UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.1)*
Crocker Realty Trust, Inc.
______________________________________________________________________________
(Name of Issuer)
Common Stock
______________________________________________________________________________
(Title of Class of Securities)
226 826 10 5
(CUSIP Number)
John F. Hartigan, Esq., Morgan, Lewis Bockius LLP
801 South Grand Avenue, Los Angeles, CA 90017
(213) 612-2500
______________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
April 29, 1996
______________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A
fee is not required only if the reporting person (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
C/M 11926.0021 367638.1
<PAGE>
SCHEDULE 13D
CUSIP No. 226 826 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AP CRTI Holdings, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or (e) / /
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
--------------------------------------------------------------
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------
8 SHARED VOTING POWER
12,851,761 shares of Common Stock
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
12,851,761 shares of Common Stock
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,851,761 shares of Common Stock
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
C/M 11926.0021 367638.1
<PAGE>
SCHEDULE 13D
CUSIP No. 226 826 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Apollo Real Estate Advisors, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or (e) / /
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
--------------------------------------------------------------
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------
8 SHARED VOTING POWER
12,851,761 shares of Common Stock
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
12,851,761 shares of Common Stock
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,851,761 shares of Common Stock
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
47.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
C/M 11926.0021 367638.1
<PAGE>
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
_______________________________________________________________________________
_______________________________________________________________________________
This Amendment No. 1 to Schedule 13D (this "Amendment") filed pursuant to
Section 13d-1(f)(1) and Section 13d-2(a) of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Act") should be read
in conjunction with the Schedule 13D (the "Schedule 13D") filed with the
Securities and Exchange Commission on December 28, 1995 by Apollo Real Estate
Investors Fund, L.P. and Apollo Real Estate Advisors, L.P. relating to the
common stock, par value $.01 per share (the "Common Stock"), of Crocker Realty
Trust, Inc., a Maryland corporation (the "Company"). This Amendment amends the
Schedule 13D only with respect to the items set forth below. All capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Schedule 13D.
Item 2. Identity and Background.
This Statement is filed jointly by AP CRTI Holdings, L.P., a
Delaware Limited Partnership ("AP CRTI"), and Apollo Real Estate Advisors,
L.P., a Delaware limited partnership ("AREA"), which are sometimes collectively
referred to herein as the "Reporting Persons."
AP CRTI is an indirect wholly owned subsidiary of Apollo Real Estate
Investment Fund, L.P., a Delaware limited partnership ("AREIF"). AP CRTI's sole
asset is 12,850,620 shares of Common Stock. The general partner of AP CRTI is
AP-GP CRTI Holdings, L.P., a Delaware limited partnership ("APGP") whose general
partner is AP CRTI Holdings Corp., a Delaware corporation ("Holdings Corp.").
AREIF is the sole limited partner of AP CRTI and APGP and the sole stockholder
of Holdings Corp. The address of AP CRTI's principal business and its principal
office is c/o Apollo Real Estate Advisors, L.P., Two Manhattanville Road,
Purchase, New York 10577.
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C/M 11926.0021 367638.1
<PAGE>
AREIF is principally engaged in the business of investment in real
estate and real estate-related interests. The address of AREIF's principal
business and its principal office is c/o Apollo Real Estate Advisors, L.P., 1301
Avenue of the Americas, New York, New York 10019.
AREA is the managing general partner of AREIF. AREA is principally
engaged in the business of serving as managing general partner of AREIF. The
address of AREA's principal business and its principal office is 1301 Avenue of
the Americas, New York, New York 10019.
The administrative general partner of AREIF is Apollo Real Estate
Fund Administration Limited, a Cayman Islands corporation. Apollo Real Estate
Fund Administration Limited is principally engaged in the business of serving as
administrative general partner of AREIF. AREIF does not have any other general
partners. The sole general partner of AREA is Apollo Real Estate Management,
Inc. L.P., a Delaware limited partnership ("AREM"). AREM is principally engaged
in the business of serving as general partner of AREA.
The address of the principal business and principal office of Apollo
Fund Administration Limited is c/o CIBC Bank and Trust Company (Cayman) Limited,
Edward Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies.
The address of the principal business and principal office of AREM is 1301
Avenue of
the Americas, New York, New York 10019.
Attached as Appendix A to Item 2 is information concerning the
principals, executive officers, directors and principal shareholders of the
Reporting Persons, AREM, Apollo Real Estate Fund Administration Limited and
other entities as to which such information is required to be disclosed in
response to Item 2 and General Instruction C to Schedule 13D.
Neither the Reporting Persons, AREM, Apollo Real Estate Fund
Administration Limited nor any of the persons or entities referred to in
Appendix A to Item 2 has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree, or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or state securities laws or finding
any violation with respect to such laws.
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C/M 11926.0021 367638.1
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
The shares of Common Stock beneficially owned by AP CRTI were contributed
to AP CRTI by APGP and AREIF, in exchange for a 1% general partnership interest
and a 99% limited partnership interest, respectively, in AP CRTI.
AP CRTI entered into a Stock Purchase Agreement, dated as of April 29, 1996
(the "Stock Purchase Agreement"), among AP CRTI, AEW Partners, L.P. ("AEW"),
Thomas J. Crocker, Barbara F. Crocker, Richard S. Ackerman and Robert E. Onisko
(collectively, the "Sellers") and Highwoods Properties, Inc. ("Highwoods") and
Cedar Acquisition Corporation (the "Purchaser"). Subject to the terms and
conditions of the Stock Purchase Agreement, AP CRTI has agreed to sell all of
the outstanding shares of Common Stock held by it to Cedar.
Pursuant to the terms of the Stock Purchase Agreement, AT CRTI has granted
an irrevocable proxy to the Purchaser to vote, prior to the closing of the
transactions contemplated by the Stock Purchase Agreement, AP CRTI's shares of
Common Stock of the Company in a manner to effectuate the transactions
contemplated by that certain Agreement and Plan of Merger (attached hereto as
Exhibit 2), dated as of April 29, 1996 (the "Merger Agreement") by and among
Highwoods, the Company and the Purchaser. Pursuant to the terms of the Merger
Agreement, CAC will be merged with and into the Company.
The transactions contemplated by the Stock Purchase Agreement will be
consummated on or prior to August 15, 1996, prior to the consummation of the
transactions contemplated by the Merger Agreement.
Item 4. Purpose of Transaction.
The purpose of the Stock Purchase Agreement is to enable AP CRTI to gain
liquidity with respect to its investment in shares of Common Stock of the
Company.
Except as described in this Amendment or as more fully described in the
Stock Purchase Agreement and the Merger Agreement neither AP CRTI, AREIF nor
AREA has any present plan or proposal which relates to or would result in:
(a) the acquisition of additional securities of the
Company, or the disposition of the securities of the
Company;
(b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation involving the
Company or any of its subsidiaries;
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C/M 11926.0021 367638.1
<PAGE>
(c) a sale or transfer of a material amount of assets of
the Company or any of its subsidiaries;
(d) any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of the Company;
(f) any other material change in the Company's business or
corporate structure;
(g) changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(h) a class of securities of the Company to be delisted from a national
security exchange or to cease to be authorized to be quoted in the
inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to
Section 12(g)(4) of the Exchange Act; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) As of April 29, 1996, AP CRTI beneficially owns an aggregate of
12,850,620 shares of Common Stock, or approximately 47.6% of the Common Stock
outstanding, and AREA beneficially owns 1,141 shares of the Common Stock, or
less than 1% of the Common Stock outstanding. The Reporting Persons collectively
own an aggregate of 12,851,761 shares of the Common Stock, or approximately
47.6% of Common Stock outstanding.
AR CRTI, AREIF and AREA have certain agreements with AEW with respect to
the securities of the Company, copies of which were attached to the Schedule 13D
as Exhibits. These agreements will terminate upon the consummation of the
transactions contemplated by the Stock Purchase Agreement and the Merger
Agreement. The Reporting Persons have been informed that, as of May 17, 1996,
AEW beneficially owned 8,818,231 shares of Common Stock, or 32.7%, of the total
number of shares of Common Stock then outstanding. As a result of Agreement
referred to in the preceding sentence, including the agreements with respect to,
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C/M 11926.0021 367638.1
<PAGE>
among other things, the nomination and election of directors set forth in the
Stockholders Agreement, the Reporting Persons may be deemed to have shared
voting power over the 8,818,231 shares of Common Stock owned by AEW. (Reference
is made to such statements on Schedule 13D as have been or may be filed with the
Securities and Exchange Commission by AEW for information regarding AEW and its
ownership of shares of Common Stock.) The Reporting Persons disclaim beneficial
ownership of and any pecuniary interest in such shares, which are beneficially
owned by AEW, and disclaim membership in any group with AEW or its affiliates.
(b) The number of shares of Common Stock as to which there is sole
power to vote or to direct the vote, shared power to vote or to direct the vote,
sole power to dispose or direct the disposition, or shared power to dispose or
direct the disposition for the Reporting Person is set forth in the cover pages
and such information is incorporated herein by this reference.
Except as disclosed herein, there have been no reportable
transactions with respect to the Common Stock within the last 60 days by the
Reporting Persons.
(c) Not applicable.
(d) Not applicable.
Item 7. Material to be Filed as Exhibits.
EXHIBIT
NO. DESCRIPTION
1 Stock Purchase Agreement, dated as of April 29, 1996, by and
among AP CRTI Holdings, L.P., AEW Partners, L.P., Thomas J.
Crocker, Barbara F. Crocker, Richard S. Ackerman and Robert
E. Onisko and Highwood Properties, Inc. and Cedar
Acquisition Corporation
2 Agreement and Plan of Merger, dated as of April 29, 1996, by
and among Highwoods Properties, Inc., Crocker Realty Trust,
Inc. and Cedar Acquisition Corporation
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C/M 11926.0021 367638.1
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct and agrees that this statement can be filed jointly with the other
undersigned party.
Dated: May 30, 1996
AP CRTI HOLDINGS, L.P.
By: AP-GP CRTI Holdings, L.P.
By: AP CRTI Holdings Corp.
By: \s\ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President,
AP CRTI Holdings Corp.
APOLLO REAL ESTATE ADVISORS, L.P.
By: Apollo Real Estate Management, Inc.,
General Partner
By: \s\ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President, Apollo Real
Estate Management, Inc.
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C/M 11926.0021 367638.1
<PAGE>
APPENDIX A TO ITEM 2
The following sets forth information with respect to the executive
officers, directors and principal shareholders of AREIF, AREA, which is the
managing general partner of AREIF, AREM, which is the sole general partner of
AREA, Apollo Real Estate Fund Administration Limited ("Administration") which is
the administrative general partner of AREIF.
Leon D. Black and John J. Hannan, are principal executive officers
and directors of AREM and William Mack is the President of AREM. The principal
occupation of each of Messrs. Black and Hannan, each of whom is a United States
citizen, is to act as an executive officer and director of Apollo Capital
Management, Inc., a Delaware corporation ("Apollo Capital"), and of Lion Capital
Management, Inc., a Delaware corporation ("Lion Capital"). Messrs. Black and
Hannan are founding principals of Apollo Advisors, L.P. ("Apollo Advisors"),
AREA, and Lion Advisors, L.P. ("Lion Advisors"). The principal occupation of
William Mack is to act as a consultant to Apollo Advisors and as a principal of
AREA. The principal business of Apollo Advisors and of Lion Advisors is to
provide advice regarding investments in securities and the principal business of
AREA is to provide advice regarding investments in real estate and real
estate-related investments. The business address of each of Messrs. Black,
Hannan and Mack is c/o Apollo Real Estate Advisors, L.P., 1301 Avenue of the
Americas, New York, New York 10019.
Peter Henry Larder, Michael Francis Benedict Gillooly, Ian Thomas
Patrick and Martin William Laidlaw, each of whom is a British citizen, each
serves as a director of Apollo Real Estate Fund Administration Limited
("Administration"). Each of the above four individuals is principally employed
by CIBC Bank and Trust Company (Cayman) Limited ("CIBC") in the following
positions: Mr. Larder, Managing Director; Mr. Gillooly, Deputy Managing
Director; Mr. Patrick, Manager-Accounting Services; and Mr. Laidlaw, Senior Fund
Accountant. CIBC is a Cayman Islands corporation which is principally engaged in
the provision of trust, banking and corporate administration services, the
principal address of which is Edward Street, Grand Cayman, Cayman Islands,
British West Indies. It provides accounting, administrative and other services
to Administration pursuant to a contract.
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C/M 11926.0021 367638.1
EXHIBIT 1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
Among
AP CRTI HOLDINGS, L.P.,
AEW PARTNERS, L.P.,
THOMAS J. CROCKER,
BARBARA F. CROCKER,
RICHARD S. ACKERMAN and
ROBERT E. ONISKO
and
HIGHWOODS PROPERTIES, INC. and
CEDAR ACQUISITION CORPORATION
Dated as of April 29, 1996
370748.1
<PAGE>
STOCK PURCHASE AGREEMENT dated as of April 29, 1996 among AP CRTI HOLDINGS,
L.P., a Delaware limited partnership ("AP"), AEW PARTNERS, L.P., a Delaware
limited partnership ("AEW"), Thomas J. Crocker ("Mr. Crocker"), Barbara F.
