchaser
10.47 m Contribution and Exchange Agreement by and between Reckson Morris Industrial Trust, Reckson Morris Industrial
Interim GP, LLC, Reckson Operating Partnership, L.P., Robert Morris, Joseph D. Morris, Ronald Schram, Mark M.
Bava, The Drew Morris Trust, The Justin Morris Trust, The Keith Morris Trust, Joseph D. Morris Family Limited
Partnership and Robert Morris Family Limited Partnership, and American Real Estate Investment L.P. and American
Real Estate Corporation
10.48 n Agreement of Purchase and Sale by and among Black Canyon Loop Company LLC, Metropolitan Operating Partnership,
L.P. and Safeway Inc.
10.49 n Purchase and Sale Agreement by and between Corporate Center Associates Limited Partnership and Transwestern
Investment Company, L.L.C.
10.50 n Purchase and Sale Agreement by and between East Broadway 5151 Limited Partnership, Metropolitan Operating
Partnership, L.P., 5750 Associates Limited Partnership, Maitland Associates, Ltd. and Maitland West Associates
Limited Partnership and Praedium Performance Fund IV, L.P.
10.51 n Purchase and Sale Agreement by and between Metropolitan Operating Partnership, L.P. and HUB Properties Trust
10.52 o Contract and Sale Agreement between 54-55 Street Company and Reckson Operating Partnership, L.P.
10.53 p 1999 $75 million Second Amended and Restated Credit Facility Agreement dated as of December 17, 1999
10.54 p 1999 Second Amended and Restated Guaranty Agreement dated as of December 17, 1999
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Power of Attorney (included in Part IV of the Form 10-K)
27.0 Financial Data Schedule
</TABLE>
- --------
(a) Previously filed as an exhibit to Registration Statement Form S-11 (No.
333-1280) and incorporated herein by reference.
(b) Previously filed as an exhibit to Registration Statement Form S-11 (No.
33-84324) and incorporated herein by reference.
(c) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on November 25, 1996 and incorporated herein by reference.
(d) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on August 14, 1998 and incorporated herein by reference.
(e) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on February 5, 1999 and incorporated herein by reference.
(f) Previously filed as an exhibit to the Company's Form 10-K filed with the SEC
on March 26, 1998 and incorporated herein by reference.
(g) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on December 22, 1998 and incorporated herein by reference.
(h) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on March 1, 1999 and incorporated herein by reference.
(i) Previously filed as an exhibit to the Company's Form 10-K filed with the SEC
on March 16, 1999 and incorporated herein by reference.
(j) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
March 26, 1999 and incorporated herein by reference.
(k) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 7, 1999 and incorporated herein by reference.
(l) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 25, 1999 and incorporated herein by reference.
(m) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
August 25, 1999 and incorporated herein by reference.
(n) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
October 25, 1999 and incorporated herein by reference.
(o) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
January 14, 2000 and incorporated herein by reference.
(p) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
February 8, 2000 and incorporated herein by reference.
(b) REPORTS ON FORM 8-K
On October 25, 1999, the Company filed reports on Form 8-K relating to:
(i) The completion of the first stage of the RMI closing and the sale of
certain industrial properties to Matrix,
(ii) the Company's Board of Directors authorizing the repurchase of up to
three million shares of Class B Common Stock,
(iii) the Company's sale and disposition of the Tower assets located outside
the Tri-State Area other than one Class A office property located in
Orlando, Florida and
(iv) the Operating Partnership entering into a contract to acquire 1350
Avenue of the Americas, a 540,000 square foot, 35 story, Class A office
property located in New York City for a purchase price of approximately
$126.5 million.
IV-3
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 15, 2000.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Donald J. Rechler
------------------------------
(Donald J. Rechler)
Chairman of the Board, and
Co-Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors
of Reckson Associates Realty Corp., hereby severally constitute Scott H.
Rechler, Mitchell D. Rechler and Michael Maturo, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below, the Form 10-K
filed herewith and any and all amendments to said Form 10-K, and generally to do
all such things in our names and in our capacities as officers and directors to
enable Reckson Associates Realty Corp. to comply with the provisions of the
Securities Exchange Act of 1934, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Form 10-K and any and
all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 15, 2000.
<TABLE>
<CAPTION>
NAME TITLE NAME TITLE
- --------------------------- -------------------------------- ------------------------ ---------
<S> <C> <C> <C>
/s/ Donald J. Rechler Chairman of the Board, /s/ Leonard Feinstein Director
----------------------- Co-Chief Executive Officer ------------------------
(Donald J. Rechler) and Director (principal (Leonard Feinstein)
executive officer)
/s/ Scott Rechler President /s/ John V.N. Klein Director
----------------------- Co-Chief Executive Officer -------------------------
(Scott Rechler) and Director (John V.N. Klein)
/s/ Roger M. Rechler Vice Chairman of the Board, /s/ Conrad Stephenson Director
----------------------- Executive Vice President -------------------------
(Roger M. Rechler) and Director (Conrad Stephenson)
/s/ Michael Maturo Executive Vice President, /s/ Herve A. Kevenides Director
----------------------- Treasurer and Chief -------------------------
(Michael Maturo) Financial Officer (principal (Herve A. Kevenides)
financial officer and
principal accounting officer)
/s/ Mitchell D. Rechler Executive Vice President, Co - /s/ Lewis S. Ranieri Director
------------------------ Chief Operating Officer -------------------------
(Mitchell D. Rechler) and Director (Lewis S. Ranieri)
/s/ Harvey R. Blau Director
------------------------
(Harvey R. Blau)
</TABLE>
IV-4
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Reckson Associates Realty Corp.
We have audited the accompanying consolidated balance sheets of Reckson
Associates Realty Corp. as of December 31, 1999 and 1998, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1999. We have also audited
the financial statement schedule listed in the index at item 14(a). These
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Reckson Associates
Realty Corp. at December 31, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information set
forth therein.
ERNST & YOUNG LLP
New York, New York
February 15, 2000
IV-5
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Commercial real estate properties, at cost: (Notes 2, 3, 5, 6 and 8)
Land ........................................................................ $ 276,204 $ 212,540
Buildings and improvements .................................................. 1,802,611 1,372,549
Developments in progress:
Land ........................................................................ 60,894 69,143
Development costs ........................................................... 68,690 82,901
Furniture, fixtures and equipment ........................................... 6,473 6,090
---------- ----------
2,214,872 1,743,223
Less accumulated depreciation ........................................... (218,385) (159,049)
---------- ----------
1,996,487 1,584,174
Investments in real estate joint ventures (Note 8) .......................... 31,531 15,104
Investment in mortgage notes and notes receivable (Note 6) .................. 352,466 99,268
Cash and cash equivalents (Note 12) ......................................... 21,368 2,349
Tenant receivables .......................................................... 5,117 5,159
Investments in and advances to affiliates (Note 8) .......................... 178,695 53,329
Deferred rents receivable ................................................... 22,489 22,526
Prepaid expenses and other assets (Note 6) .................................. 66,977 46,372
Contract and land deposits and pre-acquisition costs ........................ 9,585 2,253
Deferred lease and loan costs, less accumulated amortization of $24,484
and $18,170, respectively .................................................. 39,520 24,282
---------- ----------
Total Assets ................................................................ $2,724,235 $1,854,816
========== ==========
LIABILITIES
Mortgage notes payable (Note 2) ............................................. $ 459,174 $ 253,463
Unsecured credit facility (Note 3) .......................................... 297,600 465,850
Unsecured term loan (Note 3) ................................................ 75,000 20,000
Senior unsecured notes (Note 4) ............................................. 449,313 150,000
Accrued expenses and other liabilities (Note 5) ............................. 72,436 50,960
Dividends and distributions payable ......................................... 27,166 19,663
---------- ----------
Total Liabilities ........................................................... 1,380,689 959,936
---------- ----------
Minority interests' in consolidated partnerships ............................ 93,086 52,173
Preferred unit interest in the operating partnership (Note 6) ............... 42,518 42,518
Limited Partners' minority interest in the operating partnership ............ 90,986 94,125
---------- ----------
226,590 188,816
---------- ----------
Commitments and other comments (Notes 9, 10 and 13) ......................... -- --
STOCKHOLDERS' EQUITY (Note 7)
Preferred Stock, $.01 par value, 25,000,000 shares authorized
Series A preferred stock, 9,192,000 shares issued and outstanding .......... 92 92
Series B preferred stock, 6,000,000 and 0 shares issued and outstanding,
respectively ............................................................. 60 --
Common Stock, $.01 par value, 100,000,000 shares authorized
Common stock, 40,375,506 and 40,035,419 shares issued and
outstanding, respectively ................................................ 401 400
Class B Common Stock, 10,283,763 and 0 shares issued and outstanding,
respectively ............................................................. 103 --
Additional paid in capital .................................................. 1,116,300 705,572
---------- ----------
Total Stockholders' Equity .................................................. 1,116,956 706,064
---------- ----------
Total Liabilities and Stockholders' Equity .................................. $2,724,235 $1,854,816
========== ==========
</TABLE>
(see accompanying notes to financial statements)
IV-6
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES (Note 10):
Base rents ................................................................ $ 324,146 $ 224,703 $ 128,778
Tenant escalations and reimbursements ..................................... 44,989 27,744 14,981
Equity in earnings of service companies and real estate joint ventures 2,148 1,836 514
Interest income on mortgage notes and notes receivable .................... 7,944 7,739 5,437
Gain on sales of real estate (Note 6) ..................................... 10,052 -- 672
Investment and other income ............................................... 13,874 4,351 3,013
----------- ----------- -----------
Total Revenues ............................................................ 403,153 266,373 153,395
----------- ----------- -----------
EXPENSES:
Property operating expenses ............................................... 125,994 84,280 50,316
Marketing, general and administrative ..................................... 24,293 16,860 8,767
Interest .................................................................. 74,320 47,795 21,585
Depreciation and amortization ............................................. 74,504 52,957 27,237
----------- ----------- -----------
Total Expenses ............................................................ 299,111 201,892 107,905
----------- ----------- -----------
Income before preferred dividends and distributions, minority
interests and extraordinary loss ......................................... 104,042 64,481 45,490
Minority partners' interests in consolidated partnerships ................. (6,802) (2,763) (807)
Distributions to preferred unit holders ................................... (2,641) (1,753) --
Limited partners' minority interest in the operating partnership .......... (9,407) (7,909) (7,817)
----------- ----------- -----------
Income before extraordinary loss and dividends to preferred
shareholders ............................................................. 85,192 52,056 36,866
Extraordinary loss on extinguishment of debts, net of limited partners'
minority interest share of $74, $323 and $578, respectively (Note 3) (555) (1,670) (2,230)
Dividends to preferred shareholders ....................................... (24,360) (12,491) --
----------- ----------- -----------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS ............................... $ 60,277 $ 37,895 $ 34,636
=========== =========== ===========
Net Income available to:
Common shareholders ...................................................... $ 47,529 $ 37,895 $ 34,636
Class B common shareholders .............................................. 12,748 -- --
----------- ----------- -----------
Total ..................................................................... $ 60,277 $ 37,895 $ 34,636
=========== =========== ===========
Basic net income per weighted average common share before extraordinary loss:
Common shareholders ...................................................... $ 1.19 $ 1.00 $ 1.13
Extraordinary loss per common share ...................................... ( .01) ( .04) ( .07)
----------- ----------- -----------
Basic net income per weighted average common share ....................... $ 1.18 $ .96 $ 1.06
=========== =========== ===========
Class B common shareholders .............................................. $ 1.91 $ -- $ --
Extraordinary loss per Class B common share .............................. ( .02) -- --
----------- ----------- -----------
Basic net income per weighted average Class B common share ............... $ 1.89 $ -- $ --
=========== =========== ===========
Weighted average common shares outstanding:
Common shareholders ...................................................... 40,270,000 39,473,000 32,727,000
Class B common shareholders .............................................. 6,744,000 -- --
Diluted net income per weighted average common share:
Common shareholders ...................................................... $ 1.17 $ .95 $ 1.04
Class B common shareholders .............................................. $ 1.26 $ -- $ --
Diluted weighted average common shares outstanding:
Common shareholders ...................................................... 40,676,000 40,010,000 33,260,000
Class B common shareholders .............................................. 6,744,000 -- --
</TABLE>
(see accompanying notes to financial statements)
IV-7
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIMITED
CLASS B SERIES A SERIES B ADDITIONAL TOTAL PARTNERS'
COMMON COMMON PREFERRED PREFERRED PAID IN RETAINED STOCKHOLDERS' MINORITY
STOCK STOCK STOCK STOCK CAPITAL EARNINGS EQUITY INTEREST
-------- --------- ----------- ----------- -------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stockholder's equity,
January 1, 1997 ............. $244 $ -- $-- $-- $ 186,623 $ -- $ 186,867 $ 51,879
Two for one stock split ...... 50 -- -- -- (50) -- -- --
Net proceeds from
common stock offerings 80 -- -- -- 256,564 -- 256,644 33,925
Issuance of operating
partnership units ........... -- -- -- -- 9,473 -- 9,473 1,236
Net proceeds from long
term compensation
issuances ................... 4 -- -- -- 1,706 -- 1,710 178
Net Income ................... -- -- -- -- -- 34,636 34,636 7,239
Dividends and
distributions paid and
payable ..................... -- -- -- -- (6,029) (34,636) (40,665) (8,707)
---- ----- --- --- ---------- ---------- ---------- ----------
Stockholders' equity,
December 31, 1997 ........... 378 -- -- -- 448,287 -- 448,665 85,750
Net proceeds from
preferred stock offering -- -- 92 -- 220,708 -- 220,800 --
Conversions of preferred
stock ....................... -- -- -- -- (31) -- (31) 31
Net proceeds from Class
B Common Stock
offering .................... 21 -- -- -- 41,340 -- 41,361 8,785
Issuance of operating
partnership units ........... -- -- -- -- 11,576 -- 11,576 2,458
Net proceeds from long
term compensation
issuances ................... 1 -- -- -- 990 -- 991 210
Net income ................... -- -- -- -- -- 37,895 37,895 7,586
Dividends and
distributions paid and
payable ..................... -- -- -- -- (17,298) (37,895) (55,193) (10,695)
---- ----- --- --- ---------- ---------- ---------- ----------
Stockholders' equity,
December 31, 1998 ........... 400 -- 92 -- 705,572 -- 706,064 94,125
Net proceeds from
preferred stock offering -- -- -- 60 149,940 -- 150,000 --
Net proceeds from Class
B Common Stock
offering .................... -- 117 -- -- 302,536 -- 302,653 --
Repurchases of Class B
Common Stock ................ -- (14) -- -- (30,273) -- (30,287) --
Redemption of operating
partnership units ........... -- -- -- -- -- -- -- (1,485)
Net proceeds from long
term compensation
issuances ................... 1 -- -- -- 1,596 -- 1,597 --
Net income ................... -- -- -- -- -- 60,277 60,277 9,333
Dividends and
distributions paid and
payable ..................... -- -- -- -- (13,071) (60,277) (73,348) (10,987)
---- ----- --- --- ---------- ---------- ---------- ----------
Stockholders' equity
December 31, 1999 ........... $401 $ 103 $92 $60 $1,116,300 $ -- $1,116,956 $ 90,986
==== ===== === === ========== ========== ========== ==========
</TABLE>
(see accompanying notes to financial statements)
IV-8
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
1999 1998 1997
------------ --------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income available to common Shareholders .................................. $ 60,277 $ 37,895 $ 34,636
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ................................................ 74,504 52,957 27,237
Extraordinary loss, net of minority interests ................................ 555 1,670 2,230
Minority partners' interests in consolidated partnerships .................... 6,802 2,763 807
Limited partners' interest in the operating partnership ...................... 9,407 7,909 7,817
Gain on sale of interest in Reckson Executive Centers, LLC ................... -- (9) --
Gain on sales of real estate, securities and mortgage repayment .............. (9,657) (43) (672)
Distribution from investments in real estate joint ventures .................. 442 470 408
Equity in earnings of service companies and real estate joint ventures ....... (2,148) (1,836) (514)
Changes in operating assets and liabilities: increase (decrease) .............
Deferred rents receivable .................................................... (2,158) (7,553) (4,500)
Prepaid expenses and other assets ............................................ (23,722) (7,199) (1,931)
Tenant and affiliate receivables ............................................. 42 (184) (1,183)
Accrued expenses and other liabilities ....................................... 40,248 30,667 11,427
---------- ----------- ----------
Net cash provided by operating activities .................................... 154,592 117,507 75,762
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of commercial real estate properties ............................... (284,741) (449,241) (429,379)
Investment in mortgage notes and notes receivable ............................ (295,048) 4,072 (50,282)
Interest receivables ......................................................... (692) 2,602 (2,392)
(Increase) decrease in contract deposits and preacquisition costs ............ (12,650) 8,839 (1,303)
Additions to developments in progress ........................................ (9,615) (97,570) (40,367)
Additions to commercial real estate properties ............................... (28,135) (21,181) (12,038)
Payment of leasing costs ..................................................... (16,467) (8,802) (5,417)
Investments in securities .................................................... -- (42,299) (1,756)
Additions to furniture, fixtures and equipment ............................... (461) (2,071) (1,159)
Investments in real estate joint ventures .................................... (15,033) (7,773) (1,734)
Investment in and distributions from service companies ....................... -- 15 (4,241)
Proceeds from sales of real estate, securities and mortgage repayment ........ 269,916 809 725
---------- ----------- ----------
Net cash (used in) investing activities ...................................... (392,926) (612,600) (549,343)
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured borrowings ............................................. 125,548 -- --
Principal payments on secured borrowings ..................................... (4,714) (4,735) (1,624)
Proceeds from issuance of senior unsecured notes , net of issuance costs ..... 299,262 -- 150,000
Proceeds from issuance of preferred stock, net of issuance costs ............. 148,000 220,800 --
Proceeds from mortgage refinancings, net of refinancing costs ................ -- 11,458 20,134
Payment of loan and equity issuance costs .................................... (8,264) (4,738) (4,983)
Investments in and advances to affiliates .................................... (125,007) (23,452) (20,513)
Proceeds from unsecured credit facilities and term loans ..................... 397,500 413,100 421,000
Principal payments on unsecured credit facilities ............................ (510,750) (137,500) (319,250)
Repurchases of Class B common Stock .......................................... (30,287) -- --
Proceeds from issuance of common stock and exercise of options, net of
issuance costs .............................................................. 1,512 51,934 299,991
Contributions by minority partners in consolidated partnerships .............. 75,500 10,000 --
Distributions to minority partners in consolidated partnerships .............. (6,701) (3,570) (5,355)
Distributions to limited partners in the operating partnership ............... (11,177) (7,576) (8,707)
Distributions to preferred unit holders ...................................... (2,641) (1,312) --
Dividends to common and Class B common shareholders .......................... (68,031) (39,157) (47,972)
Dividends to preferred shareholders .......................................... (22,397) (9,638) --
---------- ----------- ----------
Net cash provided by financing activities .................................... 257,353 475,614 482,721
---------- ----------- ----------
Net increase (decrease) in cash and cash equivalents ......................... 19,019 (19,479) 9,140
Cash and cash equivalents at beginning of period ............................. 2,349 21,828 12,688
---------- ----------- ----------
Cash and cash equivalents at end of period ................................... $ 21,368 $ 2,349 $ 21,828
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest ..................................... $ 77,014 $ 52,622 $ 20,246
========== =========== ==========
</TABLE>
(see accompanying notes to financial statements)
IV-9
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Reckson Associates Realty Corp. (the "Company") is a self-administered and
self managed real estate investment trust ("REIT") engaged in the ownership,
management, operation, leasing and development of commercial real estate
properties, principally office and industrial buildings and also owns land for
future development (collectively, the "Properties") located in the New York
tri-state area (the "Tri-State Area").
ORGANIZATION AND FORMATION OF THE COMPANY
The Company was incorporated in Maryland in September 1994. In June 1995,
the Company completed an Initial Public Offering (the "IPO") and commenced
operations. The aggregate proceeds to the Company, net of underwriters'
discount, advisory fees and other offering costs were approximately $162
million.
The Company became the sole general partner of Reckson Operating
Partnership, L.P. (the "Operating Partnership") by contributing substantially
all of the net proceeds of the IPO, in exchange for an approximate 73% interest
in the Operating Partnership. All Properties acquired by the Company are held by
or through the Operating Partnership. In conjunction with the IPO, the Operating
Partnership executed various option and purchase agreements whereby it issued
common units of limited partnership interest in the Operating Partnership
("Units") to certain continuing investors in exchange for (i) interests in
certain property partnerships, (ii) fee simple and leasehold interests in
properties and development land, (iii) certain business assets of executive
center entities and (iv) 100% of the non-voting preferred stock of the
management and construction companies.
During 1997, the Company formed Reckson Service Industries, Inc. currently
D/B/A FrontLine Capital Group ("FrontLine") and Reckson Strategic Venture
Partners, LLC ("RSVP"). On June 11, 1998, the Operating Partnership distributed
its 95% common stock interest in FrontLine of approximately $3 million to its
owners, including the Company which, in turn, distributed the common stock of
FrontLine received from the Operating Partnership to its stockholders.
Additionally, during June 1998, the Operating Partnership established a credit
facility with FrontLine (the "FrontLine Facility") in the amount of $100 million
for FrontLine's e-commerce and e-services operations and other general corporate
purposes. As of December 31, 1999, the Company had advanced $79.5 million under
the FrontLine Facility. In addition, the Operating Partnership has approved the
funding of investments of up to $100 million with or in RSVP (the "RSVP
Commitment"), through RSVP-controlled joint venture REIT-qualified investments
or advances made to FrontLine under terms similar to the FrontLine Facility. As
of December 31, 1999, approximately $67.2 million had been invested through the
RSVP Commitment, of which $24.8 million represents RSVP-controlled joint venture
REIT-qualified investments and $42.4 million represents advances to FrontLine
under the RSVP Commitment.
During November 1999, the Board of Directors of the Company approved an
amendment to the FrontLine Facility and the RSVP Commitment to permit FrontLine
to incur secured debt and to pay interest thereon. In consideration of the
amendments, FrontLine has paid the Operating Partnership a fee of approximately
$3.6 million in the form of shares of FrontLine common stock. Such fee is being
recognized in income over an estimated nine month benefit period.
FrontLine identifies, acquires interests in and develops a network of
business to business e-commerce and e-services companies that service small to
medium sized enterprises, independent professionals and entrepreneurs and the
mobile workforce of larger companies. FrontLine serves as the managing member of
RSVP. RSVP was formed to provide the Company with a research and development
vehicle to invest in alternative real estate sectors. RSVP invests primarily in
real estate and real estate related operating companies generally outside of the
Company's core office and industrial
IV-10
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
focus. RSVP's strategy is to identify and acquire interests in established
entrepreneurial enterprises with experienced management teams in market sectors
which are in the early stages of their growth cycle or offer unique
circumstances for attractive investments as well as a platform for future
growth.
On January 6, 1998, the Company made its initial investment in the Morris
Companies, a New Jersey developer and owner of "Big Box" warehouse facilities.
In connection with the transaction the Morris Companies contributed 100% of
their interests in certain industrial properties to Reckson Morris Operating
Partnership, L. P. ("RMI") in exchange for operating partnership units in RMI.
On September 27, 1999, the Company sold its interest in RMI to Keystone Property
Trust ("KTR") (formerly American Real Estate Investment Corporation) (see note
6).
During July 1998, the Company formed Metropolitan Partners, LLC
("Metropolitan") for the purpose of acquiring Tower Realty Trust, Inc.
("Tower"). On May 24, 1999 the Company completed the merger with Tower and
acquired three Class A office properties located in New York City totaling 1.6
million square feet and one office property located on Long Island totaling
approximately 101,000 square feet. In addition, pursuant to the merger, the
Company also acquired certain office properties, a property under development
and land located outside of the Tri-State Area. All of the assets acquired in
the merger, located outside of the Tri-State Area, other than a 357,000 square
foot office property located in Orlando, Florida, have been sold (see note 6).
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the consolidated
financial position of the Company and the Operating Partnership at December 31,
1999 and 1998 and the results of their operations and their cash flows for each
of the three years in the period ended December 31,1999. The Operating
Partnership's investments in Metropolitan and Omni Partners, L. P. ("Omni") are
reflected in the accompanying financial statements on a consolidated basis with
a reduction for minority partners' interest. The Operating Partnership's
investment in RMI was reflected in the accompanying financial statements on a
consolidated basis with a reduction for minority partner's interest through
September 26, 1999. On September 27, 1999, the Operating Partnership sold its
interest in RMI to KTR (see note 6). The operating results of Reckson Executive
Centers, L.L.C., ("REC"), a service business of the Operating Partnership were
reflected in the accompanying financial statements on the equity method of
accounting through March 31, 1998. On April 1, 1998, the Operating Partnership
sold its 9.9% interest in REC to FrontLine. Additionally, the operating results
of FrontLine were reflected in the accompanying financial statements on the
equity method of accounting through June 10, 1998. On June 11, 1998 the
Operating Partnership distributed its 95% common stock interest in FrontLine to
its owners, including the Company which, in turn, distributed the common stock
of FrontLine to its stockholders. The operating results of the service
businesses currently conducted by Reckson Management Group, Inc.("RMG"), and
Reckson Construction Group, Inc.("RCG"), are reflected in the accompanying
financial statements on the equity method of accounting. The Operating
Partnership also invests in real estate joint ventures where it may own less
than a controlling interest, such investments are also reflected in the
accompanying financial statements on the equity method of accounting. All
significant intercompany balances and transactions have been eliminated in the
consolidated financial statements.
The merger with Tower (see note 6) was accounted for as a purchase in
accordance with Accounting Principles Board Opinion No. 16. Accordingly, the
fair value of the consideration given by the Company, in accordance with
generally accepted accounting principles ("GAAP"), was used as the valuation
basis for the merger. The assets acquired and liabilities assumed by the Company
were recorded at the fair value as of the closing date of the merger and the
excess of the purchase price over the historical basis of the net assets
acquired was allocated primarily to operating real estate properties and real
estate properties which have been sold.
IV-11
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
The minority interests at December 31, 1999 represent an approximate 13%
limited partnership interest in the Operating Partnership, an approximate 28%
interest in certain industrial joint venture properties formerly owned by RMI, a
convertible preferred interest in Metropolitan and a 40% interest in Omni.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
Real Estate
Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements and
five to ten years for furniture, fixtures and equipment. Tenant improvements,
which are included in buildings and improvements, are amortized on a
straight-line basis over the term of the related leases.
Cash Equivalents
The Company considers highly liquid investments with a maturity of three
months or less when purchased, to be cash equivalents.
Deferred Costs
Tenant leasing commissions and related costs incurred in connection with
leasing tenant space are capitalized and amortized over the life of the related
lease. In addition, loan costs incurred are capitalized and amortized over the
term of the related loan.
Costs incurred in connection with stock offerings are charged to
stockholders equity when incurred.
Income Taxes
The Company generally will not be subject to federal income taxes as long
as it qualifies as a REIT. A REIT will generally not be subject to federal
income taxation on that portion of income that qualifies as REIT taxable income
and to the extent that it distributes such taxable income to its stockholders
and complies with certain requirements. As a REIT, the Company is allowed to
reduce taxable income by all or a portion of distributions to stockholders and
must distribute at least 95% of its taxable income to qualify as a REIT. As
distributions, for federal income tax purposes, have exceeded taxable income, no
federal income tax provision has been reflected in the accompanying consolidated
financial statements. State income taxes are not significant.
During 1999, the Company paid cash dividends on its common stock of
approximately $1.42 per share and approximately $.98 per share (representing the
period from May 24, 1999 through October 31, 1999) on its Class B Common Stock.
During 1998, the Company paid cash dividends on its common stock of $.99 per
share (representing dividends for three quarters). In addition, on June 11,
1998, the Company paid a stock dividend equivalent to $.0824 per share relating
to the Operating Partnership's distribution of its common stock interest in
FrontLine to the Company. All of the dividends paid on the Company's common
stock during 1998 were considered ordinary income for federal tax purposes. For
1999, approximately 92.75% of the dividends paid on the Company's common stock
and Class B Common Stock were considered ordinary income for federal tax
purposes. The remaining 7.25% of the dividends paid were treated as a capital
gain distribution, subject to a 20% tax rate for individuals and certain other
taxpayers.
IV-12
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
Revenue Recognition
Minimum rental income is recognized on a straight-line basis over the term
of the lease. The excess of rents recognized over amounts contractually due are
included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.
The Company records interest income on investments in mortgage notes and
notes receivable on an accrual basis of accounting. The Company does not accrue
interest on impaired loans where, in the judgment of management, collection of
interest according to the contractual terms is considered doubtful. Among the
factors the Company considers in making an evaluation of the collectibility of
interest are: the status of the loan, the value of the underlying collateral,
the financial condition of the borrower and anticipated future events. Loan
discounts are amortized over the life of the real estate using the constant
interest method.
Gains from sales of real estate are recorded when title is conveyed to the
buyer, subject to the buyer's financial commitment being sufficient to provide
economic substance to the sale.
Earnings Per Share
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 128, "Earnings per Share" ("Statement 128") which replaced the calculation
of primary and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the Statement 128
requirements. The conversion of Units into common stock would not have a
significant effect on per share amounts as the Units share proportionately with
the common stock in the results of the Operating Partnership's operations.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock options because, the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," ("Statement 123") requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, no compensation expense was recognized because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant (see Note 7).
Comprehensive Income
In 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income" ("Statement 130") which is effective for fiscal years beginning after
December 15, 1997. Statement 130 established standards for reporting
comprehensive income and its components in a full set of general-purpose
financial statements. Statement 130 requires that all components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The adoption of this standard
had no impact on the Company's financial position or results of operations.
IV-13
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
Segment Reporting
In 1997, the FASB issued Statement No. 131 "Disclosures about segments of
an Enterprise and Related Information" ("Statement 131") which is effective for
fiscal years beginning after December 15, 1997. Statement 131 establishes
standards for reporting information about operating segments in annual financial
statements and in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The adoption of this standard had no impact on the Company's
financial position or results of operations but did affect the disclosure of
segment information. See Note 11.
Recent Pronouncements
In June 1999, the FASB issued Statement No. 137, amending Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which
extended the required date of adoption to the years beginning after June 15,
2000. The Statement permits early adoption as of the beginning of any fiscal
quarter after its issuance. The Company expects to adopt the new Statement
effective January 1, 2001. The Company does not anticipate that the adoption of
this Statement will have any effect on its results of operations or financial
position.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. MORTGAGE NOTES PAYABLE
At December 31, 1999, there were 17 mortgage notes payable with an
aggregate outstanding principal amount of approximately $459.2 million.
Properties with an aggregate carrying value at December 31, 1999 of
approximately $808 million are pledged as collateral against the mortgage notes
payable. In addition, $47.8 million of the $459.2 million are recourse to the
Company. The mortgage notes bear interest at rates ranging from 6.45% to 9.25%,
and mature between 2000 and 2027. The weighted average interest rates on the
outstanding mortgage notes payable at December 31, 1999, 1998 and 1997 were
approximately 7.6%, 7.8% and 7.7%, respectively. Certain of the mortgage notes
payable are guaranteed by certain minority partners in the Operating
Partnership.
Scheduled principal repayments during the next five years and thereafter
are as follows (in thousands):
YEAR ENDED DECEMBER 31,
- --------------------------------
2000 ......................... $ 35,145
2001 ......................... 22,751
2002 ......................... 16,499
2003 ......................... 8,350
2004 ......................... 11,769
Thereafter ................... 364,660
--------
$459,174
========
3. UNSECURED CREDIT FACILITIES AND UNSECURED TERM LOAN
As of December 31, 1999, the Company had a three year $500 million
unsecured revolving credit facility (the "Credit Facility") from Chase Manhattan
Bank, Union Bank of Switzerland and PNC Bank as co-managers of the Credit
Facility bank group. Interest rates on borrowings under the Credit Facility
IV-14
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
3. UNSECURED CREDIT FACILITIES AND UNSECURED TERM LOAN - (CONTINUED)
are priced off of LIBOR plus a sliding scale ranging from 65 basis points to 90
basis points based on the Company's investment grade rating on its senior
unsecured debt. On March 16, 1999, the Company received its investment grade
rating on its senior unsecured debt. As a result, the pricing under the Credit
Facility was adjusted to LIBOR plus 90 basis points.
The Company utilizes the Credit Facility primarily to finance the
acquisitions of properties and other real estate investments, fund its
development activities and for working capital purposes. At December 31, 1999,
the Company had availability under the Credit Facility to borrow an additional
$150.1 million (net of $52.3 million of outstanding undrawn letters of credit).
As of December 31, 1999, the Company had outstanding an 18 month, $75
million unsecured term loan (the "Term Loan") from Chase Manhattan Bank.
Interest rates on borrowings under the Term Loan are priced off of LIBOR plus
150 basis points. The Term Loan replaced the Company's previous term loan which
matured on December 17, 1999.
On May 24, 1999, in conjunction with the Tower portfolio acquisition (see
Note 6), the Company obtained a $130 million unsecured bridge facility (The
"Bridge Facility") from UBS AG. Interest rates on borrowings under the Bridge
Facility were priced off of LIBOR plus approximately 214 basis points. On July
23, 1999, the Bridge Facility was repaid through a long term fixed rate secured
borrowing and an advance under the Credit Facility. As a result, certain
deferred loan costs incurred in connection with the Bridge Facility were written
off. Such amount is reflected as an extraordinary loss in the accompanying
consolidated statements of income.
The Company capitalized interest incurred on borrowings to fund certain
acquisition and development costs in the amount of $9.8 million, $7.3 million
and $2.4 million for the years ended December 31, 1999, 1998 and 1997,
respectively.
4. SENIOR UNSECURED NOTES
As of December 31, 1999, the Operating Partnership had outstanding
approximately $449.3 million (net of issuance discounts) of senior unsecured
notes (the "Senior Unsecured Notes"). The following table sets forth the
Operating Partnership's Senior Unsecured Notes and other related disclosures
(dollars in thousands):
<TABLE>
<CAPTION>
FACE COUPON
ISSUANCE AMOUNT RATE TERM MATURITY
- ----------------------- ----------- ---------- ---------- ----------------
<S> <C> <C> <C> <C>
August 27, 1997 $150,000 7.20% 10 years August 28, 2007
March 26, 1999 $100,000 7.40% 5 years March 15, 2004
March 26, 1999 $200,000 7.75% 10 years March 15, 2009
</TABLE>
Interest on the Senior Unsecured Notes is payable semiannually with
principal and unpaid interest due on the scheduled maturity dates. In addition,
the Senior Unsecured Notes issued on March 26, 1999 were issued at an aggregate
discount of $738,000.
Net proceeds of approximately $297.4 million received from the issuance of
the March 26, 1999 Senior Unsecured Notes were used to repay outstanding
borrowings under the Company's Credit Facility.
5. LAND LEASES
The Company leases, pursuant to noncancellable operating leases, the land
on which ten of its buildings were constructed. The leases, which contain
renewal options, expire between 2018 and 2080. The leases either contain
provisions for scheduled increases in the minimum rent at specified intervals or
IV-15
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
5. LAND LEASES - (CONTINUED)
for adjustments to rent based upon the fair market value of the underlying land
or other indexes at specified intervals. Minimum ground rent is recognized on a
straight-line basis over the terms of the leases. The excess of amounts
recognized over amounts contractually due is approximately $2.6 million and $2.3
million at December 31, 1999 and 1998, respectively. These amounts are included
in accrued expenses and other liabilities on the accompanying balance sheets.
Future minimum lease commitments relating to the land leases during the
next five years and thereafter are as follows (in thousands):
YEAR ENDED DECEMBER 31,
- --------------------------------
2000 ......................... $ 1,833
2001 ......................... 1,850
2002 ......................... 1,869
2003 ......................... 1,818
2004 ......................... 1,942
Thereafter ................... 48,232
-------
$57,544
=======
6. COMMERCIAL REAL ESTATE INVESTMENTS
The Tower Merger
In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC, a Delaware limited liability company ("Metropolitan"), with Crescent Real
Estate Equities Company, a Texas real estate investment trust ("Crescent").
On December 8, 1998, the Company, Metropolitan and Tower Realty Trust, Inc.
("Tower") executed a merger agreement and on May 24, 1999 Tower was merged (the
"Merger") into Metropolitan, with Metropolitan surviving the Merger.
Concurrently with the Merger, Tower Realty Operating Partnership, L.P. ("Tower
OP") was merged with and into a subsidiary of Metropolitan. The consideration
issued in the mergers was comprised of (i) 25% cash (approximately $107.2
million) and (ii) 75% of shares of Class B Exchangeable Common Stock, par value
$.01 per share, of the Company (the "Class B Common Stock") (valued for GAAP
purposes at approximately $304.1 million).
Under the terms of the transaction, Metropolitan effectively paid for each
share of Tower common stock and each unit of limited partnership interest of
Tower OP the sum of (i) $5.75 in cash, and (ii) 0.6273 of a share of Class B
Common Stock. The shares of Class B Common Stock are entitled to receive an
initial annual dividend of $2.24 per share, which dividend is subject to
adjustment annually commencing on July 1, 2000. The shares of Class B Common
Stock are exchangeable at any time, at the option of the holder, into an equal
number of shares of common stock, par value $.01 per share, of the Company
subject to customary antidilution adjustments. The Company, at its option, may
redeem any or all of the Class B Common Stock in exchange for an equal number of
shares of the Company's common stock at any time following the four year,
six-month anniversary of the issuance of the Class B Common Stock.
The Board of Directors of the Company has authorized a purchase buy back
program for the Company's Class B Common Stock (see note 7).
The Company controls Metropolitan and owns 100% of the common equity;
Crescent owns a $85 million preferred equity interest in Metropolitan.
Crescent's interest accrues distributions at a rate of 7.5% per annum for a
two-year period (May 24, 1999 through May 24, 2001) and may be redeemed by
IV-16
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)
Metropolitan at any time during that period for $85 million, plus an amount
sufficient to provide a 9.5% internal rate of return. If Metropolitan does not
redeem the preferred interest, upon the expiration of the two-year period,
Crescent must convert its $85 million preferred interest into either (i) a
common membership interest in Metropolitan or (ii) shares of the Company's
common stock at a conversion price of $24.61 per share.
The Tower portfolio acquired in the Merger consists of three office
properties comprising approximately 1.6 million square feet located in New York
City, one office property located on Long Island and certain office properties
and other real estate assets located outside the Tri-State Area.
Prior to the closing of the Merger, the Company arranged for the sale of
four of Tower's Class B New York City properties, comprising approximately
701,000 square feet for approximately $84.5 million. Subsequent to the closing
of the Merger, the Company has sold a real estate joint venture interest and all
of the property located outside the Tri-State Area other than one office
property located in Orlando, Florida for approximately $171.1 million. The
combined consideration consisted of approximately $143.8 million in cash and
approximately $27.3 million of debt relief. Net cash proceeds from the sales
were used primarily to repay borrowings under the Credit Facility. As a result
of incurring certain sales and closing costs in connection with the sale of the
assets located outside the Tri-State Area, the Company has incurred a loss of
approximately $4.4 million which has been included in gain on sales of real
estate on the accompanying consolidated statements of income.
"Big Box" Industrial Investment Activity
On January 6, 1998, the Company made an initial investment in the Morris
Companies, a New Jersey developer and owner of "Big Box" warehouse facilities.
In connection with the transaction the Morris Companies contributed 100% of
their interests in certain industrial properties to RMI in exchange for
operating partnership units in RMI.
During 1999, the Company purchased approximately 68.1 acres of vacant land
in Northern New Jersey for approximately $2.6 million. In addition, RMI
purchased 74.6 acres of vacant land for approximately $3.7 million and a 846,000
square foot industrial property located in Cranbury, New Jersey for
approximately $34 million. These assets were sold to KTR and the Matrix
Development Group ("Matrix") as discussed below.
On August 9, 1999, the Company executed a contract for the sale, which will
take place in three stages, of its interest in RMI which consisted of 28
properties, comprising approximately 6.1 million square feet and three other big
box industrial properties to KTR. In addition, the Company also entered into a
sale agreement with Matrix relating to a first mortgage note and certain
industrial land holdings (the "Matrix Sale"). The combined total sale price is
$310 million (approximately $42 million of which is payable to the Morris
Companies and its affiliates) and consists of a combination of (i) cash, (ii)
convertible preferred and common stock of KTR, (iii) preferred units of KTR's
operating partnership, (iv) relief of debt and (v) a purchase money mortgage
note secured by certain land that is being sold to Matrix.
During September 1999, the Matrix Sale and the first stage of the RMI
closing occurred whereby the Company sold its interest in RMI to KTR for a
combined sales price of approximately $164.7 million (net of minority partner's
interest). The combined consideration consisted of approximately (i) $86.3
million in cash, (ii) $40 million of preferred stock of KTR, (iii) $1.5 million
in common stock of KTR, (iv) approximately $26.7 million of debt relief and (v)
approximately $10.2 million in purchase money mortgages. As a result, the
Company incurred a gain of approximately $10.1 million which has been included
in gain on sales of real estate on the accompanying consolidated statements of
income. In
IV-17
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)
addition, the $41.5 million of common and preferred stock of KTR has been
included in prepaid expenses and other assets on the accompanying consolidated
balance sheet. Cash proceeds from the sales were used primarily to repay
borrowings under the Credit Facility.
The second and third stages of the RMI closing are scheduled to be
completed in April 2000. The remaining stages consist of six industrial
buildings and are being sold for total consideration of approximately $98
million .
Other Real Estate Investment Activity
During 1998, the Company acquired three office properties encompassing
approximately 674,000 square feet, two industrial properties encompassing
approximately 200,000 square feet and approximately 79.9 acres of vacant land
which allows for approximately 816,000 square feet of future development
opportunities on Long Island for an aggregate purchase price of approximately
$82.8 million.
During 1998, the Company acquired four office properties encompassing
approximately 522,000 square feet, six industrial properties encompassing
approximately 985,000 square feet and approximately 112.2 acres of vacant land
which allows for approximately 815,000 square feet of future development
opportunities in New Jersey for an aggregate purchase price of approximately
$138.1 million.
During 1998, the Company acquired Stamford Towers located in Stamford,
Connecticut for approximately $61.3 million. Stamford Towers is a Class A office
complex consisting of two eleven story towers totaling approximately 325,000
square feet.
During 1998, the Company acquired a portfolio of six office properties
encompassing approximately 980,000 square feet in Westchester County, New York
from Cappelli Enterprises and affiliated entities ("Cappelli") for a purchase
price of approximately $173 million. The Cappelli acquisition includes a five
building, 850,000 square foot Class A office park located in Valhalla, New York
and Court House Square, a 130,000 square foot Class A office building located in
White Plains, New York. The Company also obtained from Cappelli the remaining
50% interest in 360 Hamilton Avenue, a 365,000 square foot vacant office tower
in downtown White Plains for $10 million plus the return of his capital
contributions of approximately $1.5 million. In addition, the Company received
an option from Cappelli to acquire the remaining development parcels within the
Valhalla office park on which up to 875,000 square feet of office space can be
developed. These acquisitions were financed in part through proceeds from a draw
under the Credit Facility, the issuance of 42,518 (approximately $42.5 million)
preferred operating partnership units (the "Cappelli Preferred Units"), and the
assumption of approximately $47.1 million of mortgage debt. Additionally, as of
December 31, 1999, the Company issued and advanced to Cappelli $36.5 million
under three liquidity loans (the "Cappelli Liquidity Loans"). The Cappelli
Liquidity Loans bear interest at rates ranging from 10% to 10.5% per annum and
are secured by Cappelli's right, title and interest in the Cappelli Preferred
Units. Such amounts have been included in investments in mortgage notes and
notes receivable on the accompanying balance sheets.
On April 13, 1999, the Company received approximately $25.8 million from
the repayment of a mortgage note receivable which had been acquired at a
discount and secured three office properties located in Garden City, Long
Island, encompassing approximately 400,000 square feet. As a result, the Company
recognized a gain of approximately $4.3 million. Such gain has been included in
gain on sales of real estate on the accompanying consolidated statements of
income.
On June 7, 1999 the Company sold a 24,000 square foot office property
located in Ossining, New York for approximately $1.5 million. As partial
consideration for the sale, the Company obtained a $1.2 million, three year
purchase money mortgage.
IV-18
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
6. COMMERCIAL REAL ESTATE INVESTMENTS - (CONTINUED)
On June 15, 1999, the Company acquired the first mortgage note secured by a
47 story, 1.4 million square foot Class A office property located at 919 Third
Avenue in New York City for approximately $277.5 million. The first mortgage
note entitles the Company to all the net cash flow of the property and to
substantial rights regarding the operations of the property, with the Company
anticipating to ultimately obtain title to the property. This acquisition was
financed with proceeds from the issuance of six million shares of Series B
Convertible Cumulative Preferred Stock (see note 7) and through an advance under
the Credit Facility. Current financial accounting guidelines provide that where
a lender has virtually the same risks and potential rewards as those of a real
estate owner it should recognize the full economic effect associated with the
operations of the property. As such, the Company has included the real estate
operations of 919 Third Avenue in the accompanying consolidated statements of
income from the date of acquisition.
