EXECUTION COPY
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Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
by and among
TOWER REALTY TRUST, INC.,
RECKSON ASSOCIATES REALTY CORP.,
CRESCENT REAL ESTATE EQUITIES COMPANY
and
METROPOLITAN PARTNERS LLC
Dated as of July 9, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.2 Effect on Shares of Company Common Stock and Company OP
Units . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.3 Share Election . . . . . . . . . . . . . . . . . . . . .
SECTION 1.4 Proration . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.5 Exchange of Certificates . . . . . . . . . . . . . . . .
SECTION 1.6 Transfer Taxes; Withholding . . . . . . . . . . . . . .
SECTION 1.7 No Further Ownership Rights in Shares of Company Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.8 Closing of Company Transfer Books . . . . . . . . . . .
SECTION 1.9 Stock Options . . . . . . . . . . . . . . . . . . . . .
SECTION 1.10 Restricted Stock . . . . . . . . . . . . . . . . . . . .
Section 1.11 Dissenting Shares . . . . . . . . . . . . . . . . . . .
SECTION 1.12 Closing . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
THE SURVIVING ENTITY
SECTION 2.1 Certificate of Formation . . . . . . . . . . . . . . . .
SECTION 2.2 Operating Agreement . . . . . . . . . . . . . . . . . .
SECTION 2.3 Members and Managers . . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power. . . . . . . . . . . . . .
SECTION 3.2 Corporate Authorization . . . . . . . . . . . . . . . .
SECTION 3.3 Consents and Approvals; No Violations . . . . . . . . .
SECTION 3.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
SECTION 3.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 SEC Documents . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Financial Statements . . . . . . . . . . . . . . . . . .
SECTION 3.8 Absence of Undisclosed Liabilities . . . . . . . . . . .
SECTION 3.9 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Absence of Material Adverse Changes, etc. . . . . . . .
SECTION 3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.12 Employee Benefit Plans and Employee Matters . . . . . .
SECTION 3.13 Litigation. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.14 Compliance with Laws . . . . . . . . . . . . . . . . . .
SECTION 3.15 Certain Contracts and Arrangements . . . . . . . . . . .
SECTION 3.16 Environmental Matters . . . . . . . . . . . . . . . . .
SECTION 3.17 Real Property . . . . . . . . . . . . . . . . . . . . .
SECTION 3.18 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
SECTION 3.19 Opinion of Financial Advisors . . . . . . . . . . . . .
SECTION 3.20 Board Recommendation . . . . . . . . . . . . . . . . . .
SECTION 3.21 Vote Required . . . . . . . . . . . . . . . . . . . . .
SECTION 3.22 Related Party Transactions . . . . . . . . . . . . . . .
SECTION 3.23 Investment Company Act of 1940 . . . . . . . . . . . . .
SECTION 3.24 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 . .
SECTION 3.25 State Takeover Statutes . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER,
RECKSON AND CRESCENT
SECTION 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.1 Corporate Existence and Power . . . . . . . . . . . . .
4.1.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.1.3 Consents and Approvals; No Violations . . . . . . . . .
4.1.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
4.1.5 SEC Documents . . . . . . . . . . . . . . . . . . . . .
4.1.6 Financial Statements . . . . . . . . . . . . . . . . . .
4.1.7 Absence of Undisclosed Liabilities . . . . . . . . . . .
4.1.8 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
4.1.9 Absence of Material Adverse Changes, etc. . . . . . . .
4.1.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.11 Compliance with Laws . . . . . . . . . . . . . . . . . .
4.1.12 Real Property . . . . . . . . . . . . . . . . . . . . .
4.1.13 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.1.14 Share Ownership; Other Ownership . . . . . . . . . . . .
4.1.15 Investment Company Act of 1940 . . . . . . . . . . . . .
4.1.16 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 . .
4.1.17 Financing . . . . . . . . . . . . . . . . . . . . . . .
4.1.18 Authorization for Reckson Common Stock . . . . . . . . .
SECTION 4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2.1 Organization, Standing and Power . . . . . . . . . . . .
4.2.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.2.3 Consents and Approvals; No Violations . . . . . . . . .
4.2.4 Capitalization . . . . . . . . . . . . . . . . . . . . .
4.2.5 SEC Documents . . . . . . . . . . . . . . . . . . . . .
4.2.6 Financial Statements . . . . . . . . . . . . . . . . . .
4.2.7 Absence of Undisclosed Liabilities . . . . . . . . . . .
4.2.8 Proxy Statement; Form S-4 Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . .
4.2.9 Absence of Material Adverse Changes, etc. . . . . . . .
4.2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
4.2.11 Compliance with Laws . . . . . . . . . . . . . . . . . .
4.2.12 Real Property . . . . . . . . . . . . . . . . . . . . .
4.2.13 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.2.14 Share Ownership; Other Ownership . . . . . . . . . . . .
4.2.15 Investment Company Act of 1940 . . . . . . . . . . . . .
4.2.16 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 . .
4.2.17 Financing . . . . . . . . . . . . . . . . . . . . . . .
4.2.18 Authorization for Crescent Common Stock . . . . . . . .
SECTION 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.1 Corporate Existence and Power . . . . . . . . . . . . .
4.3.2 Authorization . . . . . . . . . . . . . . . . . . . . .
4.3.3 Consents and Approvals; No Violations . . . . . . . . .
4.3.4 Finders' Fees . . . . . . . . . . . . . . . . . . . . .
4.3.5 Share Ownership; Other Ownership . . . . . . . . . . . .
4.3.6 Investment Company Act of 1940 . . . . . . . . . . . . .
4.3.7 Buyer's Operations . . . . . . . . . . . . . . . . . . .
4.3.8 Surviving Entity After the Merger . . . . . . . . . . .
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Company . . . . . . . . . . . . . . . . .
SECTION 5.2 Stockholders' Meetings; Proxy Material . . . . . . . . .
SECTION 5.3 Access to Information; Confidentiality
Agreement . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.4 No Solicitation of Transactions by the
Company . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.5 Voting of Shares of Company Common Stock . . . . . . . .
SECTION 5.6 Director and Officer Liability . . . . . . . . . . . . .
SECTION 5.7 Reasonable Best Efforts . . . . . . . . . . . . . . . .
SECTION 5.8 Certain Filings . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Public Announcements . . . . . . . . . . . . . . . . . .
SECTION 5.10 Further Assurances . . . . . . . . . . . . . . . . . . .
SECTION 5.11 Employee Matters. . . . . . . . . . . . . . . . . . . .
SECTION 5.12 Transfer Taxes . . . . . . . . . . . . . . . . . . . . .
SECTION 5.13 Advice of Changes . . . . . . . . . . . . . . . . . . .
SECTION 5.14 Guaranty . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.15 Form S-4 Registration Statement . . . . . . . . . . . .
SECTION 5.16 Blue Sky Permits . . . . . . . . . . . . . . . . . . . .
SECTION 5.17 NYSE Listing . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.18 Affiliates . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligations . . . . . . . . .
SECTION 6.2 Conditions to the Company's Obligations . . . . . . . .
SECTION 6.3 Conditions to Obligations of the Buying
Entities . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.2 Effect of Termination . . . . . . . . . . . . . . . . .
SECTION 7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Survival of Representations and Warranties . . . . . . .
SECTION 8.3 Interpretation . . . . . . . . . . . . . . . . . . . . .
SECTION 8.4 Amendments, Modification and Waiver . . . . . . . . . .
SECTION 8.5 Successors and Assigns . . . . . . . . . . . . . . . . .
SECTION 8.6 Specific Performance . . . . . . . . . . . . . . . . . .
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . . . . .
SECTION 8.8 Severability . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.9 Third Party Beneficiaries . . . . . . . . . . . . . . .
SECTION 8.10 Entire Agreement . . . . . . . . . . . . . . . . . . . .
SECTION 8.11 Counterparts; Effectiveness . . . . . . . . . . . . . .
TABLE OF DEFINED TERMS
TERM SECTION NO.
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . 5.4(a)
Active Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . 3.1
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Applicable Break-Up Fee . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Break-Up Fee Ruling . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Buyer's Representatives . . . . . . . . . . . . . . . . . . . . . . . 5.3
Buying Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Buying Entities' Common Stock . . . . . . . . . . . . . . . . . . Recitals
Cash Proration Factor . . . . . . . . . . . . . . . . . . . . . 1.4(c)(i)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(b)
Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(a)(i)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10(h)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Acquisition Agreements . . . . . . . . . . . . . . . . . . 5.4(a)
Company Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Development Properties . . . . . . . . . . . . . . . . . 3.17(e)
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . 1.9
Company Future Development Properties . . . . . . . . . . . . . . 3.17(e)
Company Joint Ventures . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Company Leased Real Property . . . . . . . . . . . . . . . . . . 3.17(a)
Company Leases . . . . . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company OP Election . . . . . . . . . . . . . . . . . . . . . 1.2(a)(iii)
Company OP Election Units . . . . . . . . . . . . . . . . . . 1.2(a)(iii)
Company OP Units . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Operating Partnership . . . . . . . . . . . . . . . . . . Recitals
Company Operating Partnership Agreement . . . . . . . . . . . . . . 3.4(b)
Company Owned Real Property . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Permitted Liens . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Company Real Property . . . . . . . . . . . . . . . . . . . . . . 3.17(a)
Company Rent Roll . . . . . . . . . . . . . . . . . . . . . . . . 3.17(i)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 3.6
Company Securities . . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Company Space Lease . . . . . . . . . . . . . . . . . . . . . . . 3.17(i)
Company Special Meeting . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
Common Stock Election . . . . . . . . . . . . . . . . . . . . . 1.2(a)(i)
Common Stock Election Shares . . . . . . . . . . . . . . . . . 1.2(a)(i)
Company Stock Option . . . . . . . . . . . . . . . . . . . . . . . 1.9(a)
Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . 5.3
Continuing Employees . . . . . . . . . . . . . . . . . . . . . . 5.11(b)
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Counter Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(a)
Crescent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Crescent Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1
Crescent Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Confidentiality Agreement . . . . . . . . . . . . . . . . . 5.3
Crescent Excess Preferred Shares . . . . . . . . . . . . . . . . . 4.2.4
Crescent Exchange Ratio . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Leased Real Property . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Measured Price . . . . . . . . . . . . . . . . . . . . . Recitals
Crescent Operating Partnership . . . . . . . . . . . . . . . . . . 4.2.4
Crescent Owned Real Property . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Permitted Liens . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent Preferred Shares . . . . . . . . . . . . . . . . . . . . . 4.2.4
Crescent Real Property . . . . . . . . . . . . . . . . . . . . 4.2.12(a)
Crescent SEC Documents . . . . . . . . . . . . . . . . . . . . . . 4.2.5
Crescent Series A Preferred Shares . . . . . . . . . . . . . . . . 4.2.4
Crescent Series B Preferred Shares . . . . . . . . . . . . . . . . 4.2.4
Crescent Units . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.4
Deal Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13
Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . 4.2.1
Delaware Secretary of State . . . . . . . . . . . . . . . . . . . . 1.1(b)
Director Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
DLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Election Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Environmental Claim . . . . . . . . . . . . . . . . . . . . . 3.16(a)(ii)
Environmental Laws . . . . . . . . . . . . . . . . . . . . 3.16(a)(iii)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Excess Shares of Crescent Common Stock . . . . . . . . . . . . . . 4.2.4
Excess Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5(d)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.16
Form of Election . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Form S-4 Registration Statement . . . . . . . . . . . . . . . . . . . 5.15
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . 3.16(a)(iv)