Crocker ("Mrs. Crocker"), Richard S. Ackerman ("Ackerman") and Robert E. Onisko
("Onisko") (collectively, the "Sellers") and HIGHWOODS PROPERTIES, INC., a
Maryland corporation ("Highwoods") and CEDAR ACQUISITION CORPORATION, a Maryland
corporation (the "Purchaser") and a subsidiary of Highwoods.
W I T N E S S E T H:
WHEREAS, each Seller owns (either beneficially or of record) the
number of shares of common stock, par value $.01 per share (the "Company Common
Stock"), of CROCKER REALTY TRUST, INC., a Maryland corporation (the "Company"),
set forth below such Shareholder's name on Exhibit A hereto (all such shares,
and together with all shares of the Company Common Stock subsequently acquired
or otherwise owned (either beneficially or of record) by any Seller during the
Term (as defined in Section 2.03) of this Agreement, being referred to herein as
the "Shares"); and
WHEREAS, Highwoods and the Company propose to enter into an
Agreement and Plan of Merger (as the same may be amended from time to time, the
"Merger Agreement"), which provides, upon the terms and subject to the
conditions thereof, for the merger of the Purchaser with and into the Company
(the "Merger"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, the Shares, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition to the willingness of Highwoods to enter
into the Merger Agreement, Highwoods and the Purchaser requested that each
Seller agree, and in order to induce Highwoods to enter into the Merger
Agreement, each Seller has agreed, to enter into this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Purchase and Sale of the Shares. Upon the
terms and subject to the conditions of this Agreement, at the
370748.1
<PAGE>
Closing (as defined in Section 1.3), the Sellers shall sell to the Purchaser,
and the Purchaser shall purchase from the Sellers, the Shares.
SECTION 1.2 Purchase Price. The purchase price per share for the
Shares shall be $11.02 (in the aggregate, the "Purchase Price"). In the event
the Merger Consideration per share (as defined in the Merger Agreement) is
adjusted, the Purchase Price hereunder shall be adjusted in the same manner,
such that the Merger Consideration per share and the Purchase Price per share
are equal.
SECTION 1.3 Closing. Upon the terms and subject to the conditions of
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Smith Helms Mulliss & Moore, L.L.P., Raleigh, North Carolina at 10:00
a.m. local time at any time on or prior to August 15, 1996 on the fifth business
day following written notice delivered by the Purchaser to each of the Sellers,
or at such other place or at such other time or on such other date as the
Sellers and the Purchaser may mutually agree upon in writing (the day on which
the Closing takes place being the "Closing Date").
For purposes of this Agreement, "business day" means any day, except
a Saturday, Sunday or other day on which commercial banking institutions in New
York, New York are authorized or directed by law or executive order to close.
SECTION 1.4 Closing Deliveries by the Sellers. At the Closing, each
Seller shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares held by such Seller
duly endorsed in blank, or accompanied by stock powers duly executed in blank,
in form satisfactory to the Purchaser and with all required stock transfer tax
stamps affixed;
(b) a receipt for the Purchase Price and the
Additional Consideration (as defined in Section 3.3); and
(c) the certificates and other documents required to
be delivered pursuant to Section 6.1.
SECTION 1.5 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver to each of the Sellers the Purchase Price with respect
to such Seller's Shares and any Additional Consideration, if applicable, by wire
transfer in immediately available funds to the bank account of such Seller in
the United States to be designated by such Seller in a written
370748.1
<PAGE>
notice to the Purchaser at least three days before the Closing
Date.
ARTICLE II
VOTING OF THE SHARES
SECTION 2.1 Agreement to Vote Shares. Each of the Sellers hereby
agrees that during the Term of this Agreement, at any meeting of the
stockholders of the Company however called, and in any action by written consent
of the stockholders of the Company, it shall (a) vote its shares in favor of the
Merger or any other transaction contemplated by the Merger Agreement; (b) vote
its Shares against any action or agreement which would result in a breach in any
material respect of any covenant, representation or warranty) or any other
obligation of the Company under the Merger Agreement; and (c) vote its Shares
against any action or agreement which would impede, interfere with or attempt to
discourage the Merger, including, but not limited to: (i) any extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company or any of its subsidiaries; (ii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iii) any change in
the management or Board of Directors of the Company, except as otherwise agreed
to in writing by Highwoods; (iv) any change in the present capitalization or
dividend policy of the Company or (v) any other material change in the Company's
corporate structure or business.
SECTION 2.2 Proxy. EACH SELLER HEREBY GRANTS TO THE PURCHASER, OR
ANY NOMINEE OF THE PURCHASER, THE SELLER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL
POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT TO ALL OF
SUCH SELLER'S SHARES IN RESPECT OF ANY OF THE MATTERS SET FORTH IN CLAUSES (a)
THROUGH (c) OF SECTION 2.1. EACH SELLER ACKNOWLEDGES THAT SUCH PROXY IS COUPLED
WITH AN INTEREST, IS IRREVOCABLE AND SHALL NOT BE TERMINATED BY OPERATION OF LAW
UPON THE OCCURRENCE OF ANY EVENT. ANY SUCH PROXY SHALL TERMINATE UPON
TERMINATION OF THIS AGREEMENT.
SECTION 2.3 Term. For purposes of this Agreement, "Term" shall mean
the period commencing on the date hereof and continuing until the earlier to
occur of (i) the Closing Date or (ii) the termination of the Merger Agreement in
accordance with its own terms.
-3-
370748.1
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, hereby represents and
warrants to the Purchaser as follows:
SECTION 3.1 Due Organization, etc. Such Seller (if it is a
partnership) is duly organized and validly existing under the laws of the
jurisdiction of its incorporation or organization. Such Seller has full power
and authority (partnership or otherwise) to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action (partnership or
otherwise) on the part of such Seller. This Agreement has been duly executed and
delivered by such Seller and, assuming this Agreement constitutes a legal, valid
and binding agreement of the Purchaser, it constitutes a legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
similar laws relating to creditors' rights or general principles of equity.
SECTION 3.2 No Conflicts; Required Filings and Consents. (a) None of
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or in the Merger Agreement or compliance by
such Seller with any of the provisions hereof will (i) violate any provision of
such Seller's organizational or governing documents (in the case of a Seller
that is a partnership), (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default, or give rise to
any right of termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, consolidation or change in
control under, any of the terms, conditions or provisions of any notice, bond,
mortgage, indenture or other instrument of indebtedness for money borrowed to
which such Seller is a party, or by which any of its properties is bound, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, consolidation, or change in control under, any of the
terms, conditions or provisions of any license, franchise, permit or agreement
to which such Seller is a party, or by which such Seller or any of its
properties is bound, or (iv) violate any statute, rule, regulation, order, or
decree of any public body or authority by which such Seller or any of its
properties is bound, except (in the case of clauses (ii) and (iii) above) for
any such breaches, defaults or other occurrences that would not prevent or
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370748.1
<PAGE>
delay the performance by such Seller of its obligations under
this Agreement.
(b) The execution and delivery of this Agreement by such Seller do
not, and the performance of this Agreement by such Seller will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except where
the failure to obtain such consents, approvals, authorizations, or permits, or
to make such filings or notifications, would not prevent or delay the
performance by such Seller of its obligations under this Agreement.
SECTION 3.3 Title to Shares. As of the date of this Agreement, each
Seller is the record or beneficial owner of the number of respective Shares set
forth below the name of such Seller on Exhibit A hereto, which shares constitute
all of the shares of the Company Common Stock owned by such Seller. Each Seller
has good and valid title to its Shares free and clear of any pledge, lien,
security interest, charge, claim, equity, option, proxy, voting restriction,
right of first refusal or other limitation on disposition or voting rights or
encumbrance of any kind (an "Encumbrance"), other than pursuant to the
Stockholders Agreement by and among the Company, AP, AEW and CRT Leasing, Inc.
dated December 28, 1995 (the "Stockholders Agreement"), the legend relating to
transfer restrictions imposed by the Securities Act of 1933, as amended,
contained on the certificates representing the Shares (the "1933 Act
Restrictions"), or with respect to the Shares owned by AP, pursuant to the terms
of the Credit Agreement dated March 18, 1996 between Cs First Boston
Corporation, as agent, and AP and the Pledge and Security Agreement dated as of
March 26, 1996 between Bankers Trust Company, as collateral agent, and AP
(collectively, the "AP Margin Agreement") or with respect to Shares owned by
Ackerman, 5,000 Shares are held in a broker's margin account (the "Ackerman
Margin Agreement and, together with the AP Margin Agreement, the "Margin
Agreement") (the Stockholders Agreement, the 1933 Act Restrictions and the
Margin Agreement are collectively referred to herein as the "Existing
Restrictions"), or pursuant to this Agreement. At Closing each Seller shall
deliver to the Purchaser good and valid title to the Shares free and clear of
all Encumbrances and Existing Restrictions (other than the continued application
of the 1933 Act Restrictions after the transfer of the Shares to the Purchaser).
Each Seller does not own, of record or beneficially, any warrants, options or
other rights to acquire any shares of Company Common Stock, except as set forth
on Schedule 3.3. If any Seller owns any such warrants, options or other rights
to acquire shares of Company Common Stock, such Seller agrees not to exercise
such warrants, options or other rights prior to the Closing. At Closing, the
Purchaser shall pay to each Seller the amount set forth opposite the name of
such Seller on Schedule 3.3
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<PAGE>
in exchange for such Seller releasing all rights of such Seller in and to such
warrants, options or other rights, all of which shall automatically expire and
be of no further force or effect as of the Closing Date upon payment of such
amount (the "Additional Consideration"); provided, however, if it is determined
that compliance with the provisions of this sentence may cause any individual
subject to Section 16 of the Securities Exchange Act of 1934, as amended, to
become subject to the profit recovery provisions thereof, any such options,
warrants or other rights held by such individual may, if such individual so
agrees, be canceled or purchased, as the case may be, on the Closing Date or at
such later time as may be necessary to avoid application of such profit recovery
provisions and such individual will be entitled to receive from the Purchaser
the Additional Consideration allocated to such options, warrants or other rights
at the time of such cancellation or purchase. The parties hereto agree to
cooperate, including, if necessary, providing alternate arrangements in order to
achieve the intent of the foregoing sentence without giving rise to such profit
recovery. Each Seller has not appointed or granted any proxy, which appointment
or grant is still effective, with respect to the Shares.
SECTION 3.4 Merger Agreement. Each Seller acknowledges receipt and
review of a copy of the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to each Seller as
follows:
SECTION 4.1 Due Organization, etc. The Purchaser is duly organized
and validly existing under the laws of the jurisdiction of its incorporation.
The Purchaser has full power and authority (corporate or otherwise) to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and, assuming this Agreement
constitutes a legal, valid and binding agreement of each of the Sellers, it
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or similar laws relating to creditors' rights
or general principles of equity.
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<PAGE>
SECTION 4.2 No Conflicts; Required Filings and Consents. None of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby or in the Merger Agreement or compliance by the Purchaser
with any of the provisions hereof will (i) violate any provision of the
Purchaser's organizational or governing documents, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default, or give rise to any right of termination, cancellation or acceleration
or any right which becomes effective upon the occurrence of a merger,
consolidation or change in control under, any of the terms, conditions or
provisions of any notice, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which the Purchaser is a party, or by which
any of its properties is bound, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default, or
give rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation, or
change in control under, any of the terms, conditions or provisions of any
license, franchise, permit or agreement to which the Purchaser is a party, or by
which the Purchaser or any of its properties is bound, or (iv) violate any
statute, rule, regulation, order, or decree of any public body or authority by
which the Purchaser or any of its properties is bound, except (in the case of
clauses (ii) and (iii) above) for any such breaches, defaults or other
occurrences that would not prevent or delay the performance by the Purchaser of
its obligations under this Agreement.
SECTION 4.3 Financing. The Purchaser has, or has commitments from
responsible financial institutions to enable it to borrow, sufficient funds to
permit the Purchaser to acquire all the outstanding Shares pursuant to this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.1 Restrictions on Transfers and Other Actions. Each Seller
hereby agrees, during the Term, and except as contemplated hereby, not to (i)
sell, transfer record or beneficial ownership of, pledge, encumber, assign or
otherwise dispose of, enforce or permit the execution of the provisions of any
redemption agreement with the Company or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, transfer record or beneficial ownership of, pledge, encumbrance,
assignment or other disposition of, any of its Shares or any interest in any of
the foregoing except to the Purchaser or Highwoods or with respect to the
Excluded Assets (as defined in the Merger Agreement), or to purchase or
otherwise acquire any additional shares of Company
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<PAGE>
Common Stock or securities or other rights exchangeable or convertible into
Company Common Stock, (ii) grant any proxies or powers of attorney, deposit any
of its Shares into a voting trust or enter into a voting agreement with respect
to any of its Shares in, or any interest in any of the foregoing, except to the
Purchaser or Highwoods, (iii) consent or otherwise agree to any amendment,
waiver or other modification of the Articles of Incorporation or Bylaws (or
other applicable organizational documents) of the Company or its subsidiaries
without the prior written consent of the Purchaser or Highwoods or (iv) take any
action that would make any representation or warranty of such Seller contained
herein untrue or incorrect or have the effect of preventing or disabling such
Seller from performing its or his obligations under this Agreement, or that
would otherwise hinder or delay the Purchaser or Highwoods from acquiring a
majority of the outstanding shares of Company Common Stock, determined on a
fully diluted basis.