In addition, as of December 31, 1999, the Company has invested
approximately $15.7 million in certain mortgage indebtedness encumbering one
Class A office property encompassing approximately 177,000 square feet and
approximately 472 acres of land located in New Jersey. The Company has also
loaned approximately $17 million to its minority partner in Omni, its 575,000
square foot flagship Long Island office property, and effectively increased its
economic interest in the property owning partnership.
7. STOCKHOLDERS' EQUITY
A Unit and a share of common stock have essentially the same economic
characteristics as they effectively share equally in the net income or loss and
distributions of the Operating Partnership. Subject to certain holding periods
Units may either be redeemed for cash or, at the election of the Company, for
shares of common stock on a one-for-one basis.
On February 18, 1998, the Company sold 791,152 shares of the Company's
common stock at $25.44 per share for an aggregate consideration of approximately
$20.1 million before deducting offering expenses.
During April 1998, the Company completed a preferred stock offering and
sold 9,200,000 shares (including 1,200,000 shares related to the exercise of the
underwriters over allotment option) of 7.625% Series A Convertible Cumulative
Preferred Stock (the "Series A Preferred Stock") at a price of $25.00 per share
for an aggregate consideration of $230 million before deducting offering
expenses. The Series A Preferred Stock is convertible to the Company's common
stock at a conversion rate of .8769 shares of common stock for each share of
Series A Preferred Stock. As of December 31, 1999, 8,000 shares of the Series A
Preferred Stock were converted into the Company's common stock.
On April 29, 1998, the Company completed a common stock offering and sold
1,093,744 common shares at a price of $24.38 per share for an aggregate
consideration of approximately $26.7 million before deducting offering expenses.
On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company issued 11,694,567 shares of Class B Common Stock which were valued for
GAAP purposes at $26 per share for total consideration of approximately $304.1
million. The shares of Class B Common Stock are entitled to receive an initial
annual dividend of $2.24 per share, which dividend is subject to adjustment
annually. The shares of Class B Common Stock are exchangeable at any time, at
the option of the holder, into an equal number of shares of common stock, par
value $.01 per share, of the Company subject to customary antidilution
adjustments. The Company, at its option, may redeem any or all of the Class B
Common Stock in exchange for an equal number of shares of the Company's common
stock at any time following the four year, six-month anniversary of the issuance
of the Class B Common Stock.
On June 2, 1999, the Company issued six million shares of Series B
Convertible Cumulative Preferred Stock (the "Series B Preferred Stock") for
aggregate proceeds of $150 million. The Series B Preferred Stock is redeemable
by the Company on or after March 2, 2002 and is convertible into the
IV-19
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
7. STOCKHOLDERS' EQUITY - (CONTINUED)
Company's common stock at a price of $26.05 per share. The Series B Preferred
Stock accumulates dividends at an initial rate of 7.85% per annum with such rate
increasing to 8.35% per annum on April 30, 2000 and to 8.85% per annum from and
after April 30, 2001. Proceeds from the Series B Preferred Stock offering were
used as partial consideration in the acquisition of the first mortgage note
secured by 919 Third Avenue located in New York City.
The Board of Directors of the Company has authorized the purchase of up to
three million shares of the Company's Class B Common Stock and has also
authorized the purchase of up to an additional three million shares of the
Company's Class B Common Stock and/or its common stock. The buy-back program
will be effected in accordance with the safe harbor provisions of the Securities
Exchange Act of 1934 and may be terminated by the Company at any time. As of
December 31, 1999, the Company purchased and retired 1,410,804 shares of its
Class B Common Stock for approximately $30.3 million.
The Company has made loans to certain executive officers to purchase
545,393 shares of common stock at market prices ranging from $20.56 per share to
$27.13 per share. The loans bear interest at the mid-term Applicable Federal
Rate and are secured by the shares purchased. Such loans including accrued
interest will be forgiven each year on the annual anniversary of the grant date
based upon amortization periods ranging from four to ten years. In addition, the
loans which are secured by 310,834 shares of common stock are due with a balloon
payment on the fifth anniversary of the grant date and loans which are secured
by 47,059 and 187,500 shares of common stock are forgiven over terms of four and
seven years, respectively. As of December 31, 1999, the loan balances aggregated
approximately $11.1 million and have been included as a reduction of additional
paid in capital on the accompanying consolidated statement of stockholders'
equity.
The Company has established the 1995, 1996, 1997 and 1998 Employee Stock
Option Plans (the "Plans") for the purpose of attracting and retaining executive
officers, directors and other key employees. As of December 31, 1999, 1,500,000,
400,000, 3,000,000 and 3,000,000 of the Company's authorized shares have been
reserved for issuance under the 1995, 1996, 1997 and 1998 plans, respectively.
The following table sets forth the options granted under the Plans and
their corresponding exercise price range per share:
EXERCISE PRICE RANGE
----------------------
OPTIONS
GRANTED(1) FROM (1) TO(1)
------------ ---------- -----------
1995 Employee Stock Option Plan 1,495,538 $ 12.04 $ 25.56
1996 Employee Stock Option Plan 182,350 $ 19.67 $ 26.13
1997 Employee Stock Option Plan 2,485,965 $ 22.67 $ 27.04
1998 Employee Stock Option Plan 1,494,001 $ 18.19 $ 25.67
---------
Total .......................... 5,657,854
=========
- ----------
(1) Exercise prices have been split adjusted, where applicable.
Options granted to new employees vest in three equal installments on the
first, second and third anniversaries of the date of the grant. Options granted
to existing employees are generally exercisable on the date of the grant.
The independent directors of the Company have been granted options to
purchase 129,000 shares pursuant to the 1995 Employee Stock Option Plan at
exercise prices ranging from $12.04 to $25.56 per share and options to purchase
3,000 shares pursuant to the 1997 Employee Stock Option Plan at an exercise
price of $25.23 per share. The options granted to the independent directors were
exercisable on the date of the grant.
IV-20
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
7. STOCKHOLDERS' EQUITY - (CONTINUED)
During 1999 and 1998, employees exercised 88,308 and 74,837 options,
respectively resulting in proceeds to the Company of approximately $1.2 million
and $1.1 million, respectively.
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
Statement 123. The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1999, 1998 and 1997, respectively: risk-free
interest rate of 5%; dividend yields of 7.25 %, 6.19% and 5.59%; volatility
factors of the expected market price of the Company's common stock of .197 and a
weighted-average expected life of the option of five years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period.
The following table sets forth the Company's pro forma information for the
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Pro forma net income (in thousands) ........... $ 46,744 $ 32,846 $ 34,287
======== ======== ========
Basic pro forma earnings per share ............ $ 1.16 $ .83 $ 1.05
======== ======== ========
Diluted pro forma earnings per share .......... $ 1.15 $ .82 $ 1.03
======== ======== ========
</TABLE>
The following table summarizes the Company's stock option activity and
related information:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE(1)
------------- ------------------
<S> <C> <C>
Outstanding -- January 1, 1997 ........... 1,421,214 $ 14.28
Granted .................................. 1,123,300 $ 26.67
Exercised ................................ (126,429) $ 14.94
Forfeited ................................ (10,319) $ 16.33
---------
Outstanding -- December 31, 1997 ......... 2,407,766 $ 20.16
Granted .................................. 2,431,132 $ 24.03
Exercised ................................ (74,837) $ 14.76
Forfeited ................................ (30,417) $ 25.44
---------
Outstanding -- December 31, 1998 ......... 4,733,644 $ 22.22
Granted .................................. 619,217 $ 20.82
Exercised ................................ (88,308) $ 13.99
Forfeited ................................ (90,632) $ 23.44
---------
Outstanding -- December 31, 1999 ......... 5,173,921 $ 22.17
=========
</TABLE>
- ----------
(1) Exercise prices have been split adjusted, where applicable.
IV-21
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
7. STOCKHOLDERS' EQUITY - (CONTINUED)
The weighted average fair value of options granted for the years ended
December 31, 1997, 1998 and 1999 was $1.47, $2.06 and $2.10, respectively. In
addition, there were 1,758,534 options at a weighted average per share exercise
price of $20.16, 4,527,144 options at a weighted average per share exercise
price of $22.22 and 5,137,588 options at a weighted average per share exercise
price of $22.17 exercisable at December 31, 1997, 1998 and 1999, respectively.
Exercise prices for options outstanding as of December 31, 1999 ranged from
$12.04 per share to $27.04 per share. The weighted-average remaining contractual
life of those options is approximately 7.74 years.
The following table sets forth the Company's reconciliation of numerators
and denominators of the basic and diluted earnings per weighted average common
share and the computation of basic and diluted earnings per share for the
Company's common stock as required by Statement 128 for the years ended December
31, (in thousands except for earnings per share data):
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ----------
<S> <C> <C> <C>
Numerator:
Income before extraordinary loss, dividends to
preferred shareholders and income allocated to
Class B shareholders ............................ $ 85,192 $ 52,056 $ 36,866
Dividends to preferred shareholders .............. (24,360) (12,491) --
Extraordinary loss (net of share applicable to
limited partners and Class B Common
shareholders) ................................... (389) (1,670) (2,230)
Income allocated to Class B shareholders ......... (12,914) -- --
--------- --------- --------
Numerator for basic and diluted earnings per
share ........................................... $ 47,529 $ 37,895 $ 34,636
========= ========= ========
Denominator:
Denominator for basic earnings per share-
weighted-average common shares .................. 40,270 39,473 32,727
Effect of dilutive securities:
Employee stock options .......................... 406 537 533
--------- --------- --------
Denominator for diluted earnings per common
share adjusted weighted-average shares and
assumed conversions ............................. 40,676 40,010 33,260
========= ========= ========
Basic earnings per common share:
Income before extraordinary loss ................ $ 1.19 $ 1.00 $ 1.13
Extraordinary loss .............................. ( .01) ( .04) ( .07)
--------- --------- --------
Net income per common share ..................... $ 1.18 $ .96 $ 1.06
========= ========= ========
Diluted earnings per common share:
Income before extraordinary loss ................ $ 1.18 $ .99 $ 1.11
Extraordinary loss .............................. ( .01) ( .04) ( .07)
--------- --------- --------
Diluted net income per common share ............. $ 1.17 $ .95 $ 1.04
========= ========= ========
</TABLE>
IV-22
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
7. STOCKHOLDERS' EQUITY - (CONTINUED)
The following table sets forth the Company's reconciliation of numerators
and denominators of the basic and diluted earnings per weighted average Class B
common share and the computation of basic and diluted earnings per share for the
Company's Class B Common Stock as required by Statement 128. (in thousands
except for earnings per share data):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
Numerator:
Income before extraordinary loss, dividends to preferred
shareholders and income allocated to common shareholders . $ 85,192
Dividends to preferred shareholders .............................. (24,360)
Extraordinary loss (net of share applicable to limited partners
and common shareholders) ....................................... (166)
Income allocated to common shareholders .......................... (47,918)
---------
Numerator for basic earnings per share ........................... 12,748
Add back:
Income allocated to common shareholders .......................... 47,529
Limited partners' interest in the operating partnership .......... 9,407
---------
Numerator for diluted earnings per share .......................... $ 69,684
=========
Denominator:
Denominator for basic earnings per share- weighted-average
Class B common shares .......................................... 6,744
Effect of dilutive securities:
Weighted average common shares outstanding ....................... 40,270
Weighted average limited partnership Units outstanding ........... 7,705
Employee stock options ........................................... 406
---------
Denominator for diluted earnings per Class B common
share-adjusted weighted average shares and assumed
conversions ...................................................... 55,125
=========
Basic earnings per Class B common share:
Income before extraordinary loss ................................. $ 1.91
Extraordinary loss ............................................... ( .02)
---------
Net income per Class B common share .............................. $ 1.89
=========
Diluted earnings per Class B common share:
Income before extraordinary loss ................................. $ 1.26
Extraordinary loss ............................................... (--)
Diluted net income per Class B common share ...................... $ 1.26
=========
</TABLE>
The Company's computation for purposes of calculating the diluted weighted
average Class B common shares outstanding is based on the assumption that the
Class B Common Stock is converted to the Company's common stock.
IV-23
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
8. RELATED PARTY TRANSACTIONS
The Company, through its subsidiaries and affiliates, provides management,
leasing and other tenant related services to the Properties. Certain executive
officers of the Company have continuing ownership interests in the
unconsolidated service companies.
In connection with the IPO, the Company was granted a ten year option
period to acquire ten properties which are either owned by the Reckson Group,
the predecessor to the Company, or in which the Reckson Group owns a
non-controlling minority interest. During 1998, one of these properties was sold
by the Reckson Group to a third party. In addition, as of December 31, 1999, the
Company has acquired four of these properties for a aggregate purchase price of
approximately $35 million, which included the issuance of approximately 475,000
Units valued at approximately $8.8 million.
The Operating Partnership and FrontLine have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their relationship
and to limit conflicts of interest. Under the Reckson Intercompany Agreement,
FrontLine granted the Operating Partnership a right of first opportunity to make
any REIT -qualified investment that becomes available to FrontLine. In addition,
if a REIT-qualified investment opportunity becomes available to an affiliate of
FrontLine, including RSVP, the Reckson Intercompany Agreement requires such
affiliate to allow the Operating Partnership to participate in such opportunity
to the extent of FrontLine's interest.
Under the Reckson Intercompany Agreement, the Operating Partnership granted
FrontLine a right of first opportunity to provide commercial services to the
Operating Partnership and its tenants. FrontLine will provide services to the
Operating Partnership at rates and on terms as attractive as either the best
available for comparable services in the market or those offered by FrontLine to
third parties. In addition, the Operating Partnership will give FrontLine access
to its tenants with respect to commercial services that may be provided to such
tenants and, under the Reckson Intercompany Agreement, subject to certain
conditions, the Operating Partnership granted FrontLine a right of first refusal
to become the lessee of any real property acquired by the Operating Partnership
if the Operating Partnership determines that, consistent with the Company's
status as a REIT, it is required to enter into a "master" lease agreement.
On August 27, 1998 the Company announced the formation of a joint venture
with RSVP and the Dominion Group, an Oklahoma-based, privately-owned group of
companies that focuses on the development, acquisition and ownership of
government occupied office buildings and correctional facilities. The new
venture, Dominion Properties LLC (the "Dominion Venture"), is owned by Dominion
Venture Group LLC, and by a subsidiary of the Company. The Dominion Venture is
primarily engaged in acquiring, developing and/or owning government-occupied
office buildings and privately operated correctional facilities. Under the
Dominion Venture's operating agreement, RSVP is to invest up to $100 million,
some of which may be invested by the Company ( the "RSVP Capital"). The initial
contribution of RSVP Capital was approximately $39 million of which
approximately $10.1 million was invested by a subsidiary of the Company. The
Company's investment was funded through the RSVP Commitment. In addition, the
Company advanced approximately $2.9 million to FrontLine through the RSVP
Commitment for an investment in RSVP which was then invested on a joint venture
basis with the Dominion Group in certain service business activities related to
the real estate activities. As of December 31, 1999, the Company had invested
approximately $17.6 million in the Dominion Venture which had investments in 13
government office buildings and three correctional facilities.
During 1998, the Company made investments in and advances to RMG of
approximately $29.5 million. Such investments and advances were used by RMG in
connection with RMG's acquisition of an approximate 64% ownership interest in an
executive office suite business. Concurrently with RMG's investment, FrontLine
received an option to purchase RMG's interest at cost plus 8%. RMG is owned 97%
by the Company and 3% by an entity owned by certain officers of the Company. On
November 9,
IV-24
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
8. RELATED PARTY TRANSACTIONS - (CONTINUED)
1998, FrontLine exercised its option and, as a result, RMG earned income during
the period of ownership of approximately $707,000. In addition, FrontLine
assumed the outstanding debt plus accrued interest owing to the Company.
During July 1999, the Company sold its interest in a 852,000 square foot
development property to RCG in exchange for a $12.3 million note. The note
accrues interest annually at the rate of 12%, has a five year maturity and is
prepayable in whole or in part. During October 1999, RCG made a payment to the
Company, in the form of 97 shares of its preferred stock, valued at
approximately $4.0 million, towards accrued interest and principal due under the
note.
In 1999 the Company invested approximately $7.2 million, through a
subsidiary, in RAP Student Housing Properties, LLC ("RAP - SHP"), a company that
engages primarily in the acquisition and development of off-campus student
housing projects. The Company's investment was funded through the RSVP
Commitment. In addition, the Company has advanced approximately $3.2 million to
FrontLine through the RSVP Commitment for an additional investment in RSVP which
was invested in certain service business activities related to student housing.
As of December 31, 1999, RAP - SHP had investments in 4 off -- campus student
housing projects.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, "Disclosures About Fair Value of
Financial Instruments", management has made the following disclosures of
estimated fair value at December 31, 1999 as required by FASB Statement No. 107.
Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.
The fair value of the Company's long term debt, mortgage notes and notes
receivable is estimated based on discounting future cash flows at interest rates
that management believes reflects the risks associated with long term debt,
mortgage notes and notes receivable of similar risk and duration. In addition,
management believes that the estimated aggregate fair value of these assets and
liabilities approximates their carrying values.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
10. RENTAL INCOME
The Properties are being leased to tenants under operating leases. The
minimum rental amount due under certain leases are generally either subject to
scheduled fixed increases or indexed escalations. In addition, the leases
generally also require that the tenants reimburse the Company for increases in
certain operating costs and real estate taxes above base year costs.
Included in base rents and tenant escalations and reimbursements in the
accompanying statements of income are amounts from Reckson Executive Centers,
LLC, a service business of the Company through March 31, 1998 and, a related
party as follows (in thousands):
<TABLE>
<CAPTION>
TENANT
ESCALATIONS AND
FOR THE PERIODS BASE RENTS REIMBURSEMENTS
- ------------------------------------------------- ------------ ----------------
<S> <C> <C>
January 1 through March 31, 1998 ......... $ 597 $149
Year ended December 31, 1997 ............. $2,154 $441
</TABLE>
IV-25
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
10. RENTAL INCOME - (CONTINUED)
Expected future minimum rents to be received over the next five years and
thereafter from leases in effect at December 31, 1999 are as follows (in
thousands):
2000 ......................... $ 312,654
2001 ......................... 295,862
2002 ......................... 293,714
2003 ......................... 257,655
2004 ......................... 230,477
Thereafter ................... 1,286,533
----------
$2,676,895
==========
11. SEGMENT DISCLOSURE
The Company's portfolio consists of Class A office properties located
within the New York City metropolitan area and Class A suburban office and
industrial properties located and operated within the Tri-State Area (the "Core
Portfolio"). In addition, the Company's portfolio also includes one office
property located in Orlando, Florida and for the period commencing January 6,
1998 and ending September 26, 1999, industrial properties which were owned by
RMI. The Company has managing directors who report directly to the Chief
Operating Officer and Chief Financial Officer who have been identified as the
Chief Operating Decision Makers because of their final authority over resource
allocation, decisions and performance assessment.
In addition, as the Company expects to meet its short term liquidity
requirements in part through the Credit Facility and Term Loan, interest
incurred on borrowings under the Credit Facility and Term Loan is not considered
as part of property operating performance. Further, the Company does not
consider the property operating performance of the office property located in
Orlando, Florida as a part of its Core Portfolio.
The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies.
The following tables set forth the components of the Company's revenues and
expenses and other related disclosures, as required by Statement 131, for the
years ended December 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------
DECEMBER 31, 1999
-----------------------------------------------------
CORE CONSOLIDATED
PORTFOLIO RMI OTHER TOTALS
------------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Base rents, tenant escalations
and reimbursements ........... $ 340,293 $15,394 $ 13,448 $ 369,135
Equity in earnings of real
estate joint ventures and
service companies ............ --- --- 2,148 2,148
Other income .................. 448 9 31,413 31,870
Total Revenues ................ 340,741 15,403 47,009 403,153
EXPENSES:
Property expenses ............. 119,270 2,406 4,318 125,994
Marketing, general and
administrative ............... 16,981 548 6,764 24,293
Interest ...................... 25,167 445 48,708 74,320
Depreciation and amortization 64,097 3,663 6,744 74,504
---------- ------- --------- ----------
Total Expenses ................ 225,515 7,062 66,534 299,111
---------- ------- --------- ----------
Income before preferred
dividends and distributions,
minority interests and
extraordinary loss ........... $ 115,226 $ 8,341 $ (19,525) $ 104,042
========== ======= ========= ==========
Total assets .................. $2,142,696 $ 0 $ 581,539 $2,724,235
========== ======= ========= ==========
<CAPTION>
YEAR ENDED
----------------------------------------------------
DECEMBER 31, 1998
----------------------------------------------------
CORE CONSOLIDATED
PORTFOLIO RMI OTHER TOTALS
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Base rents, tenant escalations
and reimbursements ........... $ 237,105 $ 15,137 $ 205 $ 252,447
Equity in earnings of real
estate joint ventures and
service companies ............ --- --- 1,836 1,836
Other income .................. 460 --- 11,630 12,090
Total Revenues ................ 237,565 15,137 13,671 266,373
EXPENSES:
Property expenses ............. 80,489 2,587 1,204 84,280
Marketing, general and
administrative ............... 11,699 456 4,705 16,860
Interest ...................... 16,651 1,101 30,043 47,795
Depreciation and amortization 43,701 3,491 5,765 52,957
---------- -------- --------- ----------
Total Expenses ................ 152,540 7,635 41,717 201,892
---------- -------- --------- ----------
Income before preferred
dividends and distributions,
minority interests and
extraordinary loss ........... $ 85,025 $ 7,502 $ (28,046) $ 64,481
========== ======== ========= ==========
Total assets .................. $1,424,472 $156,430 $ 273,914 $1,854,816
========== ======== ========= ==========
</TABLE>
IV-26
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
12. NON-CASH INVESTING AND FINANCING ACTIVITIES
Additional supplemental disclosures of non-cash investing and financing
activities are as follows:
During 1998, the Company issued 584,062 Units in connection with the
acquisition of three office and two industrial properties encompassing
approximately 580,000 square feet for a total non cash investment of
approximately $13.7 million. In addition, in connection with the acquisitions of
the Cappelli portfolio and 360 Hamilton Avenue located in White Plains, New
York, the Company assumed approximately $47.1 million of indebtedness and issued
42,518 preferred units with a stated value of approximately $42.5 million for a
total non cash investment of approximately $89.6 million.
On June 11, 1998, the Operating Partnership distributed its 95% common
stock interest in FrontLine of approximately $3 million to its owners, including
the Company which, in turn, distributed the common stock of FrontLine to its
shareholders.
During 1998, in connection with the Company's investment in the Morris
Companies, the Company assumed approximately $23 million of indebtedness ($16.9
million net of minority partners interest). In addition, the Morris Companies
contributed net assets of approximately $36 million to the Company in exchange
for an approximate 28.2% minority partners interest in RMI.
On May 24, 1999, in conjunction with the Tower portfolio acquisition, the
Company issued 11,694,567 shares of Class B Common Stock which were valued for
GAAP purposes at approximately $304.1 million and assumed approximately $133.4
million of indebtedness for a total non cash investment of approximately $437.5
million.
During June 1999, in connection with the sale of an office property, the
Company obtained a $1.2 million purchase money mortgage as partial consideration
for the sale.
During July 1999, the Company sold its interest in a 852,000 square foot
development property to RCG in exchange for a $12.3 million note. During October
1999, the Company accepted 97 shares of preferred stock of RCG as payment of
$4.0 million of principal and interest due under the note.
During September 1999, in connection with the Matrix Sale and the first
stage closing of RMI, the Company received as partial consideration for the sale
$41.5 million of common and preferred stock of KTR and approximately $10.2
million in purchase money mortgages from Matrix. In addition, the Company was
also relieved of approximately $26.7 million of secured indebtedness.
During November 1999, the Company received approximately $3.6 million of
common stock of FrontLine as consideration for amending the FrontLine Facility
and the RSVP Commitment.
13. COMMITMENTS AND OTHER COMMENTS
The Company has entered into employment agreements with its chairman and
five executive officers. The agreements are for five years and expire on May 31,
2003.
The Company sponsors a defined contribution savings plan pursuant to
section 401(k) of the Internal Revenue Code. Under such plan, there are no prior
service costs. Employees are generally eligible to participate in the plan after
six months of service. Employer contributions are based on a discretionary
amount determined by the Company's management. During 1999 and 1998 the Company
made no contributions.
The Company had outstanding undrawn letters of credit against its Credit
Facility of approximately $52.3 million and $26.1 million at December 31, 1999
and 1998, respectively.
IV-27
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following summary represents the Company's results of operations for
each quarter during 1999 and 1998 (in thousands, except share amounts):
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues ................................ $ 76,108 $ 91,239 $ 125,345 $ 110,461
=========== =========== =========== ===========
Income before preferred dividends and
distributions, minority interests and
extraordinary loss ........................... $ 19,774 $ 20,626 $ 35,220 $ 28,422
Preferred dividends and distributions ......... (5,041) (5,989) (7,985) (7,986)
Minority interests ............................ (3,409) (3,442) (5,164) (4,194)
Extraordinary loss ............................ -- -- (555) --
----------- ----------- ----------- -----------
Net income available to common
shareholders ................................. $ 11,324 $ 11,195 $ 21,516 $ 16,242
=========== =========== =========== ===========
Net Income available to:
Common shareholders .......................... $ 11,324 $ 9,464 $ 15,066 $ 11,675
Class B common shareholders .................. -- 1,731 6,450 4,567
----------- ----------- ----------- -----------
Total ......................................... $ 11,324 $ 11,195 $ 21,516 $ 16,242
=========== =========== =========== ===========
Basic net income per weighted average common
share before extraordinary loss:
Common shareholders .......................... $ .28 $ .23 $ .38 $ .29
Extraordinary loss per common share . -- -- (.01) --
----------- ----------- ----------- -----------
Basic net income per weighted average
common share ............................... $ .28 $ .23 $ .37 $ .29
=========== =========== =========== ===========
Class B common shareholders .................. $ -- $ .35 $ .57 $ .44
Extraordinary loss per Class B
common share ............................... -- -- (.01) --
----------- ----------- ----------- -----------
Basic net income per weighted average
Class B common share ....................... $ -- $ .35 $ .56 $ .44
=========== =========== =========== ===========
Weighted average common shares outstanding:
Common shareholders .......................... 40,049,079 40,284,511 40,367,161 40,374,658
Class B common shareholders .................. -- 4,883,446 11,456,931 10,468,600
Diluted net income per weighted average common
share:
Common shareholders .......................... $ .28 $ .23 $ .37 $ .29
Class B common shareholders .................. $ -- $ .24 $ .41 $ .32
Diluted weighted average common shares outstanding:
Common shareholders .......................... 40,450,296 40,704,147 40,796,597 40,747,826
Class B common shareholders .................. -- 4,883,446 11,456,931 10,468,600
</TABLE>
IV-28
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED) - (CONTINUED)
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues ................................ $ 55,063 $ 66,319 $ 71,600 $ 73,391
=========== =========== =========== ===========
Income before preferred dividends and
distributions, minority interests and
extraordinary loss ........................... $ 12,097 $ 17,524 $ 17,143 $ 17,717
Preferred dividends and distributions ......... -- (4,168) (5,034) (5,042)
Minority interests ............................ (2,524) (3,445) (1,874) (2,829)
Extraordinary loss ............................ -- -- (1,670) --
----------- ----------- ----------- -----------
Net income available to common
shareholders ................................. $ 9,573 $ 9,911 $ 8,565 $ 9,846
=========== =========== =========== ===========
Basic net income per weighted average common
share:
Income before extraordinary loss ............. $ .25 $ .25 $ .25 $ .25
Extraordinary loss ........................... -- -- (.04) --
----------- ----------- ----------- -----------
Net income per weighted average
common share ............................... $ .25 $ .25 $ .21 $ .25
=========== =========== =========== ===========
Weighted average common shares
outstanding .................................. 38,182,577 39,636,815 40,011,627 40,034,781
=========== =========== =========== ===========
Diluted net income per common share:
Income before extraordinary loss ............. $ .25 $ .25 $ .25 $ .24
Extraordinary loss ........................... -- -- (.04) --
----------- ----------- ----------- -----------
Diluted net income per weighted
average common share ....................... $ .25 $ .25 $ .21 $ .24
=========== =========== =========== ===========
Diluted weighted average common
shares outstanding ......................... 38,767,454 40,178,083 40,533,540 40,533,023
=========== =========== =========== ===========
</TABLE>
15. PRO FORMA RESULTS (UNAUDITED)
The following unaudited pro forma operating results of the Company for the
year ended December 31, 1999 have been prepared as if the property acquisitions
made during 1999 had occurred on January 1, 1999. Unaudited pro forma financial
information is presented for informational purposes only and may not be
indicative of what the actual results of operations of the Company would have
been had the events occurred as of January 1, 1999, nor does it purport to
represent the results of operations for future periods (in thousands except per
share data):
<TABLE>
<S> <C>
Total Revenues .............................................. $ 455,663
=========
Income before preferred dividends and distributions, minority
interests and extraordinary loss ........................... $ 118,319
=========
Net Income available to common shareholders ................. $ 54,712
=========
Net Income per common share ................................. $ 1.36
=========
Net income available to Class B common shareholders ......... $ 14,675
=========
Net Income per Class B common share ......................... $ 2.18
=========
</TABLE>
16. SUBSEQUENT EVENT
On January 13, 2000, the Company acquired 1350 Avenue of the Americas, a
540,000 square foot, 35 story, Class A office property, located in New York
City, for a purchase price of approximately $126.5 million. This acquisition was
financed through a $70 million secured debt financing and a draw under the
Credit Facility.
IV-29
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- ------------------------------------------------------ ---------------- ------------------------- ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------- ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------------------ ---------------- --------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ B $1,940 $ 9,955 -- 10,082
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 2,616 (C) 1,263 13,608 -- 10,895
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ B 628 3,686 -- 2,693
32 Windsor Place, Islip, New York .................... B 32 321 -- 46
42 Windsor Place, Islip, New York .................... B 48 327 -- 548
505 Walt Whitman Rd., Huntington, New York ........... B 140 42 -- 59
1170 Northern Blvd., N. Great Neck, New York ......... B 30 99 -- 34
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 15,479 A 12,089 -- 5,286
200 Broadhollow Road, Melville, New York ............. 6,560 338 3,354 -- 3,057
48 South Service Road, Melville, New York ............ B 1,652 10,245 -- 4,733
395 North Service Road, Melville, New York ........... 20,933 A 15,551 -- 6,852
6800 Jericho Turnpike, Syosset, New York ............. 15,001 582 6,566 -- 8,126
6900 Jericho Turnpike, Syosset, New York ............. 5,279 385 4,228 -- 3,359
300 Motor Parkway, Hauppauge, New York ............... B 276 1,136 -- 1,510
88 Duryea Road, Melville, New York ................... B 200 1,565 -- 690
210 Blydenburgh Road, Islandia, New York ............. B 11 158 -- 156
208 Blydenburgh Road, Islandia, New York ............. B 12 192 -- 147
71 Hoffman Lane, Islandia, New York .................. B 19 260 -- 172
933 Motor Parkway, Hauppauge, New York ............... B 106 375 -- 356
65 and 85 South Service Road Plainview, New York ..... B 40 218 -- 17
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 56,367 A 67,221 -- 18,521
135 Fell Court Islip, New York ....................... B 462 1,265 -- 52
40 Cragwood Road, South Plainfield, New Jersey ....... B 725 7,131 -- 5,593
110 Marcus Drive, Huntington, New York ............... B 390 1,499 -- 107
333 East Shore Road, Great Neck, New York ............ B A 564 -- 200
310 East Shore Road, Great Neck, New York ............ 2,322 485 2,009 -- 1,458
70 Schmitt Blvd., Farmingdale, New York .............. B 727 3,408 -- 33
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
- ------------------------------------------------------ ---------------------------------- -------------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------
BUILDINGS AND ACCUMULATED DATE OF
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION
- ------------------------------------------------------ --------- --------------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ $1,940 20,037 21,977 13,495 1961-1979
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 1,263 24,503 25,766 14,637 1970-1988
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ 628 6,379 7,007 4,333 1975-1979
32 Windsor Place, Islip, New York .................... 32 367 399 336 1971
42 Windsor Place, Islip, New York .................... 48 875 923 717 1972
505 Walt Whitman Rd., Huntington, New York ........... 140 101 241 81 1950
1170 Northern Blvd., N. Great Neck, New York ......... 30 133 163 127 1947
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 0 17,375 17,375 9,110 1984
200 Broadhollow Road, Melville, New York ............. 338 6,411 6,749 3,774 1981
48 South Service Road, Melville, New York ............ 1,652 14,978 16,630 7,277 1986
395 North Service Road, Melville, New York ........... 0 22,403 22,403 11,094 1988
6800 Jericho Turnpike, Syosset, New York ............. 582 14,692 15,274 8,631 1977
6900 Jericho Turnpike, Syosset, New York ............. 385 7,587 7,972 3,699 1982
300 Motor Parkway, Hauppauge, New York ............... 276 2,646 2,922 1,381 1979
88 Duryea Road, Melville, New York ................... 200 2,255 2,455 1,261 1980
210 Blydenburgh Road, Islandia, New York ............. 11 314 325 297 1969
208 Blydenburgh Road, Islandia, New York ............. 12 339 351 337 1969
71 Hoffman Lane, Islandia, New York .................. 19 432 451 414 1970
933 Motor Parkway, Hauppauge, New York ............... 106 731 837 592 1973
65 and 85 South Service Road Plainview, New York ..... 40 235 275 224 1961
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 0 85,742 85,742 19,681 1990
135 Fell Court Islip, New York ....................... 462 1,317 1,779 330 1965
40 Cragwood Road, South Plainfield, New Jersey ....... 725 12,724 13,449 6,839 1970
110 Marcus Drive, Huntington, New York ............... 390 1,606 1,996 1,190 1980
333 East Shore Road, Great Neck, New York ............ 0 764 764 525 1976
310 East Shore Road, Great Neck, New York ............ 485 3,467 3,952 1,527 1981
70 Schmitt Blvd., Farmingdale, New York .............. 727 3,441 4,168 497 1965
<CAPTION>
COLUMN A COLUMN H COLUMN I
- ------------------------------------------------------ ------------ --------------
LIFE ON WHICH
DATE DEPRECIATION
DESCRIPTION ACQUIRED IS COMPUTED
- ------------------------------------------------------ ------------ --------------
<S> <C> <C>
Vanderbilt Industrial Park, Hauppauge, New York
(27 buildings in an industrial park) ................ 1961-1979 10-30 Years
Airport International Plaza, Islip, New York (17
buildings in an industrial park) .................... 1970-1988 10-30 Years
County Line Industrial Center, Huntington, New
York (3 buildings in an industrial park) ............ 1975-1979 10-30 Years
32 Windsor Place, Islip, New York .................... 1971 10-30 Years
42 Windsor Place, Islip, New York .................... 1972 10-30 Years
505 Walt Whitman Rd., Huntington, New York ........... 1968 10-30 Years
1170 Northern Blvd., N. Great Neck, New York ......... 1962 10-30 Years
50 Charles Lindbergh Blvd., Mitchel Field, New
York ................................................ 1984 10-30 Years
200 Broadhollow Road, Melville, New York ............. 1981 10-30 Years
48 South Service Road, Melville, New York ............ 1986 10-30 Years
395 North Service Road, Melville, New York ........... 1988 10-30 Years
6800 Jericho Turnpike, Syosset, New York ............. 1978 10-30 Years
6900 Jericho Turnpike, Syosset, New York ............. 1982 10-30 Years
300 Motor Parkway, Hauppauge, New York ............... 1979 10-30 Years
88 Duryea Road, Melville, New York ................... 1980 10-30 Years
210 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years
208 Blydenburgh Road, Islandia, New York ............. 1969 10-30 Years
71 Hoffman Lane, Islandia, New York .................. 1970 10-30 Years
933 Motor Parkway, Hauppauge, New York ............... 1973 10-30 Years
65 and 85 South Service Road Plainview, New York ..... 1961 10-30 Years
333 Earl Ovington Blvd., Mitchel Field, New York
(Omni) .............................................. 1995 10-30 Years
135 Fell Court Islip, New York ....................... 1992 10-30 Years
40 Cragwood Road, South Plainfield, New Jersey ....... 1983 10-30 Years
110 Marcus Drive, Huntington, New York ............... 1980 10-30 Years
333 East Shore Road, Great Neck, New York ............ 1976 10-30 Years
310 East Shore Road, Great Neck, New York ............ 1981 10-30 Years
70 Schmitt Blvd., Farmingdale, New York .............. 1995 10-30 Years
</TABLE>
Continued
IV-30
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- ------------------------------------------------------- ------------- ------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------------------- ------------- -------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
19 Nicholas Drive, Yaphank, New York .................. B 160 7,399 -- 4,731
1516 Motor Parkway, Hauppauge, New York ............... B 603 6,722 -- 127
125 Baylis Road, Melville, New York ................... B 1,601 8,626 -- 1,443
35 Pinelawn Road, Melville, New York .................. B 999 7,073 -- 2,067
520 Broadhollow Road, Melville, New York .............. B 457 5,572 -- 1,574
1660 Walt Whitman Road, Melville, New York ............ B 370 5,072 -- 350
70 Maxess Road, Melville, New York .................... B 367 1,859 95 2,879
85 Nicon Court, Hauppauge, New York ................... B 797 2,818 -- 64
104 Parkway Drive So., Hauppauge, New York ............ B 54 804 -- 136
20 Melville Park Rd., Melville, New York .............. B 391 2,650 -- 202
105 Price Parkway, Hauppauge, New York ................ B 2,030 6,327 -- 469
48 Harbor Park Drive, Hauppauge, New York ............ B 1,304 2,247 -- 89
125 Ricefield Lane, Hauppauge, New York ............... B 13 852 -- 330
110 Ricefield Lane, Hauppauge, New York ............... B 33 1,043 -- 57
120 Ricefield Lane, Hauppauge, New York ............... B 16 1,051 -- 74
135 Ricefield Lane, Hauppauge, New York ............... B 24 906 -- 473
30 Hub Drive, Huntington, New York .................... B 469 1,571 -- 312
60 Charles Lindbergh, Mitchel Field, New York ......... B A 20,800 -- 1,654
155 White Plains Rod., Tarrytown, New York ............ B 1,613 2,542 -- 874
235 Main Street, Tarrytown, New York .................. B 933 5,375 -- 881
245 Main Street, Tarrytown, New York .................. B 1,235 7,284 -- 614
505 White Plains Road, Tarrytown, New York ............ B 210 1,332 -- 209
555 White Plains Road, Tarrytown, New York ............ B 712 4,133 51 4,233
560 White Plains Road, Tarrytown, New York ............ B 1,521 8,756 -- 1,788
580 White Plains Road, Tarrytown, New York ............ 8,172 2,414 14,595 -- 2,203
660 White Plains Road, Tarrytown, New York ............ B 3,929 22,640 45 3,447
Landmark Square, Stamford, Connecticut ................ 47,809 11,603 64,466 769 20,723
110 Bi-County Blvd., Farmingdale, New York ............ 4,221 2,342 6,665 -- 170
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) B 930 20,619 -- 2,845
275 Broadhollow Road, Melville, New York .............. B 5,250 11,761 -- 594
One Eagle Rock, East Hanover, New Jersey .............. B 803 7,563 -- 2,099
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- ------------------------------------------------------- --------------------------------- -------------- -------------- ----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
---------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- ------------------------------------------------------- -------- --------------- -------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
19 Nicholas Drive, Yaphank, New York .................. 160 12,130 12,290 1,147 1989 1995
1516 Motor Parkway, Hauppauge, New York ............... 603 6,849 7,452 1,012 1981 1995
125 Baylis Road, Melville, New York ................... 1,601 10,069 11,670 1,353 1980 1995
35 Pinelawn Road, Melville, New York .................. 999 9,140 10,139 1,508 1980 1995
520 Broadhollow Road, Melville, New York .............. 457 7,146 7,603 1,461 1978 1995
1660 Walt Whitman Road, Melville, New York ............ 370 5,422 5,792 802 1980 1995
70 Maxess Road, Melville, New York .................... 462 4,738 5,200 585 1967 1995
85 Nicon Court, Hauppauge, New York ................... 797 2,882 3,679 383 1984 1995
104 Parkway Drive So., Hauppauge, New York ............ 54 940 994 124 1985 1996
20 Melville Park Rd., Melville, New York .............. 391 2,852 3,243 316 1965 1996
105 Price Parkway, Hauppauge, New York ................ 2,030 6,796 8,826 871 1969 1996
48 Harbor Park Drive, Hauppauge, New York ............ 1,304 2,336 3,640 299 1976 1996
125 Ricefield Lane, Hauppauge, New York ............... 13 1,182 1,195 229 1973 1996
110 Ricefield Lane, Hauppauge, New York ............... 33 1,100 1,133 150 1980 1996
120 Ricefield Lane, Hauppauge, New York ............... 16 1,125 1,141 125 1983 1996
135 Ricefield Lane, Hauppauge, New York ............... 24 1,379 1,403 284 1981 1996
30 Hub Drive, Huntington, New York .................... 469 1,883 2,352 269 1976 1996
60 Charles Lindbergh, Mitchel Field, New York ......... 0 22,454 22,454 3,041 1989 1996
155 White Plains Rod., Tarrytown, New York ............ 1,613 3,416 5,029 390 1963 1996
235 Main Street, Tarrytown, New York .................. 933 6,256 7,189 868 1974 1996
245 Main Street, Tarrytown, New York .................. 1,235 7,898 9,133 1,163 1983 1996
505 White Plains Road, Tarrytown, New York ............ 210 1,541 1,751 270 1974 1996
555 White Plains Road, Tarrytown, New York ............ 763 8,366 9,129 1,551 1972 1996
560 White Plains Road, Tarrytown, New York ............ 1,521 10,544 12,065 2,155 1980 1996
580 White Plains Road, Tarrytown, New York ............ 2,414 16,798 19,212 2,618 1997 1996
660 White Plains Road, Tarrytown, New York ............ 3,974 26,087 30,061 3,974 1983 1996
Landmark Square, Stamford, Connecticut ................ 12,372 85,189 97,561 8,489 1973-1984 1996
110 Bi-County Blvd., Farmingdale, New York ............ 2,342 6,835 9,177 723 1984 1997
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) 930 23,464 24,394 2,358 1974-1982 1997
275 Broadhollow Road, Melville, New York .............. 5,250 12,355 17,605 1,191 1970 1997
One Eagle Rock, East Hanover, New Jersey .............. 803 9,662 10,465 1,077 1986 1997
<CAPTION>
COLUMN A COLUMN I
- ------------------------------------------------------- --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- ------------------------------------------------------- --------------
<S> <C>
19 Nicholas Drive, Yaphank, New York .................. 10-30 Years
1516 Motor Parkway, Hauppauge, New York ............... 10-30 Years
125 Baylis Road, Melville, New York ................... 10-30 Years
35 Pinelawn Road, Melville, New York .................. 10-30 Years
520 Broadhollow Road, Melville, New York .............. 10-30 Years
1660 Walt Whitman Road, Melville, New York ............ 10-30 Years
70 Maxess Road, Melville, New York .................... 10-30 Years
85 Nicon Court, Hauppauge, New York ................... 10-30 Years
104 Parkway Drive So., Hauppauge, New York ............ 10-30 Years
20 Melville Park Rd., Melville, New York .............. 10-30 Years
105 Price Parkway, Hauppauge, New York ................ 10-30 Years
48 Harbor Park Drive, Hauppauge, New York ............ 10-30 Years
125 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
110 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
120 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
135 Ricefield Lane, Hauppauge, New York ............... 10-30 Years
30 Hub Drive, Huntington, New York .................... 10-30 Years
60 Charles Lindbergh, Mitchel Field, New York ......... 10-30 Years
155 White Plains Rod., Tarrytown, New York ............ 10-30 Years
235 Main Street, Tarrytown, New York .................. 10-30 Years
245 Main Street, Tarrytown, New York .................. 10-30 Years
505 White Plains Road, Tarrytown, New York ............ 10-30 Years
555 White Plains Road, Tarrytown, New York ............ 10-30 Years
560 White Plains Road, Tarrytown, New York ............ 10-30 Years
580 White Plains Road, Tarrytown, New York ............ 10-30 Years
660 White Plains Road, Tarrytown, New York ............ 10-30 Years
Landmark Square, Stamford, Connecticut ................ 10-30 Years
110 Bi-County Blvd., Farmingdale, New York ............ 10-30 Years
RREEF Portfolio, Hauppauge, New York (10
additional buildings in Vanderbuilt Industrial Park) 10-30 Years
275 Broadhollow Road, Melville, New York .............. 10-30 Years
One Eagle Rock, East Hanover, New Jersey .............. 10-30 Years
</TABLE>
Continued
IV-31
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- --------------------------------------------- ------------- ------------------------ ----------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
------------------------ ----------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- --------------------------------------------- ------------- -------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
710 Bridgeport Avenue, Shelton, Connecticut . B 5,405 21,620 7 623
101 JFK Expressway, Short Hills, New Jersey . B 7,745 43,889 -- 1,134
10 Rooney Circle, West Orange, New Jersey ... B 1,302 4,615 1 421
Executive Hill Office Park, West Orange, New
Jersey ..................................... B 7,629 31,288 4 1,073
3 University Plaza, Hackensack, New Jersey .. B 7,894 11,846 --- 1,068
400 Garden City Plaza, Garden City, New York B 13,986 10,127 --- 1,275
425 Rabro Drive, Hauppauge, New York ........ B 665 3,489 --- 71
One Paragon Drive, Montvale, New Jersey ..... B 2,773 9,901 --- 533
90 Merrick Avenue, East Meadow, New York .... B A 19,193 --- 3,350
150 Motor Parkway, Hauppauge, New York ...... B 1,114 20,430 --- 2,588
390 Motor Parkway, Hauppauge, New York ...... B 240 4,459 -- 249
Reckson Executive Park, Ryebrook, New York .. B 18,343 55,028 -- 1,299
120 White Plains Road, Tarrytown, New York .. B 3,355 24,605 -- 182
University Square, Princeton, New Jersey .... B 3,288 8,888 -- 111
100 Andrews Road Hicksville, New York ....... B 2,337 1,711 155 5,707
2 Macy Road, Harrison, New York ............. B 642 2,131 -- 47
80 Grasslands, Elmsford, New York ........... B 1,208 6,728 -- 242
65 Marcus Drive, Melville, New York ......... B 295 1,966 57 885
400 Cabot Drive, Hamilton, New Jersey ....... B 2,068 18,614 -- 71
51 JFK Parkway, Short Hills, New York ....... B 8,732 58,437 -- 874
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... B 3,528 31,786 -- 5,897
100 Forge Way, Rockaway, New Jersey ......... B 315 902 -- 89
200 Forge Way, Rockaway, New Jersey ......... B 1,128 3,228 -- 178
300 Forge Way, Rockaway, New Jersey ......... B 376 1,075 -- 254
400 Forge Way, Rockaway, New Jersey ......... B 1,142 3,267 -- 179
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... B A 27,975 -- 4,174
155 Passaic Avenue, Fairfield, New Jersey ... B 3 3,538 -- 1,418
100 Summit Drive Vahalla, New York .......... 22,614 3,007 41,351 -- 2,769
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
- --------------------------------------------- --------------------------------- -------------- -------------- ----------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
---------------------------------
BUILDINGS AND ACCUMULATED DATE OF DATE
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
- --------------------------------------------- -------- --------------- -------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
710 Bridgeport Avenue, Shelton, Connecticut . 5,412 22,243 27,655 2,091 1971-1979 1997
101 JFK Expressway, Short Hills, New Jersey . 7,745 45,023 52,768 3,970 1981 1997
10 Rooney Circle, West Orange, New Jersey ... 1,303 5,036 6,339 505 1971 1997
Executive Hill Office Park, West Orange, New
Jersey ..................................... 7,633 32,361 39,994 2,782 1978-1984 1997
3 University Plaza, Hackensack, New Jersey .. 7,894 12,914 20,808 1,157 1985 1997
400 Garden City Plaza, Garden City, New York 13,986 11,402 25,388 938 1989 1997
425 Rabro Drive, Hauppauge, New York ........ 665 3,560 4,225 305 1980 1997
One Paragon Drive, Montvale, New Jersey ..... 2,773 10,434 13,207 870 1980 1997
90 Merrick Avenue, East Meadow, New York .... 0 22,543 22,543 1,817 1985 1997