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Indemnifiable Claim . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Key Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Maryland Department . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 3.1
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(c)
Maximum Common Stock Election Number . . . . . . . . . . . . . . . 1.4(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Xxxxxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18
MGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
New York Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
Non-Electing Units . . . . . . . . . . . . . . . . . . . . . . 1.2(a)(iv)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
1940 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23
1997 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Non-Electing Shares . . . . . . . . . . . . . . . . . . . . . . 1.2(a)(ii)
Outside Termination Date . . . . . . . . . . . . . . . . . . . . . 7.1(b)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(b)
Qualifying Income . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Reckson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Reckson Common Stock . . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Confidentiality Agreement . . . . . . . . . . . . . . . . . . 5.3
Reckson Disclosure Schedule . . . . . . . . . . . . . . . . . . . 4.1.3(a)
Reckson Exchange Ratio . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Leased Real Property . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Leases . . . . . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Measured Price . . . . . . . . . . . . . . . . . . . . . Recitals
Reckson Owned Real Property . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Permitted Liens . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 4.1.4
Reckson Real Property . . . . . . . . . . . . . . . . . . . . . 4.1.12(a)
Reckson SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 4.1.5
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(b)
REIT Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(a)(v)
Special Dividend . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(c)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(a)
Surviving Entity . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(d)(i)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . 3.11(d)(ii)
Termination Year . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11(c)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1998 (this
"Agreement"), by and among Tower Realty Trust, Inc., a Maryland corporation (the
"Company"), Metropolitan Partners LLC, a Delaware limited liability company
("Buyer"), Reckson Associates Realty Corp., a Maryland corporation ("Reckson"),
and Crescent Real Estate Equities Company, a Texas real estate investment trust
("Crescent").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of the Company, Buyer,
Reckson and Crescent have each approved this Agreement and the merger of the
Company with and into Buyer (with Buyer being the surviving entity) (the
"Merger"), upon the terms and subject to the conditions set forth herein, and in
accordance with the Maryland General Corporation Law (the "MGCL") and the
Delaware Limited Liability Company Act (the "DLLCA"), whereby each issued and
outstanding share of common stock, par value $.01 per share, of the Company (the
"Company Common Stock") (other than shares owned directly or indirectly by
Buyer, any Subsidiary (as defined in Section 3.5(a) hereof) of Buyer or by the
Company or any wholly-owned Subsidiary of the Company immediately prior to the
Effective Time (as defined in Section 1.1(b) hereof) and other than Dissenting
Shares (as defined in Section 1.10 hereof)), will, upon the terms and subject to
the conditions and limitations set forth herein, at the election of the holders
thereof either (A) be converted into (i) .3523 (the "Crescent Exchange Ratio")
of a share of beneficial interest, par value $.01 per share, of Crescent (for
purposes of this Agreement, "Crescent Common Stock"); provided that if the
average closing price for the shares of Crescent Common Stock on the New York
Stock Exchange (the "NYSE") during the fifteen consecutive trading days ending
on the tenth trading day prior to the Company Special Meeting (as defined in
Section 5.2(b) hereof) (the "Crescent Measured Price") is equal to or greater
than 1.07 multiplied by $34.0625, then the Crescent Exchange Ratio shall be
equal to the quotient of 12.84 divided by the Crescent Measured Price and (ii)
.4615 (the "Reckson Exchange Ratio") of a share of common stock, par value $.01
per share, of Reckson ("Reckson Common Stock" and, together with Crescent Common
Stock, "Buying Entities' Common Stock"); provided further that if the average
closing price for the shares of Reckson Common Stock on the NYSE during the
fifteen trading days ending on the tenth trading day prior to the Company
Special Meeting (the "Reckson Measured Price") is equal to or greater than 1.07
multiplied by 26, then the Reckson Exchange Ratio shall be equal to the quotient
of 12.84 divided by the Reckson Measured Price or (B) be converted into the
right to receive $24 per share of Company Common Stock in cash payable to the
holder thereof, without interest;
WHEREAS, in connection with the Merger, the following additional
transaction will be effected (the Merger, together with the other documents,
agreements and transactions contemplated by this Agreement, being referred to
collectively as the "Transactions"): the parties hereto shall cause the merger
of Tower Realty Operating Partnership, L.P., a Delaware limited partnership (the
"Company Operating Partnership"), with and into a newly formed entity created by
Buyer, pursuant to which each holder of a limited partnership interest (a
"Company OP Unit") in the Company Operating Partnership will receive the same
consideration as such holders would be entitled to pursuant to Section 1.2
hereof; and
WHEREAS, as a condition precedent to the execution of this Agreement,
Reckson, Crescent, Buyer and certain stockholders of the Company have entered
into certain voting agreements whereby each of such stockholders have agreed to,
subject to the terms and conditions of this Agreement, vote at the Company
Special Meeting (as defined in Section 5.2(a) hereof) one hundred percent (100%)
of the shares of Company Common Stock owned by each in favor of this Agreement
and the Transactions.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and conditions hereafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement,
and in accordance with the DLLCA and the MGCL, at the Effective Time, the
Company shall be merged with and into Buyer, whereupon the separate existence of
the Company shall cease, and Buyer shall continue as the surviving entity
(sometimes referred to herein as the "Surviving Entity") and shall continue to
be governed by the laws of the State of Delaware and shall continue under the
name "Metropolitan Partners LLC."
(b) Concurrently with the Closing (as defined in Section 1.12 hereof)
the Company and Buyer will cause (i) a certificate of merger or consolidation
(the "Certificate of Merger") with respect to the Merger to be executed and
filed with the Office of the Secretary of State of the State of Delaware (the
"Delaware Secretary of State") pursuant to the DLLCA and (ii) articles of merger
(the "Articles of Merger") with respect to the Merger to be executed and filed
with the State Department of Assessment and Taxation of Maryland (the "Maryland
Department") pursuant to the MGCL. The Merger shall become effective on the date
and time at which the Certificate of Merger and the Articles of Merger have been
duly filed with the Delaware Secretary of State and the Maryland Department,
respectively, or at such other date and time as is agreed between the parties
and specified in the Certificate of Merger and the Articles of Merger, and such
date and time is hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Entity shall
possess all the rights, privileges, immunities, powers and franchises and be
subject to all of the obligations, restrictions, disabilities, liabilities,
debts and duties of the Company and Buyer.
SECTION 1.2 Effect on Shares of Company Common Stock and Company OP
Units. At the Effective Time:
(a) Conversion of Company Common Stock and Company OP Units. Except
as otherwise provided herein and subject to Section 1.4 hereof, each share of
Company Common Stock and each Company OP Unit issued and outstanding immediately
prior to the Effective Time (other than shares cancelled pursuant to 1.2(b)
hereof and Dissenting Shares) shall be converted into the following (the "Merger
Consideration"):
(i) for each share of Company Common Stock with respect to
which an election to receive Buying Entities' Common Stock has
been effectively made pursuant to Section 1.3 hereof and not
revoked or lost (a "Common Stock Election"), a number of shares
of Crescent Common Stock equal to the Crescent Exchange Ratio and
a number of shares of Reckson Common Stock equal to the Reckson
Exchange Ratio (collectively, "Common Stock Election Shares");
(ii) for each share of Company Common Stock other than
Common Stock Election Shares, the right to receive in cash an
amount equal to $24 (collectively, "Non-Electing Shares");
(iii) for each Company OP Unit with respect to which an
election to receive Buying Entities' Common Stock has been
effectively made in accordance with Section 1.3 hereof and not
revoked or lost (a "Company OP Election"), a number of shares of
Crescent Common Stock equal to the Crescent Exchange Ratio and a
number of shares of Reckson Common Stock equal to the Reckson
Exchange Ratio (collectively, "Company OP Election Units"); and
(iv) for each Company OP Unit other than Company OP Election
Units, the right to receive in cash an amount equal to $24
(collectively, "Non-Electing Units").
(b) Cancellation of Shares of Company Common Stock and Company OP
Units. Each share of Company Common Stock held by the Company as treasury stock
or owned by Buyer or any Subsidiary of Buyer immediately prior to the Effective
Time shall automatically be cancelled and retired and cease to exist, and no
consideration or payment shall be delivered therefor or in respect thereto. All
shares of Company Common Stock to be converted into the Merger Consideration
pursuant to this Section 1.2 shall, by virtue of the Merger and without any
action on the part of the holders thereof, cease to be outstanding, be cancelled
and retired and cease to exist; and each holder of a certificate representing
prior to the Effective Time any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive (i) the Merger Consideration, (ii) any
dividends and other distributions in accordance with Section 1.2(c) hereof and
(iii) any cash to be paid in lieu of any fractional share of Buying Entities'
Common Stock in accordance with Section 1.5(d) hereof. All Company OP Units
shall, without any action on the part of the holders thereof, cease to be
outstanding, be cancelled and retired and cease to exist; and each holder of a
Company OP Unit prior to the Effective Time shall thereafter cease to have any
rights with respect to such Company OP Units, except the right to receive (i)
the Merger Consideration, (ii) any dividends and other distributions in
accordance with Section 1.2(c) and 1.5(c) hereof and (iii) any cash to be paid
in lieu of any fractional share of Buying Entities' Common Stock in accordance
with Section 1.5(d) hereof.
(c) Company Special Dividend. The Company shall declare a dividend
(the "Special Dividend") to its stockholders, the record date for which shall be
the close of business on the last business day prior to the Closing. The Special
Dividend shall be equal to the Company's most recent quarterly dividend rate,
multiplied by the number of days elapsed since the last dividend record date
through and including the Closing and divided by ninety-one (91); provided,
however, that the Special Dividend shall be increased to the extent the Company
reasonably determines that the amount provided in the preceding clause may not
be sufficient for the Company to qualify as a REIT for its taxable year ended
December 31, 1997, December 31, 1998 or its taxable year ended on the Closing
Date. The Special Dividend shall be paid in the ordinary course of business
consistent with past practices of the Company as to the manner and timing of
payment. Concurrently with the Special Dividend, an equivalent distribution
shall be made by the Company Operating Partnership.
SECTION 1.3 Share Election.
(a) Each Person (as defined in Section 1.6 hereof) who, on or prior
to the Election Date referred to in subsection (c) below, is a record holder of
shares of Company Common Stock or a record holder of Company OP Units, as the
case may be, shall have the right to submit a Form of Election (as defined in
Section 1.3(c) hereof) specifying the number of shares of Company Common Stock
or Company OP Units, as the case may be, that such Person desires to be
converted into Buying Entities' Common Stock pursuant to the Common Stock
Election or a Company OP Election.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 5.2(b) hereof), Buyer shall designate the Company's registrar or
transfer agent, or such other bank, trust company, Person or Persons as shall be
acceptable to the Company to act as exchange agent (the "Exchange Agent") for
the payment of the Merger Consideration.