SECTION 5.2 Permitted Distributions. Notwithstanding anything herein
to the contrary, each Seller shall be entitled to receive its or his
proportionate interest in the Excluded Assets (as defined in the Merger
Agreement) in connection with the Company's distribution of such Excluded Assets
to its stockholders as contemplated by the Merger Agreement, whether such
distribution occurs before or after the Closing. Each Seller shall also be
entitled to receipt of the Company's regular quarterly dividend on the shares of
the Company's Common Stock that they respectively own in an amount not exceeding
$.15 per share (or a prorated portion of such amount in the case of any portion
of a quarterly period) for such period as Seller continues to own Shares; the
Purchaser shall be entitled to all such dividends from and after the date it
acquires the Shares hereunder. The parties hereto will cooperate with each other
to effectuate the terms of this Section 5.2.
SECTION 5.3 Ownership of Subsidiaries. Each Seller covenants and
agrees hereby, that to the extent such Seller or any of its affiliates owns any
equity or other interest in a subsidiary (as defined in the Merger Agreement) of
the Company at Closing, in consideration for payment of the Purchase Price and
the Additional Consideration, such Seller shall relinquish and transfer such
interest to such person or entity designated by Highwoods at Closing, except for
interests in any subsidiary that is a part of, or owner of, the Excluded Assets
(as defined in the Merger Agreement).
SECTION 5.4 Consent Under and Termination of Stockholders Agreement.
Each of AP and AEW covenants and hereby agrees and consents to the transfer of
their respective Shares to Purchaser and the consummation of the transactions
contemplated hereby as required under the Stockholders Agreement and also hereby
agrees that upon Purchaser's acquisition of the Shares
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<PAGE>
owned by AP and AEW hereunder, the Stockholders Agreement shall automatically
terminate and be of no further force or effect.
SECTION 5.5 Mr. Crocker Litigation. Mr. Crocker covenants and hereby
agrees on his behalf and on the behalf of Crocker and Company, for which Mr.
Crocker hereby presents that he is an authorized representative of with full
power and authority to bind Mr. Crocker and Company, to release any claim he or
Crocker and Company has for indemnification against the Company in the case
styled Patrick Jolivet v. Thomas J. Crocker and Crocker and Company, Case No.
94-8669, U.S. District Court, Southern District of Florida; provided, that this
consent and release shall be valid only in the event that provision has been
made by the Company to transfer its obligation to indemnify Mr. Crocker and
Crocker and Company to another entity in connection with the distribution of the
Excluded Assets as contemplated by the Merger Agreement and that such indemnity
obligation has been assumed by the owner of such Excluded Assets upon their
distribution out of the Company.
SECTION 5.6 Further Assurances. Each Seller shall perform such
further acts and execute such further documents and instruments as may
reasonably be required to vest in Highwoods the power to carry out the
provisions of this Agreement. Each Seller further agrees that neither it nor its
representatives shall take any action which is intended to or which does prevent
or delay the transactions contemplated by this Agreement; provided, however,
that nothing in this Agreement shall restrict the action of any director of the
Company in his capacity as a director. In addition, both prior to and after the
Closing Date, AP agrees to reasonably cooperate with Purchaser and Highwoods in
connection with Purchaser's and Highwoods' review of the Company's status as a
REIT.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Closing. The obligations of the Purchaser
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants Contained in this
Agreement. Each of the Sellers shall have performed in all material respects its
agreements contained in this Agreement required to be performed at or prior to
the Closing and the representations and warranties of each of the Sellers
contained in this Agreement shall be true when made and at and as of the Closing
as if made at and as of such time. The Purchaser shall have received a
certificate of each Seller or, in
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<PAGE>
the case of a Seller which is a limited partnership, an appropriate officer of
the general partner of such Seller, as the case may be, to that effect.
(b) Covenants Contained in the Merger Agreement. The Company and its
subsidiaries, if applicable. shall have performed in all material respects its
agreements contained in the Merger Agreement required to be performed at or
prior to the Closing, including taking all actions necessary to allow the
transactions contemplated hereby to be consummated, and that all conditions to
Highwoods' obligation to close the Merger (other than any required consent of
the Company's stockholders) shall have been satisfied or waived, including, but
not limited to, (i) the distribution out of the Company of the Excluded Assets,
(ii) the continued qualification of the Company as a REIT as of the Closing
Date, unless the Company's failure to qualify as a REIT is the result of any
action or omission of (or an action or omission taken at the direction of)
Highwoods or the Purchaser or as a result of the inaccuracy of the
representation contained in Section 4.6 of the Merger Agreement, (iii) the
consent to the transfer of the Shares to Purchaser under the Stockholders
Agreement and the agreement to terminate the Stockholders Agreement upon the
Purchaser's acquisition of AP's and AEW's Shares pursuant to this Agreement,
(iv) the waiver of the transfer restrictions imposed by the 1933 Act
Restrictions in connection with the transfer of the Shares to the Purchaser (it
being understood that the Shares upon transfer to the Purchaser will continue to
be subject to the 1933 Act Restrictions) and (v) that the obligation to
indemnify Mr. Crocker and Crocker and Company with respect to the litigation
described in Section 5.5 herein shall have been assumed by the owner of the
Excluded Assets or that such owner has agreed to reimburse the Company for all
costs associated with the Company obtaining full insurance coverage for any
losses that may be suffered as a result of its indemnification of Mr. Crocker
and Crocker and Company in such litigation.
(c) Consents. The applicable consents set forth in
Schedule 3.4 of the Merger Agreement shall have been received.
(d) Company Actions. The Company shall have taken all actions
necessary, including actions necessary under its Articles of Amendment and
Restatement of Articles of Incorporation (the "Articles") and Bylaws, to duly
authorize and approve the transactions contemplated by this Agreement, including
exemption of Highwoods and the Purchaser from the Existing Holder Limits and
Ownership Limits (as such terms are defined in the Articles assuming the
accuracy of the representation contained in Section 4.6 of the Merger Agreement)
and notice requirements set forth in the Articles of the Company and waiving
application of the Maryland Control Share Acquisition Act to the transactions
contemplated by this Agreement and the Merger Agreement and
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<PAGE>
approving and consenting to the consummation of the transactions contemplated
under this Agreement as may be required under the Stock Purchase Agreement and
the 1933 Act Restrictions. All actions required under Maryland law to consummate
the transactions contemplated by this Agreement shall have been appropriately
taken.
(e) Litigation. There shall have been no order or preliminary or
permanent injunction entered in an action or proceeding before any federal,
state or foreign court or governmental, administrative or regulatory authority
or agency by any federal, state or foreign legislative body, court, government
or governmental, administrative or regulatory authority or agency which shall
have remained in effect and which shall have had the effect of making illegal
the consummation of any of the transactions contemplated hereunder.
(f) Severance Agreements. Each of Mr. Crocker, Ackerman and Onisko
shall have entered into with the Company a Severance Agreement, in each case
substantially in the form attached hereto as Exhibit B (the "Severance
Agreement" and, collectively, the "Severance Agreements"), which Severance
Agreements shall be in full force and effect as of the Closing Date and
thereafter.
(g) Distribution of Excluded Assets. The Company
shall have completed the distribution of the Excluded Assets from
the Company as contemplated by Section 5.2 hereof and the Merger
Agreement.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Expenses. The Purchaser shall not bear any expenses
incurred by the Sellers, nor shall any Seller bear any expenses incurred by the
Purchaser in connection with this Agreement and the transactions contemplated
hereby, whether or not the Closing shall have occurred. Each Seller will bear
its or his own expenses incurred directly in connection with the transfer of its
or their respective Shares pursuant to this Agreement.
SECTION 7.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses
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<PAGE>
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 7.2):
(a) if to any Seller:
at the address set forth below the name of such
Seller on Exhibit A hereto
(b) if to Highwoods or the Purchaser:
Highwoods
3100 Smoketree Court, Suite 700
Raleigh, North Carolina 27604-5001
Telecopier: (919) 876-2448
Attention: Carman Liuzzo, Chief Financial Officer
With a copy to:
Smith Helms Mulliss & Moore, L.L.P.
316 West Edenton Street
Post Office Box 27525
Raleigh, North Carolina 27611
Telecopier: (919) 755-8731
Attention: Brad Markoff, Esq.
SECTION 7.3 Public Announcements. Subject to each party's disclosure
obligations imposed by law and any stock exchange or similar rules, no party to
this Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby without prior notification to the other parties, and the parties shall
cooperate with each other in the development and distribution of news releases
and other public information disclosures with respect to this Agreement and any
of the transactions contemplated hereby.
SECTION 7.4 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 7.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
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<PAGE>
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 7.6 Entire Agreement. This Agreement, the Merger Agreement
and the Severance Agreements constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the parties
hereto with respect to the subject matter hereof and thereof.
SECTION 7.7 Assignment. This Agreement may not be assigned by
operation of law or otherwise; provided, however, that the Purchaser may assign
this Agreement to an affiliate of the Purchaser without the consent of the
Sellers.
SECTION 7.8 No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permit assigns and nothing herein, express or implied, is intended to or shall
confer upon any other person or entity any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 7.9 Amendment. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by the party against whom such
amendment is sought to be enforced. No waiver of any provisions hereof by any
party shall be deemed a waiver of any other provisions hereof by any such party,
nor shall any such waiver be deemed a continuing waiver of any provision hereof
by such party.
SECTION 7.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, applicable to
contracts executed in and to be performed entirely within that state.
SECTION 7.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement, and this Agreement
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided receipt of copies of such counterparts is confirmed.
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<PAGE>
SECTION 7.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
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<PAGE>
IN WITNESS WHEREOF, the Sellers and Highwoods and the Purchaser have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
HIGHWOODS PROPERTIES, INC.
By:
Name:
Title:
CEDAR ACQUISITION CORPORATION
By:
Name:
Title:
AP CRTI HOLDINGS, L.P.
By: APGP CRTI HOLDINGS L.P., its
general partner
By: APGP CRTI HOLDINGS CORP., its
general partner
By:
Name:
Title:
EW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
Name:
Title:
___________________________________________________
THOMAS J. CROCKER
___________________________________________________
BARBARA F. CROCKER
___________________________________________________
RICHARD S. ACKERMAN
___________________________________________________
ROBERT E. ONISKO
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370748.1
Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and among
HIGHWOODS PROPERTIES, INC.,
CROCKER REALTY TRUST, INC.
and
CEDAR ACQUISITION CORPORATION
dated as of
April 29, 1996
C/M 11926.0021 370762.1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
The Merger
Section 1.1 The Merger.....................................1
Section 1.2 Closing........................................1
Section 1.3 Effective Time of the Merger...................1
Section 1.4 Effect of the Merger...........................2
ARTICLE 2
The Surviving Corporation and Conversion of Shares
Section 2.1 Articles of Incorporation......................2
Section 2.2 By-laws........................................2
Section 2.3 Board of Directors; Officers...................2
Section 2.4 Merger Consideration...........................3
Section 2.5 Payment........................................4
Section 2.6 Stock Options..................................5
Section 2.7 No Further Rights..............................5
Section 2.8 Closing of the Company's Transfer Books........5
ARTICLE 3
Representations and Warranties of the Company
Section 3.1 Organization...................................6
Section 3.2 Capitalization.................................6
Section 3.3 Authority......................................7
Section 3.4 No Violations; Consents and Approvals..........7
Section 3.5 SEC Documents; Financial Statements............9
Section 3.6 Absence of Certain Changes; No
Undisclosed Liabilities........................9
Section 3.7 Litigation................................... 10
Section 3.8 Compliance with Applicable Law............... 10
Section 3.9 Taxes........................................ 11
Section 3.10 Certain Employee Plans....................... 12
Section 3.11 Properties................................... 13
Section 3.12 Leases....................................... 14
Section 3.13 Environmental Matters........................ 14
Section 3.14 Opinion of Financial Advisor................. 15
Section 3.15 Information.................................. 15
Section 3.16 Board Action................................. 15
Section 3.17 Broker's Fees................................ 16
C/M 11926.0021 370762.1
<PAGE>
ARTICLE 4
Representations and Warranties of Buyer
Section 4.1 Organization................................. 16
Section 4.2 Authority.................................... 17
Section 4.3 No Violations; Consents and Approvals........ 17
Section 4.4 SEC Documents; Financial Statements.......... 18
Section 4.5 Information.................................. 19
Section 4.6 REIT......................................... 19
ARTICLE 5
Covenants of the Parties
Section 5.1 Taking of Necessary Action................... 20
Section 5.2 Public Announcements; Confidentiality........ 21
Section 5.3 Conduct of the Business of the Company....... 22
Section 5.4 No Solicitation of Transactions.............. 25
Section 5.5 Information and Access....................... 26
Section 5.8 Notification of Certain Matters.............. 29
Section 5.9 Separation of Excluded Assets................ 29
Section 5.10 Newco Obligations............................ 29
ARTICLE 6
Conditions to Closings
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger............................ 30
Section 6.2 Conditions to Obligation of the Company
to Effect the Merger......................... 30
Section 6.3 Conditions to Obligations of Buyer to
Effect the Merger............................ 31
Section 6.4 Conditions to obligations of the Company
and Buyer to Effect the Merger Following
Buyer's Ownership of Shares.................. 31
Section 6.5 Representations and Warranties............... 32
ARTICLE 7
Termination, Amendment and Waiver
Section 7.1 Termination.................................. 32
Section 7.2 Procedure and Effect of Termination.......... 33
Section 7.3 Expenses..................................... 33
C/M 11926.0021 370762.1
<PAGE>
ARTICLE 8
Miscellaneous
Section 8.1 Counterparts................................. 34
Section 8.2 Governing Law................................ 34
Section 8.3 Entire Agreement............................. 34
Section 8.4 Notices...................................... 34
Section 8.5 Successors and Assigns....................... 35
Section 8.6 Headings..................................... 35
Section 8.7 Amendments and Waivers....................... 35
Section 8.8 Certain Definitions; Interpretation;
Absence of Presumption....................... 36
Section 8.9 Severability................................. 37
Section 8.10 Confidentiality Agreement.................... 37
Section 8.11 Further Assurances........................... 37
Section 8.12 Specific Performance......................... 37
Section 8.13 Third Party Beneficiaries.................... 37
Section 8.14 Survival..................................... 38
C/M 11926.0021 370762.1
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April
29, 1996, by and among HIGHWOODS PROPERTIES, INC., a Maryland corporation
("Buyer"), CROCKER REALTY TRUST, INC., a Maryland corporation (the "Company")
and CEDAR ACQUISITION CORPORATION, a Maryland corporation ("CAC").