150 Motor Parkway, Hauppauge, New York ...... 1,114 23,018 24,132 1,999 1984 1997
390 Motor Parkway, Hauppauge, New York ...... 240 4,708 4,948 386 1980 1997
Reckson Executive Park, Ryebrook, New York .. 18,343 56,327 74,670 4,140 1983-1986 1997
120 White Plains Road, Tarrytown, New York .. 3,355 24,787 28,142 1,717 1984 1997
University Square, Princeton, New Jersey .... 3,288 8,999 12,287 625 1987 1997
100 Andrews Road Hicksville, New York ....... 2,492 7,418 9,910 826 1954 1996
2 Macy Road, Harrison, New York ............. 642 2,178 2,820 158 1962 1997
80 Grasslands, Elmsford, New York ........... 1,208 6,970 8,178 516 1989/1964 1997
65 Marcus Drive, Melville, New York ......... 352 2,851 3,203 310 1968 1996
400 Cabot Drive, Hamilton, New Jersey ....... 2,068 18,685 20,753 1,255 1989 1998
51 JFK Parkway, Short Hills, New York ....... 8,732 59,311 68,043 3,643 1988 1998
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... 3,528 37,683 41,211 2,669 1987 1998
100 Forge Way, Rockaway, New Jersey ......... 315 991 1,306 67 1986 1998
200 Forge Way, Rockaway, New Jersey ......... 1,128 3,406 4,534 227 1989 1998
300 Forge Way, Rockaway, New Jersey ......... 376 1,329 1,705 101 1989 1998
400 Forge Way, Rockaway, New Jersey ......... 1,142 3,446 4,588 230 1989 1998
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... 0 32,149 32,149 3,232 1981 1998
155 Passaic Avenue, Fairfield, New Jersey ... 3 4,956 4,959 296 1984 1998
100 Summit Drive Vahalla, New York .......... 3,007 44,120 47,127 2,614 1988 1998
<CAPTION>
COLUMN A COLUMN I
- --------------------------------------------- --------------
LIFE ON WHICH
DEPRECIATION
DESCRIPTION IS COMPUTED
- --------------------------------------------- --------------
<S> <C>
710 Bridgeport Avenue, Shelton, Connecticut.. 10-30 Years
101 JFK Expressway, Short Hills, New Jersey... 10-30 Years
10 Rooney Circle, West Orange, New Jersey .... 10-30 Years
Executive Hill Office Park, West Orange, New
Jersey ..................................... 10-30 Years
3 University Plaza, Hackensack, New Jersey .. 10-30 Years
400 Garden City Plaza, Garden City, New York 10-30 Years
425 Rabro Drive, Hauppauge, New York ........ 10-30 Years
One Paragon Drive, Montvale, New Jersey ..... 10-30 Years
90 Merrick Avenue, East Meadow, New York .... 10-30 Years
150 Motor Parkway, Hauppauge, New York ...... 10-30 Years
390 Motor Parkway, Hauppauge, New York ...... 10-30 Years
Reckson Executive Park, Ryebrook, New York .. 10-30 Years
120 White Plains Road, Tarrytown, New York .. 10-30 Years
University Square, Princeton, New Jersey .... 10-30 Years
100 Andrews Road Hicksville, New York ....... 10-30 Years
2 Macy Road, Harrison, New York ............. 10-30 Years
80 Grasslands, Elmsford, New York ........... 10-30 Years
65 Marcus Drive, Melville, New York ......... 10-30 Years
400 Cabot Drive, Hamilton, New Jersey ....... 10-30 Years
51 JFK Parkway, Short Hills, New York ....... 10-30 Years
Triad V -- 1979 Marcus Ave. Lake Success, New
York ....................................... 10-30 Years
100 Forge Way, Rockaway, New Jersey ......... 10-30 Years
200 Forge Way, Rockaway, New Jersey ......... 10-30 Years
300 Forge Way, Rockaway, New Jersey ......... 10-30 Years
400 Forge Way, Rockaway, New Jersey ......... 10-30 Years
51-55 Charles Lindergh Blvd., Uniondale, New
York ....................................... 10-30 Years
155 Passaic Avenue, Fairfield, New Jersey ... 10-30 Years
100 Summit Drive Vahalla, New York .......... 10-30 Years
</TABLE>
Continued
IV-32
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999 (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- -------------------------------------------------- ------------- --------------------------- -------------------------
COST CAPITALIZED,
SUBSEQUENT TO
INITIAL COST ACQUISITION
--------------------------- -------------------------
BUILDINGS AND BUILDINGS AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS
- -------------------------------------------------- ------------- ----------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... B 1,094 22,490 -- 628
200 Summit Lake Drive, Valhalla, New York ........ 20,463 4,343 37,305 -- 541
140 Grand Street., Valhalla, New York ............ B 1,932 18,744 -- 153
500 Summit Lake Drive, Valhalla, New York ........ B 7,052 37,309 -- 7,547
5 Henderson Drive, West Caldwell, New Jersey ..... B 2,450 6,984 4 690
Stamford Towers, Stamford, Connecticut ........... B 13,557 47,916 -- 3,377
99 Cherry Hill Road, Parsippany, New Jersey ...... B 2,360 7,508 -- 339
119 Cherry Hill Road, Parsipanny, New Jersey ..... B 2,512 7,622 -- 577
120 Wilbur Place, Bohemia, New York .............. B 202 1,154 8 114
45 Melville Park Road, Melville, New York ........ B 355 1,487 -- 1,813
500 Saw Mill River Road, Elmsford, New York ...... B 1,542 3,796 -- 178
2004 Orville Drive, No. Bohemia, New York ........ B 633 4,226 -- 1,407
2005 Orville Drive North Bohemia, New York ....... B 984 5,410 -- 489
120 W. 45th Street New York, New York ............ 66,933 28,757 162,809 -- 338
4 Appelgate Drive Robbinsville, New Jersey ....... B 544 7,623 -- 1,503
1305 Walt Whitman Road Melville, New York ........ B 2,885 15,029 -- 3,448
600 Old Willets Path Hauppauge, New York ......... B 295 3,521 -- 723
1255 Broad Street Clifton, New Jersey ............ B 1,329 15,869 -- 2,806
810 Seventh Avenue New York, New York ............ 86,822 26,984 152,767 -- 2,036
120 Mineola Blvd. Mineola, New York .............. B 1,869 10,603 -- 41
100 Wall Street, New York, New York .............. 37,623 11,749 66,517 -- 1,020
One Orlando, Orlando, Florida .................... 39,960 9,386 51,136 -- 0
Land held for development ........................ B 60,894 --- -- 0
Developments in progress ......................... --- --- 68,690 -- --
Other property ................................... B --- --- -- 5,482
------ ------ ------- -- -----
Total ............................................ $459,174 $335,902 $1,656,797 $1,196 214,504
======== ======== ========== ====== =======
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
- -------------------------------------------------- ---------------------------------------- -------------- --------------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------------
BUILDINGS AND ACCUMULATED DATE OF
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION
- -------------------------------------------------- ----------- --------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... 1,094 23,118 24,212 1,309 1984
200 Summit Lake Drive, Valhalla, New York ........ 4,343 37,846 42,189 2,133 1990
140 Grand Street., Valhalla, New York ............ 1,932 18,897 20,829 1,059 1991
500 Summit Lake Drive, Valhalla, New York ........ 7,052 44,856 51,908 1,779 1986
5 Henderson Drive, West Caldwell, New Jersey ..... 2,454 7,674 10,128 363 1967
Stamford Towers, Stamford, Connecticut ........... 13,557 51,293 64,850 2,686 1989
99 Cherry Hill Road, Parsippany, New Jersey ...... 2,360 7,847 10,207 375 1982
119 Cherry Hill Road, Parsipanny, New Jersey ..... 2,512 8,199 10,711 385 1982
120 Wilbur Place, Bohemia, New York .............. 210 1,268 1,478 64 1972
45 Melville Park Road, Melville, New York ........ 355 3,300 3,655 229 1998
500 Saw Mill River Road, Elmsford, New York ...... 1,542 3,974 5,516 264 1968
2004 Orville Drive, No. Bohemia, New York ........ 633 5,633 6,266 522 1998
2005 Orville Drive North Bohemia, New York ....... 984 5,899 6,883 58 1999
120 W. 45th Street New York, New York ............ 28,757 163,147 191,904 3,603 1998
4 Appelgate Drive Robbinsville, New Jersey ....... 544 9,126 9,670 300 1999
1305 Walt Whitman Road Melville, New York ........ 2,885 18,477 21,362 579 1999
600 Old Willets Path Hauppauge, New York ......... 295 4,244 4,539 143 1999
1255 Broad Street Clifton, New Jersey ............ 1,329 18,675 20,004 175 1999
810 Seventh Avenue New York, New York ............ 26,984 154,803 181,787 3,398 1970
120 Mineola Blvd. Mineola, New York .............. 1,869 10,644 12,513 234 1977
100 Wall Street, New York, New York .............. 11,749 67,537 79,286 1,477 1969
One Orlando, Orlando, Florida .................... 9,386 51,136 60,522 702 1987
Land held for development ........................ 60,894 0 60,894 0 N/A
Developments in progress ......................... -- 68,690 68,690 0
Other property ................................... -- 5,482 5,482 637
------ ------- ------- -----
Total ............................................ $337,098 1,871,301 2,208,399 215,112
======== ========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
COLUMN A COLUMN H COLUMN I
- -------------------------------------------------- ---------- --------------
LIFE ON WHICH
DATE DEPRECIATION
DESCRIPTION ACQUIRED IS COMPUTED
- -------------------------------------------------- ---------- --------------
<S> <C> <C>
115/117 Stevens Avenue, Valhalla, New York ....... 1998 10-30 Years
200 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years
140 Grand Street., Valhalla, New York ............ 1998 10-30 Years
500 Summit Lake Drive, Valhalla, New York ........ 1998 10-30 Years
5 Henderson Drive, West Caldwell, New Jersey ..... 1998 10-30 Years
Stamford Towers, Stamford, Connecticut ........... 1998 10-30 Years
99 Cherry Hill Road, Parsippany, New Jersey ...... 1998 10-30 Years
119 Cherry Hill Road, Parsipanny, New Jersey ..... 1998 10-30 Years
120 Wilbur Place, Bohemia, New York .............. 1998 10-30 Years
45 Melville Park Road, Melville, New York ........ 1998 10-30 Years
500 Saw Mill River Road, Elmsford, New York ...... 1998 10-30 Years
2004 Orville Drive, No. Bohemia, New York ........ 1998 10-30 Years
2005 Orville Drive North Bohemia, New York ....... 1999 10-30 Years
120 W. 45th Street New York, New York ............ 1999 10-30 Years
4 Appelgate Drive Robbinsville, New Jersey ....... 1999 10-30 Years
1305 Walt Whitman Road Melville, New York ........ 1999 10-30 Years
600 Old Willets Path Hauppauge, New York ......... 1999 10-30 Years
1255 Broad Street Clifton, New Jersey ............ 1999 10-30 Years
810 Seventh Avenue New York, New York ............ 1999 10-30 Years
120 Mineola Blvd. Mineola, New York .............. 1999 10-30 Years
100 Wall Street, New York, New York .............. 1999 10-30 Years
One Orlando, Orlando, Florida .................... 1999 10-30 Years
Land held for development ........................ Various N/A
Developments in progress .........................
Other property ...................................
Total ............................................
</TABLE>
- --------------
A These land parcels are leased (see Note 4).
B There are no encumbrances on these properties.
C The Encumbrance of $2,616 is related to one property.
The aggregate cost for Federal Income Tax purposes was approximately $1,728
million at December 31, 1999.
IV-33
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(IN THOUSANDS)
The changes in real estate for each of the periods in the three years ended
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Real estate balance at beginning
of period ....................... $1,737,133 $1,011,228 $ 516,768
Improvements ..................... 57,571 134,582 37,778
Disposal, including write-off of
fully depreciated building
improvements .................... (317,864) -- (154)
Acquisitions ..................... 731,559 591,323 456,836
---------- ---------- ----------
Balance at end of period ......... $2,208,399 $1,737,133 $1,011,228
========== ========== ==========
</TABLE>
The changes in accumulated depreciation, exclusive of amounts relating to
equipment, autos, furniture and fixtures, for each of the periods in the three
years ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Balance at beginning of period ...... $156,231 $108,652 $ 86,344
Depreciation for period ............. 65,471 47,579 22,442
Disposal, including write-off of
fully depreciated building
improvements ....................... (6,590) -- (134)
-------- -------- --------
Balance at end of period ............ $215,112 $156,231 $108,652
======== ======== ========
</TABLE>
IV-34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- --------- ----------- --------------------------------------------------------------------------------
<S> <C> <C>
3.1 a Amended and Restated Articles of Incorporation
3.2 Amended and Restated By-Laws of Registrant
3.3 h Articles Supplementary of the Registrant Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock filed with the Maryland
State Department of Assessments and Taxation on April 9, 1998
3.4 Articles Supplementary of the Registrant Establishing and Fixing the Rights and
Preferences of a Class of Shares of Common Stock filed with the Maryland State
Department of Assessments and Taxation on May 24, 1999.
3.5 k Articles Supplementary of the Registrant Establishing and Fixing the Rights and
Preferences of a Series of Shares of Preferred Stock filed with the Maryland
State Department of Assessments and Taxation on May 28, 1999
3.6 Articles of Amendment of the Registrant filed with the Maryland State
Department of Assessments and Taxation on January 4, 2000.
3.7 Articles Supplementary of the Registrant filed with the Maryland State
Department of Assessments and Taxation on January 11, 2000.
4.1 b Specimen Share Certificate of Common Stock
4.2 h Specimen Share Certificate of Series A Preferred Stock
4.3 j Form of 7.40% Notes due 2004 of Reckson Operating Partnership, L.P.
4.4 j Form of 7.75% Notes due 2009 of Reckson Operating Partnership, L.P.
4.5 j Indenture, dated March 26, 1999, among Reckson Operating Partnership, L.P.,
the Company, and The Bank of New York, as trustee
10.1 a Amended and Restated Agreement of Limited Partnership of Reckson
Operating Partnership, L.P.
10.2 h Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series A Preferred Units of
Limited Partnership Interest
10.3 h Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series B Preferred Units of
Limited Partnership Interest
10.4 h Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series C Preferred Units of
Limited Partnership Interest
10.5 h Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series D Preferred Units of
Limited Partnership Interest
10.6 Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series B Common Units of
Limited Partnership Interest
10.7 Supplement to the Amended and Restated Agreement of Limited Partnership
of Reckson Operating Partnership, L.P. Establishing Series E Preferred
Partnership Units of Limited Partnership Interest
10.8 f Third Amended and Restated Agreement of Limited Partnership of Omni
Partners, L.P.
10.9 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and Donald Rechler
10.10 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and Scott Rechler
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- ---------- ----------- ------------------------------------------------------------------------------
<S> <C> <C>
10.11 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and Mitchell Rechler
10.12 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and Gregg Rechler
10.13 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and Roger Rechler
10.14 i Amendment and Restatement of Employment and Non-Competition
Agreement between Registrant and J. Michael Maturo
10.15 a Purchase Option Agreements relating to the Reckson Option Properties
10.16 a Purchase Option Agreements relating to the Other Option Properties
10.17 c Amended 1995 Stock Option Plan
10.18 c 1996 Employee Stock Option Plan
10.19 b Ground Leases for certain of the properties
10.20 i Third Amended and Restated Agreement of Limited Partnership of Reckson FS
Limited Partnership
10.21 a Indemnity Agreement relating to 100 Oser Avenue
10.22 f Amended and Restated 1997 Stock Option Plan
10.23 f 1998 Stock Option Plan
10.24 f Note Purchase Agreement for the Senior Unsecured Notes
10.25 i Amended and Restated Severance Agreement between Registrant and Donald
Rechler
10.26 i Amended and Restated Severance Agreement between Registrant and Scott
Rechler
10.27 i Amended and Restated Severance Agreement between Registrant and Mitchell
Rechler
10.28 i Amended and Restated Severance Agreement between Registrant and Gregg
Rechler
10.29 i Amended and Restated Severance Agreement between Registrant and Roger
Rechler
10.30 i Amended and Restated Severance Agreement between Registrant and J.
Michael Maturo
10.31 d $500 million Credit Agreement dated July 23, 1998 among Reckson Operating
Partnership, L.P. and Reckson Morris Operating Partnership, L.P. and the
Chase Manhattan Bank, UBS AG and PNC Bank and other lenders party
thereto
10.32 g Agreement and Plan of Merger by and among Tower Realty Trust, Inc.,
Reckson Associates Realty Corp., Reckson Operating Partnership, L.P. and
Metropolitan Partners LLC, dated December 8, 1998
10.33 g Stock Purchase Agreement by and between Tower Realty Trust, Inc. and
Metropolitan Partners LLC, dated December 8, 1998
10.34 g Amended and Restated Operating Agreement of Metropolitan Partners LLC,
dated December 8, 1998
10.35 i Intercompany Agreement by and between Reckson Operating Partnership, L.P.
and Reckson Service Industries, Inc., dated May 13, 1998
10.36 Amended and Restated Credit Agreement dated as of August 4, 1999 between
Reckson Service Industries, Inc., as borrower and Reckson Operating
Partnership, L.P., as Lender relating to Reckson Strategic Venture Partners,
LLC ("RSVP Credit Agreement")
10.37 Amended and Restated Credit Agreement dated as of August 4, 1999 between
Reckson Service Industries, Inc., as borrower and Reckson Operating
Partnership, L.P., as Lender relating to the operations of Reckson Service
Industries, Inc. ("RSI Credit Agreement")
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- ---------- ----------- -----------------------------------------------------------------------------------
<S> <C> <C>
10.38 Letter Agreement, dated November 30, 1999, amending the RSVP Credit
Agreement and the RSI Credit Agreement
10.39 j Terms Agreement, dated March 23, 1999, between Reckson Operating
Partnership, L.P. and Goldman, Sachs & Co., on behalf of itself and the other
named underwriters
10.40 k $130 million Credit Agreement dated as of May 24, 1999 among Metropolitan
Operating Partnership, L.P., Warburg Dillon Read and UBS AG, Stamford
Branch
10.41 k Guaranty Agreement dated as of May 24, 1999 among Metropolitan Operating
Partnership, L.P., Warburg Dillon Read and UBS AG, Stamford Branch
10.42 k Purchase Agreement dated as of May 27, 1999 among Stichting Pensioenfonds
ABP, The Travelers Insurance Company, The Travelers Life and Annuity
Company, The Standard Fire Insurance Company, Travelers Casualty and
Surety Company, Reckson Associates Realty Corp. and Reckson Operating
Partnership, L.P. relating to 6,000,000 shares of Series B Convertible Cumulative
Preferred Stock
10.43 k Registration Rights Agreement among Stichting Pensioenfonds ABP, The
Travelers Insurance Company, The Travelers Life and Annuity Company, The
Standard Fire Insurance Company, Travelers Casualty and Surety Company and
Reckson Associates Realty Corp. relating to 6,000,000 shares of Series B
Convertible Cumulative Preferred Stock
10.44 l Consolidated, Amended and Restated Fee and Leasehold Mortgage Note
relating to 919 Third Avenue
10.45 o Agreement of Purchase and Sale, between NBBRE 919 Third Avenue
Associates, L.P., as Seller, and Reckson Operating Partnership, L.P., as
Purchaser
10.46 l Side Letter to Agreement of Purchase and Sale, between NBBRE 919 Third
Avenue Associates, L.P., as Seller, and Reckson Operating Partnership, L.P., as
Purchaser
10.47 m Contribution and Exchange Agreement by and between Reckson Morris
Industrial Trust, Reckson Morris Industrial Interim GP, LLC, Reckson
Operating Partnership, L.P., Robert Morris, Joseph D. Morris, Ronald Schram,
Mark M. Bava, The Drew Morris Trust, The Justin Morris Trust, The Keith
Morris Trust, Joseph D. Morris Family Limited Partnership and Robert Morris
Family Limited Partnership, and American Real Estate Investment L.P. and
American Real Estate Corporation
10.48 n Agreement of Purchase and Sale by and among Black Canyon Loop Company
LLC, Metropolitan Operating Partnership, L.P. and Safeway Inc.
10.49 n Purchase and Sale Agreement by and between Corporate Center Associates
Limited Partnership and Transwestern Investment Company, L.L.C.
10.50 n Purchase and Sale Agreement by and between East Broadway 5151 Limited
Partnership, Metropolitan Operating Partnership, L.P., 5750 Associates Limited
Partnership, Maitland Associates, Ltd. and Maitland West Associates Limited
Partnership and Praedium Performance Fund IV, L.P.
10.51 n Purchase and Sale Agreement by and between Metropolitan Operating
Partnership, L.P. and HUB Properties Trust
10.52 o Contract and Sale Agreement between 54-55 Street Company and Reckson
Operating Partnership, L.P.
10.53 p 1999 $75 million Second Amended and Restated Credit Facility Agreement
dated as of December 17, 1999
10.54 p 1999 Second Amended and Restated Guaranty Agreement dated as of
December 17, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILING
NUMBER REFERENCE DESCRIPTION
- -------- ----------- ---------------------------------------------------------
<S> <C> <C>
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Power of Attorney (included in Part IV of the Form 10-K)
27.0 Financial Data Schedule
</TABLE>
- ----------
(a) Previously filed as an exhibit to Registration Statement Form S-11 (No.
333-1280) and incorporated herein by reference.
(b) Previously filed as an exhibit to Registration Statement Form S-11 (No.
33-84324) and incorporated herein by reference.
(c) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on November 25, 1996 and incorporated herein by reference.
(d) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on August 14, 1998 and incorporated herein by reference.
(e) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on February 5, 1999 and incorporated herein by reference.
(f) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 26, 1998 and incorporated herein by reference.
(g) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on December 22, 1998 and incorporated herein by reference.
(h) Previously filed as an exhibit to the Company's Form 8-K report filed with
the SEC on March 1, 1999 and incorporated herein by reference.
(i) Previously filed as an exhibit to the Company's Form 10-K filed with the
SEC on March 16, 1999 and incorporated herein by reference.
(j) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
March 26, 1999 and incorporated herein by reference.
(k) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 7, 1999 and incorporated herein by reference.
(l) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
June 25, 1999 and incorporated herein by reference.
(m) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
August 25, 1999 and incorporated herein by reference.
(n) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
October 25, 1999 and incorporated herein by reference.
(o) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
January 14, 2000 and incorporated herein by reference.
(p) Previously filed as an exhibit to the Company's Form 8-K filed with SEC on
February 8, 2000 and incorporated herein by reference.
EXHIBIT 3.2
RECKSON ASSOCIATES REALTY CORP.
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation shall
be located at such place or places as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices
at such places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the
election of directors and the transaction of any business within the powers of
the Corporation shall be held on a date and at the time set by the Board of
Directors during the month of May in each year.
Section 3. SPECIAL MEETINGS. The president, chief executive officer or
Board of Directors may call special meetings of the stockholders. Special
meetings of stockholders shall also be called by the secretary of the
Corporation upon the written request of the holders of shares entitled to cast
not less than a majority of all the votes entitled to be cast at such meeting.
Such request shall state the purpose of such meeting and the matters proposed to
be acted on at such meeting. The secretary shall inform such stockholders of the
reasonably estimated cost of preparing and mailing notice of the meeting and,
upon payment to the Corporation by such stockholders of such costs, the
secretary shall give notice to each stockholder entitled to notice of the
meeting. Unless requested by the stockholders entitled to cast a majority of all
the votes entitled to be cast at such meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the stockholders held during the preceding twelve
months.
Section 4. NOTICE. Not less than ten nor more than 90 days before each
meeting of stockholders, the secretary shall give to each stockholder entitled
to vote at such meeting and to each stockholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as
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otherwise may be required by any statute, the purpose for which the meeting is
called, either by mail or by presenting it to such stockholder personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at his post office address as it appears on the records of
the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of stockholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of stockholders, the Chairman of
the Board, if there be one, shall conduct the meeting or, in the case of vacancy
in office or absence of the Chairman of the Board, one of the following officers
present shall conduct the meeting in the order stated: the Vice Chairman of the
Board, if there be one, the President, the Vice Presidents in their order of
rank and seniority, or a Chairman chosen by the stockholders entitled to cast a
majority of the votes which all stockholders present in person or by proxy are
entitled to cast, shall act as Chairman, and the Secretary, or, in his absence,
an assistant secretary, or in the absence of both the Secretary and assistant
secretaries, a person appointed by the Chairman shall act as Secretary.
Section 7. QUORUM. At any meeting of stockholders, the presence in person
or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the charter of the
Corporation for the vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of the stockholders, the
stockholders entitled to vote at such meeting, present in person or by proxy,
shall have the power to adjourn the meeting from time to time to a date not more
than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. Each share may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of stockholders duly called and
at which a quorum is present shall be sufficient to approve any other matter
which may properly come before the meeting, unless more than a majority of the
votes cast is required by statute or by the charter of the Corporation. Unless
otherwise provided in the charter, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
Section 9. PROXIES. A stockholder may vote the stock owned of record by
him, either in person or by proxy executed in writing by the stockholder or by
his duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
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Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation
registered in the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the president or a vice president, a
general partner or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who has been
appointed to vote such stock pursuant to a bylaw or a resolution of the
governing body of such corporation or other entity or agreement of the partners
of a partnership presents a certified copy of such bylaw, resolution or
agreement, in which case such person may vote such stock. Any director or other
fiduciary may vote stock registered in his name as such fiduciary, either in
person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall
not be voted at any meeting and shall not be counted in determining the total
number of outstanding shares entitled to be voted at any given time, unless they
are held by it in a fiduciary capacity, in which case they may be voted and
shall be counted in determining the total number of outstanding shares at any
given time.
The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
Notwithstanding any other provision of the charter of the Corporation or
these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article
of the Annotated Code of Maryland (or any successor statute) shall not apply to
any acquisition by any person of shares of stock of the Corporation. This
section may be repealed, in whole or in part, at any time, whether before or
after an acquisition of control shares and, upon such repeal, may, to the extent
provided by any successor bylaw, apply to any prior or subsequent control share
acquisition.
Section 11. INSPECTORS. At any meeting of stockholders, the chairman of the
meeting may, or upon the request of any stockholder shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report
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of the inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence thereof.
Section 12. NOMINATIONS AND STOCKHOLDER BUSINESS
(a) Annual Meetings of Stockholders. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the stockholders (except for stockholder proposals included in the proxy
materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) may be made at an annual meeting of stockholders
(i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) by any stockholder of the Corporation who was
a stockholder of record at the time of giving of notice provided for in this
Section 12(a), who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 12(a).
(ii) (2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of
this Section 12, the stockholder must have given timely notice thereof in
writing to the secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the secretary at the principal executive offices of
the Corporation not less than 75 days nor more than 180 days prior to the first
anniversary of the preceding year's annual meeting or special meeting in lieu
thereof; provided, however, that in the event that the date of the annual
meeting is advanced by more than seven calendar days or delayed by more than 60
days from such anniversary date, notice by the stockholder to be timely must be
so delivered not earlier than the 180th day prior to such annual meeting and not
later than the close of business on the later of the 75th day prior to such
annual meeting or the twentieth day following the earlier of the day on which
public announcement of the date of such meeting is first made or notice of the
meeting is mailed to stockholders. Such stockholder's notice shall set forth (i)
as to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (ii) as
to any other business that the stockholder proposes to bring before the meeting,
a brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and of the beneficial owner, if
any, on whose behalf the proposal is made; and (iii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made, (x) the name and address of such stockholder, as
they appear on the Corporation's books, and of such beneficial owner and (y) the
number of shares of each class of stock of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of
this Section 12 to the contrary, in the event that the number of directors to be
elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Corporation at least 85 days prior
to the first anniversary of the preceding year's annual meeting,
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a stockholder's notice required by this Section 12(a) shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal executive
offices of the Corporation not later than the close of business on the tenth day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of Stockholders. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting pursuant to the Corporation's notice of meeting. Nominations of persons
for election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 12(b), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 12(b). In the
event the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be) for election to such
position as specified in the Corporation's notice of meeting, if the
stockholder's notice containing the information required by paragraph (a)(2) of
this Section 12 shall be delivered to the secretary at the principal executive
offices of the Corporation not earlier than the 180th day prior to such special
meeting and not later than the close of business on the later of the 75th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
(c) General. (1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 12 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 12. The presiding officer of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 12 and, if any proposed nomination or business is not in
compliance with this Section 12, to declare that such defective nomination or
proposal be disregarded.
(2) For purposes of this Section 12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 12, a
stockholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 12. Nothing in this Section 12 shall be deemed
to affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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Section 13. VOTING BY BALLOT. Voting on any question or in any election may
be viva voce unless the presiding officer shall order or any stockholder shall
demand that voting be by ballot.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at
any special meeting called for that purpose, a majority of the entire Board of
Directors may establish, increase or decrease the number of directors, provided
that the number thereof shall never be less than the minimum number required by
the Maryland General Corporation Law, nor more than 15, and further provided
that the tenure of office of a director shall not be affected by any decrease in
the number of directors.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of
Directors shall be held immediately after and at the same place as the annual
meeting of stockholders, no notice other than this Bylaw being necessary. The
Board of Directors may provide, by resolution, the time and place, either within
or without the State of Maryland, for the holding of regular meetings of the
Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the chairman of the board (or any co-chairman
of the board if more than one), president or by a majority of the directors then
in office. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Maryland, as the place for holding any special meeting of the Board of Directors
called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of Directors
shall be delivered personally or by telephone, facsimile transmission, United
States mail or courier to each director at his business or residence address.
Notice by personal delivery, by telephone or a facsimile transmission shall be
given at least two days prior to the meeting. Notice by mail shall be given at
least five days prior to the meeting and shall be deemed to be given when
deposited in the United States mail properly addressed, with postage thereon
prepaid. Telephone notice shall be deemed to be given when the director is
personally given such notice in a telephone call to which he is a party.
Facsimile transmission notice shall be deemed to be given upon completion of the
transmission of the message to the number given to the Corporation by the
director and receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a quorum
for transaction of business at any meeting of the Board of Directors, provided
that, if less than a majority of such directors are present at said meeting, a
majority of the directors present may
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adjourn the meeting from time to time without further notice, and provided
further that if, pursuant to the charter of the Corporation or these Bylaws, the
vote of a majority of a particular group of directors is required for action, a
quorum must also include a majority of such group.
The Board of Directors present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.
Section 7. VOTING. The action of the majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by applicable statute.
Section 8. TELEPHONE MEETINGS. Directors may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting, if a consent in writing to such action is signed by each director and
such written consent is filed with the minutes of proceedings of the Board of
Directors.
Section 10. VACANCIES. If for any reason any or all the directors cease to
be directors, such event shall not terminate the Corporation or affect these
Bylaws or the powers of the remaining directors hereunder (even if fewer than
three directors remain). Any vacancy on the Board of Directors for any cause
other than an increase in the number of directors shall be filled by a majority
of the remaining directors, although such majority is less than a quorum. Any
vacancy in the number of directors created by an increase in the number of
directors may be filled by a majority vote of the entire Board of Directors. Any
individual so elected as director shall hold office for the unexpired term of
the director he is replacing.
Section 11. COMPENSATION. Directors shall not receive any stated salary for
their services as directors but, by resolution of the Board of Directors, may
receive fixed sums per year and/or per meeting and/or per visit to real property
owned or to be acquired by the Corporation and for any service or activity they
performed or engaged in as directors. Directors may be reimbursed for expenses
of attendance, if any, at each annual, regular or special meeting of the Board
of Directors or of any committee thereof and for their expenses, if any, in
connection with each property visit and any other service or activity they
performed or engaged in as directors; but nothing herein contained shall be
construed to preclude any directors from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 12. LOSS OF DEPOSITS. No director shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or stock have been
deposited.
Section 13. SURETY BONDS. Unless required by law, no director shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
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Section 14. RELIANCE. Each director, officer, employee and agent of the
Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
The directors shall have no responsibility to devote their full time to the
affairs of the Corporation. Any director or officer, employee or agent of the
Corporation, in his personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to or in
competition with those of or relating to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may
appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee and other committees, composed of two or more directors,
to serve at the pleasure of the Board of Directors.
Section 2. POWERS. The Board of Directors may delegate to committees
appointed under Section 1 of this Article any of the powers of the Board of
Directors, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors. A majority
of the members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board of
Directors may designate a chairman of any committee, and such chairman or any
two members of any committee may fix the time and place of its meeting unless
the Board shall otherwise provide. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member. Each committee shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted
to be taken at any meeting of a committee of the Board of Directors may be taken
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without a meeting, if a consent in writing to such action is signed by each
member of the committee and such written consent is filed with the minutes of
proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
include a chief executive officer, a president, a secretary and a treasurer and
may include a chairman of the board (or one or more co-chairmen of the board), a
vice chairman of the board, one or more executive vice presidents, one or more
senior vice presidents, one or more vice presidents, a chief operating officer,
a chief financial officer, a treasurer, one or more assistant secretaries and
one or more assistant treasurers. In addition, the Board of Directors may from
time to time appoint such other officers with such powers and duties as they
shall deem necessary or desirable. The officers of the Corporation shall be
elected annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of stockholders, except that the chief
executive officer may appoint one or more vice presidents, assistant secretaries
and assistant treasurers. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall hold office until his successor is elected and qualifies or
until his death, resignation or removal in the manner hereinafter provided. Any
two or more offices except president and vice president may be held by the same
person. In its discretion, the Board of Directors may leave unfilled any office
except that of president, treasurer and secretary. Election of an officer or
agent shall not of itself create contract rights between the Corporation and
such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation
may be removed by the Board of Directors if in its judgment the best interests
of the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any officer
of the Corporation may resign at any time by giving written notice of his
resignation to the Board of Directors, the chairman of the board (or any
co-chairman of the board if more than one), the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a resignation shall not be
necessary to make it effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if any, of the
Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board of
Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a
chief executive officer. In the absence of such designation, the chairman of the
board (or, if
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more than one, the co-chairmen of the board in the order designated at the time
of their election or, in the absence of any designation, then in the order of
their election) shall be the chief executive officer of the Corporation. The
chief executive officer shall have general responsibility for implementation of
the policies of the Corporation, as determined by the Board of Directors, and
for the management of the business and affairs of the Corporation.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a
chief operating officer. The chief operating officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a
chief financial officer. The chief financial officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a
chairman of the board (or one or more co-chairmen of the board). The chairman of
the board shall preside over the meetings of the Board of Directors and of the
stockholders at which he shall be present. If there be more than one, the
co-chairmen designated by the Board of Directors will perform such duties. The
chairman of the board shall perform such other duties as may be assigned to him
or them by the Board of Directors.
Section 8. CHAIRMAN OF THE BOARD EMERITUS. The directors may elect by a
majority vote, from time to time, a chairman of the board emeritus (or one or
more co-chairmen of the board emeritus). The chairman of the board emeritus
shall be an honorary position and shall have no vote on any matter considered by
the directors. The chairman of the board emeritus shall serve for such term as
determined by the Board of Directors and may be removed by a majority vote of
directors with or without cause.
Section 9. PRESIDENT. The president or chief executive officer, as the case
may be, shall in general supervise and control all of the business and affairs
of the Corporation. In the absence of a designation of a chief operating officer
by the Board of Directors, the president shall be the chief operating officer.
He may execute any deed, mortgage, bond, contract or other instrument, except in
cases where the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed; and in general shall
perform all duties incident to the office of president and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 10. VICE PRESIDENTS. In the absence of the president or in the
event of a vacancy in such office, the vice president (or in the event there be
more than one vice president, the vice presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the president and when so acting
shall have all the powers of and be subject to all the restrictions upon the
president; and shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors. The Board of
Directors may designate one or more vice presidents as executive vice president
or as vice president for particular areas of responsibility.
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Section 11. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the secretary by such stockholder; (e)
have general charge of the share transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned to him by
the chief executive officer, the president or by the Board of Directors.
Section 12. TREASURER. The treasurer shall have the custody of the funds
and securities of the Corporation and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. In the absence of a designation of a chief financial officer by the
Board of Directors, the treasurer shall be the chief financial officer of the
Corporation.
The treasurer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the president and Board of Directors, at the regular meetings of
the Board of Directors or whenever it may so require, an account of all his
transactions as treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or treasurer, respectively, or by the
president or the Board of Directors. The assistant treasurers shall, if required
by the Board of Directors, give bonds for the faithful performance of their
duties in such sums and with such surety or sureties as shall be satisfactory to
the Board of Directors.
Section 14. SALARIES. The salaries and other compensation of the officers
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer or
agent to enter into any contract or to execute and deliver any instrument in the
name of and on behalf
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of the Corporation and such authority may be general or confined to specific
instances. Any agreement, deed, mortgage, lease or other document executed by
one or more of the directors or by an authorized person shall be valid and
binding upon the Board of Directors and upon the Corporation when authorized or
ratified by action of the Board of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or agent of the Corporation in
such manner as shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each certificate
shall be signed by the chief executive officer, the president or a vice
president and countersigned by the secretary or an assistant secretary or the
treasurer or an assistant treasurer and may be sealed with the seal, if any, of
the Corporation. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Corporation shall, from time to
time, issue several classes of stock, each class may have its own number series.
A certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the
Corporation, shall have a statement of such restriction, limitation, preference
or redemption provision, or a summary thereof, plainly stated on the
certificate. If the Corporation has authority to issue stock of more than one
class, the certificate shall contain on the face or back a full statement or
summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of each
class of stock and, if the Corporation is authorized to issue any preferred or
special class in series, the differences in the relative rights and preferences
between the shares of each series to the extent they have been set and the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series. In lieu of such statement or summary, the certificate may
state that the Corporation will furnish a full statement of such information to
any stockholder upon request and without charge. If any class of stock is
restricted by the Corporation as to transferability, the certificate shall
contain a full statement of the restriction or state that the Corporation will
furnish information about the restrictions to the stockholder on request and
without charge.
Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer
agent of the Corporation of a stock certificate duly endorsed or accompanied by
proper evidence of
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succession, assignment or authority to transfer, the Corporation shall issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of any class of stock
will be subject in all respects to the charter of the Corporation and all of the
terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board of
Directors may direct a new certificate to be issued in place of any certificate
previously issued by the Corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing the issuance
of a new certificate, an officer designated by the Board of Directors may, in
his discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or the owner's legal
representative to advertise the same in such manner as he shall require and/or
to give bond, with sufficient surety, to the Corporation to indemnify it against
any loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of
Directors may set, in advance, a record date for the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
determining stockholders entitled to receive payment of any dividend or the
allotment of any other rights, or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall not be
prior to the close of business on the day the record date is fixed and shall be
not more than 90 days and, in the case of a meeting of stockholders, not less
than ten days, before the date on which the meeting or particular action
requiring such determination of stockholders of record is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period but not longer than
20 days. If the stock transfer books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders, such
books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the stock transfer books are not closed for
the determination of stockholders, (a) the record date for the determination of
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day on which the notice of meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the record date for the determination of stockholders entitled to
receive payment of a dividend or an allotment of any other rights shall be
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the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been
made through the closing of the transfer books and the stated period of closing
has expired or (ii) the meeting is adjourned to a date more than 120 days after
the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate share ledger containing the name and address of each
stockholder and the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may
issue fractional stock or provide for the issuance of scrip, all on such terms
and under such conditions as they may determine. Notwithstanding any other
provision of the charter or these Bylaws, the Board of Directors may issue units
consisting of different securities of the Corporation. Any security issued in a
unit shall have the same characteristics as any identical securities issued by
the Corporation, except that the Board of Directors may provide that for a
specified period securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the
fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the stock
of the Corporation may be authorized and declared by the Board of Directors,
subject to the provisions of law and the charter of the Corporation. Dividends
and other distributions may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the charter.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the Board of
Directors may from time to time, in its absolute discretion, think proper as a
reserve fund for contingencies, for equalizing dividends or other distributions,
for repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall determine to be in the best interest of
the Corporation,
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and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the charter of the Corporation, the Board of
Directors may from time to time adopt, amend, revise or terminate any policy or
policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a
seal by the Corporation. The seal shall contain the name of the Corporation and
the year of its incorporation and the words "Corporate Seal Maryland." The Board
of Directors may authorize one or more duplicate seals and provide for the
custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required
to affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Corporation.
ARTICLE XII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall indemnify and shall pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any individual who is a present or former director or officer of the
Corporation and who is made a party to the proceeding by reason of his service
in that capacity or (b) any individual who, while a director of the Corporation
and at the request of the Corporation, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is made
a party to the proceeding by reason of his service in that capacity. The
Corporation may, with the approval of its Board of Directors, provide such
indemnification and advance for expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the Corporation
inconsistent with this Article,
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shall apply to or affect in any respect the applicability of the preceding
paragraph with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the charter of the
Corporation or these Bylaws or pursuant to applicable law, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power to adopt, alter or
repeal any provision of these Bylaws and to make new Bylaws.
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EXHIBIT 3.4
RECKSON ASSOCIATES REALTY CORP.
ARTICLES SUPPLEMENTARY
ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF A CLASS OF SHARES OF COMMON STOCK
Reckson Associates Realty Corp., a Maryland corporation (the
"Corporation"), certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Pursuant to the authority expressly vested in the board of directors
of the Corporation (the "Board of Directors") by Article VI of its charter, as
heretofore amended and restated (which, as hereafter restated or amended from
time to time, are together with these Articles Supplementary herein called the
"Articles"), the Board of Directors has, by resolution, duly designated and
reclassified 12,000,000 shares of the common stock of the Corporation into a
class designated Class B Exchangeable Common Stock and has provided for the
issuance of such class.