(c) Buyer shall prepare and mail a form of election, which form shall
be subject to the reasonable approval of the Company (the "Form of Election")
with the Proxy Statement to the record holders of shares of Company Common Stock
and the record holders of Company OP Units as of the record date for the Company
Special Meeting, which Form of Election shall be used by each record holder of
shares of Company Common Stock and each record holder of Company OP Units who
wishes to elect to receive shares of Buying Entities' Common Stock for any or
all shares of Company Common Stock or Company OP Units, as the case may be,
held, subject to the provisions of Section 1.4 hereof, by such holder. The
Company shall use its reasonable best efforts to make the Form of Election and
the Proxy Statement available to all Persons who become holders of shares of
Company Common Stock during the period between such record date and the Election
Date. Any such holder's election to receive shares of Buying Entities' Common
Stock shall have been properly made only if the Exchange Agent shall have
received at its designated office, by 5:00 p.m., New York City time on the
business day (the "Election Date") next preceding the date of the Company
Special Meeting, a Form of Election properly completed and signed and
accompanied by certificates for the shares of Company Common Stock or Company OP
Units to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company (or by an
appropriate guarantee of delivery of such certificates as set forth in such Form
of Election from a firm which is a member of a registered national securities
exchange or of the NYSE or a commercial bank or trust company having an office
or correspondent in the United States, provided such certificates are in fact
delivered to the Exchange Agent within five NYSE trading days after the date of
execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the stockholder submitting
it to the Exchange Agent only by written notice received by the Exchange Agent
prior to 5:00 p.m., New York City time on the Election Date. In addition, all
Forms of Election shall automatically be revoked if the Exchange Agent is
notified in writing by Buyer and the Company that the Merger has been abandoned.
If a Form of Election is revoked, the certificate or certificates (or guarantees
of delivery, as appropriate) for the share of Company Common Stock or Company OP
Unit, if any, to which such Form of Election relates shall promptly be returned
to the stockholder submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be binding as to
whether or not elections have been properly made or revoked pursuant to this
Section 1.3 with respect to shares of Company Common Stock and Company OP Units
and when elections and revocations were received by it. If the Exchange Agent
determines that any Common Stock Election was not properly made with respect to
shares of Company Common Stock or Company OP Units, then such shares of Company
Common Stock or Company OP Units shall be treated by the Exchange Agent at the
Effective Time as Non-Electing Shares, and such shares shall be exchanged in the
Merger for cash pursuant to Section 1.2(a)(ii) hereof. If the Exchange Agent
determines that any Company OP Election was not properly made with respect to
Company OP Units, then such Company OP Units shall be treated by the Exchange
Agent at the Effective Time as Non-Electing Units, and such units shall be
exchanged for cash pursuant to 1.2(a)(iv) hereof. The Exchange Agent shall also
make all computations as to the allocation and the proration contemplated by
Section 1.4 hereof, and any such computation shall be conclusive and binding on
the holders of shares of Company Common Stock and the holders of Company OP
Units. The Exchange Agent may, with the mutual agreement of Buyer and the
Company, make such rules as are consistent with this Section 1.3 for the
implementation of the elections provided for herein as shall be necessary or
desirable to effect such elections fully.
SECTION 1.4 Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the
maximum number of shares of Company Common Stock and Company OP Units which can
be converted into shares of Buying Entities' Common Stock pursuant to the Common
Stock Election and Company OP Election shall be the number determined by the
formula in the following sentence (the "Maximum Common Stock Election Number").
The Maximum Common Stock Election Number shall be the number such that the
product of (i) the Maximum Common Stock Election Number multiplied by (ii) the
sum of (x) the product of (A) the Crescent Exchange Ratio multiplied by (B) the
Crescent Stated Price and (y) the product of (C) the Reckson Exchange Ratio
multiplied by (D) the Reckson Stated Price shall be equal to the product of (1)
16 multiplied by (2) the excess of the total number of shares of Company Common
Stock outstanding or issuable upon exchange of Company OP Units immediately
prior to the Effective Time over the Maximum Common Stock Election Number.
(b) If the sum of (i) the number of Common Stock Election Shares and
(ii) the number of Company OP Election Units does not exceed the Maximum Common
Stock Election Number, then each Common Stock Election Share and each Company OP
Election Unit shall be converted into shares of Buying Entities' Common Stock.
(c) If the sum of (i) the number of Common Stock Election Shares and
(ii) the number of Company OP Election Units exceeds the Maximum Common Stock
Election Number, then each Common Stock Election Share and each Company OP
Election Unit shall either (x) be converted into Buying Entities' Common Stock
or (y) be converted into the right to receive cash in accordance with the terms
of Section 1.2(a) hereof in the following manner:
(i) A proration factor (the "Cash Proration Factor") shall
be determined by dividing the Maximum Common Stock Election Number by
the sum of (i) the total number of Common Stock Election Shares and
(ii) the total number of Company OP Election Units;
(ii) The number of Common Stock Election Shares covered by
each Common Stock Election and Company OP Election Units which are
covered by Company OP Elections which are converted into Buying
Entities' Common Stock shall be determined by multiplying the Cash
Proration Factor by the sum of (i) the number of Common Stock Election
Shares and (ii) the number of Company OP Election Units; and
(iii) All Common Stock Election Shares and Company OP
Election Units, other than those shares and units which are converted
into Buying Entities' Common Stock in accordance with clause (ii) of
this subsection (c), shall be converted into the right to receive cash
on a consistent basis among stockholders and unitholders who made the
elections referred to in Section 1.2(a)(i) and (iii) hereof, pro rata
to the number of shares of Company Common Stock and number of Company
OP Units as to which they made such election. Holders of Company
Common Stock who make a Common Stock Election pursuant to Section
1.2(a)(i) hereof and holders of Company OP Units who make a Company OP
Election in accordance with Section 1.2(a)(iii) hereof, but who
receive cash in accordance with this Section 1.4(c), shall have the
portion of their Merger Consideration received in Crescent Common
Stock and the portion of their Merger Consideration received in
Reckson Common Stock reduced proportionately to account for the
receipt of cash pursuant to this Section 1.4(c).
SECTION 1.5 Exchange of Certificates.
(a) At or promptly following the Effective Time, Buyer shall deposit,
or cause to be deposited with the Exchange Agent for the benefit of holders of
shares of Company Common Stock, cash and certificates representing shares of
Buying Entities' Common Stock, constituting the Merger Consideration. For
purposes of this Section 1.5, holders of Company OP Units shall be treated in
the same manner as holders of shares of Company Common Stock.
(b) As of or promptly after, and in any event not later than one
business day following, the Effective Time, the Surviving Entity shall cause the
Exchange Agent to mail (and to make available for collection by hand) to each
holder of record of a certificate or certificates, which immediately prior to
the Effective Time represented outstanding shares of Company Common Stock (the
"Certificates"), (i) a letter of transmittal and a Form of Election (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and which shall be in the form and have such other provisions as
Buyer and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for (A) a certificate or
certificates representing the number of full shares of Buying Entities' Common
Stock, if any, into which all or a portion of the number of shares of Company
Common Stock previously represented by such Certificate have been converted
pursuant to this Agreement and (B) the amount of cash, if any, into which all or
a portion of the number of shares of Company Common Stock previously represented
by such Certificate shall have been converted pursuant to this Agreement (which
instructions shall provide that at the election of the surrendering holder,
Certificates may be surrendered, and the Merger Consideration in exchange
therefor collected, by hand delivery). Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with a Form of Election and a
letter of transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate, to be mailed (or made available
for collection by hand if so elected by the surrendering holder) within three
business days of receipt thereof, and the Certificate so surrendered shall be
forthwith cancelled. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. No interest shall be paid or accrued for the benefit of holders of
the Certificates on the Merger Consideration payable upon the surrender of the
Certificates.
(c) No dividends or other distributions with respect to shares of
Buying Entities' Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Buying Entities' Common Stock represented thereby by reason of the
conversion of shares of Company Common Stock pursuant to Sections 1.2(a), 1.3
and 1.4 hereof and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 1.5(d) hereof until the surrender of such
Certificate in accordance with this Article I. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the person in whose name the shares of Buying Entities' Common Stock are
registered (i) at the time of such surrender or as promptly after the sale of
the Excess Shares (as defined in Section 1.5(d) hereof) as practicable, the
amount of any cash payable in lieu of fractional shares of Buying Entities'
Common Stock to which such holder is entitled pursuant to Section 1.5(d) hereof
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Buying Entities' Common
Stock issued upon conversion of Company Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such Buying Entities'
Common Stock.
(d) Notwithstanding any other provision of this Agreement, no
fraction of a share of Buying Entities' Common Stock shall be issued in
connection with the Merger, and such fractional interest shall not entitle the
owner thereof to vote or to any rights as a security holder of the Buying
Entities. In lieu of any such fractional security, each holder of shares of
Company Common Stock otherwise entitled to a fraction of a share of Buying
Entities' Common Stock will be entitled to receive in accordance with the
provisions of this Section 1.5 from the Exchange Agent, a cash payment
representing such holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent on behalf of all such holders of the aggregate of the
fractions of Buying Entities' Common Stock which would otherwise be issued (the
"Excess Shares"). The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. Until the net proceeds of such
sale or sales have been distributed to the holders of shares of Company Common
Stock, the Exchange Agent will, subject to Section 1.5(e) hereof, hold such
proceeds in trust for the holders of shares of Company Common Stock (the "Excess
Shares Trust"). Buyer shall pay all commissions, transfer taxes and other
out-of- pocket transaction costs, including the expenses and compensation, of
the Exchange Agent incurred in connection with such sale of the Excess Shares.
As soon as practicable after the determination of the amount of cash, if any, to
be paid to holders of shares of Company Common Stock in lieu of any fractional
Buying Entities' Common Stock, the Exchange Agent shall make available such
amounts to such holders of shares of Company Common Stock.
(e) Any portion of the Merger Consideration deposited with the
Exchange Agent pursuant to this Section 1.5 (the "Exchange Fund") which remains
undistributed to the holders of the Certificates for one year after the
Effective Time shall be delivered to Buyer, upon demand, and any holders of
shares of Company Common Stock prior to the Merger who have not theretofore
complied with this Article I shall thereafter look only to Buyer and only as
general creditors thereof for payment of their claim for (i) cash, if any, (ii)
shares of Buying Entities' Common Stock, if any, (iii) any cash in lieu of
fractional shares of Buying Entities' Common Stock and (iv) any dividends or
distributions with respect to shares of Buying Entities' Common Stock to which
such holders may be entitled.
(f) None of Buyer, the Buying Entities, the Company or the Exchange
Agent shall be liable to any Person in respect of shares of Buying Entities'
Common Stock or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which (i) any cash,
(ii) any cash in lieu of fractional shares of retained shares of Buying
Entities' Common Stock, (iii) any shares of Buying Entities' Common Stock or
(iv) any dividends or distributions with respect to shares of Buying Entities'
Common Stock in respect of which such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.3(b)
hereof)), any such shares of Buying Entities' Common Stock, cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of Buyer, free and clear of all claims or
interest of any Person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included in the Exchange
Fund, as directed by Buyer on a daily basis. Any interest and other income
resulting from such investments shall be paid to the Company. Nothing contained
in this Section 1.5(g) shall relieve Buyer, the Buying Entities or the Exchange
Agent from making the payments required by this Article I to be made to the
holders of shares of Company Common Stock and to holders of Company Stock
Options (as defined in Section 1.9 hereof).
SECTION 1.6 Transfer Taxes; Withholding. If the Merger Consideration
is to be paid to a Person other than a Person in whose name the Company
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Company Certificate so surrendered in
exchange therefor shall be properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange shall pay to the Exchange
Agent any transfer or other Taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the Company
Certificate so surrendered, or shall establish to the satisfaction of the
Exchange Agent that such Tax has been paid or is not applicable. "Person" means
any natural person, firm, individual, corporation, limited liability company,
partnership, association, joint venture, company, business trust, trust or any
other entity or organization, whether incorporated or unincorporated, including
a government or political subdivision or any agency or instrumentality thereof.