WHEREAS, the respective Boards of Directors of Buyer, the Company
and CAC have approved the merger of CAC with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE 1
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.3), CAC shall be merged
with and into the Company and the separate existence of CAC shall thereupon
cease, and the Company shall continue as the surviving corporation in the Merger
(the "Surviving Corporation") under the laws of the State of Maryland.
Section 1.2 Closing. Unless this Merger Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.1, and subject to the satisfaction or waiver of the
conditions set forth in Article 6, the closing of the Merger will take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Sections 6.1, 6.2 and 6.3,
at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York,
New York 10019, unless another date, time or place is agreed to in writing by
the parties hereto (the "Closing Date"); provided, that Buyer may, at its
election, postpone the Closing Date until August 15, 1996.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the acceptance for record of the articles of merger by the
Department of Assessments and Taxation of the State of Maryland (the
"Department") in accordance with the provisions of the General Corporation Law
of Maryland (the "GCLM"), and by making all other filings required under the
GCLM to be made prior to or concurrent with the effectiveness of the Merger,
which filings shall be made as soon as practicable on the
C/M 11926.0021 370762.1
<PAGE>
Closing Date. When used in this Merger Agreement, the term "Effective Time"
shall mean the time at which such articles are accepted for filing by the
Department.
Section 1.4 Effect of the Merger. The Merger shall, from and after
the Effective Time, have all the effects provided by the GCLM. If at any time
after the Effective Time the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, the title to any property or
rights of the Company to be vested in the Surviving Corporation, by reason of,
or as a result of, the Merger, or otherwise to carry out the purposes of this
Agreement, the Company agrees that the Surviving Corporation and its proper
officers and directors shall execute and deliver all such deeds, conveyances,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized in the name of the Company or otherwise to take any and all
such action.
ARTICLE 2
The Surviving Corporation and Conversion of Shares
Section 2.1 Articles of Incorporation. The Articles of Incorporation
of CAC as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time,
until thereafter changed or amended as provided therein or by applicable law;
provided, that the provisions contained in the Articles (as hereinafter defined)
relating to indemnification of officers and directors shall be incorporated into
the Articles of Incorporation of CAC.
Section 2.2 By-laws. The By-laws of CAC as in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving Corporation,
until, subject to Section 5.8, thereafter changed or amended as provided therein
or by applicable law; provided, that the provisions contained in the By-laws of
the Company relating to indemnification of officers and directors shall be
incorporated into the By-laws of CAC.
Section 2.3 Board of Directors; Officers. The directors of CAC
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of CAC immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case, until the
earlier of
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their respective resignations or the time that their respective successors are
duly elected or appointed and qualified.
Section 2.4 Merger Consideration. (a) As of the
Effective Time, by virtue of the Merger and without any action on
the part of any stockholder of the Company,
(i) all shares of common stock, $0.01 par value, of the Company (the
"Company Common Stock"), which are held by Buyer, the Company or any
wholly-owned subsidiary of Buyer or the Company shall be cancelled and
retired and shall cease to exist, and no consideration shall be delivered
in the exchange therefor;
(ii) each outstanding share of Company Common Stock, other than
those to which clause (i) of this Section 2.4(a) applies, shall be
converted into and represent the right to receive $11.02 in cash (or, if
there is Excess Cash, $11.02 plus the Per Share Excess Cash Amount in
cash, or, if there is Deficient Cash, $11.02 minus the Per Share Deficient
Cash Amount) (such amount of cash being referred to herein as the "Merger
Consideration"). "Excess Cash" shall equal (x) the amount, if any, by
which the sum of cash, cash equivalents and restricted cash reflected on
the Company's consolidated balance sheet as of the date hereof exceeds the
sum of cash, cash equivalents and restricted cash reflected on the
Company's consolidated balance sheet as of March 31, 1996 minus (y) the
amount, if any, by which the principal amount of the Company's
indebtedness for borrowed money outstanding as of the date hereof exceeds
the sum of $5 million, and the principal amount of the Company's
indebtedness for borrowed money outstanding as of March 31, 1996. The "Per
Share Excess Cash Amount" shall equal the quotient obtained by dividing
the Excess Cash by the number of shares of Company Common Stock
outstanding on the date hereof, assuming the exercise of all currently
outstanding options and warrants (the "Fully Diluted Shares"). "Deficient
Cash" shall equal (x) the amount, if any, by which the sum of cash, cash
equivalents and restricted cash reflected on the Company's consolidated
balance sheet as of March 31, 1996 exceeds the sum of cash, cash
equivalents and restricted cash reflected on the Company's consolidated
balance sheet as of the date hereof plus (y) the amount, if any, by which
the principal amount of the Company's indebtedness for borrowed money
outstanding as of the date hereof exceeds the sum of $5 million and the
principal amount of the Company's indebtedness for borrowed money
outstanding as of March 31, 1996. The "Per Share Deficient Cash Amount"
shall equal the quotient obtained by dividing the Deficient Cash by the
Fully Diluted Shares; and
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(iii) each share of common stock of CAC shall be converted into one
share of common stock of the Surviving Corporation.
Section 2.5 Payment. (a) Promptly after the Effective Time, Buyer
shall deposit (or cause to be deposited) with a bank or trust company to be
designated by Buyer and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article 2, cash in the amount sufficient to pay
the aggregate Merger Consideration.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Company Common Stock
immediately prior to the Effective Time (A) a letter of transmittal (the
"Company Letter of Transmittal") (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon delivery of such Company Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Buyer shall specify) and (B)
instructions for use in effecting the surrender of certificates representing
Company Common Stock ("Company Certificates") in exchange for the Merger
Consideration with respect to the shares of Company Common Stock formerly
represented thereby.
(c) Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with the Company Letter of Transmittal, duly executed,
and such other documents as Buyer or the Exchange Agent shall reasonably
request, the holder of such Company Certificate shall be entitled to receive in
exchange therefor (A) a certified or bank cashier's check in the amount equal to
the cash which such holder has the right to receive pursuant to the provisions
of this Article 2, and the Company Certificate so surrendered shall forthwith be
cancelled. Until surrendered as contemplated by this Section 2.5, each Company
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby.
(d) If the Merger Consideration is to be delivered to a person other
than the person in whose name the certificates surrendered in exchange therefor
are registered, it shall be a condition to the payment of such Merger
Consideration that the certificates so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid.
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(e) Unless required otherwise by applicable law, any portion of the
aggregate Merger Consideration which remains undistributed to holders of shares
of Company Common Stock two years after the Effective Time shall be delivered to
Buyer and any holders of shares of Company Common Stock who have not theretofore
complied with the provisions of this Article 2 shall thereafter look only to
Buyer for payment of any Merger Consideration to which they are entitled
pursuant to this Article 2. Neither Buyer nor the Exchange Agent shall be liable
to any holder of shares of Company Common Stock for any cash held by Buyer or
the Exchange Agent for payment pursuant to this Article 2 delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.6 Stock Options. The Company and Buyer shall take all
actions necessary to provide that, at the Effective Time, (i) each Company Stock
Option (as hereinafter defined) as set forth on Schedule 3.2, whether or not
then exercisable or vested, shall become fully exercisable and vested, (ii) each
such Company Stock Option shall be cancelled, and (iii) in consideration of such
cancellation, the Company shall pay to each such holder of Company Stock Options
an amount in cash in respect thereof equal to the product of (1) the excess, if
any, of the Merger Consideration over the exercise price of such Common Stock
Option as reflected on Schedule 3.2 and (2) the number of shares of Company
Common Stock subject thereto. Notwithstanding anything to the contrary herein,
if it is determined that compliance with any of the foregoing may cause any
individual subject to Section 16 of the Securities Exchange Act of 1934, as
amended, to become subject to the profit recovery provisions thereof, any
Company Stock Options held by such individual may, if such individual so agrees,
subject to the proviso to this sentence, be cancelled or purchased, as the case
may be, at the Effective Time or at such later time as may be necessary to avoid
application of such profit recovery provisions and such individual will be
entitled to receive from the Company or the Surviving Corporation an amount in
cash in respect thereof equal to the product of (1) the excess, if any, of the
Merger Consideration over the exercise price of such Common Stock Option and (2)
the number of shares of Company Common Stock subject thereto immediately prior
to the Effective Time; provided, that the parties hereto will cooperate,
including by providing alternate arrangements, so as to achieve the intent of
the foregoing without giving rise to such profit recovery.
Section 2.7 No Further Rights. From and after the Effective Time,
holders of certificates theretofore evidencing shares of Company Common Stock
shall cease to have any rights as stockholders of the Company, except as
provided herein or by law.
Section 2.8 Closing of the Company's Transfer Books.
At the Effective Time, the stock transfer books of the Company
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shall be closed and no transfer of shares of Company Common Stock shall be made
thereafter. In the event that, after the Effective Time, certificates for shares
of Company Common Stock are presented to Buyer or the Surviving Corporation,
they shall be cancelled and exchanged for Merger Consideration for each share of
Company Common Stock represented as provided in Section 2.4.
ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Buyer as follows:
Section 3.1 Organization. The Company and each of its Subsidiaries
(as defined in Section 8.8(a)(iii)), all of which are set forth in Schedule 3.1,
is a corporation or partnership duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation or
organization, as applicable, and the Company and each of its Subsidiaries has
all requisite corporate or partnership power and authority to own, lease and
operate their respective properties and to carry on their respective businesses
as now being conducted. The Company and each of its Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
listed on Schedule 3.1, which are all of the jurisdictions in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined in Section 8.8(a)(i)). Except as set forth on
Schedule 3.1, the Company owns directly all of the outstanding capital stock or
other equity interests of each of its Subsidiaries.
Section 3.2 Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock, 10,000,000 shares
of preferred stock, par value $0.01, 50,000,000 shares of excess common stock,
par value $0.01, and 10,000,000 shares of excess preferred stock, par value
$0.01. As of April 26, 1996, there were 26,981,087 shares of Company Common
Stock, no shares of preferred stock, no shares of excess common stock and no
shares of excess preferred stock issued and outstanding, and there were no
shares of Company Common Stock, no shares of preferred stock, no shares of
excess common stock and no shares of excess preferred stock held in the
Company's treasury. As of the date hereof, there were outstanding options (the
"Company Stock Options") to purchase 1,347,000 shares of Company Common Stock
under the 1995 Stock Option Plan of the Company (the "Company Option Plan").
Schedule 3.2 sets forth all
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outstanding options, warrants and other securities or rights to purchase shares
of Company Common Stock or securities convertible into or exchangeable for
Company Common Stock as of the date hereof and, with respect to each such
option, warrant, security or other right, (i) the holder of such option,
warrant, security or other right, (ii) the number of shares of Company Common
Stock or securities convertible into or exchangeable for Company Common Stock
for which such option, warrant, security or other right is exercisable, and
(iii) the price at which such option, warrant, security or other right is
exercisable. Except as set forth on Schedule 3.2, there were not as of the date
hereof, and at all times thereafter through the Effective Time, there will not
be, any existing options, warrants, calls, subscriptions, or other rights or
other agreements or commitments obligating the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
equity interests of the Company or any of its Subsidiaries or any other
securities convertible into or evidencing the right to subscribe for any such
shares or other equity interests. All issued and outstanding shares of Company
Common Stock are duly authorized and validly issued, fully paid, non-assessable
(other than general partnership interests in Subsidiaries that are partnerships)
and free of preemptive rights with respect thereto.