SECOND: The preferences, rights, voting powers, restrictions, limitations
as to distributions, qualifications and terms and conditions of redemption of
the shares of such class of common stock, which upon any restatement of the
Articles shall be included as part of Article VI of the Articles, are as
follows:
CLASS B EXCHANGEABLE COMMON STOCK
1. Designation and Number. A class of Common Stock of the Corporation,
designated the "Class B Exchangeable Common Stock" (the "Class B Common"), is
hereby established. The number of shares of the Class B Common shall be
12,000,000.
2. Distributions.
(a) For any quarterly period, holders of the shares of Class B Common shall
be entitled to receive, if, when and as authorized by the Board of Directors out
of funds legally available for the payment of distributions, cash distributions
in an amount per share equal to the Class B Dividend Amount. Distributions on
the Class B Common, if authorized, shall be payable quarterly in arrears on
January 31, April 30, July 31 and October 31 of each year or, if not a Business
Day, the next succeeding Business Day, commencing July 31, 1999 (each, a
"Distribution Payment Date"). Distributions will be payable to holders of record
as they appear in the stock transfer records of the Corporation at the close of
business on the applicable record date, which shall be such date designated by
the Board of Directors of the Corporation for the payment of distributions that
is not more than 30 nor less than 10 days prior to such Distribution Payment
Date (each, a "Distribution Payment Record Date").
(b) No distributions on the Class B Common shall be authorized by the Board
of Directors of the Corporation or be paid or set apart for payment by the
Corporation at such
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time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebtedness, prohibits such authorization,
payment or setting apart for payment or provides that such authorization,
payment or setting apart for payment would constitute a breach thereof or a
default thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
(c) Distributions on the Class B Common will be noncumulative. If the Board
of Directors of the Corporation does not authorize a dividend on the Class B
Common payable on any Distribution Payment Date while any Class B Common is
outstanding, then holders of the Class B Common will have no right to receive a
distribution for that Distribution Payment Date, and the Corporation will have
no obligation to pay a distribution for that Distribution Payment Date, whether
or not distributions are declared and paid for any future Distribution Payment
Date with respect to either the Common Stock, the preferred stock, par value
$0.01 per share, of the Corporation or any other Capital Stock.
(d) No distributions, whether in cash, securities or property, will be
authorized or paid or set apart for payment to holders of Common Stock for any
quarterly period unless for each share of Class B Common outstanding, a
distribution equal to the Class B Dividend Amount with respect to such period
has been or contemporaneously is authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for such payment to holders of
the Class B Common for the then current distribution period. No interest, or sum
of money in lieu of interest, shall be payable in respect of any distribution
payment or payments on Class B Common which may be in arrears.
(e) Subject to the rights and preferences of other classes or series of
Capital Stock, the Corporation, at its election and as determined in the sole
discretion of the Board of Directors of the Corporation, may authorize and pay a
distribution to holders of Class B Common in excess of the Class B Dividend
Amount.
(f) Shares of Class B Common shall not entitle the holders thereof to
receive any distribution made in respect of Common Stock.
3. Liquidation.
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation (referred to herein as a "liquidation"), the
holders of the Class B Common will have no liquidation preference, but will be
entitled to share ratably (treating each Class B Common share as the equivalent
of that number of shares of Common Stock into which it may then be exchanged) in
any distribution or payment made to holders of Common Stock.
4. Redemption.
Shares of Class B Common will not be redeemable; provided, however, that
the foregoing shall not prohibit the Corporation from repurchasing shares of
Class B Common from any holder if and to the extent such holder agrees to sell
such shares.
5. Voting Rights.
Holders of Class B Common shall have the right to vote on all matters
submitted to a vote of the holders of Common Stock; holders of Class B Common
and Common Stock shall vote together as a single class. In addition, the
affirmative vote or consent of the Holders of at least
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two-thirds of the outstanding shares of Class B Common, given in person or by
proxy, either in writing or at a meeting, voting separately as a class, shall be
required to amend, alter or repeal these Articles Supplementary, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the Class B
Common or the Holders thereof; provided, however, with respect to the occurrence
of any of the Events referred to above, so long as the Class B Common remains
outstanding with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event, the Corporation may not be the surviving
entity, the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of Holders
of Class B Common. In any such vote, each holder of Class B Common shall be
entitled to one vote with respect to each share of Class B Common held by such
holder.
6. Exchange at Holder's Election.
(a) Subject to Section 10, shares of Class B Common will be exchangeable at
any time, at the option of the holders thereof, into Common Stock at a rate of
one share of Common Stock per share of Class B Common, subject to adjustment as
described below (the "Exchange Rate"); provided, however, that the right of a
holder to exchange shares of Class B Common for which the Corporation has mailed
an Exchange Notice (as defined below) will terminate at the close of business on
the fifth Business Day prior to the Exchange Date (as defined below).
(b) To exercise the exchange right, the holder of Class B Common to be
exchanged shall surrender the certificate representing such Class B Common, duly
endorsed or assigned to the Corporation or in blank, at the principal office of
the Transfer Agent accompanied by written notice to the Corporation that such
holder elects to exchange such Class B Common. Unless the shares issuable on
exchange are to be issued in the same name as the name in which such Class B
Common is registered, in which case the Corporation shall bear the related
taxes, each share surrendered for exchange shall be accompanied by instruments
of transfer, in form satisfactory to the Corporation, duly executed by the
holder or such holder's duly authorized attorney and an amount sufficient to pay
any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid).
(c) Each exchange consummated pursuant to this Section 6 shall be deemed to
have been effected immediately prior to the close of business on the date on
which the certificates representing shares of Class B Common shall have been
surrendered and such notice (and if applicable, payment of an amount equal to
the distribution payable on such shares) received by the Corporation as
aforesaid, and the person or persons in whose name or names any certificate or
certificates representing shares of Common Stock shall be issuable upon such
exchange shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date, and such exchange shall be
at the Exchange Rate in effect at such time and on such date unless the stock
transfer records of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer records are open, but such exchange shall be at the Exchange Rate in
effect on the date on which such shares have been surrendered and such notice
received by the Corporation.
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(d) Holders of shares of Class B Common at the close of business on a
Distribution Payment Record Date shall be entitled to receive and retain the
distribution payable on such shares on the corresponding Distribution Payment
Date notwithstanding the exchange of such shares following such Distribution
Payment Record Date and on or prior to such Distribution Payment Date. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on exchanged shares or for
distribution on the Common Stock that is issued upon such exchange.
As promptly as practicable after the surrender of certificates representing
Class B Common as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
exchange of such shares in accordance with the provisions of this Section 6, and
any fractional interest in respect of a share of Common Stock arising upon such
conversion shall be settled as provided in Section 8.
7. Exchange at Corporation's Option.
(a) The Class B Common shall not be exchangeable by the Corporation prior
to the end of the 54-month period commencing with the Class B Issue Date.
Subject to Section 10, each share of Class B Common (and each share of Class B
Excess Common (as defined below)) will be exchangeable at any time after the
fifty-four (54) month period immediately following the Class B Issue Date, at
the option of the Corporation, into Common Stock at the Exchange Rate, plus the
amounts indicated in Section 7(e). If fewer than all of the outstanding shares
of Class B Common are to be exchanged, the shares to be exchanged shall be
determined pro rata or by lot or in such other manner as prescribed by the Board
of Directors of the Corporation to be equitable. If fewer than all the shares of
Class B Common represented by any certificate are exchanged, then new
certificates representing the unredeemed shares shall be issued without cost to
the holder thereof.
(b) At least 30 days, but no more than 60 days, prior to a date fixed for
exchange of some or all of the Class B Common (the "Exchange Date") in
accordance with this Section 7, written notice (the "Exchange Notice") shall be
given by first class mail, to each holder of record on a date no more than three
business days prior to the mailing date of such notice at such holder's address
as it appears in the stock transfer records of the Corporation; provided,
however, neither failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the exchange of any share of Class B
Common to be exchanged. The Exchange Notice shall include the following
information:
(i) the Exchange Rate;
(ii) the number of shares of Class B Common to be exchanged and, if fewer
than all the shares held by such holders are to be exchanged, the number of such
shares to be exchanged from such holder;
(iii) the Exchange Date;
(iv) the manner in which the holder is to surrender to the Corporation or
the Transfer Agent, the certificate or certificates representing the shares of
Class B Common to be exchanged;
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(v) that the holder's right to elect to exchange such holder's Class B
Common for Common Stock will terminate on the fifth Business Day prior to the
Exchange Date; and
(vi) that dividends on the shares of Class B Common to be exchanged shall
cease on the Exchange Date unless the Corporation defaults in the issuance of
the Common Stock issuable upon exchange of such Class B Common.
(c) Each holder shall surrender the certificate or certificates
representing such shares of Class B Common so exchanged to the Corporation or
the Transfer Agent, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Exchange Notice, and on the Exchange Date the number of full shares of Common
Stock issuable upon the exchange of such shares of Class B Common shall be
payable to the holder whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be canceled and
retired.
(d) On or after the Exchange Date, unless the Corporation defaults in the
issuance of the shares of Common Stock as described above and except as provided
in Section 7(e), (i) all distributions on any Class B Common so called for
exchange shall cease on the Exchange Date, and all rights of the holders of such
shares of Class B Common as holders of Class B Common shall terminate with
respect thereto on the Exchange Date, other than the right to receive the shares
of Common Stock issuable upon exchange thereof, (ii) the shares of Class B
Common called for exchange will not be transferred (except with the consent of
the Corporation) on the Corporation's stock transfer records, and (iii) such
shares shall no longer be deemed outstanding for any purpose whatsoever. Until
shares of Class B Common Stock called for exchange are surrendered in the manner
described in the Exchange Notice, no shares of Common Stock will be issued in
respect thereof. No provision will be made in respect of distributions payable
on such Common Stock prior to the Exchange Date.
(e) If the Exchange Date falls after a Distribution Payment Record Date and
on or prior to the corresponding Distribution Payment Date, then each holder of
Class B Common at the close of business on such Distribution Payment Record Date
shall be entitled to the distribution payable on such shares on the
corresponding Distribution Payment Date notwithstanding the exchange of such
shares prior to such Distribution Payment Date.
(f) Following the Exchange Date, the Corporation shall pay all
distributions payable on the Common Stock to be exchanged for the Class B Common
with a record date for such distribution following the Exchange Date
notwithstanding the exchange of certificates representing such shares after such
the Distribution Payment Record Date.
8. No Fractional Shares.
No fractional shares of Common Stock shall be issued upon exchange of Class
B Common. Instead of any fractional share of Common Stock that would otherwise
be deliverable upon the exchange of a share of Class B Common, the Corporation
shall pay to the holder of such share an amount in cash in respect of such
fractional interest based upon the Current Market Price of a share of Common
Stock on the Trading Day immediately preceding the date of exchange. If more
than one share of Class B Common shall be surrendered for exchange at one time
by the same holder, the number of full shares of Common Stock issuable upon
exchange
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thereof shall be computed on the basis of the aggregate number of shares of
Class B Common so surrendered.
9. Exchange Rate Adjustments.
(a) The Exchange Rate shall be adjusted from time to time as follows:
(i) If the Corporation shall after the date on which shares of Class B
Common are first issued (the "Class B Issue Date") (A) pay or make a
distribution to holders of Common Stock in the form of Common Stock, (B)
subdivide its outstanding Common Stock into a greater number of shares, (C)
combine its outstanding Common Stock into a smaller number of shares or (D)
issue any equity securities by reclassification of its Common Stock (other than
any reclassification by way of merger or binding share exchange that is subject
to Section 9(b)), then the Exchange Rate in effect at the opening of business on
the day following the record date for the determination of stockholders entitled
to receive such distribution or at the opening of business on the day following
the day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of any share
of Class B Common thereafter surrendered for exchange shall be entitled to
receive the number of shares of Common Stock and other equity securities issued
by reclassification of Common Stock that such holder would have owned or have
been entitled to receive after the happening of any of the events described
above had such shares been exchanged immediately prior to the record date in the
case of a distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the day following such record date (except as provided in Section
9(e)) in the case of a distribution and shall become effective immediately after
the opening of business on the day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Class B Issue Date rights,
options or warrants to all holders of Common Stock entitling them (for a period
expiring within 45 days after the record date for determination of stockholders
entitled to receive such rights, options or warrants) to subscribe for or
purchase shares of Common Stock (or securities convertible into or exchangeable
for Common Stock) at a price per share less than the Fair Market Value per share
of Common Stock on the record date for the determination of stockholders
entitled to receive such rights, options or warrants, then the Exchange Rate in
effect at the opening of business on the day following such record date shall be
adjusted to equal the amount determined by multiplying (I) the Exchange Rate in
effect immediately prior to the opening of business on the day following the
record date fixed for such determination by (II) a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
on the close of business on the record date fixed for such determination and (B)
the number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights, options or warrants and the denominator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
on the close of business on the record date fixed for such determination and (B)
the number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Stock would purchase at
such Fair Market Value. Such adjustment shall become effective immediately after
the opening of business on the day following such record date (except as
provided in Section 9(e)). In determining whether any rights, options or
warrants entitle the holders of Common Stock to
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subscribe for or purchase Common Stock at less than the Fair Market Value, there
shall be taken into account any consideration received by the Corporation upon
issuance and upon exercise of such rights, options or warrants, with the value
of such consideration, if other than cash, to be determined by the Board of
Directors of the Corporation.
(iii) If the Corporation shall distribute to all holders of its Common
Stock any equity securities of the Corporation (other than Common Stock) or
evidences of its indebtedness or assets (excluding cash distributions and those
rights, options and warrants referred to in and treated under subparagraph (ii)
above), then the Exchange Rate shall be adjusted so that it shall equal the
amount determined by multiplying (I) the Exchange Rate in effect immediately
prior to the close of business on the record date fixed for the determination of
stockholders entitled to receive such distribution by (II) a fraction, the
numerator of which shall be the Fair Market Value per share of Common Stock on
the record date for such determination and the denominator of which shall be the
Fair Market Value per share of Common Stock on the record date for such
determination less the then fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive) of the
portion of the equity securities, evidences of indebtedness or assets so
distributed applicable to one share of Common Stock. Such adjustment shall
become effective immediately at the opening of business on the day following
such record date (except as provided in Section 9(e)). For the purposes of this
subparagraph (iii), the distribution of equity securities, evidences of
indebtedness or assets which are distributed not only to the holders of Common
Stock on the record date fixed for the determination of stockholders entitled to
such distribution, but also are distributed with each share of Common Stock
delivered to a person exchanging a share of Class B Common at any time after
such record date, shall not require an adjustment of the Exchange Rate pursuant
to this subparagraph (iii), provided that on the date, if any, on which a person
exchanging a share of Class B Common would no longer be entitled to receive such
equity securities, evidences of indebtedness or assets with a share of Common
Stock (other than as a result of the termination of all such equity securities,
evidences of indebtedness or assets), a distribution of such equity securities,
evidences of indebtedness or assets shall be deemed to have occurred, and the
Exchange Rate shall be adjusted as provided in this subparagraph (iii) (and such
day shall be deemed to be "the record date fixed for the determination of the
stockholders entitled to receive such distribution" and the "record date" within
the meaning of the two preceding sentences).
(iv) The Exchange Rate may be further adjusted from time to time as
described in this subparagraph (iv); provided, however, that the Exchange Rate
as so adjusted shall only be applicable in the event that the exchange of Class
B Common is effected pursuant to Section 6 and then, only to shares of Class B
Common surrendered for exchange in accordance with Section 6(b); and all
adjustments described in this subparagraph (iv) shall be disregarded in the
event of any exchange pursuant to Section 7. If during any two consecutive
quarters, the total distributions paid on a share of Class B Common for each
such quarter and the immediately prior quarter is less than the sum of (x) 1/4th
of the Unadjusted Class B Dividend Amount applicable to the current quarter plus
(y) 1/4th of the Unadjusted Class B Dividend Amount applicable to the
immediately prior quarter, then the Exchange Rate thereafter shall be subject to
adjustment as follows. If at the time the exchange option is exercised pursuant
to Section 6:
(A) the Exchange Consideration Amount is equal to or greater than $27.50,
then no additional adjustment is required;
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(B) the Exchange Consideration Amount is less than $27.50, but equal to or
greater than $22.00, then the Exchange Rate will be multiplied by the quotient
of (I) $27.50 divided by (II) the Exchange Consideration Amount; and
(C) the Exchange Consideration Amount is less than $22.00, then the
Exchange Rate will be multiplied by 1.25.
(v) No adjustment in the Exchange Rate shall be required other than by
reason of Section 9(a)(iv) unless such adjustment would require a cumulative
increase or decrease of at least 1% in the Exchange Rate; provided, however,
that any adjustments that by reason of this subparagraph (v) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall be
required and made in accordance with the provisions of this Section 9 (other
than this subparagraph (v)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of Common
Stock. Notwithstanding any other provisions of this Section 9, the Corporation
shall not be required to make any adjustment of the Exchange Rate for the
issuance of any Common Stock pursuant to any plan providing for the reinvestment
of distributions or interest payable on securities of the Corporation and the
investment of additional optional amounts in Common Stock under such plan. All
calculations under this Section 9 shall be made to the nearest cent (with $.005
being rounded upward) or to the nearest one-tenth of a share (with .05 of a
share being rounded upward), as the case may be. Anything in this subsection (a)
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such increases in the Exchange Rate, in
addition to those required by this subsection (a), as it in its discretion shall
determine to be advisable in order that any share distributions, subdivision,
reclassification or combination of shares, distribution of rights, options or
warrants to purchase shares or securities, or a distribution of other assets
(other than cash distributions) hereafter made by the Corporation to its
stockholders shall not be taxable.
(b) Except as otherwise provided for in Section 9(a)(i), if the Corporation
shall be a party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of the Common Stock, sale or transfer of all or substantially all of the
Corporation's assets or recapitalization of the Common Stock) (each of the
foregoing being referred to herein as a "Transaction"), in each case as a result
of which Common Stock shall be converted into the right to receive shares,
stock, securities or other property (including cash or any combination thereof),
the Corporation (or its successor in such Transaction) shall make appropriate
provision so that each share of Class B Common, if not converted into the right
to receive shares, stock, securities or other property in connection with such
Transaction in accordance with the third to last sentence of this subsection (b)
shall thereafter be exchangeable into the kind and amount of shares, stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of shares of Common Stock into which one share of Class B Common was convertible
immediately prior to such Transaction, assuming such holder of Common Stock (i)
is not a Person with which the Corporation consolidated or into which the
Corporation merged or which merged into the Corporation or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an affiliate
of a Constituent Person and (ii) failed to exercise his rights of the election,
if any, as to the kind or amount of shares, stock,
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securities and other property (including cash or any combination thereof)
receivable upon such Transaction (each, a "Non-Electing Share") (provided that
if the kind and amount of shares, stock, securities and other property
(including cash or any combination thereof) receivable upon consummation of such
Transaction is not the same for each Non-Electing Share, the kind and amount of
shares, stock, securities and other property (including cash or any combination
thereof) receivable upon such Transaction by each Non-Electing Share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares). The Corporation shall not be a party to any Transaction in
which any share of Class B Common is converted into the right to receive shares,
stock, securities or other property (including cash or any combination thereof)
with an aggregate value (as determined by the Board of Directors in good faith,
whose determination shall be conclusive) less than that receivable by the number
of shares of Common Stock into which shares of Class B Common were exchangeable
immediately prior to such Transaction. The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this subsection (b), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class B Common that will contain provisions
enabling holders of Class B Common that remains outstanding after such
Transaction to exchange their Class B Common into the consideration received by
holders of Common Stock at the Exchange Rate in effect immediately prior to such
Transaction. The provisions of this subsection (b) shall similarly apply to
successive Transactions.
(c) If:
(i) the Corporation shall declare a distribution on the Common Stock (other
than cash distributions which do not constitute extraordinary dividends) or
there shall be a reclassification, subdivision or combination of the Common
Stock; or
(ii) the Corporation shall grant to the holders of the Common Stock of
rights, options or warrants to subscribe for or purchase Common Stock at less
than Fair Market Value; or
(iii) the Corporation shall enter into a Transaction; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(v) there shall occur the circumstances described in clause (a)(iv) of
Section 9 that would cause the Exchange Rate to be adjusted,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of the Class B Common at their addresses as
shown on the stock transfer records of the Corporation, as promptly as possible,
but at least 15 days prior to the applicable date hereinafter specified, a
notice stating (i) the date on which a record is to be taken for the purpose of
such distribution or rights, options or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such distribution or rights, options or warrants are to be determined or (ii)
the date on which such reclassification, subdivision, combination, Transaction
or liquidation, dissolution or winding up is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record
9
<PAGE>
shall be entitled to exchange their Common Stock for securities or other
property, if any, deliverable upon such reclassification, subdivision,
combination, Transaction or liquidation, dissolution or winding up. Failure to
give or receive such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 9.
(d) Whenever the Exchange Rate is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Exchange Rate after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after delivery of such certificate, the Corporation shall prepare a
notice of such adjustment of the Exchange Rate setting forth the adjusted
Exchange Rate and the effective date such adjustment becomes effective and shall
mail such notice of such adjustment of the Exchange Rate to the holder of each
share of Class B Common at such holder's last address as shown on the stock
transfer records of the Corporation.
(e) In any case in which Section 9(a) provides that an adjustment shall
become effective on the day following the record date for an event, the
Corporation may defer until the occurrence of such event (i) issuing to the
holder of any share of Class B Common converted after such record date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion before
giving effect to such adjustment and (ii) fractionalizing any share of Class B
Common and/or paying to such holder any amount of cash in lieu of any fraction
pursuant to Section 8.
(f) There shall be no adjustment of the Exchange Rate in case of the
issuance of any equity securities of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 9. If any action or transaction would require adjustment of the
Exchange Rate pursuant to more than one subsection of Section 9(a), only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(g) If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 9, that in the opinion of the Board
of Directors of the Corporation would materially adversely affect the exchange
rights of the holders of the Class B Common, the Exchange Rate for the Class B
Common shall be adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Board of Directors of the Corporation, in its sole
discretion, determines to be equitable in the circumstances.
(h) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock, for the purpose of effecting any exchange of the Class B Common,
the full number of shares of Common Stock deliverable upon the exchange of all
outstanding shares of Class B Common not theretofore exchanged. For purposes of
this subsection (h), the number of shares of Common Stock that shall be
deliverable upon the exchange of all outstanding shares of Class B Common shall
be computed as if at the time of computation all such outstanding shares were
held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
exchange of the Class B Common shall be validly issued, fully paid and
non-assessable.
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The Corporation shall list the Common Stock required to be delivered upon
exchange of the Class B Common, prior to such delivery, upon each national
securities exchange, if any, upon which the outstanding Common Stock is listed
at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon exchange of the Class B Common, the Corporation shall
comply with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof, by any governmental authority.
(i) The Corporation shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Stock or other securities or property on exchange of the Class B Common pursuant
hereto; provided, however, that the Corporation shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of Common Stock or other securities or property in a name other than
that of the record holder of the Class B Common to be exchanged, and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
10. Ownership Limitations. Notwithstanding Article VII of the Articles, the
provisions of this Section 10 shall apply with respect to the limitations on the
ownership and acquisition of shares of Class B Common.
(a) Restriction on Ownership and Transfer.
(i) Except as provided in Section 10(h), no Person shall Beneficially Own
or Constructively Own any shares of Class B Common such that such Person would
Beneficially Own or Constructively Own Capital Stock in excess of the Ownership
Limit;
(ii) Except as provided in Section 10(h), any Transfer (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the New York Stock Exchange, Inc. (the "NYSE")) that, if effective, would result
in any Person Beneficially Owning Class B Common in excess of the Ownership
Limit shall be void ab initio as to the Transfer of such Class B Common which
would be otherwise Beneficially Owned by such Person in excess of the Ownership
Limit; and the intended transferee shall acquire no rights in such Class B
Common;
(iii) Except as provided in Section 10(h), any Transfer (whether or not
such Transfer is the result of a transaction entered into through the facilities
of the NYSE) that, if effective, would result in any Person Constructively
Owning Class B Common in excess of the Ownership Limit shall be void ab initio
as to the Transfer of such Class B Common which would be otherwise
Constructively Owned by such Person in excess of the Ownership Limit; and the
intended transferee shall acquire no rights in such Class B Common; and
(iv) Notwithstanding any other provisions contained in this Section 10, any
Transfer (whether or not such Transfer is the result of a transaction entered
into through the facilities of the NYSE) or other event that, if effective,
would result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT (including, but not limited to, a Transfer or other event
that would result in the Corporation owning (directly or Constructively) an
interest in a tenant
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that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code) shall be
void ab initio as to the Transfer of the Class B Common or other event which
would cause the Corporation to be "closely held" within the meaning of Section
856(h) of the Code or would otherwise result in the Corporation failing to
qualify as a REIT; and the intended transferee or owner or Constructive or
Beneficial Owner shall acquire or retain no rights in such Class B Common.
(b) Conversion Into and Exchange For Class B Excess Common. If,
notwithstanding the other provisions contained in this Section 10, at any time
after the date of the Class B Issue Date, there is a purported Transfer (whether
or not such Transfer is the result of a transaction entered into through the
facilities of the NYSE), change in the capital structure of the Corporation or
other event such that one or more of the restrictions on ownership and transfers
described in Section 10(a), above, has been violated, then the Class B Common
being Transferred (or in the case of an event other than a Transfer, the Class B
Common owned or Constructively Owned or Beneficially Owned or, if the next
sentence applies, the Class B Common identified in the next sentence) which
would cause the restriction on ownership or transfer to be violated (rounded up
to the nearest whole share) shall be automatically converted into an equal
number of shares of Class B Common Excess Stock ("Class B Excess Common"). If at
any time of such purported Transfer any of the shares of the Class B Common are
then owned by a depositary to permit the trading of beneficial interests in
fractional shares of Class B Common, then shares of Class B Common that shall be
converted to Class B Excess Common shall be first taken from any Class B Common
that is not in such depositary that is Beneficially Owned or Constructively
Owned by the Person whose Beneficial Ownership or Constructive Ownership would
otherwise violate the restrictions of Section 10(a) prior to converting any
shares in such depositary. Any conversion pursuant to this subparagraph shall be
effective as of the close of business on the Business Day prior to the date of
such Transfer or other event.
(c) Remedies For Breach. If the Board of Directors of the Corporation or
its designee shall at any time determine in good faith that a Transfer or other
event has taken place in violation of Section 10(a) or that a Person intends to
Transfer or acquire, has attempted to Transfer or acquire or may Transfer or
acquire direct ownership, beneficial ownership (determined without reference to
any rules of attribution), Beneficial Ownership or Constructive Ownership of any
shares of the Corporation in violation of Section 10(a), the Board of Directors
of the Corporation or its designee shall take such action as it deems advisable
to refuse to give effect to or to prevent such Transfer, acquisition or other
event, including, but not limited to, causing the Corporation to purchase such
shares for Fair Market Value upon the terms and conditions specified by the
Board of Directors of the Corporation in its sole discretion, refusing to give
effect to such Transfer, acquisition or other event on the books of the
Corporation or instituting proceedings to enjoin such Transfer, acquisition or
other event; provided, however, that any Transfer or acquisition (or, in the
case of events other than a Transfer or acquisition, ownership or Constructive
Ownership or Beneficial Ownership) in violation of Section 10(a) shall
automatically result in the conversion described in Section 10(b), irrespective
of any action (or non-action) by the Board of Directors of the Corporation.
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(d) Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire or Beneficially Owns or Constructively Owns shares of Class B Common in
excess of the aforementioned limitations, or any Person who is or attempts to
become a transferee such that Class B Excess Common results under the provisions
of these Articles, shall immediately give written notice or, in the event of a
proposed or attempted Transfer, give at least 15 days prior written notice to
the Corporation of such event and shall provide to the Corporation such other
information as it may request in order to determine the effect of any such
Transfer on the Corporation's status as a REIT.
(e) Owners Required To Provide Information. From and after the Class B
Issue Date, each Person who is a Beneficial Owner or Constructive Owner of Class
B Common and each Person (including the stockholder of record) who is holding
Class B Common for a Beneficial Owner or Constructive Owner shall provide to the
Corporation such information with respect to the direct, indirect and
constructive ownership of Class B Common as the Corporation may request, in good
faith, in order to comply with the provisions of the Code applicable to REITs,
to comply with the requirements of any taxing authority or governmental agency
or to determine such compliance.
(f) Remedies Not Limited. Nothing contained in this Section 10 (but subject
to Section 10(l)) shall limit the authority of the Board of Directors of the
Corporation to take such other action as it deems necessary or advisable to
protect the Corporation and the interests of its stockholders by preservation of
the Corporation's status as a REIT.
(g) Ambiguity. In the case of an ambiguity in the application of any of the
provisions of this Section 10, including any definition contained in Section 11,
the Board of Directors of the Corporation shall have the power to determine the
application of the provisions of this Section 10 with respect to any situation
based on the facts known to it (subject, however, to the provisions of Section
10(l)).
(h) Exceptions.
(i) Subject to Section 10(a)(iv), the Board of Directors of the
Corporation, in its sole and absolute discretion, with the advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Beneficially Owning Class B Common in excess of the Ownership Limit if such
Person is not an individual for purposes of Section 542(a)(2) of the Code and
the Board of Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain that no individual's
Beneficially Owning Class B Common will violate the Ownership Limit and such
Person agrees that any violation of such representations or undertaking (or
other action which is contrary to the restrictions contained in this Section 10)
or attempted violation will result in such Class B Common Beneficially Owned in
excess of the Ownership Limit being exchanged for Class B Excess Common in
accordance with Section 10(b).
(ii) Subject to Section 10(a)(iv), the Board of Directors of the
Corporation, in its sole and absolute discretion, with advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Constructively Owning Class B Common in excess of the Ownership Limit if such
Person does not and represents that it will not own, directly or constructively
(by virtue of the application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code), more than a 9% interest (as set forth in Section
856(d)(2)(B)
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of the Code) in a tenant of the Corporation and the Board of Directors obtains
such representations and undertakings from such Person as are reasonably
necessary to ascertain this fact and such Person agrees that any violation or
attempted violation will result in such Class B Common Constructively Owned in
excess of the Ownership Limit being exchanged for Excess Stock in accordance
with Section 10(b).
(iii) Prior to granting any exception pursuant to Section 10(h)(i) or
10(h)(ii), the Board of Directors of this Corporation may require a ruling from
the IRS, or an opinion of counsel, in either case in form and substance
satisfactory to the Board of Directors, in its sole discretion as it may deem
necessary or advisable in order to determine or ensure the Corporation's
organization and operation in conformity with the requirements for qualification
as a REIT under the Code; provided, however, that obtaining a favorable ruling
or opinion shall not be required for the Board of Directors to grant an
exception hereunder.
(i) Increase in Ownership Limit. Notwithstanding anything herein to the
contrary, Article VII, Section 9 of the charter of the Corporation shall apply
to this Section 10.
(j) Legend. Each certificate for Class B Common shall bear substantially
the following legend:
The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the information required by Section 2-211(d) of
the Corporations and Associations Article of the Annotated Code of Maryland
with respect to the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption of
the shares of each class of stock which the Corporation has authority to
issue and, if the Corporation is authorized to issue any preferred or
special class in series, (i) the differences in the relative rights and
preferences between the shares of each series to the extent set, and (ii)
the authority of the Board of Directors to set such rights and preferences
of subsequent series. The following summary does not purport to be complete
and is subject to and qualified in its entirety by reference to the charter
of the Corporation including all amendments and supplements thereto (the
"Charter"), a copy of which, including restrictions on transfer, will be
sent without charge to each stockholder who so requests. Such request must
be made to the Secretary of the Corporation at its principal office or to
the Transfer Agent. All capitalized terms in this legend have the meanings
defined in the Charter.
The securities represented by this certificate are subject to restrictions
on ownership and transfer for the purpose of the Corporation's maintenance
of its status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended. Except as otherwise provided pursuant to the
Charter of the Corporation, no Person may Beneficially Own or
Constructively Own any shares of Class B Common such that such Person would
Beneficially Own or Constructively Own Common Equity in excess of 9% in
value of the aggregate of the outstanding shares of Common
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Equity of the Corporation. Any Person who acquires or attempts to acquire
or Beneficially Owns or Constructively Owns shares of Class B Common in
excess of the aforementioned limitation, or any Person who is or attempts
to become a transferee such that Class B Excess Common would result under
the provisions of the Charter, shall immediately give written notice or, in
the event of a proposed or attempted Transfer, give at least 15 days prior
written notice to the Corporation of such event and shall provide to the
Corporation such other information as it may request in order to determine
the effect of any such Transfer on the corporation's status as a REIT.
Transfers in violation of the restrictions described above shall be void ab
initio. If the restrictions on ownership and transfer are violated, the
securities represented hereby will be designated and treated as shares of
Class B Excess Common which will be transferred, by operation of law, to
the trustee of a trust for the exclusive benefit of one or more charitable
organizations.
(k) Severability. If any provision of this Section 10 or any application of
any such provision is determined to be invalid by any federal or state court
having jurisdiction, the validity of the remaining provisions shall not be
affected and other applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.
(l) Class B Excess Common.
(i) Ownership In Trust. Upon any purported Transfer (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the NYSE) that results in the issuance of Class B Excess Common pursuant to
Section 10(b), such Class B Excess Common shall be deemed to have been
transferred to the Trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. The Trustee shall be appointed by the Corporation, and
shall be a person unaffiliated with the Corporation, any Purported Beneficial
Transferee or any Purported Record Transferee. By written notice to the Trustee,
the Corporation shall designate one or more non-profit organizations to be the
Charitable Beneficiary(ies) of the interest in the Trust representing the Class
B Excess Common such that (a) the shares of Class B Common from which the shares
of Class B Excess Common held in the Trust were so converted would not violate
the restrictions set forth in paragraph (a) of this Section 10 in the hands of
such Charitable Beneficiary and (b) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(a), 170(c)(2) and 501(c)(3) of the
Code. The Trustee of the Trust will be deemed to own the Class B Excess Common
for the benefit of the Charitable Beneficiary on the date of the purported
Transfer or other event that results in Class B Excess Common pursuant to
paragraph (b) of this Section 10. Class B Excess Common so held in trust shall
be issued and outstanding shares of stock of the Corporation. The Purported
Record Transferee shall have no rights in such Class B Excess Common except the
right to designate a transferee of such Class B Excess Common upon the terms
specified in Section 10(l)(v). The Purported Beneficial Transferee shall have no
rights in such Class B Excess Common except as provided in this Section 10.
(ii) Dividend Rights. Class B Excess Common will be entitled to dividends
and distributions authorized and declared with respect to the Class B Common
from which the Class B Excess Common was converted and will be payable to the
Trustee of the Trust
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in which such Class B Excess Common is held, for the benefit of the Charitable
Beneficiary. Dividends and distributions will be authorized and declared with
respect to each share of Class B Excess Common in an amount equal to the
dividends and distributions authorized and declared on each share of Class B
Common from which the Class B Excess Common was converted. Any dividend or
distribution paid to a Purported Record Transferee prior to the discovery by the
Corporation that Class B Common has been transferred in violation of the
provisions of this Section 10 shall be repaid by the Purported Record Transferee
to the Trustee upon demand. The Corporation shall rescind any dividend or
distribution authorized and declared but unpaid as void ab initio with respect
to the Purported Record Transferee, and the Corporation shall pay such dividend
or distribution when due to the Trustee of the Trust for the benefit of the
Charitable Beneficiary.
(iii) Conversion Rights. Holders of shares of Class B Excess Common shall
not be entitled to exchange any shares of Class B Excess Common into shares of
Common Stock. Any exchange of shares of Class B Common for shares of Common
Stock made prior to the discovery by the Corporation that such shares of Class B
Common have been converted into Class B Excess Common shall be void ab initio
and the Purported Record Transferee shall return the shares of Common Stock into
which the Class B Common was exchanged upon demand to the Corporation which
shares of Common Stock shall be exchanged back into Class B Excess Common and
deposited into the Trust. Notwithstanding the foregoing, at any time on or after
the Class B Issue Date, the Corporation may elect to exchange Class B Excess
Common for Common Stock in accordance with Section 7.
(iv) Rights Upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any other distribution of all or
substantially all of the assets of the Corporation, each holder of shares of
Class B Excess Common shall be entitled to receive, ratably (treating each Class
B Excess Common share as the equivalent of that number of shares of Common Stock
into which it may then be exchanged by the Corporation pursuant to Section 7)
with each other holder of Class B Common and Class B Excess Common converted
from Class B Common, any distribution or payment made to all holders of Common
Stock.
Any liquidation distributions to be distributed with respect to Class B
Excess Common shall be distributed in the same manner as proceeds from the sale
of Class B Excess Common are distributed as set forth in Section 10(l)(v).
(v) Non-Transferability of Excess Stock. Class B Excess Common shall not be
transferable. In its sole discretion, the Trustee of the Trust may transfer the
interest in the Trust representing shares of Class B Excess Common to any Person
if the shares of Class B Excess Common would not be Class B Excess Common in the
hands of such Person. If such transfer is made, the interest of the Charitable
Beneficiary in the Class B Excess Common shall terminate and the proceeds of the
sale shall be payable by the Trustee to the Purported Record Transferee and to
the Charitable Beneficiary as herein set forth. The Purported Record Transferee
shall receive from the Trustee the lesser of (i) the price paid by the Purported
Record Transferee for its shares of Class B Common that were converted into
Class B Excess Common or, if the Purported Record Transferee did not give value
for such shares (e.g. the stock was received through a gift, devise or other
transaction), the average closing price for the class of shares from which such
shares of Class B Excess Common were converted for the ten trading
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days immediately preceding such sale or gift, and (ii) the price received by the
Trustee from the sale or other disposition of the Class B Excess Common held in
trust. The Trustee may reduce the amount payable to the Purported Record
Transferee by the amount of dividends and distributions which have been paid to
the Purported Record Transferee and are owed by the Purported Record Transferee
to the Trustee pursuant to Section 10(l)(ii). Any proceeds in excess of the
amount payable to the Purported Record Transferee shall be paid by the Trustee
to the Charitable Beneficiary. Upon such transfer of an interest in the Trust,
the corresponding shares of Class B Excess Common in the Trust shall be
automatically exchanged for an equal number of shares of Class B Common and such
shares of Class B Common shall be transferred of record to the transferee of the
interest in the Trust if such shares of Class B Common would not be Class B
Excess Common in the hands of such transferee. Prior to any transfer of any
interest in the Trust, the Corporation must have waived in writing its purchase
rights under Section 10(l)(vii).
(vi) Voting Rights for Class B Excess Common. Any vote cast by a Purported
Record Transferee of Class B Excess Common prior to the discovery by the
Corporation that Class B Common has been transferred in violation of the
provisions of this Section 10 shall be void ab initio. While the Class B Excess
Common is held in trust, the Purported Record Transferee will be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class B Common
which have been converted into shares of Class B Excess Common for the benefit
of the Charitable Beneficiary.
(vii) Purchase Rights in Class B Excess Common. Notwithstanding the
provisions of Section 10(l)(v), shares of Class B Excess Common shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
required the issuance of such Class B Excess Common (or, if the Transfer or
other event that resulted in the issuance of Class B Excess Common was not a
transaction in which the Purported Beneficial Transferee gave full value for
such Class B Excess Common, a price per share equal to the Market Price on the
date of the purported Transfer or other event that resulted in the issuance of
Class B Excess Common) and (ii) the Market Price on the date the Corporation, or
its designee, accepts such offer. The Corporation shall have the right to accept
such offer for a period of ninety (90) days after the later of (i) the date of
the Transfer or other event which resulted in the issuance of such shares of
Class B Excess Common and (ii) the date the Board of Directors determines in
good faith that a Transfer or other event resulting in the issuance of shares of
Class B Excess Common has occurred, if the Corporation does not receive a notice
of such Transfer or other event pursuant to Section 10(d). The Corporation may
appoint a special trustee of the Trust for the purpose of consummating the
purchase of Class B Excess Common by the Corporation. In the event that the
Corporation's actions cause a reduction in the number of shares of Class B
Common outstanding and such reduction results in the issuance of Class B Excess
Common, the Corporation is required to exercise its option to repurchase such
shares of Class B Excess Common if the Beneficial Owner notifies the Corporation
that it is unable to sell its rights to such Class B Excess Common.
(m) Settlement. Nothing in this Section 10 shall preclude the settlement of
any transaction entered into through the facilities of the NYSE.
11. Definitions. For purposes of the provisions included in Article VII of
the Articles as a result of the Articles Supplementary adopted and filed in
connection with the designation and reclassification of the Class B Common:
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"Aggregate FFO Growth" shall mean, with respect to any Class B Year, the
fraction (expressed as a percentage), the numerator of which is the excess, if
any, of FFO per share of Common Stock in such Class B Year over the FFO per
share of Common Stock in the Base Year ("Base Year FFO"), in each case,
calculated on a fully diluted basis and the denominator of which is the Base
Year FFO, calculated on a fully diluted basis. For purposes of determining FFO
per share on a fully diluted basis, the diluted weighted average number of
shares shall be calculated in accordance with GAAP, except that all Class B
Common Stock and Class B Excess Common will be deemed converted into Common
Stock at then applicable Exchange Rate for an exchange at the election of a
holder pursuant to Section 6.
"Base Year" shall mean the twelve month period ending on the last day of
the calendar quarter in which the Class B Issue Date occurs.
"Base Year Quarterly Dividend" shall mean $.3375 per share.
"Beneficial Ownership" shall mean ownership of Class B Common or Class B
Excess Common by a Person who is or would be treated as an owner of such Class B
Common or Class B Excess Common either directly or constructively through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of
the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have the correlative meanings.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in The City of
New York are authorized or required by law, regulation or executive order to
close.
"Capital Stock" shall mean all classes of series of stock of the
Corporation, including, without limitation, Common Stock, Class B Common,
preferred stock, par value $0.01 per share and excess stock, par value $0.01 per
share.
"Charitable Beneficiary" shall mean a beneficiary of the Trust as
determined pursuant to Section 10(l).
"Class B Dividend Amount" shall mean, with respect to any quarterly period,
an amount equal to 1/4th of the product of (a) the Unadjusted Class B Dividend
Amount for the Class B Year in which such quarterly period occurs, multiplied by
(b) the Dividend Payment Percentage for such quarterly period; provided, however
that if during any Class B Year after the second Class B Year, the Unadjusted
Class B Dividend Amount for the then current Class B Year is less than the
Unadjusted Class B Dividend Amount for the prior Class B Year, then for each
quarter during such year having a Dividend Payment Percentage of 100%, the Class
B Dividend Amount for such quarter shall not be less than the sum of (i) the
dividends paid on a share of Common Stock plus (ii) $0.2225. Notwithstanding the
foregoing, the Class B Dividend Amount for the quarter in which the Class B
Issue Date occurs shall be equal to the product of (a) $.006222, multiplied by
(b) the number of days elapsed from the Class B Issue Date to the last day of
the calendar quarter in which the Class B Issue Date occurs and multiplied by
(c) the Dividend Payment Percentage for such quarterly period.
"Class B Year" shall mean the Base Year and each consecutive twelve-month
period thereafter.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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<PAGE>
"Common Equity" shall mean all shares now or hereafter authorized of any
class of common stock of the Corporation, including the Common Stock and the
Class B Common Stock, and any other stock of the Corporation, howsoever
designated, authorized after the Class B Issue Date, which has the right
(subject always to prior rights of any class or series of preferred stock) to
participate in the distribution of the assets and earnings of the Corporation
without limit as to per share amount.
"Constructive Ownership" shall mean ownership of Class B Common or Class B
Excess Common by a Person who is or would be treated as an owner of such Class B
Common or Class B Excess Common either directly or constructively through the
application of Section 318 of the Code, as modified by Section 856(d)(5) of the
Code. The terms "Constructive Owner," "Constructively Owns" and "Constructively
Owned" shall have the correlative meanings.
"Current Market Price" of publicly traded Common Stock or any other equity
security of the Corporation or any other issuer for any day shall mean the last
reported sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE or, if such security is not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such security is listed or admitted for trading or, if not
listed or admitted for trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on the Nasdaq National
Market, the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by Nasdaq or, if bid and asked prices for
such security on such day shall not have been reported through Nasdaq the
average of the bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security selected for such purpose by the
Corporation's Chief Executive Officer or the Board of Directors of the
Corporation.
"Dividend Payment Percentage" shall mean, with respect to any quarterly
period, the lesser of (a) 1 and (b) the fraction (expressed as a percentage)
equal to (i) the dividend paid per share on the Common Stock in such quarter
over (ii) the Base Year Quarterly Dividend.
"Exchange Consideration Amount" shall mean, on any date of determination,
the product of (a) the Market Price of the Common Stock on such date multiplied
by (b) the Exchange Rate on such date, without giving effect to the adjustment
described in Section 9(a)(iv).