SECTION 1.7 No Further Ownership Rights in Shares of Company Common
Stock. The Merger Consideration delivered upon the surrender for exchange of any
Company Certificate in accordance with the terms hereof shall be deemed to have
been delivered (and paid) in full satisfaction of all rights pertaining to the
shares of Company Common Stock previously represented by such Company
Certificate.
SECTION 1.8 Closing of Company Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed, and no transfer of
shares of Company Common Stock shall thereafter be made. Subject to the last
sentence of Section 1.5 hereof, if after the Effective Time Company Certificates
are presented to the Surviving Entity, they shall be cancelled and exchanged as
provided in this Article I.
SECTION 1.9 Stock Options.
(a) Each option to acquire shares of Company Common Stock ("Company
Stock Option") set forth in Schedule 3.12 of the disclosure schedule of the
Company attached hereto (the "Company Disclosure Schedule") that is outstanding
immediately prior to the Effective Time, whether or not then vested or
exercisable, shall, effective as of the Effective Time, become fully exercisable
and vested and each such Company Stock Option shall, subject to obtaining the
required consent, if any, of each holder of Company Stock Options, be cancelled.
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 $24 over the exercise price of such Common
Stock Option and (2) the number of shares of Company Common Stock subject
thereto. The Company's obligations to make such payment to any holder of Company
Stock Options shall be subject to having received the required consent, if any,
of such holder to the cancellation of such Options and the Company shall use its
reasonable best effort to obtain such consents prior to the Effective Time.
SECTION 1.10 Restricted Stock. All unvested shares of restricted
stock of the Company, set forth in Schedule 1.10 of the Company Disclosure
Schedule, shall, by virtue of this Agreement and without further action of the
Company, Buyer or the holder of such restricted shares, to the extent required
in the plan, agreement or instrument pursuant to which such restricted stock was
granted, vest and become free of all restrictions immediately prior to the
Effective Time and shall be converted into the Merger Consideration pursuant to
Section 1.2 hereof.
Section 1.11 Dissenting Shares. Notwithstanding Section 1.2(b)
hereof, shares of Common Stock issued and outstanding immediately prior to the
Effective Time and held by a holder who has properly exercised and perfected
appraisal rights under Title 3. Subtitle 2. of the MGCL (the "Dissenting
Shares") shall not be converted into the right to receive the Merger
Consideration, but the holders of Dissenting Shares shall be entitled to receive
such consideration as shall be determined pursuant to Title 3. Subtitle 2. of
the MGCL; provided, however, that if any such holder shall have failed to
perfect or shall effectively withdraw or lose his or her right to appraisal and
payment under the MGCL, such holder's shares of Company Common Stock shall
thereupon be deemed to have been converted as of the Effective Time into the
right to receive Merger Consideration as set forth in Section 1.2(a) hereof, and
such shares of Common Stock shall no longer be Dissenting Shares.
SECTION 1.12 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII hereof, the closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties hereto, which shall be no later than the second
business day after the satisfaction of the conditions set forth in Section 8.1
hereof, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 919 Third
Avenue, New York, New York, unless another time, date or place is agreed to in
writing by the parties hereto (such date, the "Closing Date").
ARTICLE II
THE SURVIVING ENTITY
SECTION 2.1 Certificate of Formation. The Certificate of Formation of
Buyer shall be the certificate of formation of the Surviving Entity until
thereafter amended in accordance with applicable law.
SECTION 2.2 Operating Agreement. The operating agreement of Buyer in
effect at the Effective Time shall be the operating agreement of the Surviving
Entity until thereafter amended in accordance with applicable law, the
certificate of formation of the Surviving Entity and the operating agreement of
the Surviving Entity.
SECTION 2.3 Members and Managers. From and after the Effective Time,
the members and managers of Buyer at the Effective Time shall be the initial
members and managers of the Surviving Entity, in each case until their
respective successors are duly elected or appointed and qualified in accordance
with applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
SECTION 3.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland, and except as set forth in Schedule 3.1 of the
Company Disclosure Schedule, has all corporate powers and all governmental
licenses, authorizations, consents and approvals (collectively, "Licenses")
required to carry on its business as now conducted except for failures to have
any such License which would not, individually or in the aggregate, have a
Material Adverse Effect (as defined hereafter). The Company is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned, leased or operated by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where failures to be so qualified would not, in the
aggregate, have a Material Adverse Effect. As used herein, the term "Material
Adverse Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of the Company and its
Subsidiaries, or Reckson and Crescent and their respective Subsidiaries, as the
case may be, in each case taken as a whole, that is not a result of a decline or
deterioration in the economy in general or the real estate markets in which such
entities operate. Notwithstanding the foregoing, for purposes of Sections 3.14
and 3.17 hereof, a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole, shall include, without limitation, the Company being deprived
of all or substantially all of its beneficial ownership of or rights to use any
Key Property (as defined hereafter), and the Company continuing to be deprived
of such interests as of the date of termination of this Agreement pursuant to
Section 7.1(b) or (d) hereof, as the case may be. For purposes of this
Agreement, the term "Key Properties" shall mean: Tower 00, Xxx Xxxx, Xxx Xxxx;
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; Xxx
Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx. The Company has heretofore made available to
Reckson, Crescent and Buyer (collectively, the "Buying Entities") complete and
correct copies of its articles of incorporation and the by-laws of the Company
(the "Articles of Incorporation" and "Company By-laws," respectively) as
currently in effect.
SECTION 3.2 Corporate Authorization. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval of the Company's stockholders as contemplated by Section 5.2 hereof,
to perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly and
validly authorized by the Board of Directors of the Company and, other than the
approval and adoption of this Agreement by the requisite vote of the Company's
stockholders, no other corporate proceedings on the part of the Company are
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes, assuming due authorization, execution and delivery of this
Agreement by each of the Buying Entities, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
SECTION 3.3 Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 3.3(a) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will (i) conflict with
or result in any breach of any provision of the Articles of Incorporation or the
Company By-laws; (ii) result in a breach or violation of, a default under, or
the triggering of any payment or other material obligations pursuant to, or
except as otherwise contemplated by Sections 1.9 and 1.10 hereof, accelerate
vesting under, any of the Company stock option or other benefit plans, or any
grant or award made under any of the foregoing; (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 obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) or result in the creation of any Lien (as defined in Section 3.5(b)
hereof) upon any properties of the Company or any of its Subsidiaries (other
than Company Permitted Liens) under any of the terms, conditions or provisions
of, any note, mortgage, indenture, letter of credit, other evidence of
indebtedness, franchise, permit, guarantee, license, lease or agreement or
similar instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their assets may be bound or (iv)
assuming that the filings, registrations, notifications, authorizations,
consents and approvals referred to in subsection (b) below have been obtained or
made, as the case may be, violate any order, injunction, decree, statute, rule
or regulation of any Governmental Entity (as defined in Section 3.3(b) hereof)
to which the Company or any of its Subsidiaries is subject, excluding from the
foregoing clauses (ii), (iii) and (iv) such requirements, defaults, breaches,
rights, violations or creations of such liens, security interests, charges or
encumbrances (A) that would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and would not reasonably be expected to have a
material adverse effect on the ability of the Company to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which any of the Buying Entities or any of their respective
affiliates is or proposes to be engaged or any acts or omissions by, or facts
pertaining to, any of the Buying Entities.
(b) Except as set forth in Schedule 3.3(b) of the Company Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent or approval of, any government or any agency, court, tribunal,
commission, board bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"Governmental Entity"), is required in connection with the execution and
delivery of this Agreement by the Company or the performance by the Company of
its obligations hereunder, except (i) the filing of the Certificate of Merger in
accordance with the DLLCA and the Articles of Merger in accordance with the MGCL
and filings to maintain the good standing of the Surviving Entity; (ii)
compliance with any applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"); (iii) compliance with any applicable
requirements of state takeover laws; (iv) any Tax Returns (as defined in Section
3.11(d) hereof) that may be required in connection with the Merger and (v) such
other consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings (A) the failure of which to be obtained or made would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect
and would not have a material adverse effect on the ability of the Company to
perform its obligations hereunder or (B) that become applicable as a result of
the business or activities in which any of the Buying Entities or any of their
respective affiliates is or proposes to be engaged or any acts or omissions by,
or facts pertaining to, any of the Buying Entities.
SECTION 3.4 Capitalization.
(a) The authorized capital stock of the Company consists of
150,000,000 shares of Company Common Stock and 50,000,000 shares of preferred
stock, par value $.01 per share, of the Company (the "Company Preferred Stock").
As of May 31, 1998, there were (i) 16,959,355 shares of Company Common Stock and
(ii) no shares of Company Preferred Stock issued and outstanding. All shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and are free of pre-emptive rights. As of May
31, 1998, there were (i) outstanding Company Stock Options in respect of
1,268,597 shares of Company Common Stock at an option price, in each case, equal
to $26 per share, which Options were granted pursuant to the Company's 1997
Incentive Plan (the "1997 Plan") and an additional 338,846 shares of Company
Common Stock available for future grants pursuant to the 1997 Plan through
December 31, 1998, (ii) up to 200,000 shares of Company Common Stock authorized
for possible issuance pursuant to the Company's 1997 Directors' Plan (the
"Director Plan"), (iii) no agreements with respect to stock bonuses for shares
of Company Common Stock and (iv) 2,000,000 shares of Company Common Stock
reserved for issuance upon exchange of limited partnership interests in the
Company Operating Partnership ("Company OP Units").
(b) Except (i) as set forth in this Section 3.4, (ii) for Company OP
Units (which, subject to certain restrictions, may be exchanged by holders
thereof for shares of Company Common Stock), (iii) as required under the Second
Amendment and Restatement of Agreement of Limited Partnership of the Company
Operating Partnership, as amended (the "Company Operating Partnership
Agreement"), (iv) for changes since April 30, 1998 resulting from the exercise
of Options outstanding on such date and (v) as set forth in Schedule 3.4 of the
Company Disclosure Schedule, there are outstanding (A) no shares of capital
stock or other voting securities or partnership interests of the Company, (B) no
securities of the Company or any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or voting securities or partnership
interests of the Company and (C) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or partnership interests or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (A), (B) and (C) being referred to collectively as the "Company
Securities"). Except (x) as required pursuant to rights of first refusal or
rights of first offer, "buy-sell" provisions, anti-dilution provisions or
pro-rata funding obligations set forth in the terms of any partnership or joint
venture agreement governing any of the partnerships, joint ventures or business
trusts in which the Company Operating Partnership owns an interest
(collectively, the "Company Joint Ventures") existing on the date of this
Agreement, a list of which is set forth in Schedule 3.4 of the Company
Disclosure Schedule , (y) as set forth in Schedule 3.4 of the Company Disclosure
Schedule and (z) as required under the Company Operating Partnership Agreement,
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Company Securities or any capital
stock, voting securities or other ownership interests in any Subsidiary of the
Company or make any material investment (in the form of a loan, capital
contribution or otherwise) in any Person (other than a Subsidiary of the Company
or a wholly owned Company Joint Venture).
SECTION 3.5 Subsidiaries.