Section 3.3 Authority. The Company has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
its stockholders, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of the Company, and, other than the approval
by its stockholders, no other corporate proceedings are necessary to authorize
this Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company, and,
assuming this Agreement constitutes a legal, valid and binding agreement of
Buyer, it constitutes a legal, valid and binding agreement of the Company,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
Section 3.4 No Violations; Consents and Approvals. (a) None of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will (i) violate any provision of its or any of its Subsidiaries'
Articles of Incorporation or by-laws, partnership agreement or other
organizational document, as applicable, (ii) except for the indebtedness of the
Company described under the caption "Use of Proceeds" in the Company's
Registration Statement on Form S-11 filed with the Securities and Exchange
Commission (the "SEC") on
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March 18, 1996 or as set forth in Schedule 3.4, result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default, or give rise to any right of termination, cancellation or acceleration
or any right which becomes effective upon the occurrence of a merger,
consolidation or change in control under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which the Company or any of its Subsidiaries
is a party, or by which the Company or any of its Subsidiaries or any of their
respective properties is bound, (iii) except as set forth in Schedule 3.4,
require any consent, waiver or approval by any other party or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination, cancellation
or acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control under, any of the terms, conditions
or provisions of any license, franchise, permit or agreement to which the
Company or any of its Subsidiaries is a party, or by which the Company or any of
its Subsidiaries or any of their respective properties is bound, or (iv) violate
any statute, rule, regulation, order or decree of any public body or authority
by which the Company or any of its Subsidiaries or any of their respective
properties is bound, excluding from the foregoing clauses (iii) and (iv) of this
Section 3.4(a) violations, breaches, defaults or rights which, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or for which the Company has received or, prior to the
Closing Date, shall have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required in
connection with the execution and delivery of this Agreement by the Company, or
the consummation by the Company of the transactions contemplated hereby, except
(i) expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), if a filing under the HSR
Act is required, (ii) in connection, or in compliance, with the provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the
filing of articles of merger with the Department, (iv) such filings and consents
as may be required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated hereby, (v) filing with, and approval of, the American Stock
Exchange and the SEC with respect to the Merger and the delisting and
deregistration of the shares of Company Common Stock, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states and (vii) such other consents, approvals, orders,
authorizations,
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notifications, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 3.5 SEC Documents; Financial Statements. (a) The Company has
made available to Buyer copies of each registration statement, report, proxy
statement, information statement or schedule filed with the SEC by the Company
or its predecessor since March 31, 1994 (the "Company SEC Documents"). As of
their respective dates, the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, as the case may be, and
none of such Company SEC Documents contained an untrue statement of any material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) None of the Company, any of its Subsidiaries, or any of their
respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment thereto, that, in each case, would be
required to be filed as an exhibit to a Form 10-K as of the date of this
Agreement that has not been filed as an exhibit to a Company SEC Document filed
prior to the date of this Agreement.
(c) As of their respective dates, the consolidated financial
statements included in the Company SEC Documents complied as to form in all
material respects with then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented the Company's consolidated
financial position and that of its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and statements of cash
flows for the periods then ended (subject, in the case of unaudited statements,
to the lack of footnotes thereto of normal year-end audit adjustments and to any
other adjustments described therein).
Section 3.6 Absence of Certain Changes; No Undisclosed Liabilities.
(a) Except as disclosed in the Company SEC Documents filed on or prior to the
date hereof or as set forth on Schedule 3.6, since December 31, 1995, the
Company has not (i) incurred any liability, whether or not accrued, contingent
or otherwise, or suffered any event or occurrence which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, (ii)
made any changes in
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accounting methods, principles or practices or (iii) declared, set aside or paid
any dividend or other distribution with respect to its capital stock, other than
a special dividend of $.03 per share of Company Common Stock paid in March 1996
and its regular quarterly dividend in an amount not exceeding $.15 per share of
Company Common Stock (or a prorated portion of such amount in the case of any
portion of a quarterly period). Since December 31, 1995 to the date of this
Agreement, each the Company and its Subsidiaries has conducted its operations
according to its ordinary course of business consistent with past practice.
(b) Except as and to the extent disclosed in the Company SEC
Documents filed on or prior to the date hereof, as of December 31, 1995, neither
the Company nor any of its Subsidiaries had any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a consolidated balance sheet of the Company
and its Subsidiaries (including the notes thereto) or which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.7 Litigation. Except as disclosed in the Company SEC
Reports filed on or prior to the date hereof, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective properties or assets before any governmental entity which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Company SEC Documents filed
on or prior to the date hereof, neither the Company nor any of its Subsidiaries
is subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen in the future would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Schedule
3.7 sets forth a list of all litigation as of the date hereof in which the
Company or any of its Subsidiaries is a defendant and there is a claim in excess
of $100,000.
Section 3.8 Compliance with Applicable Law. Except as disclosed in
the Company SEC Documents filed on or prior to the date hereof, the Company and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental entities necessary for the lawful ownership and
operation of the Company Properties (as defined in Section 3.11) or the lawful
conduct of their respective businesses (the "Company Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the Company
SEC Documents filed on or prior to the date hereof, the Company and its
Subsidiaries and the Company Properties are in
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compliance with the terms of the Company Permits, except where the failure so to
comply would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in the Company SEC Documents
filed on or prior to the date hereof, the businesses of the Company and its
Subsidiaries and the operation of the Company Properties are not being conducted
in violation of any law, ordinance or regulation of an governmental entity
except for violations or possible violations which, individually or in the
aggregate, would not, and, insofar as reasonably can be foreseen, in the future
will not, reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Company SEC Documents filed on or prior to the date hereof, no
investigation or review by any governmental entity with respect to the Company
or any of its Subsidiaries or any Company Property is pending or, to the
knowledge of the Company, threatened nor, to the knowledge of the Company, has
any governmental entity indicated an intention to conduct the same, other than,
in each case, those which the Company reasonably believes will not reasonably be
expected to have a Material Adverse Effect.
Section 3.9 Taxes. Except as set forth in Schedule 3.9, each of the
Company and its Subsidiaries has filed, or caused to be filed, all federal,
state, local and foreign income and other material tax returns required to be
filed by it, including all returns required to be filed for the Company Plans,
as defined below, has paid or withheld, or caused to be paid or withheld, all
taxes of any nature whatsoever, with any related penalties, interest and
liabilities (any of the foregoing being referred to herein as a "Company Tax"),
that are shown on such tax returns as due and payable, or otherwise required to
be paid, other than such Company Taxes as are being contested in good faith and
for which adequate reserves have been established and other than where the
failure to so file, pay or withhold would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 3.9, there are no
material claims or assessments pending against the Company or its Subsidiaries
for any alleged deficiency in any Company Tax, and the Company does not know of
any threatened Company Tax claims or assessments against the Company or any of
its Subsidiaries which if upheld would reasonably be expected to have a Material
Adverse Effect or adversely affect the REIT qualification of the Company. None
of the Company or any of its Subsidiaries has made an election to be treated as
a "consenting corporation" under Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"). There is no material deferred inter-company gain
within the meaning of the Treasury Regulations promulgated under Section 1502 of
the Code. There are no waivers or extension of any applicable statute of
limitations to assess any Company Taxes. All returns filed with respect to
Company Taxes are true and correct in all material respects. There are no
outstanding requests for any extension of time within which to file any return
or within which to pay any
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Company Taxes shown to be due on any return. The Company (a) has elected to be
taxed as a real estate investment trust (a "REIT") within the meaning of
Sections 856 through 860 of the Code and for all periods beginning with the
period of such election has qualified as, and complied with all applicable laws,
rules and regulations, including the Code, relating to, a REIT, (b) subject to
the accuracy of the representation contained in Section 4.6, has operated, and
intends to continue to operate, in such a manner as to qualify as a REIT for
1996, and (c) except as set forth on Schedule 3.9, subject to the accuracy of
the representation contained in Section 4.6, has not taken or omitted to take,
nor has any predecessor REIT of the Company not taken or omitted to take, any
action which could result in, and the Company has no actual knowledge of, a
challenge to its status as a REIT. The Company represents that each of its
Subsidiaries of which all the outstanding capital stock is owned solely by the
Company is a "Qualified REIT Subsidiary" as defined in Section 856(i) of the
Code.
Section 3.10 Certain Employee Plans. The Company and its
Subsidiaries have complied, and are now in compliance, in all material respects
with all provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and all laws and regulations applicable to the
"employee benefit plans," as defined in Section 3(3) of ERISA, of the Company or
any of its Subsidiaries (the "Company Plans"). No Company Plan is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code, nor is any
Company Plan subject to Title IV or Section 302 of ERISA or Section 412 or 4971
of the Code. None of the Company, the Subsidiaries of the Company and their
respective ERISA Affiliates (as defined in the next sentence) contributes to or
is obligated to contribute to, or has, at any time within the last six years,
contributed to or been obligated to contribute to, any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or
any plan with two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA (a "Multiple
Employer Plan"). The term "ERISA Affiliate" means, with respect to any entity,
trade or business, any other entity, trade or business that is a member of a
group described in Section 414(b) or (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA. There does not now exist, nor
do any circumstances exist that could result in, any liability on the part of
the Company or any Subsidiary of the Company under (a) Title IV of ERISA, (b)
Section 301 of ERISA, (c) Sections 412 and 4971 of the Code or (iv) the
continuation coverage requirements of Section 601 et seq. of ERISA and section
4980B of the Code, other than such liabilities that arise solely out of, or
relate solely to, the Company Plans. Neither the
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Company and its Subsidiaries, nor any of their respective directors, officers,
employees or agents has, with respect to any Company Plan, engaged in any
"prohibited transaction" (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA)) nor has any Company Plan engaged in any such prohibited
transaction which could result in any taxes or penalties or prohibited
transactions under Section 4975 of the Code or under Section 502(i) of ERISA,
which, in the aggregate, would reasonably be expected to result in material
liability on the part of the Company or any of its Subsidiaries. Copies of all
of the Company Plans and any related trusts and summary plan descriptions have
been made available to Buyer, and a list of all of the Company Plans is set
forth on Schedule 3.10. Except as set forth on Schedule 3.10 or as specifically
contemplated by this Agreement, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in, cause the accelerated vesting or delivery of, or increase the amount
or value of, any payment or benefit to any employee or former employee of the
Company, or any of its Subsidiaries, either alone or in conjunction with any
other event such as termination of employment.
Section 3.11 Properties. The Company and its Subsidiaries have fee
simple or leasehold title to each of the real properties identified in the
Company SEC Documents (the "Company Properties"), which are all of the real
estate properties owned or leased by them. Except as disclosed in the Company
SEC Documents, each Company Property is owned or leased by the Company or a
Subsidiary of the Company free and clear of liens, claims against title, rights
of way, written agreements, laws, ordinances or regulations affecting building
use or occupancy, other encumbrances on title or defects in title except for
such matters which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (collectively, the "Company
Permitted Encumbrances"). Valid policies of title insurance have been issued
insuring the Company's or any of its Subsidiaries, title to the Company
Properties in amounts at least equal to the purchase price thereof, subject only
to the Company Permitted Encumbrances or other matters disclosed in the Company
SEC Documents, and such policies are, at the date hereof, in full force and
effect and no claim has been made against any such policy. To the best knowledge
of the Company, the Company SEC Documents disclose all adverse matters with
respect to or in connection with the Company Properties (including, without
limitation, structural defects, legal noncompliance, threatened or pending
condemnation, constraints on present or future use, operation or development,
title defects or problems, deferred maintenance, deficient building systems,
absence of any necessary permits, environmental liabilities, tenant defaults or
other adverse matters with respect to tenants) which could reasonably be
expected,
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individually or in the aggregate, to have a Material Adverse Effect.
Section 3.12 Leases. (a) Schedule 3.12 sets forth a complete and
correct list of all of the lessees of the Company Properties in excess of 25,000
rentable square feet in effect as of the date hereof (the "Leases"), setting
forth for each lessee any exceptional clauses relating thereto including without
limitation, any "kick-out" clauses, co-tenancy requirements or exclusions,
"go-dark" clauses or clauses requiring any unfunded tenant improvements.
(b) Except as set forth in Schedule 3.12, as of the last day of the
calendar month immediately preceding the date hereof, (i) each of the Leases is
valid and subsisting and in full force and effect, and has not been amended,
modified or supplemented; (ii) the tenant under each of the Leases is in actual
possession of the leased premises; (iii) no tenants under the Leases are in
arrears for the payment of rent for any month preceding the month of the date
hereof; and (iv) neither the Company nor any of its Subsidiaries has received
any written notice from any tenant under the Leases of any intention to vacate.
Except as set forth in Schedule 3.12, neither the Company nor any of its
Subsidiaries has collected payment of rent (other than security deposits)
accruing for a period which is more than one month beyond the date of
collection.
(c) The Company has previously delivered or made available to Buyer
a true and correct copy of all Leases.
(d) Except as set forth in Schedule 3.12, as of the last day of the
calendar month immediately preceding the date hereof, no tenant under any of the
Leases has asserted any claim of which the Company or any of its Subsidiaries
has received written notice which would materially affect the collection of rent
from such tenant and neither the Company nor any of its Subsidiaries has
received written notice of any material default or breach on the part of the
Company or any of its Subsidiaries under any of the Leases which has not been
cured.