"Fair Market Value" shall mean the average of the daily Current Market
Prices per share of Common Stock during the ten consecutive Trading Days
selected by the Corporation commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex-date" with respect to the issuance or distribution requiring such
computation. The term "ex-date", when used with respect to any issuance or
distribution, means the first day on which the shares of Common Stock trade
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, for purposes of determining that
day's Current Market Price.
"FFO" shall mean "funds from operations" as defined by the National
Association of Real Estate Investment Trusts from time to time and determined in
good faith by the Corporation and set forth in its filings with the Securities
and Exchange Commission.
"GAAP" shall mean generally accepted accounting principles.
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<PAGE>
"IRS" shall mean the United States Internal Revenue Service.
"Market Price " as to any date shall mean the average of the last sales
price reported on the NYSE of the Common Stock, on the ten trading days
immediately preceding the relevant date, or if not then traded on the NYSE, the
average of the last reported sales price of the Class B Common on the ten
trading days immediately preceding the relevant date as reported on any exchange
or quotation system over which the Common Stock may be traded, or if not then
traded over any exchange or quotation system, then the market price of the
Common Stock on the relevant date as determined in good faith by the Board of
Directors.
"Ownership Limit" shall mean 9% in value of the aggregate of the
outstanding shares of Common Equity. The value of shares of the outstanding
shares of Common Equity shall be determined by the Board of Directors of the
Corporation in good faith, which determination shall be conclusive for all
purposes hereof.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does
not include an underwriter which participates in a public offering of the Class
B Common or any interest therein, provided that such ownership by such
underwriter would not result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code, or otherwise result in the Corporation
failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with respect to any purported
Transfer which results in Class B Excess Common, the purported beneficial
transferee or owner for whom the Purported Record Transferee would have acquired
or owned shares of Class B Common if such Transfer had been valid under Section
10(a) below.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer which results in Class B Excess Common Stock, the record holder of the
Class B Common if such Transfer had been valid under Section 10(a).
"Set apart for payment" shall be deemed to include, without any further
action, the following: the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to an
authorization of a dividend or other distribution by the Board of Directors of
the Corporation, the allocation of funds to be so paid on any series or class of
shares of the Corporation.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE or, if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted or, if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market or, if such
securities are not quoted on the Nasdaq National Market, on the applicable
securities market in which the securities are traded.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or other
disposition of Class B Common, including (i) the granting of any option or
entering into any agreement for the
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<PAGE>
sale, transfer or other disposition of Class B Common or (ii) the sale,
transfer, assignment or other disposition of any securities (or rights
convertible into or exchangeable for Class B Common), whether voluntary or
involuntary, whether of record or beneficially or Beneficially or Constructively
Owned (including but not limited to Transfers of interests in other entities
which result in changes in Beneficial or Constructive Ownership of Class B
Common), and whether by operation of law or otherwise. The term "Transferring"
and "Transferred" shall have the correlative meanings.
"Transfer Agent" shall mean American Stock Transfer & Trust Company, or
such other agent or agents of the Corporation as may be designated by the Board
of Directors of the Corporation or its designee as the transfer agent for the
Class B Common.
"Trust " shall mean the trust created pursuant to Section 10(l).
"Trustee " shall mean the Person that is appointed by the Corporation
pursuant to Section 10(l) to serve as trustee of the Trust, and any successor
thereto.
"Unadjusted Class B Dividend Amount" shall mean (a) $2.24 per share for the
first Class B Year after the Base Year and (b) with respect to any Class B Year
thereafter, an amount equal to $2.24 multiplied by the sum of (i) one plus (ii)
70% of Aggregate FFO Growth for the prior Class B Year, but in no event shall
the Unadjusted Class B Dividend Amount be less than $2.24 per share.
12. Determination by Board. Any determination by the Board of Directors
pursuant to the terms of the Class B Common shall be final and binding upon the
holders thereof and shall be conclusive for all purposes.
THIRD: The Class B Common shares have been classified and designated by the
Board of Directors under the authority contained in the Charter.
FOURTH: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FIFTH: These Articles Supplementary shall be effective at the time the
State Department of Assessments and Taxation of Maryland accepts these Articles
Supplementary for record.
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<PAGE>
IN WITNESS WHEREOF, Reckson Associates Realty Corp. has caused these
presents to be signed in its name and on its behalf by its President and Chief
Operating Officer and its corporate seal to be hereunto affixed and attested by
its Secretary, and the said officers of the Corporation further acknowledge said
instrument to be the corporate act of the Corporation, and state under the
penalties of perjury that, to the best of their knowledge, information and
belief, the matters and facts therein set forth with respect to approval are
true in all material respects.
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Scott H. Rechler,
President and Chief Operating Officer
(SEAL)
ATTEST:
______________________________________
Gregg Rechler, Secretary
EXHIBIT 3.6
RECKSON ASSOCIATES REALTY CORP.
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The charter of Reckson Associates Realty Corp., a Maryland
corporation (the "Corporation"), is hereby amended by changing the designation
of the Corporation's "Common Stock" to "Class A Common Stock."
SECOND: The foregoing amendments were approved by a majority of the
entire Board of Directors of the Corporation and are limited to changes
expressly permitted by Section 2-605(a)(2) of the Maryland General Corporation
Law to be made without action by the stockholders.
THIRD: The undersigned President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and, as to all matters or
facts required to be verified under oath, the undersigned President acknowledges
that to the best of his knowledge, information and belief, these matters and
facts are true in all material respects and that this statement is made under
the penalties of perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be
signed in its name and on its behalf by its President and attested to by its
Secretary on this _____ day of November, 1999.
ATTEST: RECKSON ASSOCIATES REALTY CORP.
By:
- ------------------- ---------------------(SEAL)
Gregg Rechler Scott Rechler
Secretary President
EXHIBIT 3.7
ARTICLES SUPPLEMENTARY
RECKSON ASSOCIATES REALTY CORP.
Reckson Associates Realty Corp., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "SDAT") that:
FIRST: Under a power contained in Title 3, Subtitle 8 of the Maryland
General Corporation Law (the "MGCL") , the Corporation, by resolutions of its
Board of Directors, duly adopted at a meeting duly called and held on November
3, 1999, elected to become subject to Section 3 - 804 (a) of the MGCL, the
repeal of which may be effected only by the means authorized by Section 3 - 802
(b) (3) of the MGCL.
SECOND: Pursuant to the resolutions described above, notwithstanding any
other lesser proportion of votes required by a provision in the charter or the
Bylaws of the Corporation, the stockholders of the Corporation may remove any
director by the affirmative vote of at least two-thirds of all the votes
entitled to be cast by the stockholders of the Corporation generally in the
election of directors.
THIRD: The election to become subject to Section 3 - 804 (a) of the MGCL
has been approved by the Board of Directors of the Corporation in the manner and
by the vote required by law, and pursuant to Section 3 - 802 (d) (3) of the
MGCL, stockholder approval is not required.
FOURTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be executed under seal in its name and on its behalf by its President and
attested to by its Secretary on this 10th day of January, 2000.
ATTEST: RECKSON ASSOCIATES REALTY CORP.
/s/ Gregg Rechler By: /s/ Scott Rechler (SEAL)
- -------------------------------- -------------------------
(Gregg Rechler) (Scott Rechler)
Secretary President
EXHIBIT 10.6
RECKSON ASSOCIATES REALTY CORP.
SUPPLEMENT TO THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
ESTABLISHING
SERIES B COMMON UNITS
OF
LIMITED PARTNERSHIP INTEREST
In accordance with Sections 4.2 and 14.1 B(3) of the Amended and Restated
Agreement of Limited Partnership, dated as of June 2, 1995, as amended on
December 6, 1995, April 13, 1998, and June 30, 1998 (the "Partnership
Agreement"), the Partnership Agreement is hereby supplemented to establish a
class of 11,694,567 common units of limited partnership interest of Reckson
Operating Partnership, L.P. (the "Partnership") which shall be designated "Class
B Common Units" having the rights, preferences, powers, privileges and
restrictions, qualifications and limitations granted to or imposed upon the
Class B Exchangeable Common Stock issued by Reckson Associates Realty Corp. (the
"Company" or "Corporation") (the "Class B Common Stock") as set forth below and
which shall be issued to the Company. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Partnership Agreement.
WHEREAS, the Company, the Partnership, Metropolitan Partners LLC
("Metropolitan") and Tower Realty Trust, Inc. ("Tower") executed a merger
agreement on December 8, 1998, pursuant to which Tower will be merged into
Metropolitan;
WHEREAS, on this date the Company is issuing 11,694,567 shares of Class B
Exchangeable Common Stock pursuant to the Articles Supplementary of the Company,
as filed with the Maryland State Department of Assessments and Taxation on or
about May 24, 1999 (the "Articles Supplementary"); and
WHEREAS, pursuant to Section 4.2 of the Partnership Agreement, the
Partnership desires to issue additional Partnership Units to the Company with
substantially similar designations, preferences and other rights to the Series B
Exchangeable Common Stock.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
<PAGE>
Section 1. Issuance of Class B Common Units
Pursuant to Section 4.2 of the Partnership Agreement, the Partnership
hereby issues 11,694,567 additional Partnership Interests (the "Class B Common
Units") to the Company. The Class B Common Units will have substantially the
same designations, preferences and other rights of the Class B Exchangeable
Common Stock, as specified in this amendment and in Exhibit I. In consideration
for the issuance of the Class B Common Units, the Company has made a Capital
Contribution to the Partnership in an equal amount of shares of Class B
Exchangeable Common Stock.
Section 2. Amendment to Partnership Agreement
Pursuant to Section 14.1.B(3) of the Partnership Agreement, the General
Partner, as general partner of the Partnership and as attorney-in-fact for its
Limited Partners, hereby amends the Partnership Agreement as follows:
(A) Article 1 of the Partnership Agreement is hereby amended by adding
the following definition of "Class B Common Units":
"Class B Common Units" means the units of limited partnership interest
issued to the Company on May 24, 1999, in connection with the issuance of the
Class B Exchangeable Common Stock by the Company.
"Common Units" means the units of limited partnership interest issued to
the Company other than the Class B Common Units, the Series A Preferred Units,
the Series B Preferred Units, the Series C Preferred Units, the Series D
Preferred Units or any other series of units of limited partnership interest
issued in the future and designated as preferred or otherwise different from the
Common Units with respect to the payment of distributions, including
distributions upon liquidation.
Section 3. Continuation of Partnership Agreement
The Partnership Agreement and this Amendment shall be read together and
shall have the same force and effect as if the provisions of the Partnership
Agreement and this Amendment were contained in one document. Any provisions of
the Partnership Agreement not amended by this Amendment shall remain in full
force and effect as provided in the Partnership Agreement immediately prior to
the date hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Supplement to the
Partnership Agreement as of the 24th day of May, 1999.
GENERAL PARTNER:
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Name:
Title:
EXISTING LIMITED PARTNERS:
By: Reckson Associates Realty Corp.,
as Attorney-in-Fact for the Limited Partners
By:____________________________
Name:
Title:
Class B Common Unit Holder
RECKSON ASSOCIATES REALTY CORP.
By:____________________________________
Name:
Title:
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<PAGE>
EXHIBIT I
RECKSON OPERATING PARTNERSHIP, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE CLASS B COMMON PARTNERSHIP UNITS
The following are the terms of the Class B Common Partnership Units
established pursuant to this Amendment:
(A) Number. The maximum number of authorized Class B Common Partnership
Units (the "Class B Common Units") shall be 11,694,567.
(B) Distributions.
(1) For any quarterly period, the holder of the Class B Common Units shall
be entitled to receive, if, when and as authorized by the General Partner out of
funds legally available for the payment of distributions, cash distributions in
an amount per unit equal to the Class B Dividend Amount. Distributions on the
Class B Common Units, if authorized, shall be payable quarterly in arrears on
January 31, April 30, July 31 and October 31 of each year or, if not a Business
Day, the next succeeding Business Day, commencing July 31, 1999 (each, a
"Distribution Payment Date"). Distributions will be payable to the holder of the
Class B Common Units with respect to the Class B Common Units held at the close
of business on the applicable record date, which shall be such date designated
by the General Partner for the payment of distributions that is not more than 30
nor less than 10 days prior to such Distribution Payment Date (each, a
"Distribution Payment Record Date").
(2) No distributions on the Class B Common Units shall be authorized by the
General Partner or be paid or set apart for payment by the Partnership at such
time as the terms and provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness, prohibits such authorization,
payment or setting apart for payment or provides that such authorization,
payment or setting apart for payment would constitute a breach thereof or a
default thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
(3) Distributions on the Class B Common Units will be noncumulative. If the
General Partner does not authorize a distribution on the Class B Common Units
payable on any Distribution Payment Date while any Class B Common Unit is
outstanding, then the holder of the Class B Common Units will have no right to
receive a distribution for that Distribution Payment Date, and the Partnership
will have no obligation to pay a distribution for that Distribution Payment Date
with respect to the Class B Common Units.
(4) No distributions, whether in cash, securities or property, will be
authorized or paid or set apart for payment to holders of Common Units for any
quarterly period unless for each Class B Common Unit outstanding, a distribution
equal to the Class B Dividend Amount
<PAGE>
with respect to such period has been or contemporaneously is authorized and paid
or authorized and a sum sufficient for the payment thereof is set apart for such
payment to the holder of the Class B Common Units for the then current
distribution period.
(5) Subject to the rights and preferences of other classes or series of
units, the Partnership, at its election, may authorize and pay a distribution to
the holder of Class B Common Units in excess of the Class B Dividend Amount.
(6) Class B Common Units shall not entitle the holder thereof to receive
any distribution made in respect of Common Units.
(C) Liquidation.
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Partnership (referred to herein as a "liquidation"), the
holder of the Class B Common Units will have no liquidation preference, but will
be entitled to share ratably (treating each Class B Common Unit as the
equivalent of that number of Common Units into which it may then be exchanged)
in any distribution or payment made to holders of Common Units.
(D) Redemption.
Class B Common Units will not be redeemable; provided, however, that the
foregoing shall not prohibit the Partnership from repurchasing Class B Common
Units from the holder thereof if and to the extent such holder agrees to sell
such Units.
(E) Voting Rights.
The holder of Class B Common Units shall have the right to vote on all
matters submitted to a vote of the holders of Common Units; the holder of Class
B Common Units and Common Units shall vote together as a single class. In any
such vote, the holder of Class B Common Units shall be entitled to one vote with
respect to each Class B Common Unit.
(F) Exchange at Holder's Election.
(1) Class B Common Units will be exchangeable at any time, at the option of
the holder thereof, into Common Units at a rate of one Common Unit per Class B
Common Unit, subject to adjustment as described below (the "Exchange Rate");
provided, however, that the right of the holder to exchange a Class B Common
Unit for which the Partnership has mailed an Exchange Notice (as defined below)
will terminate at the close of business on the fifth Business Day prior to the
Exchange Date (as defined below).
(2) To exercise the exchange right, the holder of Class B Common Units
shall provide written notice to the Partnership that such holder elects to
exchange such Class B Common Units.
(3) Each exchange consummated pursuant to this Section (F) shall be deemed
to have been effected immediately prior to the close of business on the date on
which such notice (and if applicable, payment of an amount equal to the
distribution payable on such units)
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<PAGE>
received by the Partnership as aforesaid, and such exchange shall be at the
Exchange Rate in effect at such time and on such date.
(4) The holder of Class B Common Units shall be entitled to receive and
retain the distribution payable on such units held on a Distribution Payment
Record Date on the corresponding Distribution Payment Date notwithstanding the
exchange of such units following such Distribution Payment Record Date and on or
prior to such Distribution Payment Date. Except as provided above, the
Partnership shall make no payment or allowance for unpaid distributions on
exchanged units or for distribution on the Common Units that are issued upon
such exchange.
(G) Exchange at Partnership's Option.
(1) The Class B Common Units shall not be exchangeable by the Partnership
prior to the end of the 54-month period commencing with the Class B Issue Date
(as defined below). Subject to Section (J), each Class B Common Unit will be
exchangeable at any time after the fifty-four (54) month period immediately
following the Class B Issue Date, at the option of the Partnership, into Common
Units at the Exchange Rate, plus the amounts indicated in Section (G)(5).
(2) At least 30 days, but no more than 60 days, prior to a date fixed for
exchange of some or all of the Class B Common Units (the "Exchange Date") in
accordance with this Section (G), written notice (the "Exchange Notice") shall
be given to the holder of the Class B Common Units; provided, however, neither
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the exchange of any Class B Common Unit to be exchanged.
The Exchange Notice shall include the following information:
(i) the Exchange Rate;
(ii) the number of Class B Common Units to be exchanged;
(iii) the Exchange Date;
(iv) that the holder's right to elect to exchange such holder's Class B
Common Units for Common Units will terminate on the fifth Business Day prior to
the Exchange Date; and
(v) that dividends on the Class B Common Units to be exchanged shall cease
on the Exchange Date unless the Partnership defaults in the issuance of the
Common Units issuable upon exchange of such Class B Common Units.
(3) On or after the Exchange Date, unless the Partnership defaults in the
issuance of the Common Units as described above and except as provided in
Section (G)(5), (i) all distributions on any Class B Common Units so called for
exchange shall cease on the Exchange Date, and all rights of the holder of such
Class B Common Units as a holder of such Class B Common Units shall terminate
with respect thereto on the Exchange Date, other than the right to receive the
Common Units issuable upon exchange thereof, and (ii) such units shall no longer
be deemed outstanding for any purpose whatsoever. Until Class B Common Units
called
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for exchange are surrendered in the manner described in the Exchange Notice, no
Common Units will be issued in respect thereof. No provision will be made in
respect of distributions payable on such Common Units prior to the Exchange
Date.
(4) If the Exchange Date falls after a Distribution Payment Record Date and
on or prior to the corresponding Distribution Payment Date, then the holder of
Class B Common Units shall be entitled to the distribution payable with respect
to Class B Common Units held on the Distribution Payment Record Date on the
corresponding Distribution Payment Date notwithstanding the exchange of such
units prior to such Distribution Payment Date.
(H) No Fractional Units.
No fractional Common Units shall be issued upon exchange of Class B Common
Units. The Partnership will pay to the holder of the Class B Common Units (i)
such number of Common Units as provided for herein less the whole number Common
Units that is the quotient of the amount of cash payable in accordance with (ii)
below divided by the Exchange Consideration Amount and (ii) an amount of cash
equal to the cash payable by the General Partner as a result of the exchange by
the General Partner of its Class B Common Stock, $0.01 per share, for shares of
Common Stock.
(I) Exchange Rate Adjustments.
(1) The Exchange Rate shall be adjusted from time to time as follows:
(i) If the Partnership shall after the date on which Class B Common Units
are first issued (the "Class B Issue Date") (A) pay or make a distribution to
holders of Common Units in the form of Common Units, (B) subdivide its
outstanding Common Units into a greater number of units, (C) combine its
outstanding Common Units into a smaller number of units or (D) issue any equity
securities by reclassification of its Common Units (other than any
reclassification by way of merger or binding unit exchange that is subject to
Section (I)(2)), then the Exchange Rate in effect at the opening of business on
the day following the record date for the determination of unitholders entitled
to receive such distribution or at the opening of business on the day following
the day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of any Class
B Common Unit thereafter surrendered for exchange shall be entitled to receive
the number of Common Units and other equity securities issued by
reclassification of Common Units that the holder would have owned or have been
entitled to receive after the happening of any of the events described above had
such units been exchanged immediately prior to the record date in the case of a
distribution or the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the opening of business on the day following
such record date (except as provided in Section (I)(4)) in the case of a
distribution and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Partnership shall issue after the Class B Issue Date rights,
options or warrants to all holders of Common Units entitling them (for a period
expiring within 45 days after the record date for determination of unitholders
entitled to receive such rights,
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options or warrants) to subscribe for or purchase Common Units (or securities
convertible into or exchangeable for Common Units) at a price per unit less than
the Fair Market Value per Common Unit on the record date for the determination
of unitholders entitled to receive such rights, options or warrants, then the
Exchange Rate in effect at the opening of business on the day following such
record date shall be adjusted to equal the amount determined by multiplying (I)
the Exchange Rate in effect immediately prior to the opening of business on the
day following the record date fixed for such determination by (II) a fraction,
the numerator of which shall be the sum of (A) the number of Common Units
outstanding on the close of business on the record date fixed for such
determination and (B) the number of additional Common Units offered for
subscription or purchase pursuant to such rights, options or warrants and the
denominator of which shall be the sum of (A) the number of Common Units
outstanding on the close of business on the record date fixed for such
determination and (B) the number of units that the aggregate proceeds to the
Partnership from the exercise of such rights, options or warrants for Common
Units would purchase at such Fair Market Value. Such adjustment shall become
effective immediately after the opening of business on the day following such
record date (except as provided in Section (I)(4)). In determining whether any
rights, options or warrants entitle the holders of Common Units to subscribe for
or purchase Common Units at less than the Fair Market Value, there shall be
taken into account any consideration received by the Partnership upon issuance
and upon exercise of such rights, options or warrants, with the value of such
consideration, if other than cash, to be determined by the General Partner.
(iii) If the Partnership shall distribute to all holders of its Common
Units any equity securities of the Partnership (other than Common Units) or
evidence of its indebtedness or assets (excluding cash distributions and those
rights, options and warrants referred to in and treated under subparagraph (ii)
above), then the Exchange Rate shall be adjusted so that it shall equal the
amount determined by multiplying (I) the Exchange Rate in effect immediately
prior to the close of business on the record date fixed for the determination of
unitholders entitled to receive such distribution by (II) a fraction, the
numerator of which shall be the Fair Market Value per Common Unit on the record
date for such determination and the denominator of which shall be the Fair
Market Value per Common Unit on the record date for such determination less the
then fair market value (as determined by the General Partner, whose
determination shall be conclusive) of the portion of the equity securities,
evidences of indebtedness or assets so distributed applicable to one Common
Unit. Such adjustment shall become effective immediately at the opening of
business on the day following such record date (except as provided in Section
(I)(4)). For the purposes of this subparagraph (iii), the distribution of equity
securities, evidences of indebtedness or assets which are distributed not only
to the holders of Common Units on the record date fixed for the determination of
unitholders entitled to such distribution, but also are distributed with each
Common Unit delivered to the holder of the Class B Common Units at any time
after such record date in respect of any Class B Common Units exchanged by such
holder, shall not require an adjustment of the Exchange Rate pursuant to this
subparagraph (iii), provided that on the date, if any, on which such holder
would no longer be entitled to receive in respect of such exchanged Class B
Common Units such equity securities, evidences of indebtedness or assets with a
Common Unit (other than as a result of the termination of all such equity
securities, evidences of indebtedness or assets), a distribution of such equity
securities, evidences of indebtedness or assets shall be deemed to have
occurred, and the Exchange Rate shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the record date fixed
for the
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<PAGE>
determination of the unitholders entitled to receive such distribution" and the
"record date" within the meaning of the two preceding sentences).
(iv) The Exchange Rate may be further adjusted from time to time as
described in this subparagraph (iv); provided, however, that the Exchange Rate
as so adjusted shall only be applicable in the event that the exchange of Class
B Common Units is effected pursuant to Section (F) and then, only to Class B
Common Units surrendered for exchange in accordance with Section (F); and all
adjustments described in this subparagraph (iv) shall be disregarded in the
event of any exchange pursuant to Section (G). If during any quarter of any
Class B Year, the total distributions paid on a Class B Common Unit for such
quarter and the immediately prior quarter is less than the sum of (x) 1/4th of
the Unadjusted Class B Dividend Amount applicable to the current quarter plus
(y) 1/4th of the Unadjusted Class B Dividend Amount applicable to the
immediately prior quarter, then the Exchange Rate thereafter shall be subject to
adjustment as follows. If at the time the exchange option is exercised pursuant
to Section (F):
(a) the Exchange Consideration Amount is equal to or greater than
$27.50, then no additional adjustment is required;
(b) the Exchange Consideration Amount is less than $27.50, but equal
to or greater than $22.00, then the Exchange Rate will be multiplied by the
quotient of (I) $27.50 divided by (II) the Exchange Consideration Amount;
(c) the Exchange Consideration Amount is less than $22.00, then the
Exchange Rate will be multiplied by 1.25.
(v) No adjustment in the Exchange Rate shall be required other than by
reason of Section (I)(1)(iv) unless such adjustment would require a cumulative
increase or decrease of at least 1% in the Exchange Rate; provided, however,
that any adjustments that by reason of this subparagraph (v) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall be
required and made in accordance with the provisions of this Section (I) (other
than this subparagraph (v)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of Common
Units. Notwithstanding any other provisions of this Section (I), the Partnership
shall not be required to make any adjustment of the Exchange Rate for the
issuance of any Common Units pursuant to any plan providing for the reinvestment
of distributions or interest payable on securities of the Partnership and the
investment of additional optional amounts in Common Units under such plan. All
calculations under this Section (I) shall be made to the nearest cent (with
$.005 being rounded upward) or to the nearest one-tenth of a unit (with .05 of a
unit being rounded upward), as the case may be. Anything in this subsection (1)
to the contrary notwithstanding, the Partnership shall be entitled, to the
extent permitted by law, to make such increases in the Exchange Rate, in
addition to those required by this subsection (1), as it in its discretion shall
determine to be advisable in order that any unit distributions, subdivision,
reclassification or combination of units, distribution of rights, options or
warrants to purchase units or securities, or a distribution of other assets
(other than cash distributions) hereafter made by the Partnership to its
unitholders shall not be taxable.
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(2) Except as otherwise provided for in Section (I)(1)(i), if the
Partnership shall be a party to any transaction (including, without limitation,
a merger, consolidation, statutory unit exchange, tender offer for all or
substantially all of the Common Units, sale or transfer of all or substantially
all of the Partnership's assets or recapitalization of the Common Units) (each
of the foregoing being referred to herein as a "Transaction"), in each case as a
result of which Common Units shall be converted into the right to receive units,
stock, securities or other property (including cash or any combination thereof),
the Partnership (or its successor in such Transaction) shall make appropriate
provision so that each Class B Common Unit, if not converted into the right to
receive units, stock, securities or other property in connection with such
Transaction in accordance with the third to last sentence of this subsection (2)
shall thereafter be exchangeable into the kind and amount of units, stock,
securities and other property (including cash or any combination thereof)
receivable upon the consummation of such Transaction by a holder of that number
of Common Units into which one Class B Common Unit was convertible immediately
prior to such Transaction, assuming such holder of Common Units (i) is not a
Person (as defined below) with which the Partnership consolidated or into which
the Partnership merged or which merged into the Partnership or to which such
sale or transfer was made, as the case may be (a "Constituent Person"), or an
affiliate of a Constituent Person and (ii) failed to exercise his rights of the
election, if any, as to the kind or amount of units, stock, securities and other
property (including cash or any combination thereof) receivable upon such
Transaction (each, a "Non-Electing Unit") (provided that if the kind and amount
of units, stock, securities and other property (including cash or any
combination thereof) receivable upon consummation of such Transaction is not the
same for each Non-Electing Unit, the kind and amount of units, stock, securities
and other property (including cash or any combination thereof) receivable upon
such Transaction by each Non-Electing Unit shall be deemed to be the kind and
amount so receivable per unit by a plurality of the Non-Electing Units). The
Partnership shall not be a party to any Transaction in which any Class B Common
Unit is converted into the right to receive units, stock, securities or other
property (including cash or any combination thereof) with an aggregate value (as
determined by the General Partner in good faith, whose determination shall be
conclusive) less than that receivable by the number of Common Units into which
Class B Common Units were exchangeable immediately prior to such Transaction.
The Partnership shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this subsection (2), and it
shall not consent or agree to the occurrence of any Transaction until the
Partnership has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holder of the Class B Common
Units that will contain provisions enabling the holder of Class B Common Units
that remain outstanding after such Transaction to exchange its Class B Common
Units into the consideration received by holders of Common Units at the Exchange
Rate in effect immediately prior to such Transaction. The provisions of this
subsection (2) shall similarly apply to successive Transactions.
(3) If:
(i) the Partnership shall declare a distribution on the Common Units (other
than cash distributions which do not constitute extraordinary dividends) or
there shall be a reclassification, subdivision or combination of the Common
Units; or
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<PAGE>
(ii) the Partnership shall grant to the holders of the Common Units of
rights, options or warrants to subscribe for or purchase Common Units at less
than Fair Market Value; or
(iii) the Partnership shall enter into a Transaction;
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Partnership; or
(v) there shall occur the circumstances described in clause (1)(iv) of
Section (I) that would cause the Exchange Rate to be adjusted,
then the Partnership shall notify the holder of the Class B Common Units, as
promptly as possible, but at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such distribution or rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Units
of record to be entitled to such distribution or rights, options or warrants are
to be determined or (ii) the date on which such reclassification, subdivision,
combination, Transaction or liquidation, dissolution or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Units of record shall be entitled to exchange their Common Units for
securities or other property, if any, deliverable upon such reclassification,
subdivision, combination, Transaction or liquidation, dissolution or winding up.
Failure to give or receive such notice or any defect therein shall not affect
the legality or validity of the Proceedings described in this Section (I).
(4) In any case in which Section (I)(1) provides that an adjustment shall
become effective on the day following the record date for an event, the
Partnership may defer until the occurrence of such event (i) issuing to the
holder of any Class B Common Unit converted after such record date and before
the occurrence of such event the additional Common Units issuable upon such
conversion by reason of the adjustment required by such event over and above the
Common Units issuable upon such conversion before giving effect to such
adjustment and (ii) fractionalizing any Class B Common Units and/or paying to
such holder any amount of cash in lieu of any fraction pursuant to Section (H).
(5) There shall be no adjustment of the Exchange Rate in case of the
issuance of any equity securities of the Partnership in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section (I). If any action or transaction would require adjustment of the
Exchange Rate pursuant to more than one subsection of Section (I)(1), only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(6) If the Partnership shall take any action affecting the Common Units,
other than action described in this Section (I), that in the opinion of the
General Partner would materially adversely affect the exchange rights of the
holder of the Class B Common Units, the Exchange Rate for the Class B Common
Units shall be adjusted, to the extent permitted by law, in such manner, if any,
and at such time, as the Officers of the General Partner, on behalf of the
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<PAGE>
Operating Partnership, in their sole discretion, may determine to be equitable
in the circumstances.
(7) The Partnership shall at all times reserve and keep available, free
from preemptive rights, for the purpose of effecting any exchange of the Class B
Common Units, the full number of Common Units deliverable upon the exchange of
all outstanding Class B Common Units not theretofore exchanged.
(8) The Partnership shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Units or other securities or property on exchange of the Class B Common Units
pursuant hereto.
(J) Ownership Limitations.
The Class B Common Units shall be owned and held solely by the General
Partner.
(K) General.
The rights of the General Partner, in its capacity as holder of the Class B
Common Units, are in addition to and not in limitation on any other rights or
authority of the General Partner, in any other capacity, under the Partnership
Agreement. In addition, nothing contained herein shall be deemed to limit or
otherwise restrict any rights or authority of the General Partner under the
Partnership Agreement, other than in its capacity as the holder of the Class B
Common Units.
(L) Definitions.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in The City of
New York are authorized or required by law, regulation or executive order to
close.
"Class B Dividend Amount" shall have the same meaning as "Class B Dividend
Amount" in the Articles Supplementary.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Current Market Price" of any equity security of the Company or the
Operating Partnership or any other issuer for any day shall mean the last
reported sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE or, if such security is not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such security is listed or admitted for trading or, if not
listed or admitted for trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on the Nasdaq National
Market, the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by Nasdaq or, if bid and asked prices for
such security on such day shall not have been reported through Nasdaq the
average of the bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security selected for such purpose by the
Operating Partnership's Chief Executive Officer or the General Partner; provided
however, that the Current Market Price for the Common Units
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<PAGE>
shall be deemed to be the Current Market Price of the Company's Common Stock,
par value $0.01 per share, multiplied by the Exchange Rate.
"Exchange Consideration Amount" shall mean, on any date of determination,
the product of (a) the Market Price of a Common Unit on such date multiplied by
(b) the Exchange Rate on such date, without giving effect to the adjustment
described in Section (I)(1)(iv).
"Fair Market Value" shall mean the average of the daily Current Market
Prices per share of the Company's Common Stock during the ten consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex-date" with respect to the issuance or distribution requiring
such computation. The term "ex-date", when used with respect to any issuance or
distribution, means the first day on which the shares of the Company's Common
Stock trade regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, for purposes
of determining that day's Current Market Price.
"Market Price" as to any date shall mean the average of the last sales
price reported on the NYSE of the Company's Common Stock, on the ten trading
days immediately preceding the relevant date, or if not then traded on the NYSE,
the average of the last reported sales price of the Company's Class B Common
Stock on the ten trading days immediately preceding the relevant date as
reported on any exchange or quotation system over which the Common Stock may be
traded, or if not then traded over any exchange or quotation system, then the
market price of the Company's Common Stock on the relevant date as determined in
good faith by the General Partner.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does
not include an underwriter which participates in a public offering of the Class
B Common Units or any interest therein, provided that such ownership by such
underwriter would not result in the Operating Partnership being "closely held"
within the meaning of Section 856(h) of the Code.
"Set apart for payment" shall be deemed to include, without any further
action, the following: the recording by the Operating Partnership in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to an authorization of a distribution by the General Partner, the
allocation of funds to be so paid on any series or class of units of the
Operating Partnership.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE or, if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted or, if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market or, if
10
<PAGE>
such securities are not quoted on the Nasdaq National Market, on the applicable
securities market in which the securities are traded.
11
EXHIBIT 10.7
RECKSON ASSOCIATES REALTY CORP.
SUPPLEMENT TO THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
ESTABLISHING
SERIES E PREFERRED PARTNERSHIP UNITS
OF
LIMITED PARTNERSHIP INTEREST
In accordance with Sections 4.2 and 14.1 B(3) of the Amended and Restated
Agreement of Limited Partnership, dated as of June 2, 1995, as amended on
December 6, 1995, April 13, 1998, June 30, 1998 and May 24, 1999 (the
"Partnership Agreement"), the Partnership Agreement is hereby supplemented to
establish a series of up to 6,000,000 preferred units of limited partnership
interest of Reckson Operating Partnership, L.P. (the "Partnership") which shall
be designated "Series E Preferred Units" having the rights, preferences, powers,
privileges and restrictions, qualifications and limitations granted to or
imposed upon the Series B Convertible Cumulative Preferred Stock issued by
Reckson Associates Realty Corp. (the "Company" or "Corporation") (the "Series B
Preferred Stock") as set forth below and which shall be issued to the Company.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Partnership Agreement.
WHEREAS, the Company, the Partnership, Stichting Pensioenfonds ABP, The
Travelers Insurance Company, The Travelers Life and Annuity Company, The
Standard Fire Insurance Company and Travelers Casualty and Surety Company (the
"Initial Purchasers") executed a purchase agreement on May 27, 1999;
WHEREAS, on this date the Company is issuing 6,000,000 shares of Series B
Preferred Stock pursuant to the Articles Supplementary of the Company, as filed
with the Maryland State Department of Assessments and Taxation on May 28, 1999
(the "Articles Supplementary");
WHEREAS, on this date the Company is making a Capital Contribution to the
Partnership in an amount equal to the proceeds raised in connection with the
issuance of the Series B Preferred Stock; and
WHEREAS, pursuant to Section 4.2 of the Partnership Agreement, the
Partnership desires to issue additional Partnership Units to the Company with
substantially similar designations, preferences and other rights to the Series B
Preferred Stock.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
<PAGE>
Section 1. Issuance of Series E Preferred Units
Pursuant to Section 4.2 of the Partnership Agreement, the Partnership
hereby issues 6,000,000 additional Partnership Interests (the "Series E
Preferred Units") to the Company. The Series E Preferred Units will have
substantially the same designations, preferences and other rights of the Series
B Preferred Stock, as specified in this amendment and in Exhibit I hereto. In
consideration for the issuance of the Series E Preferred Units, the Company has
made a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of the Series B Preferred Stock.
Section 2. Amendment to Partnership Agreement
Pursuant to Section 14.1.B(3) of the Partnership Agreement, the General
Partner, as general partner of the Partnership and as attorney-in-fact for its
Limited Partners, hereby amends the Partnership Agreement as follows:
(a) Article 1 of the Partnership Agreement is hereby amended by adding the
following definition of "Series E Preferred Units":
"Series E Preferred Units" means the units of limited partnership interest
issued to the Company on June 2, 1999, in connection with the issuance of the
Series B Preferred Stock by the Company.
Section 3. Continuation of Partnership Agreement
The Partnership Agreement and this Amendment shall be read together and
shall have the same force and effect as if the provisions of the Partnership
Agreement and this Amendment were contained in one document. Any provisions of
the Partnership Agreement not amended by this Amendment shall remain in full
force and effect as provided in the Partnership Agreement immediately prior to
the date hereof.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Supplement to
the Partnership Agreement as of the 2nd day of June, 1999.
GENERAL PARTNER:
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Name:
Title:
EXISTING LIMITED PARTNERS:
By: Reckson Associates Realty Corp.,
as Attorney-in-Fact for the Limited Partners
By:_______________________________
Name:
Title:
Series E Preferred Unit Holder
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Name:
Title:
3
<PAGE>
EXHIBIT I
RECKSON OPERATING PARTNERSHIP, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE SERIES E PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series E Preferred Partnership Units
established pursuant to this Amendment:
(1) Number. The maximum number of authorized Series E Preferred Partnership
Units (the "Series E Preferred Units") shall be 6,000,000.
(2) Rank. The Series E Preferred Units will, with respect to distribution
rights and rights upon liquidation, dissolution or winding up of the
Partnership, rank: (a) senior to all classes or series of common units of the
Partnership ("Common Units") and to all equity securities issued by the
Partnership the terms of which provide that such equity securities shall rank
junior to such Series E Preferred Units; (b) on a parity with all equity
securities issued by the Partnership other than those referred to in clauses (a)
and (c); and (c) junior to all equity securities issued by the Partnership that
rank senior to the Series E Preferred Units in accordance with Section 6(d). The
term "equity securities" shall not include convertible debt securities.
(3) Distributions.
(a) For any quarterly period, holders of Series E Preferred Units shall be
entitled to receive, if, when and as authorized by the General Partner, out of
funds legally available for the payment of distributions, cumulative cash
distributions in an amount per unit equal to (i) in the case of the period from
and including the date of original issue to but excluding April 30, 2000, 7.85%
per annum of the liquidation preference per unit (equivalent to $1.9625 per
annum per unit), (ii) in the case of the period from and including April 30,
2000 to but excluding April 30, 2001, 8.35% per annum of the liquidation
preference per unit (equivalent to $2.0875 per annum per unit) and (iii) in the
case of the period from and including April 30, 2001 and thereafter until any
applicable redemption or conversion, 8.85% per annum of the liquidation
preference per unit (equivalent to $2.2125 per annum per unit) (the "Series E
Convertible Dividend Amount"). Distributions on the Series E Preferred Units, if
authorized, shall be cumulative from the date of original issue and shall be
payable quarterly in arrears on January 31, April 30, July 31 and October 31 of
each year or, if not a Business Day, the next succeeding Business Day,
commencing July 31, 1999 (each, a "Distribution Payment Date"). Any distribution
payable on the Series E Preferred Units for a partial distribution period will
be computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to holders of record of Series E Preferred Units
as it appears in the records of the Partnership at the close of business on the
applicable record date, which shall be such date designated by the General
Partner for the payment of distributions that is not more than 30 nor
<PAGE>
less than 10 days prior to such Distribution Payment Date (each, a "Distribution
Payment Record Date").
(b) No distributions on the Series E Preferred Units shall be authorized by
the General Partner or be paid or set apart for payment by the Partnership at
such time as the terms and provisions of any agreement of the Partnership,
including any agreement relating to its indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law.
(c) Distributions on the Series E Preferred Units will accumulate whether
or not the Partnership has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized. Accumulated but unpaid distributions on the Series
E Preferred Units will not bear interest and holders of the Series E Preferred
Units will not be entitled to any distributions in excess of full cumulative
distributions as described above.
(d) No full distributions will be authorized or paid or set apart for
payment on any equity securities of the Partnership ranking, as to
distributions, on a parity with or junior to the Series E Preferred Units for
any period unless full distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
is set apart for such payment on the Series E Preferred Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full or a sum sufficient for such full payment is
not so set apart upon the Series E Preferred Units and the other equity
securities of the Partnership ranking on a parity as to distributions with the
Series E Preferred Units, all distributions authorized upon the Series E
Preferred Units and any other equity securities of the Partnership ranking on a
parity as to distributions with the Series E Preferred Units shall be authorized
pro rata so that the amount of distributions authorized per Series E Unit and
such other equity securities shall in all cases bear to each other the same
ratio that accumulated distributions per Series E Unit and such other equity
securities (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such equity securities do not
have cumulative distributions) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on Series E Preferred Units which may be in arrears.
(e) Except as provided in Section 3(d), unless full distributions on the
Series E Preferred Units have been or contemporaneously are authorized and paid
or authorized and a sum sufficient for the payment thereof is set apart for
payment for all past distribution periods and the then current distribution
period, no distributions (other than in common units or other equity securities
of the Partnership ranking junior to the Series E Preferred Units as to
distributions and upon liquidation) shall be authorized or paid or set aside for
payment or other distribution shall be authorized or made upon the Common Units
or any other equity securities of the Partnership ranking junior to or on a
parity with the Series E Preferred Units as to distributions or upon
liquidation, nor shall any Common Units or any other equity securities of the
Partnership ranking junior to or on a parity with the Series E Preferred Units
as to distributions or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption
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of any such units) by the Partnership (except (1) by conversion into or exchange
for other units of the Partnership ranking junior to the Series E Preferred
Units as to distributions and upon liquidation or (2) redemptions for the
purpose of preserving the Company's status as a real estate investment trust (a
"REIT") under the Code).
(f) Any distribution payment made on Series E Preferred Units shall first
be credited against the earliest accumulated but unpaid distribution due with
respect to such units which remains payable.
(4) Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Partnership (referred to herein as a "liquidation"),
the holders of the Series E Preferred Units will be entitled to be paid out of
the assets of the Partnership legally available for distribution to its
unitholders liquidating distributions, in cash or property at its fair market
value as determined by the General Partner, in the amount of a liquidation
preference of $25.00 per unit, plus an amount equal to any accumulated and
unpaid distributions to the date of such liquidation, before any distribution or
payment is made to holders of Common Units or any other equity securities of the
Partnership ranking junior to the Series E Preferred Units as to the
distribution of assets upon a liquidation. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of Series
E Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
(b) In the event that, upon any liquidation of the Partnership, the
available assets of the Partnership are insufficient to pay the amount of the
liquidating distributions on all outstanding Series E Preferred Units and the
corresponding amounts payable on all other equity securities of the Partnership
ranking on a parity with Series E Preferred Units in the distribution of assets
upon a liquidation, then the holders of Series E Preferred Units and all other
such equity securities shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions per unit to which they would
otherwise be respectively entitled.
(c) The consolidation or merger of the Partnership with or into any other
entity, or the merger of another entity with or into the Partnership, or a
statutory unit exchange by the Partnership, or the sale, lease or conveyance of
all or substantially all of the property or business of the Partnership, shall
not be deemed to constitute a liquidation of the Partnership.
(d) The liquidation preference of the outstanding Series E Preferred Units
will not be added to the liabilities of the Partnership for the purpose of
determining whether under the Delaware Revised Uniform Limited Partnership Act a
distribution may be made to unitholders of the Partnership whose preferential
rights upon dissolution of the Partnership are junior to those of holders of
Series E Preferred Units. This section 4(d) shall be without prejudice to the
provisions of Sections 3(a) and 4(a) hereof.
(5) Redemption.
(a) The Partnership shall redeem the Series E Preferred Units, in such a
number and at such time as Series B Preferred Stock is redeemed by the Company,
at a redemption price per share in cash equal to (i) in the case of a redemption
from and including March 2, 2002 to
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and including June 2, 2003, an amount that provides an annual rate of return in
respect of such unit of 15% calculated based on the timing and amount of all
payments (including all distributions other than liquidated damages) made to and
including the date of redemption, relative to the liquidation preference
thereof, (ii) in the case of a redemption from and including June 2, 2003 to and
including June 2, 2004, $25.50 and (iii) in the case of a redemption from and
including June 2, 2004 and thereafter, $25.00, plus, in each case, all
accumulated and unpaid distributions thereon to the date of redemption (the
"Cash Redemption Right").
In addition to the Cash Redemption Right, on or after March 2, 2002, the
Partnership shall redeem the Series E Preferred Units in exchange for Common
Units, in such a number and at such time as Series B Preferred Stock is redeemed
by the Company in exchange for shares of the Company's Common Stock pursuant to
Section 5 of the Articles Supplementary establishing the Series B Preferred
Stock (the "Stock Redemption Right").