(a) Each Subsidiary of the Company that is actively engaged in any
business or owns any material assets (each, an "Active Subsidiary") (i) that is
a corporation is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) that is a partnership,
limited liability company or trust is duly organized and validly existing under
the laws of its jurisdiction of organization, (iii) except as set forth in
Schedule 3.5(a) of the Company Disclosure Schedule, has all corporate power and
authority to, and all governmental licenses, authorizations, consents and
approvals required to, carry on its business as now conducted and (iv) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification or licensing necessary, except
for failures of this representation and warranty to be true which would not, in
the aggregate, have a Material Adverse Effect. For purposes of this Agreement,
"Subsidiary" means with respect to any Person, any corporation or other entity
of which such Person owns, directly or indirectly, more than 50% of the
outstanding voting stock or other equity interests. All Subsidiaries and their
respective jurisdictions of incorporation are identified in Schedule 3.5(a) of
the Company Disclosure Schedule.
(b) Except as set forth in Schedule 3.5(b) of the Company Disclosure
Schedule, (i) all of the outstanding shares of capital stock of each Subsidiary
of the Company that is a corporation are duly authorized, validly issued, fully
paid and nonassessable, and such shares are owned by the Company or by a
Subsidiary of the Company (other than directors' qualifying shares and nominal
shares held by other Persons as may be required by local law) free and clear of
any Liens (as defined hereafter) or limitations on voting rights and (ii) all
equity interests in each Subsidiary of the Company that is a partnership, joint
venture, limited liability company or trust are owned by the Company or by a
Subsidiary of the Company, free and clear of any Liens or limitations on voting
rights; provided that no representation is made as to any shares of capital
stock or other equity interests owned by any Persons other than the Company.
Except as set forth in Schedule 3.5(b) of the Company Disclosure Schedule, there
are no subscriptions, options, warrants, calls, rights, convertible securities
or other agreements or commitments of any character relating to the issuance,
transfer, sale, delivery, voting or redemption (including any rights of
conversion or exchange under any outstanding security or other instrument) for,
any of the capital stock or other equity interests of any of such Subsidiaries.
Except as set forth in Schedule 3.5(b) of the Company Disclosure Schedule, there
are no agreements requiring the Company or any of its Subsidiaries to make
contributions to the capital of, or lend or advance funds to, any Subsidiaries
of the Company. For purposes of this Agreement, "Lien" means, with respect to
any asset, any mortgage, deed of trust, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
(c) Except for interests in the Subsidiaries and except as set forth
in Schedule 3.5(c) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than investments in short-term investment
securities).
SECTION 3.6 SEC Documents. The Company has timely filed all required
reports, proxy statements, forms and other documents with the SEC since October
16, 1997 (the "Company SEC Documents"). As of their respective dates, and giving
effect to any amendments thereto, (a) the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the applicable rules and regulations of the SEC
promulgated thereunder and (b) none of the Company SEC Documents (except as to
the financial statements contained therein, which are dealt with in Section 3.7
hereof) contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.7 Financial Statements. The financial statements of the
Company (including, in each case, any notes and schedules thereto) included in
the Company SEC Documents (a) comply as to form in all material respects with
all applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (b) are in conformity with generally accepted
accounting principles ("GAAP"), applied on a consistent basis (except in the
case of unaudited statements, as permitted by Form 10-Q as filed with the SEC
under the Exchange Act) during the periods involved (except as may be indicated
in the related notes and schedules thereto) and (c) fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
SECTION 3.8 Absence of Undisclosed Liabilities. Except as set forth
in Schedule 3.8 of the Company Disclosure Schedule or in the Company SEC
Documents filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated Subsidiaries or
in the notes thereto except for those that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.9 Proxy Statement; Form S-4 Registration Statement; Other
Information. None of the information with respect to the Company or its
Subsidiaries to be included in the Proxy Statement (as defined in Section 5.2(b)
hereof) or any amendments thereof or supplements thereto or the Form S-4
Registration Statement (as defined in Section 5.15 hereof) will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or such amendments or supplements
thereto, and at the time of the Company Special Meeting, or, in the case of the
Form S-4 Registration Statement, at the time it becomes effective, 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 therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
related to any of the Buying Entities or any of their respective affiliates
included in the Proxy Statement or the Form S-4 Registration Statement, as the
case may be. The Proxy Statement and the Form S-4 Registration Statement will
each comply as to form in all material respects with the provisions of the
Exchange Act and the Securities Act, respectively, and the rules and regulations
promulgated under each of such statutes.
SECTION 3.10 Absence of Material Adverse Changes, etc. Except as
disclosed in the Company SEC Documents filed by the Company and as set forth in
Schedule 3.10 of the Company Disclosure Schedule, (i) since March 31, 1998, the
Company and its Subsidiaries have conducted their business in the ordinary
course of business consistent with past practice and there has not been a
Material Adverse Effect and (ii) since December 31, 1997, there has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution (other than regular quarterly dividends or regular
distributions pursuant to the Company Operating Partnership Agreement (or as
necessary to maintain REIT status)) with respect to the shares of Company Common
Stock or the Company OP Units, or any repurchase, redemption or other
acquisition by the Company or any Subsidiary of the Company of (x) any
outstanding shares of capital stock or other equity securities of, or other
ownership interests in, the Company or (y) the Company OP Units;
(b) any amendment of any material term of any outstanding security
issued by the Company or any Subsidiary of the Company;
(c) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money other than in
the ordinary course of business which, in any event, does not exceed
$287,000,000 in the aggregate through the date of this Agreement;
(d) any creation or assumption by the Company or any Subsidiary of
the Company of any Lien on any asset other than in the ordinary course of
business and other than Liens which, in the aggregate, do not have and could not
reasonably be expected to have a Material Adverse Effect;
(e) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary of the Company which has had a Material Adverse Effect;
(f) any change in any method of accounting or accounting practice by
the Company or any Subsidiary of the Company, except for any such change
required by reason of a change in GAAP;
(g) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary of the Company,
(ii) employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary of the Company entered into, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any Subsidiary of
the Company, in each case, other than in the ordinary course of business;
(h) any commitment or contractual obligation relating to any capital
expenditure (each, a "Commitment") entered into by the Company or any of its
Subsidiaries, other than immaterial Commitments in the ordinary course of
business; or
(i) any authorization of, or commitment or agreement to take any of,
the foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.11 Taxes.
(a) Except as set forth in Schedule 3.11 of the Company Disclosure
Schedule, (i) all Tax Returns (as defined in Section 3.11(d) hereof) required to
be filed by or with respect to Taxes of the Company and each of its Subsidiaries
as of the date hereof have been filed in a timely manner (taking into account
all lawful extensions of due dates) other than those Tax Returns as to which the
failure to file would not reasonably be expected to have a Material Adverse
Effect, and all such Tax Returns are true, complete and correct in all material
respects, (ii) all Taxes due and payable have been timely paid or adequate
provision in accordance with GAAP with respect to the matters covered by such
Tax Returns has been made for the payment therefor, (iii) the Company and each
of its Subsidiaries has properly accrued all Taxes for periods subsequent to the
periods covered by such Tax Returns, (iv) the Company and each of its
Subsidiaries have not received any written notice of deficiency or assessment
from any taxing authority with respect to liabilities for Taxes of the Company
or its Subsidiaries that have not been fully paid, finally settled or contested
in good faith, (v) neither the Company nor any of its Subsidiaries has executed
or filed with any taxing authority any agreement now in effect extending the
period for assessment or collection of any Taxes (except for extensions to file
Tax Returns which may have such effect), (vi) there are no Liens with respect to
Taxes upon any of the properties or assets of the Company or its Subsidiaries
and (vii) since the date of the most recently audited financial statements of
the Company and each of its Subsidiaries, the Company has incurred no liability
for Taxes under Sections 857(b), 860(c) or 4981 of the Code, including without
limitation, any Tax arising from a prohibited transaction described in Section
857(b)(6) of the Code, and neither the Company nor any of its Subsidiaries has
incurred any liability for Taxes other than in the ordinary course of business.
(b) The Company (i) will elect to be taxed as a real estate
investment trust (a "REIT") within the meaning of the Code commencing with its
taxable year ending December 31, 1997, (ii) for all taxable years commencing
with its taxable year ending December 31, 1997, has been organized and operated
in conformity with the requirements for taxation as a REIT within the meaning of
Section 856 of the Code, (iii) has operated to the date hereof, and intends to
continue to operate, in such a manner as to qualify as a REIT for all of its
taxable years ending on or prior to the Closing, and (iv) has not taken or
omitted to take any action which would result in a successful challenge to its
status as a REIT and, to the knowledge of the Company, no such challenge is
pending or threatened.
(c) Each of the Company's corporate Subsidiaries is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code, and each partnership,
limited liability company or joint venture in which the Company (either directly
or indirectly) owns an equity interest thereof has been treated since its
formation and continues to be treated for federal income tax purposes as a
partnership and not as an association taxable as a corporation.
(d) For purposes of this Agreement, (i) "Taxes" means all taxes,
levies or other like assessments, charges or fees (including estimated taxes,
charges and fees), including, without limitation, income, corporation, advance
corporation, gross receipts, transfer, excise, property, sales, use,
value-added, license, payroll, withholding, social security and franchise or
other governmental taxes or charges, imposed by the United States or any state,
county, local or foreign government or subdivision or agency thereof, and such
term shall include any interest, penalties or additions to tax attributable to
such taxes and (ii) "Tax Return" means any report, return, statement or other
written information required to be supplied to a taxing authority in connection
with Taxes.
SECTION 3.12 Employee Benefit Plans and Employee Matters.
(a) Schedule 3.12 of the Company Disclosure Schedule contains a true
and complete list of each deferred compensation, incentive compensation and
equity compensation plan; "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); "pension" plan, fund or program (within the meaning of section 3(2)
of ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (each,
an "ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee or former employee of the Company or any United States
Subsidiary of the Company (collectively, the "Plans").
(b) With respect to each Plan, the Company has heretofore delivered
or made available to Buyer true and complete copies of the Plan and any
amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any reports or summaries
required under ERISA or the Code and the most recent determination letter
received from the Internal Revenue Service with respect to each Plan intended to
qualify under section 401 of the Code.
(c) No Plan is subject to Title IV or Section 302 of ERISA or Section
412 of the Code. No material liability under Title IV or section 302 of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
(d) No Plan is a "multiemployer pension plan," as defined in section
3(37) of ERISA, a plan described in section 4063(a) of ERISA or a "welfare
benefit fund" as defined in Section 419(e) of the Code.
(e) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, ERISA and the Code.
(f) Except as set forth in Schedule 3.12(f) of the Company Disclosure
Schedule, each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service, and the Company is not aware of any circumstances that
could reasonably be expected to result in revocation of any such favorable
determination letter.
(g) Except as set forth in Schedule 3.12(g) of the Company Disclosure
Schedule, no Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his or her beneficiary).
(h) There are no pending, or, to the knowledge of the Company,
threatened or anticipated, claims that would reasonably be expected to have a
Material Adverse Effect by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(i) Except with respect to Company Stock Options and 10,000 shares of
restricted stock which vest upon the Merger, and except as set forth in Schedule
3.12(i) of the Company Disclosure Schedule, the consummation of the Transactions
will not, either alone or in combination with another event, (A) entitle any
current or former employee, officer, director or independent contractor of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, except as expressly provided in this Agreement; (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, officer, director or independent contractor;
(C) constitute a "prohibited transaction" (as defined in section 406 of ERISA or
section 4975 of the Code); or (D) entitle any such employee, director or
independent contractor to an "excess parachute payment" within the meaning of
Section 280G of the Code.