(e) Schedule 3.12 sets forth all space leases under which the
Company or any of its Subsidiaries is a lessee (except where the underlying real
property is owned by the Company). True and correct copies of such leases have
been delivered or made available to Buyer.
Section 3.13 Environmental Matters. Except as set forth on Schedule
3.13, none of the Company, any of its Subsidiaries or, to the knowledge of the
Company, any other person has caused or permitted (a) the unlawful presence of
any hazardous substances, hazardous materials, toxic substances or waste
materials (collectively, "Hazardous Materials") on any of
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the Company Properties, or (b) any unlawful spills, releases, discharges or
disposal of Hazardous Materials to have occurred or be presently occurring on or
from the Company Properties as a result of any construction on or operation and
use of such properties, which presence or occurrence would reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect;
and, in connection with the construction on or operation and use of the Company
Properties, the Company and its Subsidiaries have not failed to comply, in any
material respect, with all applicable local, state and federal environmental
laws, regulations, ordinances, and administrative and judicial orders relating
to the generation, recycling, reuse, sale, storage, handling, transport and
disposal of any Hazardous Materials.
Section 3.14 Opinion of Financial Advisor. The Company has received
the written opinion of Merrill Lynch & Co. ("Merrill Lynch") to the effect that
the consideration to be received in the Merger by the holders of Company Common
Stock is fair to such holders from a financial point of view. A copy of such
opinion has been made available to Buyer.
Section 3.15 Information. None of the Proxy Statement (as defined in
Section 5.1(b)) or any other document filed or to be filed by or on behalf of
the Company with the SEC or any other governmental entity in connection with the
transactions contemplated hereby contained when filed, or will, at the
respective times filed with the SEC or other governmental entity, and, in
addition, in the case of the Proxy Statement at the date it or any amendment or
supplement thereto is mailed to stockholders of the Company and at the time of
the meeting of stockholders of the Company to vote on the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading;
provided that the foregoing shall not apply to information supplied by Buyer
specifically for inclusion or incorporation by reference in any such document.
The Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. None of
the information supplied by the Company specifically for inclusion or
incorporation by reference in any document filed or to be filed by or on behalf
of Buyer with the SEC or any other governmental entity in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 3.16 Board Action. The Board of Directors of the Company has
taken all action required by the Articles of Amendment and Restatement of
Articles of Incorporation of the
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Company (the "Articles") to permit the consummation of the transactions
contemplated hereby and by the Stock Purchase Agreement (as hereinafter defined)
(assuming the accuracy of the representation contained in Section 4.6). The
Company hereby consents to the transfer of shares of Company Common Stock
pursuant to the Stock Purchase Agreement.
Section 3.17 Broker's Fees. Except for Merrill Lynch, none of the
Company, any of its Subsidiaries or any of its directors or officers has
incurred any liability for any broker's fees, commissions, or financial advisory
or finder's fees in connection with any of the transactions contemplated hereby,
and none of the Company, any of its Subsidiaries or any of their respective
directors or officers has employed any other broker, finder or financial advisor
in connection with any of the transactions contemplated hereby.
Notwithstanding any contrary provision contained in this Agreement,
none of the representations or warranties contained in this Article 3 shall
apply to the Excluded Assets (as defined in Section 5.3(a)); provided, however,
that the representations and warranties contained in this Article 3 shall apply
to liabilities or other obligations arising from or relating to the Excluded
Assets and for which the Company, as the Surviving Corporation, or Buyer will be
liable or otherwise responsible following the consummation of the Merger.
ARTICLE 4
Representations and Warranties of Buyer
Buyer hereby represents and warrants to the Company as follows:
Section 4.1 Organization. Buyer, the Highwoods/Forsyth Limited
Partnership, a North Carolina partnership (the "Operating Partnership"), and
each of their respective Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, as applicable, and
Buyer, the Operating Partnership and each of their respective Subsidiaries has
all requisite corporate or partnership power and authority to own, lease and
operate their respective properties and to carry on their respective businesses
as now being conducted. Buyer, the Operating Partnership and each of their
respective Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good
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standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in the Buyer SEC Documents
(as hereinafter defined) filed on or prior to the date hereof, Buyer and the
Operating Partnership each own directly all of the outstanding capital stock or
other equity interests of each of their respective Subsidiaries.
Section 4.2 Authority. Buyer has full corporate power and authority
to execute and deliver this Agreement and, subject to the approval of its
stockholders, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Board of Directors of Buyer, and other than the approval by its stockholders, no
other corporate proceedings are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Buyer and, assuming this Agreement
constitutes a legal, valid and binding agreement of the Company, it constitutes
a legal, valid and binding agreement of Buyer, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights or general
principles of equity.
Section 4.3 No Violations; Consents and Approvals. (a) None of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby or compliance by Buyer with any of the provisions hereof
will (i) violate any provision of its Articles of Incorporation or by-laws, (ii)
except as set forth in Schedule 4.3, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default, or
give rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation or change
in control, under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture or other instrument of indebtedness for money borrowed to
which Buyer, the Operating Partnership or any of their respective Subsidiaries
is a party, or by which Buyer, the Operating Partnership or any of their
respective Subsidiaries or any of their respective properties is bound, or (iii)
except as set forth in Schedule 4.3, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default, or
give rise to any right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger, consolidation or change
in control, under, any of the terms, conditions or provisions of any license,
franchise, permit or agreement to which Buyer, the Operating Partnership or any
of their respective Subsidiaries is a party, or by which Buyer, the Operating
Partnership or any of their
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respective Subsidiaries or any of their respective properties is bound, or (iv)
violate any statute, rule, regulation, order or decree of any public body or
authority by which Buyer, the Operating Partnership or any of their respective
Subsidiaries or any of their respective properties is bound, excluding from the
foregoing clauses (iii) and (iv) violations, breaches, defaults or rights which,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect or for which Buyer has received or, prior to the
Closing Date, shall have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required in
connection with the execution and delivery of this Agreement by Buyer, or the
consummation by Buyer of the transactions contemplated hereby except (i)
expiration of the waiting period under the HSR Act, if a filing under the HSR
Act is required, (ii) in connection, or in compliance, with the provisions of
the Exchange Act, (iii) the filing of articles of merger with the Department,
(iv) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated hereby, (v) filings with, and approval
of, the New York Stock Exchange, Inc. and the SEC with respect to the Merger,
(vi) such consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states and (vii) such other
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.4 SEC Documents; Financial Statements. (a) Buyer has made
available to the Company copies of each registration statement, report, proxy
statement, information statement or schedule filed with the SEC by Buyer since
its initial public offering (the "Buyer SEC Documents"). As of their respective
dates, the Buyer SEC Documents complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and none of such SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) None of Buyer, any of its Subsidiaries or any of their
respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment
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thereto, that in each case would be required to be filed as an exhibit to a Form
10-K as of the date of this Agreement that has not been filed as an exhibit to a
Buyer SEC Document filed prior to the date of this Agreement.
(c) As of their respective dates, the consolidated financial
statements included in the Buyer SEC Documents complied as to form in all
material respects with then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly
presented Buyer's consolidated financial position and that of its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and statements of cash flows for the periods then ended (subject, in
the case of unaudited statements, to the lack of footnotes thereto, to normal
year-end audit adjustments and to any other adjustments described therein).
Section 4.5 Information. None of the Proxy Statement or any other
document filed or to be filed by or on behalf of the Company with the SEC or any
other governmental entity in connection with the transactions contemplated by
this Agreement contained when filed or will, at the respective times filed with
the SEC or other governmental entity and, in addition, in the case of the Proxy
Statement, at the date it or any amendment or supplement thereto is mailed to
stockholders and at the time of the meeting of stockholders of the Company to
vote on the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading; provided that the foregoing shall not apply to
information supplied by the Company specifically for inclusion or incorporation
by reference in any such document. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. None of the information supplied by Buyer specifically
for inclusion or incorporation by reference in any document filed or to be filed
by or on behalf of the Company with the SEC or any other governmental entity in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 4.6 REIT. Immediately following the purchase by CAC of the
shares of Company Common Stock owned by AP CRT Holdings, L.P. ("AP"), AEW
Partners, L.P. ("AEW"), Thomas J. Crocker ("Mr. Crocker"), Richard S. Ackerman
("Mr. Ackerman") and
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Robert E. Onisko ("Mr. Onisko") pursuant to the Stock Purchase Agreement of even
date herewith, by and among AP, AEW, Messrs. Crocker, Ackerman and Onisko and
CAC (the "Stock Purchase Agreement"), immediately following the execution of the
Stock Purchase Agreement and immediately following the Merger, the Company will
not meet the test of being "closely held" within the meaning of ss. 856(a)(6) of
the Code.
ARTICLE 5
Covenants of the Parties
Section 5.1 Taking of Necessary Action. (a) Each party hereto agrees
to use its commercially reasonable best efforts promptly to take or cause to be
taken all action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, subject to the terms and
conditions hereof, including all actions and things necessary to cause all
conditions precedent set forth in Article 6 to be satisfied and including
Buyer's incorporation in Maryland of CAC as promptly as practicable following
the date hereof.
(b) As promptly as practicable after the date hereof, the Company
shall prepare and file with the SEC a preliminary proxy statement by which the
stockholders of the Company will be asked to approve the Merger (together with
all amendments and supplements thereto, the "Proxy Statement"). The Company
shall use its commercially reasonable best efforts to respond to any comments of
the SEC, and to cause the Proxy Statement to be mailed to the stockholders of
the Company at the earliest practicable time. As promptly as practicable after
the date hereof, the Company and Buyer shall prepare and file any other filings
required of the Company or Buyer under the Exchange Act, the Securities Act or
any other federal, state or local laws relating to this Agreement and the
transactions contemplated hereby, including under the HSR Act, if required, and
state takeover laws (the "Other Filings"). The Company and Buyer will notify
each other promptly of the receipt of any comments from the SEC or its staff and
of any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or any Other Filing or for
additional information and will supply each other with copies of all
correspondence between each of them or any of their respective representatives,
on the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the Proxy Statement or any Other Filing. The
Proxy Statement and any Other Filing shall comply in all material respects with
all applicable requirements of law. Whenever any event occurs which is required
to be set forth in an amendment or supplement
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to the Proxy Statement or any Other Filing, the Company or Buyer, as the case
may be, shall promptly inform the other party of such occurrence and cooperate
in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the company and of Buyer, such amendment or
supplement. The Proxy Statement shall include the recommendation of the Board of
Directors of the Company that the stockholders of the Company vote in favor of
and approve the Merger, unless otherwise required by applicable fiduciary duties
of the directors of the Company, as determined by such directors in good faith
after consultation with independent legal counsel (which may include the
Company's regularly engaged legal counsel).
(c) If required in order to effect the Merger, the Company shall
call a meeting of its stockholders to be held as promptly as practicable for the
purpose of voting upon the Merger.
(d) If a meeting of stockholders of the Company is required in order
to effect the Merger, Buyer shall, and shall use its best efforts to cause any
of its subsidiaries and affiliates, to vote any shares of Company Common Stock
of which Buyer, or any of its subsidiaries or affiliates, hold voting control in
favor of approval and adoption of the Merger.
(e) The Company shall use its commercially reasonable best efforts
to obtain the consents set forth in Schedule 3.4.
(f) In furtherance and not in limitation of the foregoing, Buyer
shall use its best efforts to resolve such objections, if any, as may be
asserted with respect to the transactions contemplated by this Agreement under
any antitrust, competition or trade regulatory laws, rules or regulations of any
governmental entity.
Section 5.2 Public Announcements; Confidentiality. (a) Subject to
each party's disclosure obligations imposed by law and any stock exchange or
similar rules and the confidentiality provisions contained in clause (b) of this
Section 5.2, the Company and Buyer will cooperate with each other in the
development and distribution of all news releases and other public information
disclosures with respect to this Agreement and any of the transactions
contemplated hereby.
(b) Each of the Company and Buyer agrees that all information
provided to it or any of its representatives pursuant to this Agreement shall be
kept confidential, and each of the Company and Buyer shall not (i) disclose such
information to any persons other than the directors, officers, employees,
financial advisors, legal advisors, accountants, consultants and affiliates of
the Company or Buyer, as applicable, who reasonably need to have access to the
confidential information and who are advised
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of the confidential nature of such information or (ii) use such information in a
manner which would be detrimental to the Company; provided, however, the
foregoing obligation of each of the Company and Buyer shall not (A) relate to
any information that (1) is or becomes generally available other than as a
result of unauthorized disclosure by the Company or Buyer, as applicable, or by
persons to whom the Company or Buyer, as applicable, has made such information
available, (2) is or becomes available to the Company or Buyer, as applicable,
on a non-confidential basis from a third party that is not, to the knowledge of
the Company or Buyer, as applicable, bound by any other confidentiality
agreement with the other party hereto, or (B) prohibit disclosure of any
information if required by law, rule, regulation, court order or other legal or
governmental process.