(b) At its election, the Company may require that the Partnership, prior to
the Series E Unit Redemption Date, deliver the redemption price to the Company
so that the Company may irrevocably deposit the redemption price (including
accumulated and unpaid distributions) of the Series B Preferred Stock it has
called for redemption in trust for the holders thereof with a bank or trust
company. Any monies so deposited which remain unclaimed by the holders of the
Series B Preferred Stock at the end of two years after the Series E Unit
Redemption Date will be returned by such bank or trust company to the Company
and the Company shall promptly deliver such funds to the Partnership.
(c) From and after the Series E Unit Redemption Date (unless the
Partnership defaults in payment of the redemption price), all distributions on
the Series E Preferred Units subject to such redemption will cease to accumulate
and all rights of the holders thereof, except the right to receive the
redemption price thereof (including all accumulated and unpaid distributions to
the Series E Unit Redemption Date), will cease and terminate and such units will
not thereafter be transferred (except with the consent of the Partnership) on
the Partnership's records, and such units shall not be deemed to be outstanding
for any purpose whatsoever.
(d) Unless full distributions on all Series E Preferred Units shall have
been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all past
distribution periods and the then current distribution period, no Series E
Preferred Units shall be redeemed unless all outstanding Series E Preferred
Units are simultaneously redeemed; provided, however, that the foregoing shall
not prevent the redemption of Series E Preferred Units (i) in order to preserve
the REIT status of the Company or (ii) pursuant to a purchase or exchange offer
made by the Company with respect to shares of the Series B Preferred Stock on
the same terms to holders of all outstanding shares of Series B Preferred Stock.
(e) Unless full distributions on all Series E Preferred Units have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof is set apart for payment for all past distribution periods
and the then current distribution period, the Partnership shall not purchase or
otherwise acquire, directly or indirectly, any Series E Preferred Units (except
by conversion into or exchange for equity securities of the Partnership ranking
junior to the Series E Preferred Units as to distributions and upon
liquidation); provided,
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however, that the foregoing shall not prevent the redemption of Series E
Preferred Units (i) in order to preserve the REIT status of the Company or (ii)
pursuant to a purchase or exchange offer made by the Company with respect to
shares of the Series B Preferred Stock on the same terms to holders of all
outstanding shares of Series B Preferred Stock.
(f) Immediately prior to any redemption of Series E Preferred Units, the
Partnership shall pay, in cash, any accumulated and unpaid distributions to the
Series E Unit Redemption Date, unless such Series E Unit Redemption Date falls
after a Distribution Payment Record Date and on or prior to the corresponding
Distribution Payment Date, in which case each holder of Series E Preferred Units
at the close of business on such Distribution Payment Record Date shall be
entitled to the distribution payable on such units on the corresponding
Distribution Payment Date notwithstanding the redemption of such units on or
prior to such Distribution Payment Date. Except as provided above, the
Partnership will make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series E Preferred Units for which a notice of redemption
has been given.
(g) Any Series E Preferred Units that have been redeemed shall, after such
redemption, have the status of authorized but unissued Preferred Units, without
designation as to series, until such units are once more designated as part of a
particular series by the General Partner.
(h) No fractional Common Units will be issued upon redemption of Series E
Preferred Units pursuant to the Partnership's Stock Redemption Right. Instead of
any fractional interest in a Common Unit that would otherwise be deliverable
upon the redemption of Series E Preferred Units, the Partnership will pay to the
holder of such Series E Preferred Units an amount in cash in respect of such
fractional interest (computed to the nearest cent) based upon the Current Market
Price of Common Units on the Trading Day immediately preceding the Series E
Redemption Date. If more than one Series E Unit shall be surrendered for
redemption at one time by the same holder, the number of full shares of Common
Units issuable upon redemption thereof shall be computed on the basis of the
aggregate number of Series E Preferred Units so surrendered.
(i) The Series E Preferred Units will not have a stated maturity date and
will not be subject to any sinking fund or mandatory redemption provisions.
(6) Voting Rights.
(a) Holders of the Series E Preferred Units will not have any voting
rights, except as set forth below. In any matter in which the Series E Preferred
Units are entitled to vote, including any action by written consent, each Series
E Unit shall be entitled to one vote.
(b) So long as any Series E Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote or consent of the holders of
record of at least two-thirds of the outstanding Series E Preferred Units given
in person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any equity securities ranking senior to the Series E Preferred
Units with respect to payment of distributions or the distribution of assets
upon a liquidation of
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the Partnership or reclassify any authorized units of the Partnership into any
such equity securities, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such unit or (ii)
amend, alter or repeal the provisions of the Partnership Agreement, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
E Preferred Units or the holders thereof; provided, however, that the holders of
the Series E Preferred Units shall not be entitled to any voting rights in
connection with an Event if as a result of such Event (a) Series E Preferred
Units remain outstanding with the terms thereof materially unchanged or (b) the
Partnership is not the surviving entity but the surviving entity issues to the
holders of the Series E Preferred Units the same number of units of a separate
class of preferred units with rights, preferences, privileges and voting powers
that are materially unchanged from the preferences, rights, privileges and other
terms of the Series E Preferred Units; and provided, further, that (x) any
increase in the amount of the authorized Series E Preferred Units or the
creation or issuance of any other series of Preferred Units or (y) any increase
in the amount of authorized units of such series, in each case ranking on a
parity with or junior to the Series E Preferred Units with respect to payment of
distributions or the distribution of assets upon a liquidation of the
Partnership, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(c) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding Series E Preferred Units shall have been
converted, redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption.
(7) Conversion.
(a) Subject to Section 8, Series E Preferred Units will be convertible at
any time, at the option of the holders thereof, into Common Units at a
conversion price of $26.05 per Common Unit (equivalent to a conversion rate of
.9597 Common Units for each Series E Unit), subject to adjustment as described
below (the "Conversion Price"); provided, however, that the right to convert
Series E Preferred Units called for redemption will terminate at the close of
business on the fifth Business Day prior to the Series E Unit Redemption Date.
(b) Unless the units issuable on conversion are to be issued in the same
name as the name in which such Series E Preferred Units are registered, in which
case the Partnership shall bear the related taxes, each unit surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Partnership, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Partnership demonstrating that such
taxes have been paid or that such taxes are not due).
(c) Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which such notice (and if applicable,
payment of an amount equal to the distribution payable on such units) is
received by the Partnership as aforesaid, and the person or persons in whose
name or names that the Common Units shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of the units
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<PAGE>
represented thereby at such time on such date, and such conversion shall be at
the Conversion Price in effect at such time and on such date unless the records
of the Partnership shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such records are open, but
such conversion shall be at the Conversion Price in effect on the date on which
such notice is received by the Partnership.
(d) Holders of Series E Preferred Units at the close of business on a
Distribution Payment Record Date shall be entitled to receive the distribution
payable on such units on the corresponding Distribution Payment Date
notwithstanding the conversion of such units following such Distribution Payment
Record Date and prior to such Distribution Payment Date. A holder of Series E
Preferred Units on a Distribution Payment Record Date who (or whose transferee)
tenders any such units for conversion into Common Units on such Distribution
Payment Date shall receive the distribution payable by the Partnership on such
Series E Preferred Units on such date, and the converting holder need not
include payment of the amount of such distribution upon the conversion of the
Series E Preferred Units. Except as provided above, the Partnership shall make
no payment or allowance for unpaid distributions, whether or not in arrears, on
converted units or for distribution on the Common Units that are issued upon
such conversion.
Any fractional interest in respect of a Common Unit arising upon conversion
in accordance with the terms of this Section 7 shall be settled as provided in
Section 7(e).
(e) No fractional Common Units shall be issued upon conversion of Series E
Preferred Units. Instead of any fractional Common Unit that would otherwise be
issuable upon the conversion of a Series E Unit, the Partnership shall pay to
the holder of such unit an amount in cash in respect of such fractional interest
based upon the Current Market Price of a Common Unit on the Trading Day
immediately preceding the date of conversion. If more than one Series E Unit
shall be surrendered for conversion at one time by the same holder, the number
of full Common Units issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Series E Preferred Units so surrendered.
(f) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall after the date on which Series E
Preferred Units are first issued (the "Issue Date") (A) pay or make a
distribution in Common Units to holders of its equity securities,
(B) subdivide its outstanding Common Units into a greater number of units,
(C) combine its outstanding Common Units into a smaller number of units or
(D) issue any equity securities by reclassification of its Common Units,
then the Conversion Price in effect at the opening of business on the day
following the record date for the determination of unitholders entitled to
receive such distribution or at the opening of business on the day
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series E Unit thereafter surrendered for
conversion shall be entitled to receive the number of Common Units that
such holder would have owned or have been entitled to receive after the
happening of any of the events
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<PAGE>
described above had such units been converted immediately prior to the
record date in the case of a distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (i) shall become effective immediately after
the opening of business on the day following such record date (except as
provided in Section 7(i)) in the case of a distribution and shall become
effective immediately after the opening of business on the day next
following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Partnership shall issue after the Issue Date rights,
options or warrants to all holders of Common Units entitling them to
subscribe for or purchase Common Units (or securities convertible into or
exchangeable for Common Units) at a price per unit less than the Fair
Market Value per Common Unit on the record date for the determination of
unitholders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the day following
such record date shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the
opening of business on the day following the record date for such
determination by (II) a fraction, the numerator of which shall be the sum
of (A) the number of Common Units outstanding on the close of business on
the record date for such determination and (B) the number of units that the
aggregate proceeds to the Partnership from the exercise of such rights,
options or warrants for Common Units would purchase at such Fair Market
Value, and the denominator of which shall be the sum of (A) the number of
Common Units outstanding on the close of business on the record date for
such determination and (B) the number of additional Common Units offered
for subscription or purchase pursuant to such rights, options or warrants.
Such adjustment shall become effective immediately after the opening of
business on the day following such record date (except as provided in
Section 7(i)). In determining whether any rights, options or warrants
entitle the holders of Common Units to subscribe for or purchase Common
Units at less than the Fair Market Value, there shall be taken into account
any consideration received by the Partnership upon issuance and upon
exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the General Partner.
(iii) If the Partnership shall distribute to all holders of its Common
Units any equity securities of the Partnership (other than Common Units) or
evidences of its indebtedness or assets (excluding Permitted Common Unit
Cash Distributions and those rights, options and warrants referred to in
and treated under subsection (ii) above), then the Conversion Price shall
be adjusted so that it shall equal the price determined by multiplying (I)
the Conversion Price in effect immediately prior to the close of business
on the record date for the determination of unitholders entitled to receive
such distribution by (II) a fraction, the numerator of which shall be the
Fair Market Value per Common Unit on the record date for such determination
less the then fair market value (as determined by the General Partner,
whose determination shall be conclusive) of the portion of the equity
securities, evidences of indebtedness or assets so distributed applicable
to one
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Common Unit, and the denominator of which shall be the Fair Market Value
per Common Unit on the record date for such determination. Such adjustment
shall become effective immediately at the opening of business on the day
following such record date (except as provided in Section 7(i)). For the
purposes of this subsection (iii), the distribution of equity securities,
evidences of indebtedness or assets which are distributed not only to the
holders of Common Units on the record date for the determination of
unitholders entitled to such distribution, but also are distributed with
each Common Unit delivered to a person converting a Series E Unit after
such record date, shall not require an adjustment of the Conversion Price
pursuant to this subsection (iii), provided that on the date, if any, on
which a person converting a Series E Unit would no longer be entitled to
receive such equity securities, evidences of indebtedness or assets with a
Common Unit (other than as a result of the termination of all such equity
securities, evidences of indebtedness or assets), a distribution of such
equity securities, evidences of indebtedness or assets shall be deemed to
have occurred and the Conversion Price shall be adjusted as provided in
this subsection (iii) (and such day shall be deemed to be "the record date
for the determination of the unitholders entitled to receive such
distribution" within the meaning of the two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in the Conversion Price; provided, however, that any adjustments that by
reason of this subsection (iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in
accordance with the provisions of this Section 7 (other than this
subsection (iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Units. Notwithstanding any other provisions of this Section 7, the
Partnership shall not be required to make any adjustment of the Conversion
Price for the issuance of any Common Units pursuant to any plan providing
for the reinvestment of distributions or interest payable on securities of
the Partnership and the investment of additional optional amounts in Common
Units under such plan. All calculations under this Section 7 shall be made
to the nearest cent with ($.005 being rounded upward) or to the nearest
one-tenth of a unit (with .05 of a unit being rounded upward), as the case
may be. Anything in this subsection (f) to the contrary notwithstanding,
the Partnership shall be entitled, to the extent permitted by law, to make
such reductions in the Conversion Price, in addition to those required by
this subsection (f), as it in its discretion shall determine to be
advisable in order that any unit distributions, subdivision,
reclassification or combination of units, distribution of rights, options
or warrants to purchase units or securities, or a distribution of other
assets (other than cash distributions) hereafter made by the Partnership to
its unitholders shall not be taxable.
(g) Except as otherwise provided for in Section7(f), if the Partnership
shall be a party to any transaction (including, without limitation, a merger,
consolidation, statutory unit exchange, tender offer for all or substantially
all of the Common Units or sale of all or
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<PAGE>
substantially all of the Partnership's assets), in each case as a result of
which Common Units shall be converted into the right to receive units, stock,
securities or other property (including cash or any combination thereof (each of
the foregoing being referred to herein as a "Transaction")), each Series E Unit,
if convertible after the consummation of the Transaction, which is not converted
into the right to receive units, stock, securities or other property in
connection with such Transaction shall thereafter be convertible into the kind
and amount of units, stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of Common Units into which one Series E Unit was
convertible immediately prior to such Transaction, assuming such holder of
Common Units (i) is not a Person with which the Partnership consolidated or into
which the Partnership merged or which merged into the Partnership or to which
such sale or transfer was made, as the case may be (a "Constituent Person"), or
an affiliate of a Constituent Person and (ii) failed to exercise his rights of
the election, if any, as to the kind or amount of units, stock, securities and
other property (including cash or any combination thereof) receivable upon such
Transaction (each, a "Non-Electing Unit") (provided that if the kind and amount
of units, stock, securities and other property (including cash or any
combination thereof) receivable upon consummation of such Transaction is not the
same for each Non-Electing Unit, the kind and amount receivable by each
Non-Electing Unit shall be deemed to be the kind and amount receivable per unit
by a plurality of the Non-Electing Units). The Partnership shall not be a party
to any Transaction unless the terms of such Transaction are consistent with the
provisions of this subsection (g), and it shall not consent or agree to the
occurrence of any Transaction until the Partnership has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series E Preferred Units that will contain
provisions enabling holders of Series E Preferred Units that remain outstanding
after such Transaction to convert into the consideration received by holders of
Common Units at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this subsection (g) shall similarly apply to
successive Transactions.
(h) If:
(i) the Partnership shall declare a distribution on the Common Units
(other than Permitted Common Unit Cash Distributions) or there shall be a
reclassification, subdivision or combination of the Common Units; or
(ii) the Partnership shall grant to the holders of the Common Units
rights, options or warrants to subscribe for or purchase Common Units at
less than Fair Market Value; or
(iii) the Partnership shall enter into a Transaction; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Partnership,
then the Partnership shall notify the Company and shall cause to be mailed
to holders of Series E Preferred Units at their addresses as shown on the
records of the Partnership, as promptly as possible, but at least 15 days
prior to the applicable date hereinafter specified, a notice stating
(A) the date on which a record is to be taken for the purpose of
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such distribution or rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Units of record to be
entitled to such distribution or rights, options or warrants are to be
determined or (B) the date on which such reclassification, subdivision,
combination, Transaction or liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Units of record shall be entitled to exchange their
Common Units for securities or other property, if any, deliverable upon
such reclassification, subdivision, combination, Transaction or
liquidation, dissolution or winding up. Failure to give or receive such
notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 7.
(i) In any case in which Section 7(f) provides that an adjustment shall
become effective on the day following the record date for an event, the
Partnership may defer until the occurrence of such event (A) issuing to the
holder of any Series E Unit converted after such record date and before the
occurrence of such event the additional Common Units issuable upon such
conversion by reason of the adjustment required by such event over and above the
Common Units issuable upon such conversion before giving effect to such
adjustment and (B) fractionalizing any Series E Unit and/or paying to such
holder any amount of cash in lieu of any fraction pursuant to Section 7(e).
(j) There shall be no adjustment of the Conversion Price in case of the
issuance of any equity securities of the Partnership in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 7. If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of Section 7(f), only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(k) If the Partnership shall take any action affecting the Common Units,
other than action described in this Section 7, that in the opinion of the
General Partner would materially adversely affect the conversion rights of the
holders of the Series E Preferred Units, the Conversion Price for the Series E
Preferred Units may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the Officers of the Partnership, in their sole
discretion, may determine to be equitable in the circumstances.
(l) The Partnership shall at all times reserve and keep available, free
from preemptive rights, for the purpose of effecting conversion of the Series E
Preferred Units, the full number of Common Units deliverable upon the conversion
of all outstanding Series E Preferred Units not theretofore converted.
(m) The Partnership will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Units or
other securities or property on conversion of the Series E Preferred Units
pursuant hereto; provided, however, that the Partnership shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of Common Units or other securities or property in a name
other than that of the record holder of the Series E Preferred Units to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Partnership the amount
of any such tax or established, to the reasonable satisfaction of the
Partnership, that such tax has been paid.
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(8) Ownership Limitations.
The Series E Preferred Units shall be owned and held solely by the General
Partner.
(9) General.
The rights of the General Partner, in its capacity as holder of the Series
E Preferred Units, are in addition to and not in limitation on any other rights
or authority of the General Partner, in any other capacity, under the
Partnership Agreement. In addition, nothing contained herein shall be deemed to
limit or otherwise restrict any rights or authority of the General Partner under
the Partnership Agreement, other than in its capacity as the holder of the
Series E Preferred Units.
(10) Definitions.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in The City of
New York are authorized or required by law, regulation or executive order to
close.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Current Market Price" of any equity security of the Company or the
Partnership or any other issuer for any day shall mean the last reported sales
price, regular way, on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the NYSE or, if such security is not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on the Nasdaq National Market, the
average of the closing bid and asked prices on such day in the over-the-counter
market as reported by Nasdaq or, if bid and asked prices for such security on
such day shall not have been reported through Nasdaq the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the General Partner;
provided however, that the Current Market Price for the Common Units shall be
deemed to be the Current Market Price of the Company's Common Stock, par value
$0.01 per share, multiplied by the applicable Conversion Factor.
"Fair Market Value" shall mean the average of the daily Current Market
Prices per share of the Company's Common Stock during the ten consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex-date" with respect to the issuance or distribution requiring
such computation. The term "ex-date," when used with respect to any issuance or
distribution, means the first day on which the shares of the Company's Common
Stock trade regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, for purposes
of determining that day's Current Market Price.
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"Market Price" as to any date shall mean the average of the last sales
price reported on the NYSE of the Company's Common Stock, on the ten trading
days immediately preceding the relevant date, or if not then traded on the NYSE,
the average of the last reported sales price of the Company's Class B Common
Stock on the ten trading days immediately preceding the relevant date as
reported on any exchange or quotation system over which the Common Stock may be
traded, or if not then traded over any exchange or quotation system, then the
market price of the Company's Common Stock on the relevant date as determined in
good faith by the General Partner.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does
not include an underwriter which participates in a public offering of the Series
E Preferred Units or any interest therein, provided that such ownership by such
underwriter would not result in the Partnership being "closely held" within the
meaning of Section 856(h) of the Code.
"Set apart for payment" shall be deemed to include, without any further
action, the following: the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to an
authorization of a distribution by the General Partner, the allocation of funds
to be so paid on any series or class of units of the Partnership.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE or, if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted or, if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market or, if such
securities are not quoted on the Nasdaq National Market, on the applicable
securities market in which the securities are traded.
13
EXHIBIT 10.36
RECKSON ASSOCIATES REALTY CORP.
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
August 4, 1999
between
RECKSON SERVICE INDUSTRIES, INC.,
as Borrower
and
RECKSON OPERATING PARTNERSHIP, L.P.,
as Lender
relating to the operations of
RECKSON STRATEGIC VENTURE PARTNERS, LLC
<PAGE>
Table of Contents
Page
----
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.....................................................1
(a) Terms Generally........................................1
(b) Other Terms............................................1
ARTICLE II.
THE REVOLVING CREDIT FACILITY
Section 2.1 Commitment and Loans............................................7
Section 2.2 Borrowing Procedure.............................................7
Section 2.3 Termination and Reduction of Commitment.........................7
Section 2.4 Repayment.......................................................7
Section 2.5 Optional Prepayment.............................................8
ARTICLE III.
INTEREST AND FEES
Section 3.1 Interest Rate...................................................8
Section 3.2 Interest on Overdue Amounts.....................................8
Section 3.3 Maximum Interest Rate...........................................8
ARTICLE IV.
DISBURSEMENT AND PAYMENT
Section 4.1 Method and Time of Payments.....................................9
Section 4.2 Compensation for Losses.........................................9
Section 4.3 Withholding and Additional Costs...............................10
(a) Withholding...........................................10
(b) Additional Costs......................................10
(c) Certificate, Etc......................................10
Section 4.4 Expenses; Indemnity............................................11
Section 4.5 Survival.......................................................11
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties.................................12
(a) Good Standing and Power...............................12
(b) Authority.............................................12
(c) Authorizations........................................12
(d) Binding Obligation....................................12
(e) Litigation............................................12
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(f) No Conflicts..........................................13
(g) Taxes.................................................13
(h) Properties............................................13
(i) Compliance with Laws and Charter Documents............13
(j) No Material Adverse Effect............................13
(k) Disclosure............................................13
Section 5.2 Survival.......................................................13
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions to the Availability of the Commitment and Letters
of Credit.....................................................14
(a) This Agreement........................................14
(b) Certificate of Incorporation and By-Laws..............14
(c) Representations and Warranties........................14
(d) Other Documents.......................................14
Section 6.2 Conditions to All Loans and Letters of Credit..................14
(a) Borrowing Request.....................................14
(b) No Default............................................15
(c) Debt-to-Equity Ratio..................................15
(d) Representations and Warranties; Covenants.............15
(e) REIT Status of Reckson................................15
(f) Certain Loans Subject to Reckson's Approval...........15
Section 6.3 Satisfaction of Conditions Precedent...........................15
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants..........................................15
(a) Financial Statements; Compliance Certificates.........15
(b) Existence.............................................16
(c) Compliance with Law and Agreements....................16
(d) Authorizations........................................16
(e) Inspection............................................16
(f) Maintenance of Records................................17
(g) Notice of Defaults and Adverse Developments...........17
Section 7.2 Negative Covenants.............................................17
(a) Mergers, Consolidations and Sales of Assets...........17
(b) Liens.................................................17
(c) Indebtedness..........................................17
(d) Dividends.............................................18
(e) Certain Amendments....................................18
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ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default..............................................18
ARTICLE IX.
EVIDENCE OF LOANS; TRANSFERS
Section 9.1 Evidence of Loans and Letters of Credit........................20
ARTICLE X.
LETTERS OF CREDIT
Section 10.1 Letters of Credit..............................................20
(a) Types and Amounts.....................................20
(b) Conditions............................................21
(c) Issuance of Letters of Credit.........................21
(d) Reimbursement Obligations; Duties of the Lender.......22
(e) Payment of Reimbursement Obligations..................22
(f) Letter of Credit Fee Charges..........................22
(g) Letter of Credit Reporting Requirements...............22
(h) Indemnification; Exoneration..........................23
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Applicable Law.................................................23
Section 11.2 Waiver of Jury.................................................23
Section 11.3 Jurisdiction and Venue; Service of Process.....................24
Section 11.4 Confidentiality................................................24
Section 11.5 Amendments and Waivers.........................................24
Section 11.6 Cumulative Rights; No Waiver...................................25
Section 11.7 Notices........................................................25
Section 11.8 Certain Acknowledgments........................................25
Section 11.9 Separability...................................................25
Section 11.10 Parties in Interest............................................26
Section 11.11 Execution in Counterparts......................................26
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<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 4, 1999, between
Reckson Service Industries, Inc., a Delaware corporation, and Reckson Operating
Partnership, L.P., a Delaware limited partnership, relating to the operations of
Reckson Strategic Venture Partners, LLC ("RSVP").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lender to commit to lend to the
Borrower up to $100 million on a revolving basis for investment in RSVP;
WHEREAS, the Lender is willing to make revolving credit loans on the terms
and conditions provided herein; and
WHEREAS, the parties hereto desire to amend and restate their credit
agreement dated June 15, 1998 to allow for the issuance of one or more Letters
of Credit in favor of the Lender for the benefit of the Borrower;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.
(a) Terms Generally. The definitions ascribed to terms in this Agreement
apply equally to both the singular and plural forms of such terms. Whenever the
context may require, any pronoun shall be deemed to include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be interpreted as if followed by the phrase "without
limitation". The phrase "individually or in the aggregate" shall be deemed
general in scope and not to refer to any specific Section or clause of this
Agreement. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. The
table of contents, headings and captions herein shall not be given effect in
interpreting or construing the provisions of this Agreement. Except as otherwise
expressly provided herein, all references to "dollars" or "$" shall be deemed
references to the lawful money of the United States of America.
(b) Other Terms. The following terms have the meanings ascribed to them
below or in the Sections of this Agreement indicated below:
"Adjusted Indebtedness" means, with respect to the Borrower, the
Borrower's Indebtedness determined without regard for any amounts described
in clause (viii) of the definition of "Indebtedness."
<PAGE>
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by, or is under common control with, such Person.
"Agreement" means this credit agreement, as it may be amended,
modified or supplemented from time to time.
"Available Commitment" means, on any day, an amount equal to (i) the
Commitment on such day minus (ii) the aggregate outstanding principal
amount of Loans on such day.
"Borrower" means Reckson Service Industries, Inc., a Delaware
corporation.
"Borrowing Date" means, with respect to any Loan or Letter of Credit,
the Business Day set forth in the relevant Borrowing Request as the date
upon which the Borrower desires to borrow such Loan or Letter of Credit;
"Borrowing Request" means a request by the Borrower for a Loan or a
Letter of Credit, which shall specify (i) the requested Borrowing Date and
(ii) the aggregate amount of such Loan or Letter of Credit.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized by law
to close.
"Capital Lease Obligations" means, with respect to any Person, the
obligation of such Person to pay rent or other amounts under any lease with
respect to any property (whether real, personal or mixed) acquired or
leased by such Person that is required to be accounted for as a liability
on a consolidated balance sheet of such Person.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 10.1 for the account of the
Lender on behalf of the Borrower.
"Commitment" means $100 million, less (i) the amount of loans made by
the Lender to the Borrower for the funding of investments made by RSVP
prior to the spin-off distribution of shares of common stock of the
Borrower by Reckson and (ii) the amount of any investments made by the
Lender in joint venture investments made with RSVP, and as such amount may
be reduced from time to time pursuant to Section 2.3.
"Commitment Termination Date" means the earlier to occur of (i) June
15, 2003 and (ii) the date, if any, on which the Commitment is terminated.
"Confidential Information" means information delivered to the Lender
by or on behalf of the Borrower in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
confidential or proprietary in nature at the time it is so delivered or
information obtained by the Lender in the course of its review of the books
or records of the Borrower contemplated herein; provided that such term
shall not include information W that was publicly known or otherwise known
to the Lender prior to the
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<PAGE>
time of such disclosure, (ii) that subsequently becomes publicly known
through no act or omission by the Lender or any Person acting on the
Lender's behalf, (iii) that otherwise becomes known to the Lender other
than through disclosure by the Borrower or (iv) that constitutes financial
information delivered to the Lender that is otherwise publicly available.
"Credit Obligations" means, at any particular time, the sum of (i) the
outstanding principal amount of the Loans at such time, plus (ii) the
Letter of Credit Obligations at such time.
"Default" means any event or circumstance which, with the giving of
notice or the passage of time, or both, would be an Event of Default.
"EBITDA" means for any fiscal period, the Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such fiscal period, after
restoring thereto amounts deducted for (a) extraordinary losses (or
deducting therefrom any amounts included therein on account of
extraordinary gains) and special charges, (b) depreciation and amortization
(including write-offs or write-downs) and special charges, (c) the amount
of interest expense of the Borrower and its Subsidiaries, if any,
determined on a consolidated basis in accordance with GAAP, for such period
on the aggregate principal amount of their consolidated indebtedness, (d)
the amount of tax expense of the Borrower and its Subsidiaries, if any,
determined on a consolidated basis in accordance with GAAP, for such period
and (e) the aggregate amount of fixed and contingent rentals payable by the
Borrower and its Subsidiaries, if any, determined on a consolidated basis
in accordance with GAAP, for such period with respect to leases of real and
personal property.
"Effective Date" has the meaning assigned to such term in Section 6.1.
"Event of Default" has the meaning assigned to such term in Section
8.1.
"GAAP" means generally accepted accounting principles, as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entities as may be approved by a significant
segment of the accounting profession of the United States of America.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person (i) to purchase or pay (or
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<PAGE>
advance or supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness or (iii) to maintain
working capital, equity capital or the financial condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness. The term "Guaranteed" shall have the corresponding meaning.
"Indebtedness" means, with respect to any Person, (i) all obligations
of such Person for borrowed money or for the deferred purchase price of
property or services (including all obligations, contingent or otherwise,
of such Person in connection with letters of credit, bankers' acceptances,
interest rate swap agreements, interest rate cap agreements or other
similar instruments, including currency swaps) other than indebtedness to
trade creditors and service providers incurred in the ordinary course of
business and payable on usual and customary terms, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other similar
instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the remedies available to the
seller or lender under such agreement are limited to repossession or sale
of such property), (iv) all Capital Lease Obligations of such Person, (v)
all obligations of the types described in clauses (i), (ii), (iii) or (iv)
above secured by (or for which the obligee has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any property
(including accounts, contract rights and other intangibles) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vi) all preferred stock issued by such
Person which is redeemable, prior to full satisfaction of the Borrower's
obligations under this Agreement (including repayment in full of the Loans
and all interest accrued thereon), other than at the option of such Person,
valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (vii) all Indebtedness of
others Guaranteed by such Person and (viii) all Indebtedness of any
partnership of which such Person is a general partner.
"Indemnitee" has the meaning assigned to such term in Section 4.4(b).
"Intercompany Agreement" means the intercompany agreement, dated as of
the date hereof, by and between the Borrower and the Lender.
"Interest Period" means, with respect to any Loan, each three-month
period commencing on the date such Loan is made or at the end of the
preceding Interest Period, as the case may be; provided, however, that:
(i) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next Business Day, unless such
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
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<PAGE>
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a calendar
month; and
(iii) any Interest Period that would otherwise end after the
Commitment Termination Date then in effect shall end on such Commitment
Termination Date.
"Issuing Bank" means The Chase Manhattan Bank or such other banking
institution selected by the parties hereto to issue a Letter of Credit
pursuant to Section 10.1(c)(ii) hereof.
"Lender" means Reckson Operating Partnership, L.P., a Delaware limited
partnership.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" has the meaning set forth in Section 10.1(f).
"Letter of Credit Obligations" means, at any particular time, the sum
of (i) all outstanding Reimbursement Obligations, (ii) the aggregate
undrawn face amount of all outstanding Letters of Credit, and (iii) the
aggregate face amount of all Letters of Credit requested by the Lender but
not yet issued.
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several documents,
taken together) as an Issuing Bank may employ in the ordinary course of
business for its own account, with such modifications thereto as may be
agreed upon by such Issuing Bank and the Lender and as are not materially
adverse (in the judgment of such Issuing Bank) to the interests of the
Lender; provided, however, in the event of any conflict between the terms
of any Letter of Credit Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Lien" means, with respect to any asset of a Person, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or
on such asset, (ii) the interest of a vendor or lessor under any
conditional sale agreement, capital lease or title retention agreement
relating to such asset, and (iii) in the case of securities, any purchase
option, call or similar right of any other Person with respect to such
securities.
"Loans" has the meaning assigned to such term in Section 2.1.
"Material Adverse Effect" means any material and adverse effect on (i)
the consolidated business, properties, condition (financial or otherwise)
or operations, present or prospective, of the Borrower and its
Subsidiaries, (ii) the ability of the Borrower timely to perform any of its
material obligations, or of the Lender to exercise any remedy, under
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this Agreement or (iii) the legality, validity, binding nature or
enforceability of this Agreement.
"Net Assets" means, with respect to the Borrower, the greater of (i)
the sum of the Borrower's paid-in capital and retained earnings or (ii) the
excess of the Value of all of the Borrower's assets of any kind over the
Borrower's Adjusted Indebtedness.
"Permitted Liens" means, collectively, the following: (i) Liens
expressly approved by the Lender, which approval shall not be unreasonably
withheld; (ii) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or that are being contested in good
faith by appropriate proceedings and for which adequate reserves are being
maintained (in accordance with GAAP); and (iii) Liens existing on the date
hereof.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether
Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Prime Rate" means the prime rate (or if a range is given, the highest
prime rate) listed under "Money Rates" in The Wall Street Journal for such
date or, if The Wall Street Journal is not published on such date, then in
The Wall Street Journal most recently published.
"Reckson" means Reckson Associates Realty Corp., a Maryland
corporation.
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Borrower with respect to
amounts drawn under Letters of Credit.
"Responsible Officer" means the chief executive officer, president,
chief financial officer, chief accounting officer, treasurer or any vice
president, senior vice president or executive vice president of the General
Partner.
"RSI Facility Agreement" means the credit agreement dated the date
hereof between Borrower and Lender in respect of the operations of Reckson
Service Industries, Inc.
"RSVP Platform" means a particular real estate market sector in which
RSVP invests.
"SEC" means the Securities and Exchange Commission (or any successor
Governmental Authority).
"Standby Letter of Credit" means any Letter of Credit issued by the
Issuing Bank pursuant to Section 10.1 for the account of the Lender, which
is not a Commercial Letter of Credit.
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"Subsidiary" means, at any time and with respect to any Person, any
other Person the shares of stock or other ownership interests of which
having ordinary voting power to elect a majority of the board of directors
or with respect to other matters of such Person are at the time owned, or
the management or policies of which is otherwise at the time controlled,
directly or indirectly through one or more intermediaries (including other
Subsidiaries) or both, by such first Person. Unless otherwise qualified or
the context indicates clearly to the contrary, all references to a
"Subsidiary" or "Subsidiaries" in this Agreement refer to a Subsidiary or
Subsidiaries of the Borrower.
"Taxes" has the meaning assigned to such term in Section 4.3(a).
"Value" means, with respect to any asset owned by the Borrower, the
present value of the net cash flow reasonably projected by the Borrower to
be received with respect to its ownership of such assets, discounted at an
interest rate that the Borrower reasonably determines appropriate given the
risks associated with such asset and such projected net cash flow, but in
no event at an interest rate lower than 2% above the Prime Rate in effect
at the time that the determination of Value is made.
ARTICLE II.
THE REVOLVING CREDIT FACILITY
Section 2.1 Commitment and Loans. Until the Commitment Termination Date,
subject to the terms and conditions of this Agreement, the Lender agrees to make
revolving credit loans (collectively, "Loans") in dollars to the Borrower in an
aggregate principal amount at any one time outstanding, and taking into account
any Letters of Credit issued pursuant to the terms of Article X, not to exceed
the Commitment.
Section 2.2 Borrowing Procedure. In order to borrow a Loan, the Borrower
shall give a Borrowing Request to the Lender, by telephone, telex or telecopy or
in writing, not later than 10:30 A.M., New York time, on the third Business Day
before the Borrowing Date (or such later time or date as the Lender may in its
sole discretion permit). (If any Borrowing Request is made otherwise than in
writing, Borrower shall promptly confirm such Borrowing Request in writing.)
Subject to satisfaction, or waiver by the Lender, of each of the applicable
conditions precedent contained in Article VI, on the Borrowing Date the Lender
shall make available, in immediately available funds, to the Borrower the amount
of the requested Loan.
Section 2.3 Termination and Reduction of Commitment. The Borrower may
terminate the Commitment, or reduce the amount thereof, by giving written notice
to the Lender, not later than 5:00 P.M., New York time, on the fifth Business
Day prior to the date of termination or reduction (or such later time or date as
the Lender may in its sole discretion permit).
Section 2.4 Repayment. Loans shall be repaid, together with all accrued and
unpaid interest thereon, on the Commitment Termination Date.
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Section 2.5 Optional Prepayment. The Borrower may prepay Loans by giving
notice (specifying the Loans to be prepaid in whole or in part, the principal
amount thereof to be prepaid and the date of prepayment) to the Lender, by
telephone, telex, telecopy or in writing not later than 12:00 noon, New York
time, on the fourth Business Day preceding the proposed date of prepayment (or
such later time or date as the Lender may in its sole discretion permit). (If
any such prepayment notice is made otherwise than in writing, Borrower shall
promptly confirm such notice in writing.) Each such prepayment shall be at the
aggregate principal amount of the principal being prepaid, together with accrued
interest on the principal being prepaid to the date of prepayment and the
amounts required by Section 4.3. Subject to the terms and conditions of this
Agreement, prepaid Loans may be reborrowed.
ARTICLE III.
INTEREST AND FEES
Section 3.1 Interest Rate. Each Loan shall bear interest from the date made
until the date repaid, payable in arrears, with respect to Interest Periods of
three months or less, on the last day of such Interest Period, and with respect
to Interest Periods longer than three months, on the day which is three months
after the commencement of such Interest Period and on the last day of such
Interest Period, at a rate per annum equal to the greater of (i) the sum of (x)
2% and (y) the Prime Rate for the applicable Interest Period and (ii) 12%. With
respect to each Loan outstanding for one year or longer, such 12% rate shall
increase to 12.48%, 12.98%, 13.50% and 14.04% as of the anniversary of the
making of such Loan, for the second, third, fourth and fifth years that such
Loan is outstanding, respectively. Notwithstanding the foregoing, if the amount
of interest to be paid by the Borrower to the Lender exceeds the amount of
EBITDA of the Borrower for the immediately preceding calendar quarter (ending
the last day of September, December, March, or June), the Borrower shall not be
obligated to repay the amount of interest in excess of EBITDA of the Borrower
for such period. Any such amount of unpaid interest shall be added to principal
and shall accrue interests thereon. Payments under the Notes shall be applied
first to any fees, costs or expenses due under the Notes or hereunder, then to
interest, and then to principal. Notwithstanding any other provision of this
Agreement, all outstanding principal and interest of the Loan and all other
amounts payable hereunder, if not sooner paid, shall be due and payable on the
Commitment Termination Date.
Section 3.2 Interest on Overdue Amounts. All overdue amounts (including
principal, interest and fees) hereunder, and, during the continuance of any
Event of Default that shall have occurred, each Loan, shall bear interest,
payable on demand, at a rate per annum equal to the greater of (i) the sum of
(x) 3% and (y) Prime Rate for the applicable Interest Period and (ii) 13%. With
respect to each Loan outstanding for one year or longer, such 13% rate shall
increase to 13.48%, 13.98%, 14.50% and 15.04% as of the anniversary of the
making of such Loan for the second, third, fourth and fifth years that such Loan
is outstanding, respectively.
Section 3.3 Maximum Interest Rate. (a) Nothing in this Agreement shall
require the Borrower to pay interest at a rate exceeding the maximum rate
permitted by applicable law. Neither this Section nor Section 11.1 is intended
to limit the rate of interest payable for the
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account of the Lender to the maximum rate permitted by the laws of the State of
New York (or any other applicable law) if a higher rate is permitted with
respect to the Lender by supervening provisions of U.S. Federal law.
(b) If the amount of interest payable for the account of the Lender on any
interest payment date in respect of the immediately preceding interest
computation period, computed pursuant to this Article III, would exceed the
maximum amount permitted by applicable law to be charged by the Lender, the
amount of interest payable for its account on such interest payment date shall
automatically be reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of the Lender in
respect of any interest computation period is reduced pursuant to Section 3.3(b)
and the amount of interest payable for its account in respect of any subsequent
interest computation period would be less than the maximum amount permitted by
law to be charged by the Lender, then the amount of interest payable for its
account in respect of such subsequent interest computation period shall be
automatically increased to such maximum permissible amount; provided that at no
time shall the aggregate amount by which interest paid for the account of the
Lender has been increased pursuant to this Section 3.3(c) exceed the aggregate
amount by which interest paid for its account has theretofore been reduced
pursuant to Section 3.3(b).
ARTICLE IV.
DISBURSEMENT AND PAYMENT
Section 4.1 Method and Time of Payments.
(a) All payments by the Borrower hereunder shall be made without setoff or
counterclaim to the Lender, for its account, in dollars and in immediately
available funds to the account of the Lender theretofore designated in writing
to the Borrower not later than 12:00 noon, New York time, on the date when due
or, in the case of payments pursuant to Sections 4.3 and 4. 4 or payments
otherwise specified as payable upon demand, forthwith upon written demand
therefor.
(b) Whenever any payment from the Borrower shall be due on a day that is
not a Business Day, the date of payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
Section 4.2 Compensation for Losses. 1. If (i) the Borrower prepays Loans,
(ii) the Borrower revokes any Borrowing Request or (iii) Loans (or portions
thereof) shall become or be declared to be due prior to the scheduled maturity
thereof, then the Borrower shall pay to the Lender an amount that will
compensate the Lender for any loss (other than lost profit) or premium or
penalty incurred by the Lender as a result of such prepayment, declaration or
revocation in respect of funds obtained for the purpose of making or maintaining
the Lender's Loans, or any portion thereof. Such compensation shall include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so paid or prepaid, or
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not borrowed, for the period from the date of such payment or prepayment or
failure to borrow to the last day of such Interest Period (or, in the case of a
failure to borrow, the Interest Period that would have commenced on the expected
Borrowing Date) in each case at the applicable rate of interest for such Loan
over (ii) the amount of interest (as reasonably determined by the Lender) that
would have accrued on such amount were it on deposit for a comparable period
with leading banks in the London interbank market.
(b) If requested by the Borrower, in connection with a payment due pursuant
to this Section 4.2, the Lender shall provide to the Borrower a certificate
setting forth in reasonable detail the amount required to be paid by the
Borrower to the Lender and the computations made by the Lender to determine such
amount. In the absence of manifest error, such certificate shall be conclusive
as to the amount required to be paid.
Section 4.3 Withholding and Additional Costs.
(a) Withholding. All payments under this Agreement (including payments of
principal and interest) shall be payable to the Lender free and clear of any and
all present and future taxes, levies, imposts, duties, deductions, withholdings,
fees, liabilities and similar charges (collectively, "Taxes"). If any Taxes are
required to be withheld or deducted from any amount payable under this
Agreement, then the amount payable under this Agreement shall be increased to
the amount which, after deduction from such increased amount of all Taxes
required to be withheld or deducted therefrom, will yield to the Lender the
amount stated to be payable under this Agreement. The Borrower shall also hold
the Lender harmless and indemnify it for any stamp or other taxes with respect
to the preparation, execution, delivery, recording, performance or enforcement
of this Agreement (all of which shall be included within "Taxes"). If any of the
Taxes specified in this Section 4.3(a) are paid by the Lender, the Borrower
shall, upon demand of the Lender, promptly reimburse the Lender for such
payments, together with any interest, penalties and expenses incurred in
connection therewith. The Borrower shall deliver to the Lender certificates or
other valid vouchers for all Taxes or other charges deducted from or paid with
respect to payments made by the Borrower hereunder.
(b) Additional Costs. Subject to Section 4.3(c), and without duplication of
any amounts payable described in Section 4.2 or 4.3(a), if after the date hereof
any change in any law or regulation or in the interpretation thereof by any
court or administrative or Governmental Authority charged with the
administration thereof or the enactment of any law or regulation shall either
(1) impose, modify or deem applicable any reserve, special deposit or similar
requirement against the Lender's Commitment or Loans or (2) impose on the Lender
any other condition regarding this Agreement, its Commitment or the Loans and
the result of any event referred to in clause (1) or (2) shall be to increase
the cost to the Lender of maintaining its Commitment or any Loans made by the
Lender (which increase in cost shall be calculated in accordance with the
Lender's reasonable averaging and attribution methods) by an amount which the
Lender deems to be material, then, upon demand by the Lender, the Borrower shall
pay to the Lender an amount equal to such increase in cost.
(c) Certificate, Etc. If requested by the Borrower, in connection with any
demand for payment pursuant to this Section 4.3, the Lender shall provide to the
Borrower a certificate
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setting forth in reasonable detail the basis for such demand, the amount
required to be paid by the Borrower to the Lender, the computations made by the
Lender to determine such amount and satisfaction of the conditions set forth in
the next sentence. Anything to the contrary herein notwithstanding, the Lender
shall not have the right to demand any payment or compensation under this
Section 4.3 (i) with respect to any period more than 180 days prior to the date
it has made a demand pursuant to this Section 4.3, and (ii) to the extent that
the Lender determines in good faith that the interest rate on the relevant Loans
appropriately accounts for any increased cost or reduced rate of return. In the
absence of manifest error, the certificate referred to above shall be conclusive
as to the amount required to be paid.