(j) No "reportable event" (other than those for which the 30-day
notice to the Pension Benefit Guaranty Corporation has been waived) or
"prohibited transaction" (other than those for which there is an available
exemption), as such terms are defined in ERISA and the Code, as applicable, has
occurred with respect to any Plan during the five years preceding the Closing
Date.
(k) Except as set forth on Schedule 3.12(k) of the Company Disclosure
Schedule, all contributions required to be made by the Company or any ERISA
Affiliate under applicable law or the terms of any Plan or collective bargaining
agreement to each Plan have been made within the time prescribed by such law,
Plan or collective bargaining agreement.
(l) Except as set forth on Schedule 3.12(l) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries and affiliates (i) is in
material compliance with all applicable law respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to current and former employees, directors and independent
contractors of the Company and such Subsidiaries and affiliates, (ii) has
withheld all amounts required by applicable law or by agreement to be withheld
from the wages, salaries and other payments to such current and former
employees, directors and independent contractors, (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing, and (iv) is not liable for any payment to any trust or other fund
or to any governmental entity, with respect to unemployment compensation
benefits, social security or other benefits, for such current or former
employees, directors and independent contractors.
(m) Except as set forth on Schedule 3.12(m) of the Company Disclosure
Schedule, (i) no employees of the Company or any of its Subsidiaries or
affiliates are represented by any labor organization and there is no union
organizational activity currently underway, or to the Company's knowledge,
threatened, with respect to any such employees, (ii) neither the Company nor any
of its Subsidiaries or affiliates is engaged in, or has received any written
notice during the current or preceding year of, any unfair labor practice, and
no such complaint is pending before the National Labor Relations Board or any
other agency having jurisdiction thereof, (iii) neither the Company nor any of
its Subsidiaries or affiliates is engaged in, or has received any notice of, any
grievances arising under any collective bargaining agreements, or any pending
arbitration proceedings under any collective bargaining agreements, (iii) during
the immediately preceding twenty-four (24) calendar months there has not been
any and, to the knowledge of the Company, there is no threatened labor strike,
work stoppage or slowdown pending against any portion of the Company or any of
its Subsidiaries or affiliates, and there is no pending lockout by the Company
or any of its Subsidiaries or affiliates. The Company and each of its
Subsidiaries and affiliates has satisfied and performed fully its obligations
under each collective bargaining agreement, and under any order, conciliation
contract or settlement contract by which any of them is bound or to which any of
them is subject concerning employment related matters.
(n) Except as set forth on Schedule 3.12(n) of the Company Disclosure
Schedule, each Plan that is a "group health plan" (as defined in section 4980B
of the Code) has been operated substantially in material compliance with section
4980B of the Code and the secondary payor requirements of section 1862(b)(1) of
the Social Security Act.
(o) Except as set forth on Schedule 3.12(o) of the Company Disclosure
Schedule, the Company has reserved all rights necessary to amend unilaterally
each Plan and to terminate its participation in any Plan.
SECTION 3.13 Litigation. Except as set forth in either the Company
SEC Documents or in Schedule 3.13 of the Company Disclosure Schedule or
otherwise fully covered by insurance, there is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against, the
Company or any Subsidiary of the Company or any of their respective properties
before any court or arbitrator or any Governmental Entity which (i) is pending
on the date of this Agreement and seeks to prevent or delay the Transactions or
challenges any of the terms or provisions of this Agreement or seeks material
damages in connection therewith ("Deal Litigation") or (ii) except for Deal
Litigation, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Compliance with Laws. Except as set forth in Schedule
3.14 of the Company Disclosure Schedule, the Company and its Subsidiaries are in
compliance with all applicable laws, ordinances, rules and regulations of any
Governmental Entity applicable to their respective businesses and operations,
including any Company Real Property, except for such violations, if any, which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. All governmental approvals, permits and licenses
(collectively, "Permits") required to conduct the business of the Company and
its Subsidiaries, including any Company Real Property, have been obtained, are
in full force and effect and are being complied with except for such violations
and failures to have Permits in full force and effect, if any, which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.15 Certain Contracts and Arrangements. Schedule 3.15 of the
Company Disclosure Schedule sets forth a list of the following contracts and
commitments to which the Company or any of its Active Subsidiaries is a party:
(i) all management agreements relating to the Company Real Property, (ii) all
leasing brokerage agreements, (iii) all service contracts that relate to
services in excess of $75,000 per annum and that are not terminable by Company
or its Subsidiary on notice of 90 days or less without penalty and (iv) all
collective bargaining agreements, if any, and includes a description of
arrangements with independent contractors for the provision of services to
certain of the Company Real Property (as defined in Section 3.17(a) hereof).
Except as set forth in Schedule 3.15 of the Company Disclosure Schedule, each
material contract or agreement, commitment and instrument to which the Company
or any of its Subsidiaries is a party or by which any of them is bound is in
full force and effect, and neither the Company nor any of its Subsidiaries, nor,
to the knowledge of the Company, any other party thereto, is in breach of, or
default under, any such contract, agreement, commitment or instrument, and no
event has occurred that with notice or passage of time or both would constitute
such a breach or default thereunder by the Company or any of its Subsidiaries,
or, to the knowledge of the Company, any other party thereto, except for such
failures to be in full force and effect and such breaches and defaults which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.16 Environmental Matters.
(a) (i) "Cleanup" means all actions required to: (A)
cleanup, remove, treat or remediate Hazardous Materials (as defined
hereafter) in the indoor or outdoor environment; (B) prevent the
Release (as defined hereafter) of Hazardous Materials so that they do
not migrate, endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment; (C) perform pre-remedial studies
and investigations and post-remedial monitoring and care; or
(D) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or
potential cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
(ii) "Environmental Claim" means any claim, action, cause
of action, investigation or written notice by any Person alleging
potential liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (A)
the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its
Subsidiaries or (B) circumstances forming the basis of any violation
of any Environmental Law (as defined hereafter).
(iii) "Environmental Laws" means all federal, state, local
and foreign laws and regulations relating to pollution or protection
of the environment, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, transport or handling of Hazardous Materials.
(iv) "Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National
Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
section 300.5, or defined as such by, or regulated as such under, any
Environmental Law.
(v) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the environment (including, without
limitation, ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any property, including the
movement of Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
(b) (i) Except as set forth in Schedule 3.16(b)(i) of the
Company Disclosure Schedule, to the knowledge of the Company, the
Company and its Subsidiaries are in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and its Subsidiaries of all permits and
other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof), except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.16(b)(i) of the Company Disclosure
Schedule, since January 1, 1996 and prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries has
received any communication (written or oral), whether from a
Governmental Entity, citizens' group, employee or otherwise, alleging
that the Company or any of its Subsidiaries is not in such compliance,
except where failures to be in compliance would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(ii) Except as set forth in Schedule 3.16(b)(ii) of the
Company Disclosure Schedule, there is no Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against
any Person whose liability for any Environmental Claim the Company or
any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law that would reasonably be expected
to have a Material Adverse Effect.
(iii) Except as set forth in Schedule 3.16(b)(iii) of the
Company Disclosure Schedule, there are no present or, to the knowledge
of the Company, past, actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the Release or
presence of any Hazardous Material that could form the basis of any
Environmental Claim against the Company or any of its Subsidiaries or,
to the knowledge of the Company, against any Person whose liability
for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation
of law that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(iv) The Company agrees to cooperate with Buyer to effect
the transfers of any permits or other governmental authorizations
under Environmental Laws that will be required to permit Buyer to
conduct the business as conducted by the Company and its Subsidiaries
immediately prior to the Closing Date.
SECTION 3.17 Real Property.
(a) For purposes of this Agreement, "Company Permitted Liens" means
(i) mechanics', carriers', workers', repairers', materialmen's, warehousemen's
and other similar Liens arising or incurred in the ordinary course of business
for sums not yet due and payable and such Liens as are being contested by the
Company in good faith, (ii) Liens arising or resulting from any action taken by
any of the Buying Entities, (iii) matters that would be disclosed by an accurate
survey or inspection of the Company Real Property, (iv) Liens for current Taxes
not yet due or payable, (v) any covenants, conditions, restrictions,
reservations, rights, Liens, easements, encumbrances, encroachments and other
matters affecting title which are shown as exceptions on the Company's title
insurance policies and/or title commitments or reports which have been made
available to the Buying Entities, (vi) any other covenants, conditions,
restrictions, reservations, rights, non-monetary Liens, easements, encumbrances,
encroachments and other matters affecting title which do not individually or in
the aggregate materially adversely affect the value or use of any of the Company
Real Property as it is presently used, (vii) Company Space Leases (as defined in
Section 3.7(i) hereof) and (viii) matters set forth in Schedule 3.17(a) of the
Company Disclosure Schedule and/or permitted pursuant to Sections 5.1(n),
5.1(r), 5.1(s) or 5.4 hereof. "Company Leases" means the real property leases,
subleases, licenses and use or occupancy agreements pursuant to which the
Company or any of its Active Subsidiaries is the lessee, sublessee, licensee,
user or occupant of Company Real Property, or interests therein. "Company Leased
Real Property" means all interests in real property pursuant to the Company
Leases. "Company Owned Real Property" means the real property owned in fee by
the Company and its Subsidiaries necessary for the conduct of, or otherwise
material to, the business of the Company and its Subsidiaries as it is currently
conducted. "Company Real Property" means the Company Owned Real Property and the
Company Leased Real Property.
(b) Schedule 3.17(b) of the Company Disclosure Schedule contains a
complete and correct list of all Company Owned Real Property setting forth
information sufficient to identify specifically such Company Owned Real Property
and the legal owner thereof. The Company and its Subsidiaries have good, valid
and insurable (at commercially reasonable rates) title to the Company Owned Real
Property, free and clear of any Liens other than Company Permitted Liens. Except
as set forth in Schedule 3.17(b) of the Company Disclosure Schedule, there are
no outstanding options or rights of first refusal to purchase the Company Owned
Real Property, or any material portion thereof or interest therein.
(c) Schedule 3.17(c) of the Company Disclosure Schedule contains a
complete and correct list of all Company Leased Real Property and the Company
Leases. Except for such exceptions as would not, in the aggregate, have a
Material Adverse Effect (i) each Company Lease is valid and binding upon the
Company and its Subsidiaries and in full force and effect and grants the lessee
under the Lease the exclusive right to use and occupy the premises and (ii) each
of the Company and its Subsidiaries has good and valid title to the leasehold
estate or other interest created under its respective Company Leases. To the
knowledge of the Company, no non- monetary defaults exist under the Company
Leases which, individually or in the aggregate, would have a Material Adverse
Effect.
(d) The Company Real Property constitutes all of the fee, leasehold
and other interests in real property, necessary for the conduct of, or otherwise
material to, the business of the Company and its Subsidiaries as it is currently
conducted in all material respects, except for any fee, leasehold or other
interest acquired or disposed of after the date hereof in accordance with
Sections 5.1(r), 5.1(s) or 5.1(u) hereof or Section 5.4 hereof. The use and
operation of the Company Real Property in the conduct of the business of the
Company and its Subsidiaries does not violate any instrument of record or
agreement affecting the Company Real Property, except for such violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(e) All Company Real Property currently under development or
construction by the Company or a Subsidiary of the Company (the "Company
Development Properties") and all properties currently proposed for acquisition,
development or commencement of construction by the Company or a Subsidiary of
the Company (the "Company Future Development Properties") are listed as such in
Schedule 3.17(e) of the Company Disclosure Schedule. All executory agreements
entered into by the Company or any Subsidiary of the Company relating to the
development or construction of commercial office or other real estate properties
(other than agreements the value of which individually do not exceed $50,000.00
or are terminable on 30 days notice or less and which are for architectural,
engineering, planning, accounting, legal or other professional services, or
construction agreements for material or labor) are listed in Schedule 3.17(e) of
the Company Disclosure Schedule. Copies of such agreements, all of which have
previously been delivered or made available to Buyer, are true and correct. To
the knowledge of the Company, there are no material defaults existing under any
of such agreements.