Section 5.3 Conduct of the Business of the Company. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, except as contemplated by the Company's budget heretofore made available
to Buyer (the "Company Budget") and except for the matters set forth in Schedule
5.3 or unless Buyer shall otherwise agree in writing, the businesses of the
Company and its Subsidiaries shall only be conducted in, and the Company and its
Subsidiaries shall not take any action except in the usual, regular and ordinary
course and in substantially the same manner as heretofore conducted, and the
Company shall, and shall cause its Subsidiaries to, use its best efforts to
comply with all material applicable laws, maintain their respective good
standing in the jurisdiction of their respective formation, maintain all
material Company Permits, comply with all state and federal securities laws and
timely file all required filings under the Exchange Act, preserve intact their
present business organizations, keep available the services of their respective
current officers, employees and consultants and preserve their respective
current relationships with customers, suppliers, tenants and others having
business dealings with the Company and its Subsidiaries. By way of amplification
and without limiting the generality of the foregoing, except as contemplated by
this Agreement or by the Company Budget and except for the matters set forth in
Schedule 5.3, neither the Company nor any Subsidiary shall, between the date of
this Agreement and the Effective Time, directly or indirectly, do, or propose to
do, any of the following without the prior written consent of Buyer:
(i) (x) declare, set aside, or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than (1) the Company's regular quarterly dividend on the shares of Company
Common Stock in an amount not exceeding $.15 per share (or a prorated
portion of such amount in the case of any portion of a quarterly period),
(2) dividends and distributions by any
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direct or indirect Subsidiary of the Company to its parent(s) and (3)
distribution by the Company to its stockholders of the assets described in
Schedule 5.3(1) (collectively, the "Excluded Assets"), (y) split, combine
or reclassify any of its capital stock or issue or, other than pursuant to
the exercise of options to purchase Company Common Stock, authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (z) purchase, redeem or
otherwise acquire, directly or indirectly, other than pursuant to the
exercise of outstanding options to purchase Company Common Stock, any
shares of capital stock of the Company or any of its Subsidiaries or any
other equity securities thereof or any rights, warrants, or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of, grant,
encumber, or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (i) any shares of capital stock of any class of the
Company or any Subsidiary or any securities convertible into, or any
rights, warrants or options to acquire, any such shares of such capital
stock, or any other ownership interest (including, without limitation, any
phantom interest), of the Company or any Subsidiary (except for the
issuance of Company Common Stock pursuant to warrants or issuable pursuant
to employee stock options outstanding on the date hereof and set forth on
Schedule 3.2) or (ii) any assets of the Company (or any Subsidiary, except
(in the case of clause (ii)) for the distribution of the Excluded Assets
and except for sales in the ordinary course of business and in a manner
consistent with past practice in an amount not to exceed $5,000
individually, or in any related series of transactions;
(iii) amend its Articles of Incorporation, by-laws
or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing the stock or assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or
other business organization or division thereof, or any real property or
buildings or any assets in excess of $5,000 individually or in any related
series of transactions;
(v) subject to liens, mortgages, deeds of trust, deeds to
secure debt, security interests, pledges, claims, charges, easements and
other encumbrances of any nature whatsoever (Collectively, "Liens") or
sell, lease or otherwise dispose of any of its properties or assets,
except in the ordinary course of business consistent with past practice
with respect to assets in an amount less than
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$5,000 individually or in any related series of transactions
and except for the distribution of the Excluded Assets;
(vi) lease, in one transaction or a series of transactions,
any of its assets or properties, except for the leases made in the
ordinary course of business consistent with capital expenditures, rental
rates, expense stops and other terms consistent with the Company Budget;
provided, however, that no leases shall be for a period of longer than
five years or with respect to properties with greater than 5,000 rentable
square feet;
(vii) (a) incur any indebtedness for borrowed money or issue
or sell any debt securities of the Company or any of its Subsidiaries, or
guarantee, assume or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or
advances, except, in any such case, for borrowings or other transactions
incurred in the ordinary course of business and consistent with past
practice in an amount less than $5,000 individually or in the aggregate;
(b) except in the ordinary course of business, make any loans, advances or
capital contributions to, or investments in, any other person but in no
event to exceed $5,000; (c) enter into any contract or agreement other
than in the ordinary course of business, consistent with past practice but
in no case greater than $5,000; or (d) authorize any single capital
expenditure which is in excess of $5,000 or capital expenditures which
are, in the aggregate, in excess of $5,000 for the Company and the
Subsidiaries taken as a whole;
(viii) increase the compensation payable or to become payable
to its officers or employees, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or any Subsidiary, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer or employee;
(ix) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
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(x) make any tax election or settle or compromise
any material federal, state, local or foreign income tax
liability;
(xi) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the balance sheet as of March
31, 1996 or subsequently incurred in the ordinary course of business and
consistent with past practice and as permitted by this Section 5.3;
(xii) enter into any transactions or agreements with any
directors, officers, employees, stockholders or affiliates of the Company
or any of its Subsidiaries, except for transactions or agreements relating
to or arising out of the Excluded Assets or as disclosed on Schedule 5.3;
or
(xiii) take any action or fail to take any action if such
action or failure to act would reasonably be expected to materially impair
the value of its material assets or properties; or
(xiv) authorize or enter into or amend any contract,
agreement, commitment or arrangement with respect to any action prohibited
by this Section 5.3.
The Company may request consent from Buyer to take any action
otherwise prohibited by this Section 5.3, and such consent shall be deemed to be
granted if Buyer does not give notice to the Company of its refusal to grant
such consent within five business days of Buyer's receipt of such request for
consent. For purposes of this Section 5.3, expenditures by the Company will be
deemed to be as contemplated by the Company Budget if (i) the actual
expenditures within a given region in the aggregate do not exceed the aggregate
amount of expenditures budgeted for such region and (ii) the expenditures are
made no earlier than the month in which they are budgeted.
Section 5.4 No Solicitation of Transactions. Except as otherwise
consented to in writing by Buyer, neither the Company nor any of its
Subsidiaries shall, directly or indirectly, through any officer, director,
employee, agent, representative or otherwise, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, (i) any acquisition in
any manner, directly or indirectly (including through any option, right to
acquire or other beneficial ownership) or more than 10% of any class of
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equity securities of the Company, or assets representing a material portion of
the assets of the Company (other than any Excluded Asset), other than any of the
transactions contemplated by this Agreement, (ii) any merger, consolidation,
sale of assets (other than any Excluded Asset), share exchange,
recapitalization, other business combination, liquidation, or other action out
of the ordinary course of business of the Company, other than any of the
transactions contemplated by this Agreement, or (iii) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing (any of the foregoing, a "Competing
Transaction"), or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of the Company
or any of its Subsidiaries or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any of
the Company's Subsidiaries to take any such action. The Company shall
immediately notify Buyer of all the relevant details relating to all inquiries
and proposals which it or any of its Subsidiaries or any such officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
representative may receive relating to any of such matters, and, if such inquiry
or proposal is in writing, the Company shall as promptly as practicable deliver
to Buyer a copy of such inquiry or proposal. Nothing contained in this Section
5.4 shall prohibit the Company from complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a Competing Transaction.
Section 5.5 Information and Access. (a) Subject to the
Confidentiality Agreement, dated as of April 8, 1996, by and between the Company
and Buyer (the "Confidentiality Agreement"), from the date hereof until the
Closing Date, (i) each party hereto and its respective Subsidiaries shall afford
to the other party and such other party's accountants, counsel and other
representatives full and reasonable access during normal business hours (and at
such other times as the parties may mutually agree) to its properties, books,
contracts, commitments, records and personnel and, during such period, shall
furnish promptly to such other party (1) a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder, and (2) all other information concerning their businesses, personnel
and the Company Properties or Buyer Properties, as applicable, as such other
party may reasonably request. Such other party and its accountants, counsel and
other representatives shall, in the exercise of the rights described in this
Section, not unduly interfere with the operation of the businesses of the party
providing the access and information.
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(b) The Company will cooperate with Buyer to the extent reasonably
necessary to enable Buyer to make appropriate filings with the SEC with respect
to the Merger, including assistance in preparing pro forma financial statements
of Buyer reflecting the Merger.
5.6 Employee and Other Arrangements. (a) From and after the
Effective Time, Buyer will cause the Surviving Corporation to honor, in
accordance with their terms, all employment and consulting agreements and other
contracts to which the Company or any of its Subsidiaries are parties relating
to (i) the employment of or rendition of personal services by any individual
and/or (ii) the compensation and/or benefits payable in connection with such
employment or services.
(b) Buyer will cause the Surviving Corporation to take such actions
as are necessary so that, for a period of at least one year from and after the
Effective Time, persons who are employees of the Company and its Subsidiaries as
of the Effective Time (the "Company Employees") will be provided cash
compensation, employee benefits and incentive compensation and similar plans and
programs as will provide compensation and benefits which, in the aggregate and
in all material respects, are no less favorable than those provided to Company
Employees as of the date hereof; provided, however, that it is understood that
after the Effective Time Buyer will have no obligation to issue shares of
capital stock of any entity pursuant to any such plan or program. In addition,
from and after the Effective Time, Buyer shall, and shall cause the Surviving
Corporation to, (i) provide all Company Employees with service credit for all
periods of employment with the Company and its Subsidiaries prior to the
Effective Time for purposes of eligibility and vesting under any employee
benefit plan program, policy or arrangement of Buyer, the Surviving Corporation
or any of their affiliates, (ii) waive any preexisting condition of any Company
Employee and any dependent thereof for purposes of determining eligibility for,
and the terms upon which they participate in, any employee benefit plan,
program, policy or arrangement of Buyer, the Surviving Corporation or any of
their affiliates and (iii) provide each Company Employee, upon the involuntary
termination of such Employee's employment with the Surviving Corporation and any
of its Subsidiaries and affiliates, within one year after the Effective Time,
with a severance benefit determined pursuant to Schedule 3.10.
(c) Buyer agrees that no constraints shall be imposed on any
stockholder or officer of the Company rewarding the use or operation of the
Excluded Assets to compete with the Surviving Corporation.
5.7 Indemnification. (a) Buyer agrees that all rights
to indemnification existing in favor of any director, officer,
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employee or agent of the Company and its Subsidiaries (the "Indemnified
Parties") as provided in their respective Articles of Incorporation, by-laws or
comparable organizational documents or in indemnification agreements with the
Company or any of its Subsidiaries, or otherwise in effect as of the date
hereof, shall survive the Merger and shall continue in full force and effect for
a period of not less than six years from the Effective Time; provided that, in
the event any claim or claims are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or claims shall
continue until final disposition of any and all such claims. Buyer also agrees
to indemnify all Indemnified Parties to the fullest extent permitted by
applicable law with respect to all acts and omissions arising out of such
individuals, services as officers, directors, employees or agents of the Company
or any of its Subsidiaries or as trustees or fiduciaries of any plan for the
benefit of employees or directors of, or otherwise on behalf of, the Company or
any of its Subsidiaries, occurring prior to the Effective Time including,
without limitation, the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including, without limitation, the
transactions contemplated by this Agreement, occurring prior to or at the
Effective Time, Buyer will pay as incurred such Indemnified Party's legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith. From and after the Effective Time, Buyer will
pay all expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided for
in this Section 5.8.
(b) Buyer agrees that it shall (i) cooperate with the Company to
obtain prior to the Effective Time directors' and officers' insurance coverage
for a six-year period following the Effective Time for current and former
directors and officers of the Company covering any actions taken on or prior to
the Effective Time, such coverage to be at least as comprehensive as the
Company's current directors' and officers' liability insurance coverage or (ii)
from and after the Effective Time, cause the Surviving Corporation to cause to
be maintained in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company; provided, that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; provided, further, that the Surviving Corporation shall not be
required to pay an annual premium in excess of 200% of the last annual premium
paid by the Company prior to the date hereof and if the Surviving Corporation
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is unable to obtain the insurance required by this Section 5.7 it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount.
Section 5.8 Notification of Certain Matters. Each of Buyer and the
Company shall use its good faith efforts to notify the other party in writing of
its discovery of any matter that would render any of such party's or the other
party's representations and warranties contained herein untrue or incorrect in
any material respect, but the failure of either party to so notify the other
party shall not be deemed a breach of this Agreement.
Section 5.9 Separation of Excluded Assets. Both prior to and after
the Effective Time, (i) Buyer shall cooperate in effecting the transfer of
ownership of the Excluded Assets in accordance with arrangements entered into by
the Company prior to the Effective Time and (ii) the Company shall notify Buyer
of any such arrangements. The Company shall cause Newco (as hereinafter defined)
to agree to reimburse Buyer at the Effective Time for expenses or costs,
including any local, state or federal income or transfer tax liability, incurred
by the Company in effecting the transfer of ownership of the Excluded Assets.
Section 5.10 Newco Obligations. (a) At the Effective Time, an entity
that will obtain direct or indirect ownership of some or all of the Excluded
Assets ("Newco") shall enter into a master lease agreement with Buyer covering
all of the Company- owned properties, which master lease agreement shall
obligate Newco to pay to Buyer $1,200,000 at the Effective Time and $600,000 on
January 1, 1997, as additional rent on the Company- owned properties and as
compensation to Buyer for rent shortfalls and vacancies at such properties.