Section 4.4 Expenses; Indemnity. (a) The Borrower agrees: (i) to pay or
reimburse the Lender for all reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of, and any amendment,
supplement or modification to, this Agreement and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of Brown & Wood LLP, counsel to the Lender; and (ii) to
pay or reimburse the Lender for all reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Lender. The Borrower also
agrees to indemnify the Lender against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement.
(b) The Borrower agrees to indemnify the Lender and its directors,
officers, partners, employees, agents and Affiliates (for purposes of this
paragraph, each, an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all claims, liabilities, damages, losses, costs, charges and
expenses (including fees and expenses of counsel) incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated by this Agreement, the performance by the parties
thereto of their respective obligations under this Agreement or the consummation
of the transactions and the other transactions contemplated by this Agreement,
(ii) the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) All amounts due under this Section 4.4 shall be payable in immediately
available funds upon written demand therefor.
Section 4.5 Survival. The provisions of Sections 4.2, 4.3 and 4.4 shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the reduction or termination of the
Commitment, the invalidity or unenforceability of any term or provision of this
Agreement, or any investigation made by or on behalf of the Lender.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties. In order to induce the Lender
to enter into this Agreement and to make Loans and the other financial
accommodations to the Borrower and to induce the Lender to obtain Letters of
Credit on its behalf as described herein, the Borrower represents and warrants
to the Lender as follows:
(a) Good Standing and Power. The Borrower and each Subsidiary is a
limited partnership or corporation, duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization; each
has the power to own its property and to carry on its business as now being
conducted; and each is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business
makes such qualification necessary, except where the failure to be so
qualified, or to be in good standing, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(b) Authority. The Borrower has full power and authority to execute
and deliver, and to incur and perform its obligations under, this
Agreement, which has been duly authorized by all proper and necessary
action. No consent or approval of limited partners is required as a
condition to the validity or performance of, or the exercise by the Lender
of any of its rights or remedies under, this Agreement.
(c) Authorizations. All authorizations, consents, approvals,
registrations, notices, exemptions and licenses with or from any
Governmental Authority or other Person necessary for the execution,
delivery and performance by the Borrower of, and the incurrence and
performance of each of its obligations under, this Agreement, and the
exercise by the Lender of its remedies under this Agreement have been
effected or obtained and are in full force and effect.
(d) Binding Obligation. This Agreement constitutes the valid and
legally binding obligation of the Borrower enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(e) Litigation. There are no proceedings or investigations now pending
or, to the knowledge of the Borrower, threatened before any court or
arbitrator or before or by any Governmental Authority which, individually
or in the aggregate, if determined adversely to the interests of the
Borrower or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect.
(f) No Conflicts. There is no statute, regulation, rule, order or
judgment, and no provision of any agreement or instrument binding upon the
Borrower or any
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Subsidiary, or affecting their properties, and no provision of the
certificate of limited partnership, certificate of incorporation, agreement
of limited partnership or by-laws (or similar constitutive instruments) of
the Borrower or any Subsidiary, that would prohibit, conflict with or in
any way impair the execution or delivery of, or the incurrence or
performance of any obligations of the Borrower under, this Agreement, or
result in or require the creation or imposition of any Lien on property of
the Borrower or any Subsidiary as a consequence of the execution, delivery
and performance of this Agreement.
(g) Taxes. The Borrower and the Subsidiaries each has filed or caused
to be filed all tax returns that are required to be filed and paid all
taxes that are required to be shown to be due and payable on said returns
or on any assessment made against it or any of its property and all other
taxes, assessments, fees, liabilities, penalties or other charges imposed
on it or any of its property by any Governmental Authority, except for any
taxes, assessments, fees, liabilities, penalties or other charges which are
being contested in good faith and (unless the amount thereof is not
material to the Borrower's consolidated financial condition) for which
adequate reserves have been established in accordance with GAAP.
(h) Properties. The Borrower and the Subsidiaries each has good and
marketable title to, or valid leasehold interests in, all of its respective
properties and assets. All such assets and properties are so owned or held
free and clear of all Liens, except Permitted Liens.
(i) Compliance with Laws and Charter Documents. Neither the Borrower
nor any Subsidiary is, or as a result of performing any of its obligations
under this Agreement will be, in violation of (a) any law, statute, rule,
regulation or order of any Governmental Authority applicable to it or its
properties or assets or (b) its certificate of limited partnership,
certificate of incorporation, agreement of limited partnership, by-laws or
any similar document.
(j) No Material Adverse Effect. Since May 15, 1997, there has not
occurred or arisen any event, condition or circumstance that, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(k) Disclosure. All information relating to the Borrower or its
Subsidiaries delivered in writing to the Lender in connection with the
negotiation, execution and delivery of this Agreement is true and complete
in all material respects. There is no material fact of which the Borrower
is aware which, individually or in the aggregate, would reasonably be
expected adversely to influence the Lender's credit analysis relating to
the Borrower and its Subsidiaries which has not been disclosed to the
Lender in writing.
Section 5.2 Survival. All representations and warranties made by the
Borrower in this Agreement, and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement, shall be
considered to have been relied upon by the Lender, (ii)
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survive the making of Loans and the issuance of or payment under any Letter of
Credit regardless of any investigation made by, or on behalf of, the Lender and
(iii) continue in full force and effect as long as the Commitment has not been
terminated and, thereafter, so long as any Loan, Letter of Credit fee or other
amount payable under this Agreement remains unpaid.
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions to the Availability of the Commitment and Letters of
Credit. The obligations of the Lender (including its obligators in respect of
Letters of Credit) hereunder are subject to, and the Lender's Commitment shall
not become available until the earliest date (the "Effective Date") on which
each of the following conditions precedent shall have been satisfied or waived
in writing by the Lender:
(a) This Agreement. The Lender shall have received this Agreement duly
executed and delivered by the Borrower.
(b) Certificate of Incorporation and By-Laws. The Lender shall have
received the following:
(i) a copy of the Certificate of Incorporation of the Borrower, as in
effect on the Effective Date, certified by the Secretary of State of
Delaware, and a certificate from such Secretary of State as to the good
standing of the Borrower, in each case as of a date reasonably close to the
Effective Date; and
(ii) a certificate of a Responsible Officer of the Borrower, dated the
Effective Date, and stating that attached thereto is a true and complete
copy of the By-Laws of the Borrower as in effect on such date.
(c) Representations and Warranties. The representations and warranties
contained in Section 5.1 shall be true and correct on the Effective Date,
and the Lender shall have received a certificate, signed by a Responsible
Officer of the Borrower, to that effect.
(d) Other Documents. The Lender shall have received such other
certificates, opinions and other documents as the Lender reasonably may
require.
Section 6.2 Conditions to All Loans and Letters of Credit. The obligations
of the Lender to make each Loan and to obtain Letters of Credit are subject to
the conditions precedent that, on the date of each Loan or Letter of Credit and
after giving effect thereto, each of the following conditions precedent shall
have been satisfied, or waived in writing by the Lender:
(a) Borrowing Request. The Lender shall have received a Borrowing
Request in accordance with the terms of this Agreement.
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(b) No Default. No Default or Event of Default shall have occurred and
be continuing, nor shall any Default or Event of Default occur as a result
of the making of such Loan or obtaining such Letter of Credit.
(c) Debt-to-Equity Ratio. The Lender shall have received from the
Borrower a certificate demonstrating that the ratio of the Borrower's
Adjusted Indebtedness to the Borrower's Net Assets, taking into account the
requested Loan or Letter of Credit and the assets, if any, to be acquired
by the Borrower with the proceeds of such Loan or Letter of Credit, shall
not exceed 4-to-1.
(d) Representations and Warranties; Covenants. The representations and
warranties contained in Section 5. 1 shall have been true and correct when
made and (except to the extent that any representation or warranty speaks
as of a date certain) shall be true and correct on the Borrowing Date with
the same effect as though such representations and warranties were made on
such Borrowing Date; and the Borrower shall have complied with all of its
covenants and agreements under this Agreement.
(e) REIT Status of Reckson. The borrowing shall not, in the sole
judgment of the Lender, endanger Reckson's status as a REIT.
(f) Certain Loans Subject to Reckson's Approval. In respect of any
Loan or Letter of Credit or Loans or Letters of Credit aggregating $25
million in a single RSVP Platform, Reckson shall have approved the Lender's
making such Loan or obtaining such Letter of Credit in its sole discretion.
Section 6.3 Satisfaction of Conditions Precedent. Each of (i) the delivery
by the Borrower of a Borrowing Request (unless the Borrower notifies the Lender
in writing to the contrary prior to the Borrowing Date) and (ii) the acceptance
of the proceeds of a Loan or the delivery of the Letter of Credit shall be
deemed to constitute a certification by the Borrower that, as of the Borrowing
Date, each of the conditions precedent contained in Section 6. 2 has been
satisfied with respect to the Loan then being made or the Letter of Credit then
being issued.
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants. Until satisfaction in full of all the
obligations of the Borrower under this Agreement and termination of the
Commitment of the Lender hereunder, the Borrower will:
(a) Financial Statements; Compliance Certificates. Furnish to the Lender:
(i) as soon as available, but in no event more than 60 days following
the end of each of the first three quarters of each fiscal year, copies of
the Borrower's Quarterly Report on Form 10-Q being filed with the SEC,
which shall include a consolidated
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balance sheet and consolidated income statement of the Borrower and the
Subsidiaries for such quarter;
(ii) as soon as available, but in no event more than 120 days
following the end of each fiscal year, a copy of the Borrower's Annual
Report on Form 10-K being filed with the SEC, which shall include the
consolidated financial statements of the Borrower and the Subsidiaries,
together with a report thereon by Ernst & Young LLP (or another firm of
independent certified public accountants reasonably satisfactory to the
Lender), for such year;
(iii) within five Business Days of any Responsible Officer of the
Borrower obtaining knowledge of any Default or Event of Default, if such
Default or Event of Default is then continuing, a certificate of a
Responsible Officer of the Borrower stating that such certificate is a
"Notice of Default" and setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto; and
(iv) such additional information, reports or statements, regarding the
business, financial condition or results of operations of the Borrower and
its Subsidiaries, as the Lender from time to time may reasonably request.
(b) Existence. Except as permitted by Section 7. 2(a), maintain its
existence in good standing and qualify and remain qualified to do business in
each jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business is such that the failure to
qualify, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(c) Compliance with Law and Agreements. Comply, and cause each Subsidiary
to comply, with all applicable laws, ordinances, orders, rules, regulations and
requirements of all Governmental Authorities and with all agreements except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings or where the failure to comply therewith, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) Authorizations. Obtain, make and keep in full force and effect all
authorizations from and registrations with Governmental Authorities required for
the validity or enforceability of this Agreement.
(e) Inspection. Permit, and cause each Subsidiary to permit, the Lender to
have one or more of its officers and employees, or any other Person designate d
by the Lender, to visit and inspect any of the properties of the Borrower and
the Subsidiaries and to examine the minute books, books of account and other
records of the Borrower and the Subsidiaries, and to photocopy extracts from
such minute books, books of account and other records, and to discuss its
affairs, finances and accounts with its officers and with the Borrower's
independent accountants, during normal business hours and at such other
reasonable times, for the purpose of monitoring the Borrower's compliance with
its obligations under this Agreement.
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(f) Maintenance of Records. Keep, and cause each Subsidiary to keep, proper
books of record and account in which full, true and correct entries will be made
of all dealings or transactions of or in relation to its business and affairs.
(g) Notice of Defaults and Adverse Developments. Promptly notify the Lender
upon the discovery by any Responsible officer of the occurrence of (i) any
Default or Event of Default; (ii) any event, development or circumstance whereby
the financial statements most recently furnished to the Lender fail in any
material respect to present fairly, in accordance with GAAP, the financial
condition and operating results of the Borrower and the Subsidiaries as of the
date of such financial statements; (iii) any material litigation or proceedings
that are instituted or threatened (to the knowledge of the Borrower) against the
Borrower or any Subsidiary or any of their respective assets; (iv) any event,
development or circumstance which, individually or in the aggregate, could
reasonably be expected to result in an event of default (or, with the giving of
notice or lapse of time or both, an event of default) under any Indebtedness and
the amount thereof; and (v) any other development in the business or affairs of
the Borrower or any Subsidiary if the effect thereof would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
in each case describing the nature thereof and the action the Borrower proposes
to take with respect thereto.
Section 7.2 Negative Covenants. Until satisfaction in full of all the
obligations of the Borrower under this Agreement and termination of the
Commitment of the Lender hereunder, the Borrower will not:
(a) Mergers, Consolidations and Sales of Assets. Wind up, liquidate or
dissolve its affairs or enter into any merger, consolidation or share exchange,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time), whether in one or a series of transactions, all
or any substantial part of its assets, or permit any Subsidiary so to do, unless
such transaction or series of transactions are expressly approved by the Lender,
which approval shall not be unreasonably withheld.
(b) Liens. Create, incur, assume or suffer to exist any Lien upon or with
respect to any of its property or assets, whether now owned or hereafter
acquired, or assign or otherwise convey any right to receive income, except
Permitted Liens.
(c) Indebtedness. Create, incur, issue, assume, guarantee or suffer to
exist any Indebtedness, except:
(i) Indebtedness to the Lender under this Agreement or under the RSI
Facility Agreement,
(ii) Non-recourse Indebtedness of the Borrower and any Subsidiary
secured by mortgages, encumbrances or liens specifically permitted by
Section 7. 2(b), and
(iii) Indebtedness expressly approved by the Lender in writing, which
approval may be withheld in the Lender's sole discretion.
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(d) Dividends. Declare any dividends on any of its shares of capital stock
unless such dividend or distribution is expressly approved in writing by the
Lender.
(e) Certain Amendments. Amend, modify or waive, or permit to be amended,
modified or waived, any provision of its Certificate of Incorporation unless,
within not less than 5 days prior to such amendment, modification or waiver (or
such later time as the Lender may in its sole discretion permit), the Borrower
shall have given the Lender notice thereof, including all relevant terms and
conditions thereof, and the Lender shall have consented in writing thereto.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default. If one or more of the following events
(each, an "Event of Default") shall occur:
(a) The Borrower shall fail duly to pay any principal of any Loan or Letter
of Credit when due, whether at maturity, by notice of intention to prepay or
otherwise; or
(b) The Borrower shall fail duly to pay any interest, fee or any other
amount payable under this Agreement within two days after the same shall be due;
or
(c) Borrower shall fail duly to observe or perform any term, covenant, or
agreement contained in Section 7. 2; or
(d) The Borrower shall fail duly to observe or perform any other term,
covenant or agreement contained in this Agreement, and such failure shall have
continued unremedied for a period of 30 days; or
(e) Any representation or warranty made or deemed made by the Borrower in
this Agreement, or any statement or representation made in any certificate,
report or opinion delivered by or on behalf of the Borrower in connection with
this Agreement, shall prove to have been false or misleading in any material
respect when so made or deemed made; or
(f) The Borrower shall fail to pay any Indebtedness (other than obligations
here under) in an amount of $100,000 or more when due; or any such Indebtedness
having an aggregate principal amount outstanding of $100,000 or more shall
become or be declared to be due prior to the expressed maturity thereof; or
(g) An involuntary case or other proceeding shall be commenced against the
Borrower seeking liquidation, reorganization or other relief with respect to it
or its debts under any applicable bankruptcy, insolvency, reorganization or
similar law or seeking the appointment of a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of more than 60 days; or an order or
decree approving or ordering any of the foregoing shall be entered and continued
unstayed and in effect; or
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(h) The Borrower shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or similar law or any other
case or proceeding to be adjudicated a bankrupt or insolvent, or any of them
shall consent to the entry of a decree or order for relief in respect of the
Borrower in an involuntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against any of them, or any of them
shall file a petition or answer or consent seeking reorganization or relief
under any applicable law, or any of them shall consent to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Borrower
or any substantial part of its property, or the Borrower shall make an
assignment for the benefit of creditors, or the Borrower shall admit in writing
its inability to pay its debts generally as they become due, or the Borrower
shall take corporate action in furtherance of any such action;
(i) One or more judgments against the Borrower or attachments against its
property, which in the aggregate exceed $100,000, or the operation or result of
which could be to interfere materially and adversely with the conduct of the
business of the Borrower remain unpaid, unstayed on appeal, undischarged,
unbonded, or undismissed for a period of more than 30 days; or
(j) Any court or governmental or regulatory authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which prohibits, enjoins or otherwise
restricts, in a manner that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, any of the transactions
contemplated under this Agreement; or
(k) Any Event of Default shall occur and be continuing under the RSI
Facility Agreement.
then, and at any time during the continuance of such Event of Default, the
Lender may, by written notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitment, Credit Obligations and any obligations of the Lender to obtain
Letters of Credit pursuant to this Agreement and (ii) declare any Credit
Obligations then outstanding to be due, whereupon the principal of the Credit
Obligations so declared to be due, together with accrued interest thereon and
any unpaid amounts accrued under this Agreement, shall become forthwith due,
without presentment, demand, protest or any other notice of any kind (all of
which are hereby expressly waived by the Borrower); provided that, in the case
of any Event of Default described in Section 8. 1(g) or (h) occurring with
respect to the Borrower, the Commitment and any obligations of the Lender to
obtain Letters of Credit pursuant to this Agreement shall automatically and
immediately terminate and the principal of all Loans then outstanding, together
with accrued interest thereon and any unpaid amounts accrued under this
Agreement, shall automatically and immediately become due without presentment,
demand, protest or any other notice of any kind (all of which are hereby
expressly waived by the Borrower).
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ARTICLE IX.
EVIDENCE OF LOANS; TRANSFERS
Section 9.1 Evidence of Loans and Letters of Credit. (a) The Lender shall
maintain accounts evidencing the indebtedness of the Borrower to the Lender
resulting from each Loan made by the Lender and each Letter of Credit issued for
the benefit of the Borrower from time to time, including the amounts of
principal and interest payable and paid to the Lender in respect of Loans or
Letters of Credit.
(b) The Lender's written records described above shall be available for
inspection during ordinary business hours by the Borrower from time to time upon
reasonable prior notice to the Lender.
(c) The entries made in the Lender's written or electronic records and the
foregoing accounts shall be prima facie evidence of the existence and amounts of
the indebtedness of the Borrower therein recorded; provided, however, that the
failure of the Lender to maintain any such account or such records, as
applicable, or any error therein, shall not in any manner affect the validity or
enforceability of any obligation of the Borrower to repay any Loan actually made
by the Lender in accordance with the terms of this Agreement.
ARTICLE X.
LETTERS OF CREDIT
Section 10.1 Letters of Credit. Until the Commitment Termination Date and
subject to the terms and conditions set forth in this Agreement, the Lender
hereby agrees to obtain from an Issuing Bank for the account of the Borrower one
or more Letters of Credit, subject to the following provisions:
(a) Types and Amounts. The Lender shall not have any obligation to obtain,
or cause the amendment or extension of any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to the
Issuing Bank, after giving effect to the issuance, amendment or extension
of the Letter of Credit requested hereunder, shall exceed any limit imposed
by law or regulation upon the Issuing Bank;
(ii) if, immediately after giving effect to the issuance, amendment or
extension of such Letter of Credit, (1) the Letter of Credit Obligations at
such time would exceed [$10,000,000] or (2) the Credit Obligations at such
time would exceed the Commitment at such time, or (3) one or more of the
conditions precedent contained in Sections 6.1 or 6.2, as applicable, would
not on such date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to the Lender
(and the Lender shall not otherwise be required to determine that, or take
notice whether, the conditions precedent set forth in Sections 6.1 or 6.2,
as applicable, have been satisfied);
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(iii) which has an expiration date later than the earlier of (A) the
date one (1) year after the date of issuance (without regard to any
automatic renewal provisions thereof) or (B) the Business Day next
preceding the scheduled Commitment Termination Date; or
(iv) which is in a currency other than dollars.
(b) Conditions. In addition to being subject to the satisfaction of the
conditions precedent contained in Sections 6.1 and 6.2, as applicable, the
obligation of the Lender to obtain from an Issuing Bank, or to cause the
amendment or extension of any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Lender so requests, the Borrower shall have executed and
delivered to the Lender a Letter of Credit Reimbursement Agreement and such
other documents and materials as may be required pursuant to the terms
thereof; and
(ii) the terms of the proposed Letter of Credit shall be satisfactory
to the Lender in its sole discretion.
(c) Issuance of Letters of Credit. (i) The Borrower shall give the Lender
written notice that it requires the issuance of a Letter of Credit not later
than 11:00 a.m. (New York time) on the third (3rd) Business Day preceding the
requested date for issuance thereof under this Agreement. Such notice shall be
irrevocable unless and until such request is denied by the Lender and shall
specify (A) that the requested Letter of Credit is either a Commercial Letter of
Credit or a Standby Letter of Credit, (B) the stated amount of the Letter of
Credit requested, (C) the effective date (which shall be a Business Day) of
issuance of such Letter of Credit, (D) the date on which such Letter of Credit
is to expire (which shall be a Business Day and no later than the Business Day
immediately preceding the scheduled Commitment Termination Date), (E) that such
Letter of Credit is to be issued for the benefit of the Borrower, (F) other
relevant terms of such Letter of Credit, (G) the Available Commitment at such
time and (H) the amount of the then outstanding Letter of Credit Obligations.
(ii) The Lender shall give the Borrower written notice, or telephonic
notice confirmed promptly thereafter in writing, of the issuance, amendment
or extension of a Letter of Credit.
(d) Reimbursement Obligations; Duties of the Lender.
(i) Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement:
(A) the Borrower shall reimburse the Lender for amounts drawn
under its Letter of Credit, in dollars, no later than the date (the
"Reimbursement Date") which is the earlier of (I) the time specified
in the applicable Letter of Credit Reimbursement Agreement and (II)
three (3) Business Days after the Borrower receives written notice
from the Lender that payment has been made under such Letter of Credit
by the Issuing Bank; and
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(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the Prime Rate in accordance with
Section 3.1 from the date of the relevant drawing under such Letter of
Credit until the Reimbursement Date.
(ii) The Lender shall give the Borrower written notice, or telephonic
notice confirmed promptly thereafter in writing, of all drawings under a
Letter of Credit and the payment (or the failure to pay when due) by the
Borrower, as the case may be, on account of a Reimbursement Obligation.
(iii) In determining whether to pay under any Letter of Credit, it is
understood that the Issuing Bank shall have no obligation other than to
confirm that any documents required to be delivered under a respective
Letter of Credit appear to have been delivered and that they appear on
their face to comply with the requirements of such Letter of Credit.
(e) Payment of Reimbursement Obligations. (i) The Borrower unconditionally
agrees to pay to the Lender, in dollars, the amount of all Reimbursement
Obligations, interest and other amounts payable to the Lender under or in
connection with the Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the Borrower may
have at any time against the Lender or any other Person.
(f) Letter of Credit Fee Charges. In connection with each Letter of Credit,
the Borrower hereby covenants to pay to the Lender the following Letter of
Credit Fee payable quarterly in arrears (on the first Banking Day of each
calendar quarter following the issuance of each Letter of Credit): a fee, for
the Lender's own account, computed daily on the amount of the Letter of Credit
issued and outstanding at a rate per annum equal to the Lender's cost in
obtaining the Letter of Credit plus a spread equal to the difference between the
interest rate payable on Loans hereunder less the Lender's cost of borrowing
under the Lender's credit facility (or, in the absence of a credit facility, the
Prime Rate as announced by Citibank N.A.). Notwithstanding the foregoing, if
amounts payable pursuant to this Section 10.1(f) together with any interest
payable pursuant to Section 3.1, exceed the amount of EBITDA of the Borrower for
the immediately preceding calendar quarter (ending the last day of September,
December, March or June), the Borrower shall not be obligated to repay the
amounts payable under this Section 10.1(f) which when added to the interest
payable pursuant to Section 3.1 exceeds EBITDA of the Borrower for such period.
Any such amount in excess of EBITDA shall be added to principal hereunder and
shall accrue interest thereon in accordance with Section 3.1.
(g) Letter of Credit Reporting Requirements. The Lender shall, upon the
request of the Borrower, provide to the Borrower separate schedules for
Commercial Letters of Credit and Standby Letters of Credit issued as Letters of
Credit, in form and substance reasonably satisfactory to the Borrower, setting
forth the aggregate Letter of Credit Obligations outstanding to it at the end of
each month and any information requested by the Borrower relating to the date of
issue, account party, amount, expiration date and reference number of each
Letter of Credit issued as contemplated hereunder.
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(h) Indemnification; Exoneration. (i) In addition to all other amounts
payable to the Lender, the Borrower hereby agrees to defend, indemnify, and save
the Lender harmless from and against any and all claims, demands, liabilities,
penalties, damages, losses (other than loss of profits), reasonable costs,
reasonable charges and reasonable expenses (including reasonable attorneys fees
but excluding taxes) which the Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit
other than as a result of the gross negligence or willful misconduct of the
Lender, as determined by a court of competent jurisdiction, or (B) the failure
of the Issuing Bank to honor a drawing under such Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority.
(ii) As between the Borrower on the one hand and the Lender on the
other hand, the Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiary of the Letters
of Credit. In furtherance and not in limitation of the foregoing, subject
to the provisions of the Letter of Credit Reimbursement Agreements, the
Lender shall not be responsible for: (A) the form, validity, legality,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance
of the Letters of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity, legality or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (C) failure of
the Borrower to duly comply with conditions required in order to draw upon
such Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the Borrower of the proceeds of any drawing Letter of
Credit; and (H) any consequences arising from causes beyond the control of
the Lender, other than of the foregoing resulting from the gross negligence
or willful misconduct of the Lender.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 11.2 Waiver of Jury. THE BORROWER AND THE LENDER EACH HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT,
23
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CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT, OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.
Section 11.3 Jurisdiction and Venue; Service of Process. 1. The Borrower
and the Lender each hereby irrevocably submits to the non-exclusive jurisdiction
of any state or federal court in the Borough of Manhattan, The City of New York
for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and to the laying of venue in the Borough of
Manhattan The City of New York. The Borrower and the Lender each hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection to the laying of the venue of any such suit, action or proceeding
brought in the aforesaid courts and hereby irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
(b) Borrower agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 11.7 or at such other address of
which the Lender shall have been notified pursuant thereto. The Borrower further
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to sue in any
other jurisdiction; and
(c) The Borrower waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
Section 11.4 Confidentiality. The Lender agrees (on behalf of itself and
each of its Affiliates, partners, officers, employees and representatives) to
use its best efforts to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with commercially reasonable business practices, any Confidential
Information; provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for the Lender, (iii) to auditors or accountants, (iv)
by the Lender to an Affiliate thereof, or (v) in connection with any litigation
relating to enforcement of this Agreement; provided further, that, unless
specifically prohibited by applicable law or court order, the Lender shall,
prior to disclosure thereof, notify the Borrower of any request for disclosure
of any Confidential Information (x) by any Governmental Authority or
representative thereof or (y) pursuant to legal process.
Section 11.5 Amendments and Waivers. (a) Any provision of this Agreement
may be amended, modified, supplemented or waived, but only by a written
amendment or supplement, or written waiver, signed by the Borrower and the
Lender.
(b) Except to the extent expressly set forth therein, any waiver shall be
effective only in the specific instance and for the specific purpose for which
such waiver is given.
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Section 11.6 Cumulative Rights; No Waiver. Each and every right granted to
the Lender hereunder or under any other document delivered in connection
herewith, or allowed it by law or equity, shall be cumulative and not exclusive
and may be exercised from time to time. No failure on the part of the Lender to
exercise, and no delay in exercising, any right will operate as a waiver
thereof, nor will any single or partial exercise by the Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right.
Section 11.7 Notices. Any communication, demand or notice to be given
hereunder will be duly given when delivered in writing or by telecopy to a party
at its address as indicated below or such other address as such party may
specify in a notice to the other party hereto. A communication, demand or notice
given pursuant to this Agreement shall be addressed:
If to the Borrower, to:
Reckson Service Industries, Inc.
225 Broadhollow Road
Melville, New York 11747
Telecopy: (516) 719-7400
Attention: Chief Financial Officer
If to the Lender, to:
Reckson Operating Partnership, L.P.
225 Broadhollow Road
Melville, New York 11747
Telecopy: (516) 694-6900
Attention: Chief Financial Officer
This Section 11.7 shall not apply to notices referred to in Article II of
this Agreement, except to the extent set forth therein.
Section 11.8 Certain Acknowledgments. The Borrower hereby confirms and
acknowledges that (a) the Lender does not have any fiduciary or similar
relationship to the Borrower by virtue of this Agreement and the transactions
contemplated herein and that the relationship established by this Agreement
between the Lender and the Borrower is solely that of creditor and debtor and
(b) no joint venture exists between the Borrower and the Lender by virtue of
this Agreement and the transactions contemplated herein.
Section 11.9 Separability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
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Section 11.10 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower may not assign any of its
rights hereunder without the prior written consent of the Lender, and any
purported assignment by the Borrower without such consent shall be void.
Section 11.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RECKSON SERVICE INDUSTRIES, INC.,
as Borrower
By:_________________________________
Name:
Title:
RECKSON OPERATING PARTNERSHIP, L.P.,
as Lender
By: Reckson Associates Realty Corp.,
its general partner
By:_________________________________
Name:
Title:
EXHIBIT 10.37
RECKSON ASSOCIATES REALTY CORP.
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
August 4, 1999
between
RECKSON SERVICE INDUSTRIES, INC.,
as Borrower
and
RECKSON OPERATING PARTNERSHIP, L.P.,
as Lender
relating to the operations of
RECKSON SERVICE INDUSTRIES, INC.
<PAGE>
Table of Contents
Page
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions..................................................1
(a) Terms Generally.....................................1
(b) Other Terms.........................................1
ARTICLE II.
THE REVOLVING CREDIT FACILITY
Section 2.1 Commitment and Loans.........................................7
Section 2.2 Borrowing Procedure..........................................7
Section 2.3 Termination and Reduction of Commitment......................7
Section 2.4 Repayment....................................................8
Section 2.5 Optional Prepayment..........................................8
ARTICLE III.
INTEREST AND FEES
Section 3.1 Interest Rate................................................8
Section 3.2 Interest on Overdue Amounts..................................8
Section 3.3 Maximum Interest Rate........................................9
ARTICLE IV.
DISBURSEMENT AND PAYMENT
Section 4.1 Method and Time of Payments..................................9
Section 4.2 Compensation for Losses......................................9
Section 4.3 Withholding and Additional Costs............................10
(a) Withholding........................................10
(b) Additional Costs...................................10
(c) Certificate, Etc...................................11
Section 4.4 Expenses; Indemnity.........................................11
Section 4.5 Survival....................................................12
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties..............................12
(a) Good Standing and Power............................12
(b) Authority..........................................12
(c) Authorizations.....................................12
(d) Binding Obligation.................................12
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(e) Litigation.........................................12
(f) No Conflicts.......................................13
(g) Taxes..............................................13
(h) Properties.........................................13
(i) Compliance with Laws and Charter Documents.........13
(j) No Material Adverse Effect.........................13
(k) Disclosure.........................................13
Section 5.2 Survival....................................................14
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions to the Availability of the Commitment and
Letters of Credit.........................................14
(a) This Agreement.....................................14
(b) Certificate of Incorporation and By-Laws...........14
(c) Representations and Warranties.....................14
(d) Other Documents....................................14
Section 6.2 Conditions to All Loans and Letters of Credit...............14
(a) Borrowing Request..................................15
(b) No Default.........................................15
(c) Debt-to-Equity Ratio...............................15
(d) Representations and Warranties; Covenants..........15
(e) REIT Status of Reckson.............................15
(f) Certain Loans Subject to Reckson's Approval........15
Section 6.3 Satisfaction of Conditions Precedent........................15
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants.......................................15
(a) Financial Statements; Compliance Certificates......15
(b) Existence..........................................16
(c) Compliance with Law and Agreements.................16
(d) Authorizations.....................................16
(e) Inspection.........................................16
(f) Maintenance of Records.............................17
(g) Notice of Defaults and Adverse Developments........17
Section 7.2 Negative Covenants..........................................17
(a) Mergers, Consolidations and Sales of Assets........17
(b) Liens..............................................17
(c) Indebtedness.......................................17
(d) Dividends..........................................18
(e) Certain Amendments.................................18
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ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default...........................................18
ARTICLE IX.
EVIDENCE OF LOANS; TRANSFERS
Section 9.1 Evidence of Loans and Letters of Credit.....................20
ARTICLE X.
LETTERS OF CREDIT
Section 10.1 Letters of Credit...........................................20
(a) Types and Amounts..................................20
(b) Conditions.........................................21
(c) Issuance of Letters of Credit......................21
(d) Reimbursement Obligations; Duties of the Lender....21
(e) Payment of Reimbursement Obligations...............22
(f) Letter of Credit Fee Charges.......................22
(g) Letter of Credit Reporting Requirements............22
(h) Indemnification; Exoneration.......................23
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Applicable Law..............................................23
Section 11.2 Waiver of Jury..............................................24
Section 11.3 Jurisdiction and Venue; Service of Process..................24
Section 11.4 Confidentiality.............................................24
Section 11.5 Amendments and Waivers......................................24
Section 11.6 Cumulative Rights; No Waiver................................25
Section 11.7 Notices.....................................................25
Section 11.8 Certain Acknowledgments.....................................25
Section 11.9 Separability................................................25
Section 11.10 Parties in Interest.........................................26
Section 11.11 Execution in Counterparts...................................26
iii
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 4, 1999, between
Reckson Service Industries, Inc., a Delaware corporation, and Reckson Operating
Partnership, L.P., a Delaware limited partnership, relating to the operations of
Reckson Service Industries, Inc.
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lender to commit to lend to the
Borrower up to $100 million on a revolving basis for acquisitions of assets and
general corporate purposes;
WHEREAS, the Lender is willing to make revolving credit loans on the terms
and conditions provided herein; and
WHEREAS, the parties hereto desire to amend and restate their credit
agreement dated June 15, 1998 to allow for the issuance of one or more Letters
of Credit in favor of the Lender for the benefit of the Borrower;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.
(a) Terms Generally. The definitions ascribed to terms in this Agreement
apply equally to both the singular and plural forms of such terms. Whenever the
context may require, any pronoun shall be deemed to include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be interpreted as if followed by the phrase "without
limitation". The phrase "individually or in the aggregate" shall be deemed
general in scope and not to refer to any specific Section or clause of this
Agreement. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. The
table of contents, headings and captions herein shall not be given effect in
interpreting or construing the provisions of this Agreement. Except as otherwise
expressly provided herein, all references to "dollars" or "$" shall be deemed
references to the lawful money of the United States of America.
(b) Other Terms. The following terms have the meanings ascribed to them
below or in the Sections of this Agreement indicated below:
"Adjusted Indebtedness" means, with respect to the Borrower, the
Borrower's Indebtedness determined without regard for any amounts described
in clause (viii) of the definition of "Indebtedness."
<PAGE>
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by, or is under common control with, such Person.
"Agreement" means this credit agreement, as it may be amended,
modified or supplemented from time to time.
"Available Commitment" means, on any day, an amount equal to (i) the
Commitment on such day minus (ii) the aggregate outstanding principal
amount of Loans on such day.
"Borrower" means Reckson Service Industries, Inc., a Delaware
corporation.
"Borrowing Date" means, with respect to any Loan or Letter of Credit,
the Business Day set forth in the relevant Borrowing Request as the date
upon which the Borrower desires to borrow such Loan or Letter of Credit;
"Borrowing Request" means a request by the Borrower for a Loan or a
Letter of Credit, which shall specify (i) the requested Borrowing Date and
(ii) the aggregate amount of such Loan or Letter of Credit.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized by law
to close.
"Capital Lease Obligations" means, with respect to any Person, the
obligation of such Person to pay rent or other amounts under any lease with
respect to any property (whether real, personal or mixed) acquired or
leased by such Person that is required to be accounted for as a liability
on a consolidated balance sheet of such Person.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 10.1 for the account of the
Lender on behalf of the Borrower.
"Commercial Services" means businesses that provide services for
occupants of office, industrial and other property types that Reckson may
not be permitted to provide under Federal tax laws applicable to a real
estate investment trust or that have not traditionally been provided by
Reckson.
"Commitment" means $100 million, as such amount may be reduced from
time to time pursuant to Section 2.3.
"Commitment Termination Date" means the earlier to occur of (i) June
15, 2003 and (ii) the date, if any, on which the Commitment is terminated.
"Confidential Information" means information delivered to the Lender
by or on behalf of the Borrower in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
confidential or proprietary in nature at the time it is so delivered or
information obtained by the Lender in the course of its review of the books
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or records of the Borrower contemplated herein; provided that such term
shall not include information W that was publicly known or otherwise known
to the Lender prior to the time of such disclosure, (ii) that subsequently
becomes publicly known through no act or omission by the Lender or any
Person acting on the Lender's behalf, (iii) that otherwise becomes known to
the Lender other than through disclosure by the Borrower or (iv) that
constitutes financial information delivered to the Lender that is otherwise
publicly available.
"Credit Obligations" means, at any particular time, the sum of (i) the
outstanding principal amount of the Loans at such time, plus (ii) the
Letter of Credit Obligations at such time.
"Default" means any event or circumstance which, with the giving of
notice or the passage of time, or both, would be an Event of Default.
"EBITDA" means for any fiscal period, the Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such fiscal period, after
restoring thereto amounts deducted for (a) extraordinary losses (or
deducting therefrom any amounts included therein on account of
extraordinary gains) and special charges, (b) depreciation and amortization
(including write-offs or write-downs) and special charges, (c) the amount
of interest expense of the Borrower and its Subsidiaries, if any,
determined on a consolidated basis in accordance with GAAP, for such period
on the aggregate principal amount of their consolidated indebtedness, (d)
the amount of tax expense of the Borrower and its Subsidiaries, if any,
determined on a consolidated basis in accordance with GAAP, for such period
and (e) the aggregate amount of fixed and contingent rentals payable by the
Borrower and its Subsidiaries, if any, determined on a consolidated basis
in accordance with GAAP, for such period with respect to leases of real and
personal property.
"Effective Date" has the meaning assigned to such term in Section 6.1.
"Event of Default" has the meaning assigned to such term in Section
8.1.
"GAAP" means generally accepted accounting principles, as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entities as may be approved by a significant
segment of the accounting profession of the United States of America.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any
3
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Indebtedness of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such Indebtedness,
(ii) to purchase property, securities or services for the purpose of
assuring the holder of such Indebtedness of the payment of such
Indebtedness or (iii) to maintain working capital, equity capital or the
financial condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness. The term "Guaranteed" shall have
the corresponding meaning.
"Indebtedness" means, with respect to any Person, (i) all obligations
of such Person for borrowed money or for the deferred purchase price of
property or services (including all obligations, contingent or otherwise,
of such Person in connection with letters of credit, bankers' acceptances,
interest rate swap agreements, interest rate cap agreements or other
similar instruments, including currency swaps) other than indebtedness to
trade creditors and service providers incurred in the ordinary course of
business and payable on usual and customary terms, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other similar
instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the remedies available to the
seller or lender under such agreement are limited to repossession or sale
of such property), (iv) all Capital Lease Obligations of such Person, (v)
all obligations of the types described in clauses (i), (ii), (iii) or (iv)
above secured by (or for which the obligee has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any property
(including accounts, contract rights and other intangibles) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vi) all preferred stock issued by such
Person which is redeemable, prior to full satisfaction of the Borrower's
obligations under this Agreement (including repayment in full of the Loans
and all interest accrued thereon), other than at the option of such Person,
valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (vii) all Indebtedness of
others Guaranteed by such Person and (viii) all Indebtedness of any
partnership of which such Person is a general partner.
"Indemnitee" has the meaning assigned to such term in Section 4.4(b).
"Intercompany Agreement" means the intercompany agreement, dated as of
the date hereof, by and between the Borrower and the Lender.
"Interest Period" means, with respect to any Loan, each three-month
period commencing on the date such Loan is made or at the end of the
preceding Interest Period, as the case may be; provided, however, that:
(i) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next Business Day, unless such
Business Day falls
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in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a calendar
month; and
(iii) any Interest Period that would otherwise end after the
Commitment Termination Date then in effect shall end on such Commitment
Termination Date.
"Issuing Bank" means The Chase Manhattan Bank or such other banking
institution selected by the parties hereto to issue a Letter of Credit
pursuant to Section 10.1(c)(ii) hereof.
"Lender" means Reckson Operating Partnership, L.P., a Delaware limited
partnership.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" has the meaning set forth in Section 10.1(f).
"Letter of Credit Obligations" means, at any particular time, the sum
of (i) all outstanding Reimbursement Obligations, (ii) the aggregate
undrawn face amount of all outstanding Letters of Credit, and (iii) the
aggregate face amount of all Letters of Credit requested by the Lender but
not yet issued.
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several documents,
taken together) as an Issuing Bank may employ in the ordinary course of
business for its own account, with such modifications thereto as may be
agreed upon by such Issuing Bank and the Lender and as are not materially
adverse (in the judgment of such Issuing Bank) to the interests of the
Lender; provided, however, in the event of any conflict between the terms
of any Letter of Credit Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Lien" means, with respect to any asset of a Person, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or
on such asset, (ii) the interest of a vendor or lessor under any
conditional sale agreement, capital lease or title retention agreement
relating to such asset, and (iii) in the case of securities, any purchase
option, call or similar right of any other Person with respect to such
securities.
"Loans" has the meaning assigned to such term in Section 2.1.
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"Material Adverse Effect" means any material and adverse effect on (i)
the consolidated business, properties, condition (financial or otherwise)
or operations, present or prospective, of the Borrower and its
Subsidiaries, (ii) the ability of the Borrower timely to perform any of its
material obligations, or of the Lender to exercise any remedy, under this
Agreement or (iii) the legality, validity, binding nature or enforceability
of this Agreement.
"Net Assets" means, with respect to the Borrower, the greater of (i)
the sum of the Borrower's paid-in capital and retained earnings or (ii) the
excess of the Value of all of the Borrower's assets of any kind over the
Borrower's Adjusted Indebtedness.
"Permitted Liens" means, collectively, the following: (i) Liens
expressly approved by the Lender, which approval shall not be unreasonably
withheld; (ii) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or that are being contested in good
faith by appropriate proceedings and for which adequate reserves are being
maintained (in accordance with GAAP); and (iii) Liens existing on the date
hereof.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether
Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Prime Rate" means the prime rate (or if a range is given, the highest
prime rate) listed under "Money Rates" in The Wall Street Journal for such
date or, if The Wall Street Journal is not published on such date, then in
The Wall Street Journal most recently published.
"Reckson" means Reckson Associates Realty Corp., a Maryland
corporation.
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Borrower with respect to
amounts drawn under Letters of Credit.
"Responsible Officer" means the chief executive officer, president,
chief financial officer, chief accounting officer, treasurer or any vice
president, senior vice president or executive vice president of the General
Partner.
"RSVP-ROP Facility Agreement" means the credit agreement dated the
date hereof between Borrower and Lender in respect of the operations of
Reckson Strategic Venture Partners, LLC.
"SEC" means the Securities and Exchange Commission (or any successor
Governmental Authority).
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"Standby Letter of Credit" means any Letter of Credit issued by the
Issuing Bank pursuant to Section 10.1 for the account of the Lender, which
is not a Commercial Letter of Credit.
"Subsidiary" means, at any time and with respect to any Person, any
other Person the shares of stock or other ownership interests of which
having ordinary voting power to elect a majority of the board of directors
or with respect to other matters of such Person are at the time owned, or
the management or policies of which is otherwise at the time controlled,
directly or indirectly through one or more intermediaries (including other
Subsidiaries) or both, by such first Person. Unless otherwise qualified or
the context indicates clearly to the contrary, all references to a
"Subsidiary" or "Subsidiaries" in this Agreement refer to a Subsidiary or
Subsidiaries of the Borrower.
"Taxes" has the meaning assigned to such term in Section 4.3(a).
"Value" means, with respect to any asset owned by the Borrower, the
present value of the net cash flow reasonably projected by the Borrower to
be received with respect to its ownership of such assets, discounted at an
interest rate that the Borrower reasonably determines appropriate given the
risks associated with such asset and such projected net cash flow, but in
no event at an interest rate lower than 2% above the Prime Rate in effect
at the time that the determination of Value is made.
ARTICLE II.
THE REVOLVING CREDIT FACILITY
Section 2.1 Commitment and Loans. Until the Commitment Termination Date,
subject to the terms and conditions of this Agreement, the Lender agrees to make
revolving credit loans (collectively, "Loans") in dollars to the Borrower in an
aggregate principal amount at any one time outstanding, and taking into account
any Letters of Credit issued pursuant to the terms of Article X, not to exceed
the Commitment.
Section 2.2 Borrowing Procedure. In order to borrow a Loan, the Borrower
shall give a Borrowing Request to the Lender, by telephone, telex or telecopy or
in writing, not later than 10:30 A.M., New York time, on the third Business Day
before the Borrowing Date (or such later time or date as the Lender may in its
sole discretion permit). (If any Borrowing Request is made otherwise than in
writing, Borrower shall promptly confirm such Borrowing Request in writing.)