(f) Valid policies of title insurance have been issued insuring the
applicable Company's or its Subsidiary's fee simple title to the Company Owned
Real Property owned by it, subject only to the Company Permitted Liens. To the
knowledge of the Company, such policies are, at the date hereof, in full force
and effect. To the knowledge of the Company, no claim has been made against any
such policy.
(g) Except as provided in Schedule 3.17(g) of the Company Disclosure
Schedule, the Company and its Subsidiaries have no knowledge (i) that any
certificate, permit or license from any Governmental Entity having jurisdiction
over any of the Company Owned Real Property or any agreement, easement or other
right which is necessary to permit the lawful use and operation of the buildings
and improvements on any of the Company Owned Real Property or which is necessary
to permit the lawful use and operation of all driveways, roads and other means
of egress and ingress to and from any of the Company Owned Real Property has not
been obtained and is not in full force and effect, or of any pending threat of
modification or cancellation of any of same which would have a Material Adverse
Effect, (ii) of any written notice of any violation of any federal, state or
municipal law, ordinance, order, regulation or requirement having a Material
Adverse Effect issued by any Governmental Entity, (iii) of any structural
defects relating to any Company Real Property which would have a Material
Adverse Effect, (iv) of any Company Owned Real Property whose building systems
are not in working order so as to have a Material Adverse Effect, or (v) of any
physical damage to any Company Owned Real Property which would have a Material
Adverse Effect for which there is no insurance in effect covering the cost of
the restoration.
(h) Neither the Company nor any of its Subsidiaries has received any
written or published notice to the effect that (i) any condemnation or rezoning
proceedings are pending or threatened with respect to any Company Owned Real
Property or (ii) any zoning, building or similar law, code, ordinance, order or
regulation is or will be violated by the continued maintenance, operation or use
of any buildings or other improvements on any Company Owned Real Property or by
the continued maintenance, operation or use of the parking areas. Except as set
forth in Section 3.17(h) of the Company Disclosure Schedule, all work required
to be performed, payments required to be made and actions required to be taken
on any Company Owned Real Property prior to the date hereof pursuant to any
agreement entered into with a governmental body or authority in connection with
a site approval, zoning reclassification or other similar action relating to any
Company Owned Real Property or under any Company Space Lease have been
performed, paid or taken, as the case may be, and the Company and its
Subsidiaries have no knowledge of any planned or proposed work, payments or
actions that may be required after the date hereof.
(i) The rent roll set forth in Schedule 3.17(i) of the Company
Disclosure Schedule (the "Company Rent Roll") lists each Company Space Lease
(including the square footage of the leased premises (if set forth in the
subject Company Space Lease)) in effect as of the date hereof. "Company Space
Lease" means each lease or other right of occupancy affecting or relating to a
property in which the Company or its Subsidiaries (or an entity in which it
directly or indirectly has an interest) is the landlord, either pursuant to the
terms of a lease agreement or as successor to any prior landlord. The Company
and its Subsidiaries have made available to the Buying Entities true, correct
and complete copies of all Company Space Leases, including all amendments,
modifications, supplements, renewals, extensions and guarantees related thereto,
as of the date hereof. Except for discrepancies that, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect, all information set forth in the Company Rent Roll is true, correct and
complete as of the date of this Agreement. To the knowledge of the Company, no
material default exists by the Company or its Subsidiaries under any Company
Space Lease. Except as set forth in Schedule 3.17(i) of the Company Disclosure
Schedule, to the Company's knowledge, (x) all rental payments due under each
Company Space Lease have been paid through the date hereof, (y) the Company has
not received any prepayment of rent for a period in excess of thirty (30) days
and (z) no tenant is in material default, and no condition or event exists which
with the giving of notice or the passage of time, or both would constitute a
material default by any tenant under any Company Space Lease.
(j) The disposition of any of the Company Owned Real Property by the
Company Operating Partnership does not require the approval of any of the
limited partners of the Company Operating Partnership.
(k) Except as set forth in Schedule 3.17(k) of the Company Disclosure
Schedule, there are no ongoing tax certiorari proceedings with respect to the
Company Owned Real Property.
SECTION 3.18 Finders' Fees. Except for Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated ("Xxxxxxx Xxxxx"), there is no investment banker, broker,
finder or other intermediary which has been retained by, or is authorized to act
on behalf of, the Company or any Subsidiary of the Company that would be
entitled to any fee or commission from the Company, any Subsidiary of the
Company, any Buying Entity or any affiliate of any of the Buying Entities upon
consummation of the Transactions.
SECTION 3.19 Opinion of Financial Advisors. The Company has received
the opinion or advice of Xxxxxxx Xxxxx to the effect that, as of such date, the
consideration to be received by holders of shares of Company Common Stock (other
than any Buying Entity or any affiliate of any of the Buying Entities) pursuant
to the Merger is fair from a financial point of view to such holders.
SECTION 3.20 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has (a) determined that this
Agreement and the Transactions, taken together, are fair to and in the best
interests of the stockholders of the Company; (b) taken all actions necessary on
the part of the Company to render the restrictions on business combinations
contained in Section 3-602 of the MGCL inapplicable to this Agreement and the
Merger; and (c) resolved to recommend that the stockholders of the Company
approve this Agreement and the Transactions.
SECTION 3.21 Vote Required. The affirmative vote of a majority of all
of the votes of Company Common Stock entitled to be cast is the only vote of the
holders of any class or series of the Company's capital stock necessary or
required under this Agreement or under applicable law to approve the Merger,
this Agreement and the Transactions.
SECTION 3.22 Related Party Transactions. Set forth in Schedule 3.22
of the Company Disclosure Schedule is a list of all arrangements, agreements and
contracts entered into by the Company or any of its Subsidiaries with (a) any
consultant or (b) any Person who is an officer, director or affiliate (as
defined in Section 8.3 hereof) of the Company or any of its Subsidiaries, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate. Copies of such documents have previously been delivered or made
available to Buyer.
SECTION 3.23 Investment Company Act of 1940. Neither the Company nor
any of its Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
SECTION 3.24 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
For purposes of determining compliance with the HSR Act, the Company confirms
that the conduct of its business consists solely of investing in, owning and
operating real estate for the benefit of its stockholders.
SECTION 3.25 State Takeover Statutes. The Company has taken all
action necessary to exempt the transactions contemplated by this Agreement from
the operation of any applicable "fair price," "moratorium," "control share
acquisition" or any other applicable anti-takeover statute enacted under the
state or federal laws of the United States or similar statute or regulation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER,
RECKSON AND CRESCENT
SECTION 4.1 Reckson represents and warrants to the Company as
follows:
4.1.1 Corporate Existence and Power. Reckson is a corporation
duly organized, validly existing and in good standing under the laws
of the requisite state of its incorporation and has all corporate
power and authority to carry on its business as now conducted.
Reckson has heretofore delivered to the Company complete and correct
copies of its governing documents or other organizational documents of
like import, as currently in effect.
4.1.2 Authorization. Reckson has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action by Reckson and no other
corporate proceedings on the part of Reckson are necessary to
authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly executed and delivered by Reckson, and
constitutes, assuming due authorization, execution and delivery of
this Agreement by the Company, a valid and binding obligation of
Reckson enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
4.1.3 Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 4.1.3(a) of the
disclosure schedule of the Reckson attached to this Agreement (the
"Reckson Disclosure Schedule"), neither the execution and delivery of
this Agreement nor the performance by Reckson of its obligations
hereunder will (i) conflict with or result in any breach of any
provision of the articles of incorporation or by-laws of Reckson or
(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
obligation to repurchase, repay, redeem or acquire or any similar
right or obligation) under any of the terms, conditions or provisions
of, any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar
instrument or obligation to which Reckson or any of its Subsidiaries
is a party or by which any of them or any of their assets may be bound
or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b)
below have been obtained or made, as the case may be, violate any
order, injunction, decree, statute, rule or regulation of any
Governmental Entity to which Reckson or any of its Subsidiaries is
subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Reckson to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.1.3(b) of the Reckson
Disclosure Schedule, 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 Reckson or the performance by Reckson of its obligations
hereunder, except (i) the filing of the Certificate of Merger in
accordance with the DLLCA and the Articles of Merger in accordance
with the MGCL and filings to maintain the good standing of the
Surviving Entity; (ii) compliance with any applicable requirements of
the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect and would not have a material
adverse effect on the ability of Reckson to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
4.1.4 Capitalization. The authorized capital stock of
Reckson consists of 100,000,000 shares of Reckson Common Stock and
25,000,000 shares of preferred stock, par value $.01 per share, of
Reckson (the "Reckson Preferred Stock"). As of May 31, 1998, there
were (i) 39,972,102 shares of Reckson Common Stock and (ii) 9,200,000
shares of Reckson Preferred Stock issued and outstanding. All shares
of capital stock of Reckson have been duly authorized and validly
issued and are fully paid and nonassessable. As of May 31, 1998,
there were outstanding Options in respect of 3,817,078 shares of
Reckson Common Stock at option prices ranging from $12.125 to $25.75
per share. Upon conversion of all existing units of limited
partnership interest in the Reckson Operating Partnership, there would
be 47,685,053 (49,051,991 shares including the conversion of
convertible preferred units) shares of Reckson Common Stock
outstanding. Except as set forth in Schedule 4.1.4 of the Buyer
Disclosure Schedule, there are outstanding (A) no shares of capital
stock or other voting securities or partnership interests of Reckson,
(B) no securities of Reckson or any Subsidiary of Reckson convertible
into or exchangeable for shares of capital stock or voting securities
or partnership interests of Reckson and (C) no options or other rights
to acquire from Reckson, and no obligation of Reckson to issue, any
capital stock, voting securities or partnership interests or
securities convertible into or exchangeable for capital stock or
voting securities or partnership interests of Reckson.
4.1.5 SEC Documents. Reckson has timely filed all required
reports, proxy statements, forms and other documents required to be
filed by it with the SEC since January 1, 1997 (collectively, the
"Reckson SEC Documents"). As of their respective dates, and giving
effect to any amendments thereto, (a) the Reckson SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder and
(b) none of the Reckson SEC Documents (except as to the financial
statements contained therein, which are dealt with in Section 4.1.6
hereof) contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.1.6 Financial Statements. The financial statements of
Reckson (including, in each case, any notes and schedules thereto)
included in the Reckson SEC Documents (a) comply as to form in all
material respects with all applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, (b)
are in conformity with GAAP, applied on a consistent basis (except in
the case of unaudited statements, as permitted by Form 10-Q as filed
with the SEC under the Exchange Act) during the periods involved
(except as may be indicated in the related notes and schedules
thereto) and (c) fairly present, in all material respects, the
consolidated financial position of Reckson and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments).