(b) At or before the Effective Time, the Company shall have caused
Newco to elect to either (i) assume the liability of the Company to indemnify
Thomas J. Crocker and Crocker and Company in the case styled Patrick Jolivet v.
Thomas J. Crocker and Crocker and Company, Case No. 94-8669 or (ii) pay the
costs of insurance to cover such indemnification.
(c) At or before the Effective Time, the Company shall cause Newco
to enter into an agreement with the Company, which agreement shall remain in
effect after the Effective Time, providing that (i) Newco shall reimburse the
Company for the excess, if any, of the Designated Transaction Expenses (as
hereinafter defined) over $9,150,000 and (ii) the Company shall pay to Newco 50%
of the excess, if any, of $8,600,000 over the Designated Transaction Expenses
The amount of the Designated Transaction Expenses shall be determined on the
20th business day following the Effective Time, and any amount required to be
paid pursuant to this paragraph shall be paid within five business
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days thereafter. Buyer and the Company will jointly prepare a good faith
estimate of the Designated Transaction Expenses two business days prior to the
Effective Time. "Designated Transaction Expenses" shall mean expenses incurred
by the Company in connection with its pending proposed public offering or in
connection with this Agreement and the Merger only in the following categories:
(i) fees and expenses of legal counsel; (ii) fees and expenses of accountants;
(iii) fees and expenses of investment bankers and appraisers; (iv) printing
expenses; (v) severance payments to employees (including officers) generally as
set forth on Schedule 3.10 or pursuant to the Severance Agreements (as defined
in the Stock Purchase Agreement); (vi) payments to the Company's three senior
executives pursuant to Section 2.6 of this Agreement; and (vii) amounts due, if
any, to any solicitation agent in connection with the exercise of the Company's
outstanding warrants.
ARTICLE 6
Conditions to Closings
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. Subject to the provisions of Section 6.4, the respective obligations of
each party to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions:
(a) if required, the Merger shall have been approved and adopted by
the requisite vote of the holders of the Company Common Stock;
(b) any waiting period applicable to the consummation of the merger
under the HSR Act, if applicable, shall have expired or been terminated or
the Company and Buyer shall have mutually concluded that no filing under
the HSR Act is required with respect to the transactions contemplated
hereby; and
(c) the consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgement, decree, injunction or ruling of a
court of competent jurisdiction.
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. Subject to the provisions of Section 6.4, the obligation of the Company
to effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the additional following conditions, unless waived by the
Company:
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(a) that the representations and warranties of Buyer contained in
the first two sentences of Section 4.1 (with respect to Buyer only) and in
Section 4.2 shall be true when made and at and as of the Effective Time as
if made at and as of such time, and that Buyer shall have performed in all
material respects its agreements contained in this Agreement required to
be performed at or prior to the Effective Time; and the Company shall have
received a certificate of the Chief Executive Officer or the Chief
Financial Officer of Buyer to that effect.
Section 6.3 Conditions to Obligations of Buyer to Effect the Merger.
Subject to the provisions of Section 6.4 the obligations of Buyer to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions, unless waived by Buyer:
(a) that the representations and warranties of the Company contained
in the first two sentences of Section 3.1 (with respect to the Company
only) and in Section 3.3 shall be true when made and at and as of the
Effective Time as if made at and as of such time, and that the Company
shall have performed in all material respects its agreements contained in
this Agreement required to be performed at or prior to the Effective Time;
and Buyer shall have received a certificate of the Chief Executive Officer
or the Chief Financial Officer of the Company to that effect;
(b) the consents set forth in Schedule 6.3 shall have been received,
or the Company shall have refinanced the indebtedness described in
Schedule 6.3 with new indebtedness which is in all respects at least as
favorable to the Company as the indebtedness described in Schedule 6.3
(but under the terms of which no lender consent is required (or any
required consent has been obtained) to effect the transactions
contemplated by this Agreement); and
(c) the Company shall meet the requirements for qualification as a
REIT under Sections 856-860 of the Code; provided, that if the Company
does not meet such requirements for qualification as a result of any
action or omission of (or any action or omission taken at the direction
of) Buyer or due to the inaccuracy of the representation contained in
Section 4.6, the condition set forth in this Section 6.3(c) shall be
deemed to be satisfied.
Section 6.4 Conditions to Obligations of the Company and Buyer to
Effect the Merger Following Buyer's Ownership of Shares. If Buyer becomes the
beneficial owner of a majority of the outstanding shares of Company Common Stock
prior to the Effective Time, the respective obligations of each party to
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effect the Merger shall be subject only to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) if required, the Merger shall have been approved and adopted by
the requisite vote of the holders of the Company Common Stock; and
(b) the consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction.
Section 6.5 Representations and Warranties. Except as set forth in
Sections 6.2 and 6.3, that the representations and warranties contained in
Article 3 hereof were true and correct when and as made shall not be a condition
to the obligation of either the Company or Buyer to effect the Merger.
ARTICLE 7
Termination, Amendment and Waiver
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the earlier of (i) such time as Buyer becomes the owner, directly
or indirectly, of a majority of the Company Common Stock and (ii) the Effective
Time, whether before or after approval by the stockholders of the Company of the
Merger:
(a) by mutual written consent of Buyer and the Company;
(b) by Buyer, upon a breach of any covenant or agreement on the part
of the Company set forth in this Agreement, such that the condition set
forth in Section 6.3(a) would not be satisfied (a "Terminating Company
Breach"), provided that, if such Terminating Company Breach is curable by
the Company through the exercise of its reasonable best efforts and for so
long as the Company continues to exercise such reasonable best efforts,
Buyer may not terminate this Agreement under this Section 7.1(b);
(c) by the Company, upon breach of any covenant or agreement on the
part of Buyer set forth in this Agreement such that the condition set
forth in Section 6.2(a) would not be satisfied ("Terminating Buyer
Breach"), provided that, if such Terminating Buyer Breach is curable by
Buyer through the exercise of its reasonable best efforts and for so long
as Buyer continues to exercise such reasonable best efforts, the Company
may not terminate this Agreement under this Section 7.1(c);
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(d) by Buyer if the Company does not meet the requirements for
qualification as a REIT under Sections 856-860 of the Code; provided that
if the Company does not meet such requirements for qualification as a
result of any action or omission of (or any action or omission taken at
the direction of) Buyer or due to the inaccuracy of the representation
contained in Section 4.6, Buyer shall not have the right to terminate this
Agreement pursuant to this Section 7.1(d).
(e) by Buyer or the Company if any court of competent jurisdiction
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction or ruling which restrains, enjoins or
otherwise prohibits the Merger and such order, judgment, decree,
injunction or ruling shall have become final and nonappealable; provided,
however, that the party seeking to terminate this Agreement pursuant to
this Section 7.1(e) shall have used commercially reasonable best efforts
to remove such injunction or overturn such action; or
(f) by either Buyer or the Company if the meeting of the
stockholders of the Company to approve the Merger (including as such
meeting may be adjourned from time to time), if required, shall have
concluded without the Company having obtained the required stockholder
approval.
Section 7.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of the Company and Buyer
pursuant to Section 7.1, written notice thereof shall forthwith be given by the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto, except
that the provisions of Sections 5.2 (Public Announcements; Confidentiality), 7.3
(Expenses), 8.2 (Governing Law), and 8.4 (Notices) shall survive the termination
of this Agreement; provided, however, that such termination shall not relieve
any party hereto of any liability for any breach of this Agreement.
Section 7.3 Expenses. Except as set forth in this Agreement, whether
or not the Merger is consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
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ARTICLE 8
Miscellaneous
Section 8.1 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 8.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 8.3 Entire Agreement. This Agreement (including agreements
incorporated herein) and the Schedules, Annexes and Exhibits hereto, the Stock
Purchase Agreement and the exhibits thereto, the Severance Agreements and the
Confidentiality Agreement contain the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except as set forth in Section 8.13, this
Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns) any rights or remedies hereunder.
Section 8.4 Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Company shall be addressed to:
Crocker Realty Trust, Inc.
433 Plaza Real, Suite 335
Boca Raton, Florida 33432
Attention: Thomas J. Crocker, Chairman and Chief
Executive Officer
Telecopy Number: (407) 447-1820
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with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Elliott V. Stein, Esq.
Telecopy Number: (212) 403-2000
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer.
Notices to Buyer shall be addressed to:
Highwoods Properties, Inc.
3100 Smoketree Court, Suite 700
Raleigh, North Carolina 27604-5001
Attention: Carmen Liuzzo, Chief Financial Officer
Telecopy Number: (919) 876-2448
with a copy to:
Smith, Helms, Mullis and Moore L.L.P.
316 West Edentown Street
Raleigh, North Carolina
Attention: Brad Markoff, Esq.
Telecopy Number: (919) 755-8731
Section 8.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors; provided, however, that this Agreement may not be assigned or
transferred by either of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party.
Section 8.6 Headings. The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
Section 8.7 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or complied with. The waiver by
any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach. In the event that prior to the
Effective Time, Buyer becomes the owner of a majority of the outstanding shares
of Company Common Stock, any amendment to this Agreement
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affecting the Merger Consideration, the timing of the Merger, or Buyer's
obligation to complete the Merger shall require that (i) a majority of the
directors of the Company are Continuing Directors and (ii) such amendment is
approved by a majority of the Continuing Directors then serving. "Continuing
Directors" shall mean individuals who, as of the date hereof, constitute the
Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least a
majority of the Continuing Directors shall be considered as though such
individual were a Continuing Director.
Section 8.8 Certain Definitions; Interpretation; Absence of
Presumption. (a) For the purposes hereof, (i) "Material Adverse Effect" shall
mean with respect to either party hereto, a material adverse effect on the
financial condition, results of operations or business of such party and its
Subsidiaries (to the extent of such party's interest therein) taken as a whole,
or, if applicable, on the ability of such party to consummate the Merger and the
other transactions contemplated hereby, (ii) "person" shall mean any individual,
corporation, partnership, limited liability company, joint venture, trust,
unincorporated organization or other form of business or legal entity or
governmental entity and (iii) "Subsidiaries" shall mean with respect to any
person, any corporation, partnership, joint venture, business trust or other
entity, of which such person, directly or indirectly, owns or controls at least
50% of the securities or other interests entitled to vote in the election of
directors or others performing similar functions with respect to such
corporation or other organization, or to otherwise control such corporation,
partnership, joint venture, business trust or other entity. Without limiting the
generality of the foregoing, Material Adverse Effect with respect to the Company
shall include the Company not meeting the requirements for qualification as a
REIT under Sections 856-860 of the Code, except to the extent that the Company
does not meet such requirements for qualification as a result of any action or
omission of (or any action or omission taken at the direction of) Buyer or due
to the inaccuracy of the representation contained in Section 4.6. Without
limiting the generality of the foregoing, (a) the Company's Subsidiaries shall
include CRT Leasing, Inc. and (b) Buyer's Subsidiaries shall (i) include
Highwoods Services, Inc. and Forsyth Properties Services, Inc., and (ii) the
Operating Partnership and any entity that is a Subsidiary of the Operating
Partnership. For purposes hereof, (1) words in the singular shall be held to
include the plural and VICE VERSA and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules, Annexes and Exhibits hereto) and
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not to any particular provision of this Agreement, and Article, Section,
paragraph, Exhibit, Annex and Schedule references are to the Articles, Sections,
paragraphs, Exhibits, Annexes and Schedules to this Agreement unless otherwise
specified, (iii) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (iv) the word "or" shall not
be exclusive, and (v) provisions shall apply, when appropriate, to successive
events and transactions.
(b) This Agreement shall be construed without regard to any
prescription or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 8.9 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 8.10 Confidentiality Agreement. The Confidentiality
Agreement shall remain in full force and effect.
Section 8.11 Further Assurances. The Company and Buyer agree that,
from time to time, whether before, at or after any Closing Date, each of them
will execute and deliver such further instruments of conveyance and transfer and
take such other action as may be necessary to carry out the purposes and intents
hereof.
Section 8.12 Specific Performance. Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
Section 8.13 Third Party Beneficiaries. Nothing in this Agreement,
except for (i) the provisions of Sections 2.1, 2.2 and 5.7 to the extent they
apply to directors and officers of the Company and (ii) the provisions of
Sections 5.9 and 5.10 to the extent they apply to Newco, is intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided, however, that if Buyer becomes the beneficial owner of a majority of
the outstanding shares of Company Common Stock and the Effective Time shall not
have occurred within 90 days thereafter, each beneficial owner of Company Common
Stock shall be deemed to be a third party
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beneficiary of this Agreement and may enforce all rights with
respect thereto.
Section 8.14 Survival. Any covenants or agreements of the parties
hereto (including the Surviving Corporation) which contemplate actions to occur
following the Effective Time shall survive the Effective Time.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties hereto as of the day first above written.
CROCKER REALTY TRUST, INC.
By: _________________________________
Name:
Title:
HIGHWOODS PROPERTIES, INC.
By: __________________________________
Name:
Title:
CEDAR ACQUISITION CORPORATION
By: __________________________________
Name:
Title:
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