Subject to satisfaction, or waiver by the Lender, of each of the applicable
conditions precedent contained in Article VI, on the Borrowing Date the Lender
shall make available, in immediately available funds, to the Borrower the amount
of the requested Loan.
Section 2.3 Termination and Reduction of Commitment. The Borrower may
terminate the Commitment, or reduce the amount thereof, by giving written notice
to the Lender, not later than 5:00 P.M., New York time, on the fifth Business
Day prior to the date of termination or reduction (or such later time or date as
the Lender may in its sole discretion permit).
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Section 2.4 Repayment. Loans shall be repaid, together with all accrued and
unpaid interest thereon, on the Commitment Termination Date.
Section 2.5 Optional Prepayment. The Borrower may prepay Loans by giving
notice (specifying the Loans to be prepaid in whole or in part, the principal
amount thereof to be prepaid and the date of prepayment) to the Lender, by
telephone, telex, telecopy or in writing not later than 12:00 noon, New York
time, on the fourth Business Day preceding the proposed date of prepayment (or
such later time or date as the Lender may in its sole discretion permit). (If
any such prepayment notice is made otherwise than in writing, Borrower shall
promptly confirm such notice in writing.) Each such prepayment shall be at the
aggregate principal amount of the principal being prepaid, together with accrued
interest on the principal being prepaid to the date of prepayment and the
amounts required by Section 4.3. Subject to the terms and conditions of this
Agreement, prepaid Loans may be reborrowed.
ARTICLE III.
INTEREST AND FEES
Section 3.1 Interest Rate. Each Loan shall bear interest from the date made
until the date repaid, payable in arrears, with respect to Interest Periods of
three months or less, on the last day of such Interest Period, and with respect
to Interest Periods longer than three months, on the day which is three months
after the commencement of such Interest Period and on the last day of such
Interest Period, at a rate per annum equal to the greater of (i) the sum of (x)
2% and (y) the Prime Rate for the applicable Interest Period and (ii) 12%. With
respect to each Loan outstanding for one year or longer, such 12% rate shall
increase to 12.48%, 12.98%, 13.50% and 14.04% as of the anniversary of the
making of such Loan, for the second, third, fourth and fifth years that such
Loan is outstanding, respectively. Notwithstanding the foregoing, if the amount
of interest to be paid by the Borrower to the Lender exceeds the amount of
EBITDA of the Borrower for the immediately preceding calendar quarter (ending
the last day of September, December, March, or June), the Borrower shall not be
obligated to repay the amount of interest in excess of EBITDA of the Borrower
for such period. Any such amount of unpaid interest shall be added to principal
and shall accrue interests thereon. Payments under the Notes shall be applied
first to any fees, costs or expenses due under the Notes or hereunder, then to
interest, and then to principal. Notwithstanding any other provision of this
Agreement, all outstanding principal and interest of the Loan and all other
amounts payable hereunder, if not sooner paid, shall be due and payable on the
Commitment Termination Date.
Section 3.2 Interest on Overdue Amounts. All overdue amounts (including
principal, interest and fees) hereunder, and, during the continuance of any
Event of Default that shall have occurred, each Loan, shall bear interest,
payable on demand, at a rate per annum equal to the greater of (i) the sum of
(x) 3% and (y) Prime Rate for the applicable Interest Period and (ii) 13%. With
respect to each Loan outstanding for one year or longer, such 13% rate shall
increase to 13.48%, 13.98%, 14.50% and 15.04% as of the anniversary of the
making of such Loan for the second, third, fourth and fifth years that such Loan
is outstanding, respectively.
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Section 3.3 Maximum Interest Rate. (a) Nothing in this Agreement shall
require the Borrower to pay interest at a rate exceeding the maximum rate
permitted by applicable law. Neither this Section nor Section 11.1 is intended
to limit the rate of interest payable for the account of the Lender to the
maximum rate permitted by the laws of the State of New York (or any other
applicable law) if a higher rate is permitted with respect to the Lender by
supervening provisions of U.S. Federal law.
(b) If the amount of interest payable for the account of the Lender on any
interest payment date in respect of the immediately preceding interest
computation period, computed pursuant to this Article III, would exceed the
maximum amount permitted by applicable law to be charged by the Lender, the
amount of interest payable for its account on such interest payment date shall
automatically be reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of the Lender in
respect of any interest computation period is reduced pursuant to Section 3.3(b)
and the amount of interest payable for its account in respect of any subsequent
interest computation period would be less than the maximum amount permitted by
law to be charged by the Lender, then the amount of interest payable for its
account in respect of such subsequent interest computation period shall be
automatically increased to such maximum permissible amount; provided that at no
time shall the aggregate amount by which interest paid for the account of the
Lender has been increased pursuant to this Section 3.3(c) exceed the aggregate
amount by which interest paid for its account has theretofore been reduced
pursuant to Section 3.3(b).
ARTICLE IV.
DISBURSEMENT AND PAYMENT
Section 4.1 Method and Time of Payments.
(a) All payments by the Borrower hereunder shall be made without setoff or
counterclaim to the Lender, for its account, in dollars and in immediately
available funds to the account of the Lender theretofore designated in writing
to the Borrower not later than 12:00 noon, New York time, on the date when due
or, in the case of payments pursuant to Sections 4.3 and 4. 4 or payments
otherwise specified as payable upon demand, forthwith upon written demand
therefor.
(b) Whenever any payment from the Borrower shall be due on a day that is
not a Business Day, the date of payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time.
Section 4.2 Compensation for Losses. (a) If (i) the Borrower prepays Loans,
(ii) the Borrower revokes any Borrowing Request or (iii) Loans (or portions
thereof) shall become or be declared to be due prior to the scheduled maturity
thereof, then the Borrower shall pay to the Lender an amount that will
compensate the Lender for any loss (other than lost profit) or premium or
penalty incurred by the Lender as a result of such prepayment, declaration or
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revocation in respect of funds obtained for the purpose of making or maintaining
the Lender's Loans, or any portion thereof. Such compensation shall include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so paid or prepaid, or not borrowed, for the period
from the date of such payment or prepayment or failure to borrow to the last day
of such Interest Period (or, in the case of a failure to borrow, the Interest
Period that would have commenced on the expected Borrowing Date) in each case at
the applicable rate of interest for such Loan over (ii) the amount of interest
(as reasonably determined by the Lender) that would have accrued on such amount
were it on deposit for a comparable period with leading banks in the London
interbank market.
(b) If requested by the Borrower, in connection with a payment due pursuant
to this Section 4.2, the Lender shall provide to the Borrower a certificate
setting forth in reasonable detail the amount required to be paid by the
Borrower to the Lender and the computations made by the Lender to determine such
amount. In the absence of manifest error, such certificate shall be conclusive
as to the amount required to be paid.
Section 4.3 Withholding and Additional Costs.
(a) Withholding. All payments under this Agreement (including payments of
principal and interest) shall be payable to the Lender free and clear of any and
all present and future taxes, levies, imposts, duties, deductions, withholdings,
fees, liabilities and similar charges (collectively, "Taxes"). If any Taxes are
required to be withheld or deducted from any amount payable under this
Agreement, then the amount payable under this Agreement shall be increased to
the amount which, after deduction from such increased amount of all Taxes
required to be withheld or deducted therefrom, will yield to the Lender the
amount stated to be payable under this Agreement. The Borrower shall also hold
the Lender harmless and indemnify it for any stamp or other taxes with respect
to the preparation, execution, delivery, recording, performance or enforcement
of this Agreement (all of which shall be included within "Taxes"). If any of the
Taxes specified in this Section 4.3(a) are paid by the Lender, the Borrower
shall, upon demand of the Lender, promptly reimburse the Lender for such
payments, together with any interest, penalties and expenses incurred in
connection therewith. The Borrower shall deliver to the Lender certificates or
other valid vouchers for all Taxes or other charges deducted from or paid with
respect to payments made by the Borrower hereunder.
(b) Additional Costs. Subject to Section 4.3(c), and without duplication of
any amounts payable described in Section 4.2 or 4.3(a), if after the date hereof
any change in any law or regulation or in the interpretation thereof by any
court or administrative or Governmental Authority charged with the
administration thereof or the enactment of any law or regulation shall either
(1) impose, modify or deem applicable any reserve, special deposit or similar
requirement against the Lender's Commitment or Loans or (2) impose on the Lender
any other condition regarding this Agreement, its Commitment or the Loans and
the result of any event referred to in clause (1) or (2) shall be to increase
the cost to the Lender of maintaining its Commitment or any Loans made by the
Lender (which increase in cost shall be calculated in accordance with the
Lender's reasonable averaging and attribution methods) by an amount which the
Lender deems to be material, then, upon demand by the Lender, the Borrower shall
pay to the Lender an amount equal to such increase in cost.
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(c) Certificate, Etc. If requested by the Borrower, in connection with any
demand for payment pursuant to this Section 4.3, the Lender shall provide to the
Borrower a certificate setting forth in reasonable detail the basis for such
demand, the amount required to be paid by the Borrower to the Lender, the
computations made by the Lender to determine such amount and satisfaction of the
conditions set forth in the next sentence. Anything to the contrary herein
notwithstanding, the Lender shall not have the right to demand any payment or
compensation under this Section 4.3 (i) with respect to any period more than 180
days prior to the date it has made a demand pursuant to this Section 4.3, and
(ii) to the extent that the Lender determines in good faith that the interest
rate on the relevant Loans appropriately accounts for any increased cost or
reduced rate of return. In the absence of manifest error, the certificate
referred to above shall be conclusive as to the amount required to be paid.
Section 4.4 Expenses; Indemnity. (a) The Borrower agrees: (i) to pay or
reimburse the Lender for all reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of, and any amendment,
supplement or modification to, this Agreement and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of Brown & Wood LLP, counsel to the Lender; and (ii) to
pay or reimburse the Lender for all reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Lender. The Borrower also
agrees to indemnify the Lender against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement.
(b) The Borrower agrees to indemnify the Lender and its directors,
officers, partners, employees, agents and Affiliates (for purposes of this
paragraph, each, an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all claims, liabilities, damages, losses, costs, charges and
expenses (including fees and expenses of counsel) incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated by this Agreement, the performance by the parties
thereto of their respective obligations under this Agreement or the consummation
of the transactions and the other transactions contemplated by this Agreement,
(ii) the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) All amounts due under this Section 4.4 shall be payable in immediately
available funds upon written demand therefor.
Section 4.5 Survival. The provisions of Sections 4.2, 4.3 and 4.4 shall
remain operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans,
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the reduction or termination of the Commitment, the invalidity or
unenforceability of any term or provision of this Agreement, or any
investigation made by or on behalf of the Lender.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties. In order to induce the Lender
to enter into this Agreement and to make Loans and the other financial
accommodations to the Borrower and to induce the Lender to obtain Letters of
Credit on its behalf as described herein, the Borrower represents and warrants
to the Lender as follows:
(a) Good Standing and Power. The Borrower and each Subsidiary is a
limited partnership or corporation, duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization; each
has the power to own its property and to carry on its business as now being
conducted; and each is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business
makes such qualification necessary, except where the failure to be so
qualified, or to be in good standing, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(b) Authority. The Borrower has full power and authority to execute
and deliver, and to incur and perform its obligations under, this
Agreement, which has been duly authorized by all proper and necessary
action. No consent or approval of limited partners is required as a
condition to the validity or performance of, or the exercise by the Lender
of any of its rights or remedies under, this Agreement.
(c) Authorizations. All authorizations, consents, approvals,
registrations, notices, exemptions and licenses with or from any
Governmental Authority or other Person necessary for the execution,
delivery and performance by the Borrower of, and the incurrence and
performance of each of its obligations under, this Agreement, and the
exercise by the Lender of its remedies under this Agreement have been
effected or obtained and are in full force and effect.
(d) Binding Obligation. This Agreement constitutes the valid and
legally binding obligation of the Borrower enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(e) Litigation. There are no proceedings or investigations now pending
or, to the knowledge of the Borrower, threatened before any court or
arbitrator or before or by any Governmental Authority which, individually
or in the aggregate, if determined adversely to the interests of the
Borrower or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect.
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(f) No Conflicts. There is no statute, regulation, rule, order or
judgment, and no provision of any agreement or instrument binding upon the
Borrower or any Subsidiary, or affecting their properties, and no provision
of the certificate of limited partnership, certificate of incorporation,
agreement of limited partnership or by-laws (or similar constitutive
instruments) of the Borrower or any Subsidiary, that would prohibit,
conflict with or in any way impair the execution or delivery of, or the
incurrence or performance of any obligations of the Borrower under, this
Agreement, or result in or require the creation or imposition of any Lien
on property of the Borrower or any Subsidiary as a consequence of the
execution, delivery and performance of this Agreement.
(g) Taxes. The Borrower and the Subsidiaries each has filed or caused
to be filed all tax returns that are required to be filed and paid all
taxes that are required to be shown to be due and payable on said returns
or on any assessment made against it or any of its property and all other
taxes, assessments, fees, liabilities, penalties or other charges imposed
on it or any of its property by any Governmental Authority, except for any
taxes, assessments, fees, liabilities, penalties or other charges which are
being contested in good faith and (unless the amount thereof is not
material to the Borrower's consolidated financial condition) for which
adequate reserves have been established in accordance with GAAP.
(h) Properties. The Borrower and the Subsidiaries each has good and
marketable title to, or valid leasehold interests in, all of its respective
properties and assets. All such assets and properties are so owned or held
free and clear of all Liens, except Permitted Liens.
(i) Compliance with Laws and Charter Documents. Neither the Borrower
nor any Subsidiary is, or as a result of performing any of its obligations
under this Agreement will be, in violation of (a) any law, statute, rule,
regulation or order of any Governmental Authority applicable to it or its
properties or assets or (b) its certificate of limited partnership,
certificate of incorporation, agreement of limited partnership, by-laws or
any similar document.
(j) No Material Adverse Effect. Since May 15, 1997, there has not
occurred or arisen any event, condition or circumstance that, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(k) Disclosure. All information relating to the Borrower or its
Subsidiaries delivered in writing to the Lender in connection with the
negotiation, execution and delivery of this Agreement is true and complete
in all material respects. There is no material fact of which the Borrower
is aware which, individually or in the aggregate, would reasonably be
expected adversely to influence the Lender's credit analysis relating to
the Borrower and its Subsidiaries which has not been disclosed to the
Lender in writing.
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Section 5.2 Survival. All representations and warranties made by the
Borrower in this Agreement, and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement, shall be
considered to have been relied upon by the Lender, (ii) survive the making of
Loans and the issuance of or payment under any Letter of Credit regardless of
any investigation made by, or on behalf of, the Lender and (iii) continue in
full force and effect as long as the Commitment has not been terminated and,
thereafter, so long as any Loan, Letter of Credit fee or other amount payable
under this Agreement remains unpaid.
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1 Conditions to the Availability of the Commitment and Letters of
Credit. The obligations of the Lender (including its obligators in respect of
Letters of Credit) hereunder are subject to, and the Lender's Commitment shall
not become available until the earliest date (the "Effective Date") on which
each of the following conditions precedent shall have been satisfied or waived
in writing by the Lender:
(a) This Agreement. The Lender shall have received this Agreement duly
executed and delivered by the Borrower.
(b) Certificate of Incorporation and By-Laws. The Lender shall have
received the following:
(i) a copy of the Certificate of Incorporation of the Borrower, as in
effect on the Effective Date, certified by the Secretary of State of
Delaware, and a certificate from such Secretary of State as to the good
standing of the Borrower, in each case as of a date reasonably close to the
Effective Date; and
(ii) a certificate of a Responsible Officer of the Borrower, dated the
Effective Date, and stating that attached thereto is a true and complete
copy of the By-Laws of the Borrower as in effect on such date.
(c) Representations and Warranties. The representations and warranties
contained in Section 5.1 shall be true and correct on the Effective Date,
and the Lender shall have received a certificate, signed by a Responsible
Officer of the Borrower, to that effect.
(d) Other Documents. The Lender shall have received such other
certificates, opinions and other documents as the Lender reasonably may
require.
Section 6.2 Conditions to All Loans and Letters of Credit. The obligations
of the Lender to make each Loan and to obtain Letters of Credit are subject to
the conditions precedent that, on the date of each Loan or Letter of Credit and
after giving effect thereto, each of the following conditions precedent shall
have been satisfied, or waived in writing by the Lender:
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(a) Borrowing Request. The Lender shall have received a Borrowing
Request in accordance with the terms of this Agreement.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing, nor shall any Default or Event of Default occur as a result
of the making of such Loan or obtaining such Letter of Credit.
(c) Debt-to-Equity Ratio. The Lender shall have received from the
Borrower a certificate demonstrating that the ratio of the Borrower's
Adjusted Indebtedness to the Borrower's Net Assets, taking into account the
requested Loan or Letter of Credit and the assets, if any, to be acquired
by the Borrower with the proceeds of such Loan or Letter of Credit, shall
not exceed 4-to-1.
(d) Representations and Warranties; Covenants. The representations and
warranties contained in Section 5. 1 shall have been true and correct when
made and (except to the extent that any representation or warranty speaks
as of a date certain) shall be true and correct on the Borrowing Date with
the same effect as though such representations and warranties were made on
such Borrowing Date; and the Borrower shall have complied with all of its
covenants and agreements under this Agreement.
(e) REIT Status of Reckson. The borrowing shall not, in the sole
judgment of the Lender, endanger Reckson's status as a REIT.
(f) Certain Loans Subject to Reckson's Approval. In respect of any
Loan or Letter of Credit or Loans or Letters of Credit aggregating in
excess of $10 million, any single Commercial Service, as well as any Loan
or Letter of Credit relating to an investment by Borrower in any area other
than Commercial Services, Reckson shall have approved the Lender's making
such Loan or obtaining such Letter of Credit in its sole discretion.
Section 6.3 Satisfaction of Conditions Precedent. Each of (i) the delivery
by the Borrower of a Borrowing Request (unless the Borrower notifies the Lender
in writing to the contrary prior to the Borrowing Date) and (ii) the acceptance
of the proceeds of a Loan or the delivery of the Letter of Credit shall be
deemed to constitute a certification by the Borrower that, as of the Borrowing
Date, each of the conditions precedent contained in Section 6. 2 has been
satisfied with respect to the Loan then being made or the Letter of Credit then
being issued.
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants. Until satisfaction in full of all the
obligations of the Borrower under this Agreement and termination of the
Commitment of the Lender hereunder, the Borrower will:
(a) Financial Statements; Compliance Certificates. Furnish to the Lender:
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(i) as soon as available, but in no event more than 60 days following
the end of each of the first three quarters of each fiscal year, copies of
the Borrower's Quarterly Report on Form 10-Q being filed with the SEC,
which shall include a consolidated balance sheet and consolidated income
statement of the Borrower and the Subsidiaries for such quarter;
(ii) as soon as available, but in no event more than 120 days
following the end of each fiscal year, a copy of the Borrower's Annual
Report on Form 10-K being filed with the SEC, which shall include the
consolidated financial statements of the Borrower and the Subsidiaries,
together with a report thereon by Ernst & Young LLP (or another firm of
independent certified public accountants reasonably satisfactory to the
Lender), for such year;
(iii) within five Business Days of any Responsible Officer of the
Borrower obtaining knowledge of any Default or Event of Default, if such
Default or Event of Default is then continuing, a certificate of a
Responsible Officer of the Borrower stating that such certificate is a
"Notice of Default" and setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto; and
(iv) such additional information, reports or statements, regarding the
business, financial condition or results of operations of the Borrower and
its Subsidiaries, as the Lender from time to time may reasonably request.
(b) Existence. Except as permitted by Section 7. 2(a), maintain its
existence in good standing and qualify and remain qualified to do business in
each jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business is such that the failure to
qualify, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(c) Compliance with Law and Agreements. Comply, and cause each Subsidiary
to comply, with all applicable laws, ordinances, orders, rules, regulations and
requirements of all Governmental Authorities and with all agreements except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings or where the failure to comply therewith, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) Authorizations. Obtain, make and keep in full force and effect all
authorizations from and registrations with Governmental Authorities required for
the validity or enforceability of this Agreement.
(e) Inspection. Permit, and cause each Subsidiary to permit, the Lender to
have one or more of its officers and employees, or any other Person designated
by the Lender, to visit and inspect any of the properties of the Borrower and
the Subsidiaries and to examine the minute books, books of account and other
records of the Borrower and the Subsidiaries, and to photocopy extracts from
such minute books, books of account and other records, and to discuss its
affairs, finances and accounts with its officers and with the Borrower's
independent
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accountants, during normal business hours and at such other
reasonable times, for the purpose of monitoring the Borrower's compliance with
its obligations under this Agreement.
(f) Maintenance of Records. Keep, and cause each Subsidiary to keep, proper
books of record and account in which full, true and correct entries will be made
of all dealings or transactions of or in relation to its business and affairs.
(g) Notice of Defaults and Adverse Developments. Promptly notify the Lender
upon the discovery by any Responsible officer of the occurrence of (i) any
Default or Event of Default; (ii) any event, development or circumstance whereby
the financial statements most recently furnished to the Lender fail in any
material respect to present fairly, in accordance with GAAP, the financial
condition and operating results of the Borrower and the Subsidiaries as of the
date of such financial statements; (iii) any material litigation or proceedings
that are instituted or threatened (to the knowledge of the Borrower) against the
Borrower or any Subsidiary or any of their respective assets; (iv) any event,
development or circumstance which, individually or in the aggregate, could
reasonably be expected to result in an event of default (or, with the giving of
notice or lapse of time or both, an event of default) under any Indebtedness and
the amount thereof; and (v) any other development in the business or affairs of
the Borrower or any Subsidiary if the effect thereof would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
in each case describing the nature thereof and the action the Borrower proposes
to take with respect thereto.
Section 7.2 Negative Covenants. Until satisfaction in full of all the
obligations of the Borrower under this Agreement and termination of the
Commitment of the Lender hereunder, the Borrower will not:
(a) Mergers, Consolidations and Sales of Assets. Wind up, liquidate or
dissolve its affairs or enter into any merger, consolidation or share exchange,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time), whether in one or a series of transactions, all
or any substantial part of its assets, or permit any Subsidiary so to do, unless
such transaction or series of transactions are expressly approved by the Lender,
which approval shall not be unreasonably withheld.
(b) Liens. Create, incur, assume or suffer to exist any Lien upon or with
respect to any of its property or assets, whether now owned or hereafter
acquired, or assign or otherwise convey any right to receive income, except
Permitted Liens.
(c) Indebtedness. Create, incur, issue, assume, guarantee or suffer to
exist any Indebtedness, except:
(i) Indebtedness to the Lender under this Agreement or under the
RSVP-ROP Facility Agreement,
(ii) Non-recourse Indebtedness of the Borrower and any Subsidiary
secured by mortgages, encumbrances or liens specifically permitted by
Section 7. 2(b), and
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(iii) Indebtedness expressly approved by the Lender in writing, which
approval may be withheld in the Lender's sole discretion.
(d) Dividends. Declare any dividends on any of its shares of capital stock
unless such dividend or distribution is expressly approved in writing by the
Lender.
(e) Certain Amendments. Amend, modify or waive, or permit to be amended,
modified or waived, any provision of its Certificate of Incorporation unless,
within not less than 5 days prior to such amendment, modification or waiver (or
such later time as the Lender may in its sole discretion permit), the Borrower
shall have given the Lender notice thereof, including all relevant terms and
conditions thereof, and the Lender shall have consented in writing thereto.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default. If one or more of the following events
(each, an "Event of Default") shall occur:
(a) The Borrower shall fail duly to pay any principal of any Loan or Letter
of Credit when due, whether at maturity, by notice of intention to prepay or
otherwise; or
(b) The Borrower shall fail duly to pay any interest, fee or any other
amount payable under this Agreement within two days after the same shall be due;
or
(c) Borrower shall fail duly to observe or perform any term, covenant, or
agreement contained in Section 7. 2; or
(d) The Borrower shall fail duly to observe or perform any other term,
covenant or agreement contained in this Agreement, and such failure shall have
continued unremedied for a period of 30 days; or
(e) Any representation or warranty made or deemed made by the Borrower in
this Agreement, or any statement or representation made in any certificate,
report or opinion delivered by or on behalf of the Borrower in connection with
this Agreement, shall prove to have been false or misleading in any material
respect when so made or deemed made; or
(f) The Borrower shall fail to pay any Indebtedness (other than obligations
here under) in an amount of $100,000 or more when due; or any such Indebtedness
having an aggregate principal amount outstanding of $100,000 or more shall
become or be declared to be due prior to the expressed maturity thereof; or
(g) An involuntary case or other proceeding shall be commenced against the
Borrower seeking liquidation, reorganization or other relief with respect to it
or its debts under any applicable bankruptcy, insolvency, reorganization or
similar law or seeking the appointment of a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall remain
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undismissed and unstayed for a period of more than 60 days; or an order or
decree approving or ordering any of the foregoing shall be entered and continued
unstayed and in effect; or
(h) The Borrower shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or similar law or any other
case or proceeding to be adjudicated a bankrupt or insolvent, or any of them
shall consent to the entry of a decree or order for relief in respect of the
Borrower in an involuntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against any of them, or any of them
shall file a petition or answer or consent seeking reorganization or relief
under any applicable law, or any of them shall consent to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Borrower
or any substantial part of its property, or the Borrower shall make an
assignment for the benefit of creditors, or the Borrower shall admit in writing
its inability to pay its debts generally as they become due, or the Borrower
shall take corporate action in furtherance of any such action;
(i) One or more judgments against the Borrower or attachments against its
property, which in the aggregate exceed $100,000, or the operation or result of
which could be to interfere materially and adversely with the conduct of the
business of the Borrower remain unpaid, unstayed on appeal, undischarged,
unbonded, or undismissed for a period of more than 30 days; or
(j) Any court or governmental or regulatory authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which prohibits, enjoins or otherwise
restricts, in a manner that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, any of the transactions
contemplated under this Agreement; or
(k) Any Event of Default shall occur and be continuing under the RSVP-ROP
Facility Agreement.
then, and at any time during the continuance of such Event of Default, the
Lender may, by written notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitment, Credit Obligations and any obligations of the Lender to obtain
Letters of Credit pursuant to this Agreement and (ii) declare any Credit
Obligations then outstanding to be due, whereupon the principal of the Credit
Obligations so declared to be due, together with accrued interest thereon and
any unpaid amounts accrued under this Agreement, shall become forthwith due,
without presentment, demand, protest or any other notice of any kind (all of
which are hereby expressly waived by the Borrower); provided that, in the case
of any Event of Default described in Section 8. 1(g) or (h) occurring with
respect to the Borrower, the Commitment and any obligations of the Lender to
obtain Letters of Credit pursuant to this Agreement shall automatically and
immediately terminate and the principal of all Loans then outstanding, together
with accrued interest thereon and any unpaid amounts accrued under this
Agreement, shall automatically and immediately become due without presentment,
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demand, protest or any other notice of any kind (all of which are hereby
expressly waived by the Borrower).
ARTICLE IX.
EVIDENCE OF LOANS; TRANSFERS
Section 9.1 Evidence of Loans and Letters of Credit. (a) The Lender shall
maintain accounts evidencing the indebtedness of the Borrower to the Lender
resulting from each Loan made by the Lender and each Letter of Credit issued for
the benefit of the Borrower from time to time, including the amounts of
principal and interest payable and paid to the Lender in respect of Loans or
Letters of Credit.
(b) The Lender's written records described above shall be available for
inspection during ordinary business hours by the Borrower from time to time upon
reasonable prior notice to the Lender.
(c) The entries made in the Lender's written or electronic records and the
foregoing accounts shall be prima facie evidence of the existence and amounts of
the indebtedness of the Borrower therein recorded; provided, however, that the
failure of the Lender to maintain any such account or such records, as
applicable, or any error therein, shall not in any manner affect the validity or
enforceability of any obligation of the Borrower to repay any Loan actually made
by the Lender in accordance with the terms of this Agreement.
ARTICLE X.
LETTERS OF CREDIT
Section 10.1 Letters of Credit. Until the Commitment Termination Date and
subject to the terms and conditions set forth in this Agreement, the Lender
hereby agrees to obtain from an Issuing Bank for the account of the Borrower one
or more Letters of Credit, subject to the following provisions:
(a) Types and Amounts. The Lender shall not have any obligation to obtain,
or cause the amendment or extension of any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to the
Issuing Bank, after giving effect to the issuance, amendment or extension
of the Letter of Credit requested hereunder, shall exceed any limit imposed
by law or regulation upon the Issuing Bank;
(ii) if, immediately after giving effect to the issuance, amendment or
extension of such Letter of Credit, (1) the Letter of Credit Obligations at
such time would exceed [$10,000,000] or (2) the Credit Obligations at such
time would exceed the Commitment at such time, or (3) one or more of the
conditions precedent contained in Sections 6.1 or 6.2, as applicable, would
not on such date be satisfied, unless such conditions are
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thereafter satisfied and written notice of such satisfaction is given to
the Lender (and the Lender shall not otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in
Sections 6.1 or 6.2, as applicable, have been satisfied);
(iii) which has an expiration date later than the earlier of (A) the
date one (1) year after the date of issuance (without regard to any
automatic renewal provisions thereof) or (B) the Business Day next
preceding the scheduled Commitment Termination Date; or
(iv) which is in a currency other than dollars.
(b) Conditions. In addition to being subject to the satisfaction of the
conditions precedent contained in Sections 6.1 and 6.2, as applicable, the
obligation of the Lender to obtain from an Issuing Bank, or to cause the
amendment or extension of any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Lender so requests, the Borrower shall have executed and
delivered to the Lender a Letter of Credit Reimbursement Agreement and such
other documents and materials as may be required pursuant to the terms
thereof; and
(ii) the terms of the proposed Letter of Credit shall be satisfactory
to the Lender in its sole discretion.
(c) Issuance of Letters of Credit. (i) The Borrower shall give the Lender
written notice that it requires the issuance of a Letter of Credit not later
than 11:00 a.m. (New York time) on the third (3rd) Business Day preceding the
requested date for issuance thereof under this Agreement. Such notice shall be
irrevocable unless and until such request is denied by the Lender and shall
specify (A) that the requested Letter of Credit is either a Commercial Letter of
Credit or a Standby Letter of Credit, (B) the stated amount of the Letter of
Credit requested, (C) the effective date (which shall be a Business Day) of
issuance of such Letter of Credit, (D) the date on which such Letter of Credit
is to expire (which shall be a Business Day and no later than the Business Day
immediately preceding the scheduled Commitment Termination Date), (E) that such
Letter of Credit is to be issued for the benefit of the Borrower, (F) other
relevant terms of such Letter of Credit, (G) the Available Commitment at such
time and (H) the amount of the then outstanding Letter of Credit Obligations.
(ii) The Lender shall give the Borrower written notice, or telephonic
notice confirmed promptly thereafter in writing, of the issuance, amendment
or extension of a Letter of Credit.
(d) Reimbursement Obligations; Duties of the Lender.
(i) Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement:
(A) the Borrower shall reimburse the Lender for amounts drawn
under its Letter of Credit, in dollars, no later than the date (the
"Reimbursement Date")
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which is the earlier of (I) the time specified in the applicable
Letter of Credit Reimbursement Agreement and (II) three (3) Business
Days after the Borrower receives written notice from the Lender that
payment has been made under such Letter of Credit by the Issuing Bank;
and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the Prime Rate in accordance with
Section 3.1 from the date of the relevant drawing under such Letter of
Credit until the Reimbursement Date.
(ii) The Lender shall give the Borrower written notice, or telephonic
notice confirmed promptly thereafter in writing, of all drawings under a
Letter of Credit and the payment (or the failure to pay when due) by the
Borrower, as the case may be, on account of a Reimbursement Obligation.
(iii) In determining whether to pay under any Letter of Credit, it is
understood that the Issuing Bank shall have no obligation other than to
confirm that any documents required to be delivered under a respective
Letter of Credit appear to have been delivered and that they appear on
their face to comply with the requirements of such Letter of Credit.
(e) Payment of Reimbursement Obligations. (i) The Borrower unconditionally
agrees to pay to the Lender, in dollars, the amount of all Reimbursement
Obligations, interest and other amounts payable to the Lender under or in
connection with the Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the Borrower may
have at any time against the Lender or any other Person.
(f) Letter of Credit Fee Charges. In connection with each Letter of Credit,
the Borrower hereby covenants to pay to the Lender the following Letter of
Credit Fee payable quarterly in arrears (on the first Banking Day of each
calendar quarter following the issuance of each Letter of Credit): a fee, for
the Lender's own account, computed daily on the amount of the Letter of Credit
issued and outstanding at a rate per annum equal to the Lender's cost in
obtaining the Letter of Credit plus a spread equal to the difference between the
interest rate payable on Loans hereunder and the Lender's cost of borrowing
under its credit facility (or, in the absence of a credit facility, the Prime
Rate as announced by Citibank NA). Notwithstanding the foregoing, if amounts
payable pursuant to this Section 10.1(f), together with any interest payable
pursuant to Section 3.1, exceed the amount of EBITDA of the Borrower for the
immediately preceding calendar quarter (ending the last day of September,
December, March or June), the Borrower shall not be obligated to repay the
amounts payable under this Section 10.1(f) which, when added to the interest
payable pursuant to Section 3.1 exceeds EBITDA of the Borrower for such period.
Any such amount in excess of EBITDA shall be added to principal hereunder and
shall accrue interest thereon in accordance with Section 3.1.
(g) Letter of Credit Reporting Requirements. The Lender shall, upon the
request of the Borrower, provide to the Borrower separate schedules for
Commercial Letters of Credit and Standby Letters of Credit issued as Letters of
Credit, in form and substance reasonably satisfactory to the Borrower, setting
forth the aggregate Letter of Credit Obligations outstanding
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to it at the end of each month and any information requested by the Borrower
relating to the date of issue, account party, amount, expiration date and
reference number of each Letter of Credit issued as contemplated hereunder.
(h) Indemnification; Exoneration. (i) In addition to all other amounts
payable to the Lender, the Borrower hereby agrees to defend, indemnify, and save
the Lender harmless from and against any and all claims, demands, liabilities,
penalties, damages, losses (other than loss of profits), reasonable costs,
reasonable charges and reasonable expenses (including reasonable attorneys fees
but excluding taxes) which the Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit
other than as a result of the gross negligence or willful misconduct of the
Lender, as determined by a court of competent jurisdiction, or (B) the failure
of the Issuing Bank to honor a drawing under such Letter of Credit as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority.
(ii) As between the Borrower on the one hand and the Lender on the
other hand, the Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiary of the Letters
of Credit. In furtherance and not in limitation of the foregoing, subject
to the provisions of the Letter of Credit Reimbursement Agreements, the
Lender shall not be responsible for: (A) the form, validity, legality,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance
of the Letters of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity, legality or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (C) failure of
the Borrower to duly comply with conditions required in order to draw upon
such Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the Borrower of the proceeds of any drawing Letter of
Credit; and (H) any consequences arising from causes beyond the control of
the Lender, other than of the foregoing resulting from the gross negligence
or willful misconduct of the Lender.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
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Section 11.2 Waiver of Jury. THE BORROWER AND THE LENDER EACH HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, OR THE RELATIONSHIPS
ESTABLISHED HEREUNDER.
Section 11.3 Jurisdiction and Venue; Service of Process. 1. The Borrower
and the Lender each hereby irrevocably submits to the non-exclusive jurisdiction
of any state or federal court in the Borough of Manhattan, The City of New York
for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and to the laying of venue in the Borough of
Manhattan The City of New York. The Borrower and the Lender each hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection to the laying of the venue of any such suit, action or proceeding
brought in the aforesaid courts and hereby irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
(b) Borrower agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 11.7 or at such other address of
which the Lender shall have been notified pursuant thereto. The Borrower further
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to sue in any
other jurisdiction; and
(c) The Borrower waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
Section 11.4 Confidentiality. The Lender agrees (on behalf of itself and
each of its Affiliates, partners, officers, employees and representatives) to
use its best efforts to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with commercially reasonable business practices, any Confidential
Information; provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for the Lender, (iii) to auditors or accountants, (iv)
by the Lender to an Affiliate thereof, or (v) in connection with any litigation
relating to enforcement of this Agreement; provided further, that, unless
specifically prohibited by applicable law or court order, the Lender shall,
prior to disclosure thereof, notify the Borrower of any request for disclosure
of any Confidential Information (x) by any Governmental Authority or
representative thereof or (y) pursuant to legal process.
Section 11.5 Amendments and Waivers. (a) Any provision of this Agreement
may be amended, modified, supplemented or waived, but only by a written
amendment or supplement, or written waiver, signed by the Borrower and the
Lender.
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(b) Except to the extent expressly set forth therein, any waiver shall be
effective only in the specific instance and for the specific purpose for which
such waiver is given.
Section 11.6 Cumulative Rights; No Waiver. Each and every right granted to
the Lender hereunder or under any other document delivered in connection
herewith, or allowed it by law or equity, shall be cumulative and not exclusive
and may be exercised from time to time. No failure on the part of the Lender to
exercise, and no delay in exercising, any right will operate as a waiver
thereof, nor will any single or partial exercise by the Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right.
Section 11.7 Notices. Any communication, demand or notice to be given
hereunder will be duly given when delivered in writing or by telecopy to a party
at its address as indicated below or such other address as such party may
specify in a notice to the other party hereto. A communication, demand or notice
given pursuant to this Agreement shall be addressed:
If to the Borrower, to:
Reckson Service Industries, Inc.
225 Broadhollow Road
Melville, New York 11747
Telecopy: (516) 719-7400
Attention: Chief Financial Officer
If to the Lender, to:
Reckson Operating Partnership, L.P.
225 Broadhollow Road
Melville, New York 11747
Telecopy: (516) 694-6900
Attention: Chief Financial Officer
This Section 11.7 shall not apply to notices referred to in Article II of
this Agreement, except to the extent set forth therein.
Section 11.8 Certain Acknowledgments. The Borrower hereby confirms and
acknowledges that (a) the Lender does not have any fiduciary or similar
relationship to the Borrower by virtue of this Agreement and the transactions
contemplated herein and that the relationship established by this Agreement
between the Lender and the Borrower is solely that of creditor and debtor and
(b) no joint venture exists between the Borrower and the Lender by virtue of
this Agreement and the transactions contemplated herein.
Section 11.9 Separability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any law, the validity,
25
<PAGE>
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
Section 11.10 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower may not assign any of its
rights hereunder without the prior written consent of the Lender, and any
purported assignment by the Borrower without such consent shall be void.
Section 11.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RECKSON SERVICE INDUSTRIES, INC.,
as Borrower
By:______________________________
Name:
Title:
RECKSON OPERATING PARTNERSHIP, L.P.,
as Lender
By: Reckson Associates Realty Corp.,
its general partner
By:______________________________
Name:
Title:
27
EXHIBIT 10.38
RECKSON ASSOCIATES REALTY CORP.
SECOND AMENDED AND RESTATED LETTER AGREEMENT
November 30, 1999
Reckson Service Industries Inc.
10 East 53rd Street
New York, New York 10022
Re: Second Amended and Restated Credit Agreements
Dear Sirs:
Reference is made to the Amended and Restated Credit Agreement, dated
as of August 4, 1999, between Reckson Service Industries, Inc., as Borrower (the
"Borrower") and Reckson Operating Partnership, L.P., as Lender (the "Lender")
relating to the operations of the Borrower (the "RSI Facility"), and the Amended
and Restated Credit Agreement, dated as of August 4, 1999, between the Borrower
and the Lender relating to Reckson Strategic Venture Partners LLC (together with
the RSI Facility, the "Credit Facilities"). Capitalized terms used herein and
not otherwise defined shall have the meaning ascribed to such terms in the
Credit Facilities.
You have advised us of your proposal to obtain (i) a $60 million
secured loan from Warburg Dillon Read and UBS AG (or other lenders)
substantially on the terms set forth on the term sheet attached hereto as
Exhibit A (the "Secured $60 million Loan") and (ii) a $75 million secured loan
from Reckson Strategic Venture Partners LLC (or other lenders) substantially on
the terms set forth in the term sheet attached hereto as Exhibit B (the "Secured
$75 million Loan" and, together with the Secured $60 million Loan, the "Secured
Loans"). You have also advised us of your proposal to issue up to $200 million
in preferred stock (the "Preferred Stock").
<PAGE>
1. Amendments. We hereby agree to the following amendments to the Credit
Facilities:
a. Section 1.1(b) is hereby amended to add the following definition:
"Adjusted EBITDA" shall mean, for any fiscal quarter, EBITDA less
any amounts payable (i) by any subsidiary in respect of the
Indebtedness of such Subsidiary (including, but not limited to,
Indebtedness of VANTAS Incorporated and the Secured $75 million
Loan) and (ii) by the Borrower in respect of the Secured $60
million Loan.
b. The third sentence of Section 3.1 of the Credit Agreements is
hereby amended by deleting the references to "EBITDA" and
replacing such references with the term "Adjusted EBITDA."
2. Consents. We hereby consent to the following:
a. The Liens to be granted under the Secured Loans shall be deemed
to be Permitted Liens for purposes of the Credit Facilities.
b. In accordance with Section 7.2(c)(iii) of the Credit Facilities,
the incurrence of Indebtedness under the Secured Loans and the
payment of interest thereon is hereby approved.
c. In accordance with Sections 7.2(d) and 7.2(e) of the Credit
Facilities, the filing of one or more Certificates of Designation
and any amendments thereto in respect of the Preferred Stock, and
the payment by the Borrower of dividends to the holders of the
Preferred Stock, is hereby approved.
3. Fees. It is understood that a fee equal to shares of common stock, par
value $.01 per share, of the Borrower shall be paid to us upon
delivery of this letter in consideration of the matters covered in
this letter.
Very truly yours,
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp., general partner
By:___________________________________
Name:
Title:
Confirmed and Accepted:
RECKSON SERVICE INDUSTRIES, INC.
By:_________________________
Name:
Title:
EXHIBIT 12.1
RECKSON ASSOCIATES REALTY CORP.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
- -------------------------------------------- JUNE 3, 1995 JANUARY 1, 1995
TO TO
1999 1998 1997 1996 DECEMBER 31, 1995 JUNE 2, 1995
- ----------- ---------- ---------- ---------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
2.06 1.98x 2.68x 2.72x 2.71x 1.02x (1)
</TABLE>
(1) Prior to completion of the IPO on June 2, 1995, the Company's predecessors
operated in a manner as to minimize net taxable income to the owners. The
IPO and the related formation transactions permitted the Company to
deleverage its properties significantly, resulting in a significantly
improved ratio of earnings to fixed charges.
The Company's consolidated ratio of earnings to fixed charges and preferred
dividends and distributions for the year ended December 31, 1999 and 1998 was
1.52x and 1.59x, respectively. The Company had no preferred capital outstanding
prior to April 1998.
EXHIBIT 21.1
RECKSON ASSOCIATES REALTY CORP.
STATEMENT OF SUBSIDIARIES
NAME STATE OF ORGANIZATION
- ------------------------------------------------- ----------------------
Reckson Operating Partnership, L.P. Maryland
Omni Partners, L.P. Delaware
Reckson FS Limited Partnership Delaware
Metropolitan Partners, LLC Delaware
Reckson Management Group, Inc. New York
Reckson Construction Group, Inc New York
Reckson Short Hills, LLC Delaware
Reckson / Stamford Towers, LLC Delaware
EXHIBIT 23.0
RECKSON ASSOCIATES REALTY CORP.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
Forms S-3 (No. 333-91915, No. 333-67129, No. 333-46883, No 333-29003 and No.
333-28015) and in the related Prospectus and Forms S-8 (No. 333-87235, No.
333-66283, No. 333-66273, No. 333-45359, and No. 333-04526) pertaining to the
Stock Option Plans, of Reckson Associates Realty Corp., of our report dated
February 15, 2000, with respect to the consolidated financial statements and
schedule of Reckson Associates Realty Corp., included in this Annual Report
Form 10-K for the year ended December 31, 1999.
Ernst & Young, LLP
New York, New York
March 14, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000930548
<NAME> RECKSON ASSOCIATES REALTY CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 21,368
<SECURITIES> 0
<RECEIVABLES> 206,301
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 227,669
<PP&E> 2,214,872
<DEPRECIATION> (218,385)
<TOTAL-ASSETS> 2,724,235
<CURRENT-LIABILITIES> 99,602
<BONDS> 1,281,087
0
152
<COMMON> 504
<OTHER-SE> 1,116,300
<TOTAL-LIABILITY-AND-EQUITY> 2,724,235
<SALES> 369,135
<TOTAL-REVENUES> 403,153
<CGS> 0
<TOTAL-COSTS> 150,287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,320
<INCOME-PRETAX> 85,192
<INCOME-TAX> 0
<INCOME-CONTINUING> 85,192
<DISCONTINUED> 0
<EXTRAORDINARY> (389)
<CHANGES> 0
<NET-INCOME> 47,529
<EPS-BASIC> 1.18
<EPS-DILUTED> 1.17
</TABLE>