4.1.7 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 4.1.7 of the Reckson Disclosure Schedule or in the
Reckson SEC Documents filed prior to the date hereof, and included in
the Reckson SEC Documents filed prior to the date hereof, neither
Reckson nor any of its Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of
Reckson and its consolidated Subsidiaries or in the notes thereto
except for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.1.8 Proxy Statement; Form S-4 Registration Statement;
Other Information. None of the information with respect to Reckson or
its Subsidiaries supplied by Reckson in writing specifically for
inclusion in the Proxy Statement or any amendments thereof or
supplements thereto and at the time of the Company Special Meeting or
in the Form S-4 Registration Statement (as defined in Section 5.16
hereof) will, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the
Proxy Statement or any amendments or supplements thereto, or, in the
case of the Form S-4 Registration Statement, at the time it becomes
effective, 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 therein, in light of the circumstances
under which they were made, not misleading, except that no
representation is made by Reckson with respect to information related
to the Company or any affiliate of the Company included in the Proxy
Statement or the Form S-4 Registration Statement, as the case may be.
The Proxy Statement and the Form S-4 Registration Statement will each
comply as to form in all material respects with the provisions of the
Exchange Act and the Securities Act, respectively, and the rules and
regulations promulgated under each of such statutes.
4.1.9 Absence of Material Adverse Changes, etc. Except as
disclosed in the Reckson SEC Documents filed by Reckson and as set
forth in Schedule 4.1.9 of the Reckson Disclosure Schedule, since
March 31, 1998, Reckson and its Subsidiaries have conducted their
business in the ordinary course of business and there has not been a
Material Adverse Effect.
4.1.10 Taxes. (a) Except as set forth in Schedule 4.1.10
of the Reckson Disclosure Schedule, (i) all Tax Returns required to be
filed by or with respect to Taxes of Reckson and its Subsidiaries have
been filed in a timely manner (taking into account all lawful
extensions of due dates), other than those Tax Returns as to which the
failure to file would not reasonably be expected to have a Material
Adverse Effect and all such Tax Returns are true, complete and correct
in all material respects, (ii) all Taxes due and payable have been
paid or adequate provision in accordance with GAAP with respect to the
matters covered by such Tax Returns has been made for the payment
therefor, (iii) Reckson and its Subsidiaries have not received any
written notice of deficiency or assessment from any taxing authority
with respect to liabilities for material Taxes of Reckson or its
Subsidiaries that have not been fully paid, finally settled or
contested in good faith and (iv) there are no Liens with respect to
Taxes upon any of the properties or assets of Reckson or its
Subsidiaries other than Liens for Taxes not yet due or payable or that
are being contested in good faith.
(b) Reckson (i) for all taxable years commencing with its
taxable year ending December 31, 1996 has been subject to taxation as
a REIT within the meaning of the Code and its proposed method of
operation, taking into account the Merger, will enable it to continue
to qualify as a REIT for each taxable year ending after the Closing
and (ii) has not taken or omitted to take any action which would
result in a successful challenge to its status as a REIT.
4.1.11 Compliance with Laws. Except as set forth in
Schedule 4.1.11 of the Reckson Disclosure Schedule, Reckson and its
Subsidiaries are in compliance with all applicable laws, ordinances,
rules and regulations of any Governmental Entity applicable to their
respective businesses and operations, except for such violations, if
any, which, in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. All Permits required to conduct the
business of Reckson and its Subsidiaries have been obtained, are in
full force and effect and are being complied with except for such
violations and failures to have Permits in full force and effect, if
any, which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.1.12 Real Property.
(a) For purposes of this Agreement, "Reckson Permitted
Liens" means (i) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or
incurred in the ordinary course of business for sums not yet due and
payable and such Liens as are being contested by Reckson in good
faith, (ii) Liens arising or resulting from any action taken by the
Company, (iii) matters that would be disclosed by an accurate survey
or inspection of the Reckson Real Property (as defined hereafter) (iv)
Liens for current Taxes not yet due or payable, (v) any covenants,
conditions, restrictions, reservations, rights, Liens, easements,
encumbrances, encroachments and other matters affecting title which
are shown as exceptions on Reckson's title insurance policies and/or
title commitments or reports which have been made available to the
Company, (vi) any other covenants, conditions, restrictions,
reservations, rights, non-monetary Liens, easements, encumbrances,
encroachments and other matters affecting title which do not
individually or in the aggregate materially adversely affect the value
or use of any of the Reckson Real Property as it is presently used and
(vii) matters set forth in Schedule 4.1.12(a) of the Buyer Disclosure
Schedule. "Reckson Leases" means the real property leases, subleases,
licenses and use or occupancy agreements pursuant to which Reckson or
any of its Subsidiaries is the lessee, sublessee, licensee, user or
occupant of Reckson Real Property, or interests therein. "Reckson
Leased Real Property" means all interests in real property pursuant to
Reckson Leases. "Reckson Owned Real Property" means the real property
owned in fee by Reckson and its Subsidiaries necessary for the conduct
of, or otherwise material to, the business of Reckson and its
Subsidiaries as it is currently conducted. "Reckson Real Property"
means Reckson Owned Real Property and Reckson Leased Real Property.
(b) The Reckson SEC Documents refer to all Reckson Owned
Real Property (in all material respects) as of their respective dates.
Reckson and its Subsidiaries have good, valid and insurable (at
commercially reasonable rates) title to the Reckson Owned Real
Property, free and clear of any Liens other than Reckson Permitted
Liens and other than title defects which would not in the aggregate
have a Material Adverse Effect.
(c) Except for such exceptions as would not, in the
aggregate, have a Material Adverse Effect (i) each Reckson Lease is
valid and binding upon Reckson and its Subsidiaries and in full force
and effect and grants the lessee under the Lease the exclusive right
to use and occupy the premises and (ii) each of Reckson and its
Subsidiaries has good and valid title to the leasehold estate or other
interest created under its respective Reckson Leases. To the
knowledge of Reckson, no non-monetary defaults exist under the Reckson
Leases which, individually or in the aggregate, would have a Material
Adverse Effect.
(d) The Reckson Real Property constitutes all of the fee,
leasehold and other interests in real property, necessary for the
conduct of, or otherwise material to, the business of Reckson and its
Subsidiaries as it is currently conducted in all material respects.
The use and operation of the Reckson Real Property in the conduct of
the business of Reckson and its Subsidiaries does not violate any
instrument of record or agreement affecting the Reckson Real Property,
except for such violations that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
4.1.13 Finders' Fees. Except for Xxxxxxx Xxxxx Xxxxxx,
whose fee will be paid by Reckson, there is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Reckson.
4.1.14 Share Ownership; Other Ownership. Reckson does not
beneficially own any shares of Company Common Stock. Since January 1,
1997, Reckson has not acquired any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture,
business trust or other entity which is, or will be, required to be
reported by Reckson in a report to the SEC and which has not been so
reported.
4.1.15 Investment Company Act of 1940. Neither Reckson nor
any of its Subsidiaries is, or at the Effective Time will be, required
to be registered under the 0000 Xxx.
4.1.16 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976. For purposes of determining compliance with the HSR Act,
Reckson confirms that the conduct of its business consists solely of
investing in, owning and operating real estate for the benefit of its
stockholders.
4.1.17 Financing. Reckson has provided, or will provide to
Buyer at the Effective Time, one-half of the funds necessary, when
taken together with cash of the Company available on the date hereof
and on the Closing Date, to (i) pay the Merger Consideration, (ii) pay
all fees and expenses required to be paid by the Buying Entities and
the Company in connection with the Merger and the financing of the
Transactions (the "Financing"), (iii) perform Reckson's obligations
hereunder and the obligations of the Surviving Entity hereunder and
(iv) provide the Surviving Entity with adequate working capital
following the Effective Time.
4.1.18 Authorization for Reckson Common Stock. Reckson has
taken all necessary action to permit it to issue the number of shares
of Reckson Common Stock required to be issued by it pursuant to this
Agreement. Shares of Reckson Common Stock issued pursuant to this
Agreement will, when issued, be validly issued, fully paid and
nonassessable and no Person will have any preemptive right of
subscription or purchase in respect thereof. Shares of Reckson Common
Stock issued pursuant to this Agreement will, when issued, be
registered under the Securities Act and the Exchange Act and
registered or exempt from registration under any applicable state
securities laws and will, when issued, be listed on the NYSE, subject
to official notice of issuance.
SECTION 4.2 Crescent represents and warrants to the Company as
follows:
4.2.1 Organization, Standing and Power. Crescent has been
formed as a real estate investment trust under the laws of the State
of Texas in accordance with the REIT Act. The County Clerk of Tarrant
County, Texas, has certified in writing that the Restated Declaration
of Trust of the Company (the "Declaration of Trust") is recorded in
Volume 12645, beginning at Page 1811, in the records of the County
Clerk. The Declaration of Trust is in effect, and no dissolution,
revocation or forfeiture proceedings regarding the Company have been
commenced. The Company has power and authority under its Declaration
of Trust, Amended and Restated Bylaws, as amended (the "Crescent
Bylaws") and the REIT Act to own, lease and operate its properties and
to conduct the business in which it is engaged. Crescent has
heretofore delivered to the Company true and complete copies of the
Declaration of Trust and the certification referred to above.
4.2.2 Authorization. Crescent has the requisite power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action by Crescent and no other
proceedings on the part of Crescent are necessary to authorize the
execution, delivery and performance of this Agreement. This Agreement
has been duly executed and delivered by Crescent, and constitutes,
assuming due authorization, execution and delivery of this Agreement
by the Company, a valid and binding obligation of Crescent enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.2.3 Consents and Approvals; No Violations. (a) Except
as set forth in Schedule 4.2.3(a) of the Crescent Disclosure Schedule,
neither the execution and delivery of this Agreement nor the
performance by Crescent of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or by-laws of Crescent or (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 obligation to repurchase, repay,
redeem or acquire or any similar right or obligation) under any of the
terms, conditions or provisions of, any note, mortgage, letter of
credit, other evidence of indebtedness, guarantee, license, lease or
agreement or similar instrument or obligation to which Crescent or any
of its Subsidiaries is a party or by which any of them or any of their
assets may be bound or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in
subsection (b) below have been obtained or made, as the case may be,
violate any order, injunction, decree, statute, rule or regulation of
any Governmental Entity to which Crescent or any of its Subsidiaries
is subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Crescent to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.2.3(b) of the
Crescent Disclosure Schedule, 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 Crescent or the performance by Crescent
of its obligations hereunder, except (i) the filing of the Certificate
of Merger in accordance with the DLLCA and the Articles of Merger in
accordance with the MGCL and filings to maintain the good standing of
the Surviving Entity; (ii) compliance with any applicable requirements
of the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect and would not have a material
adverse effect on the ability of Crescent to perform its obligations
hereunder or (B) that become applicable as a result of any acts or
omissions by, or facts pertaining to, the Company.
4.2.4 Capitalization. At the date hereof, the authorized
capital stock of Crescent solely consists of 250,000,000 shares of
Crescent Common Stock, 250,000,000 excess shares issuable in exchange
for shares of Crescent Common Stock ("Excess Shares of Crescent Common
Stock"), 100,000,000 preferred shares of beneficial interest, par
value $.01 per share (the "Crescent Preferred Shares"), and
100,000,000 excess shares issuable in exchange for Preferred Shares
("Crescent Excess Preferred Shares"). As of July 2, 1998, 120,871,894
shares of Crescent Common Stock, 8,000,000 6.75% Series A Convertible
Cumulative Preferred Shares ("Crescent Series A Preferred Shares") and
6,948,734 Series B Convertible Preferred Shares ("Crescent Series B
Preferred Shares") were issued and outstanding. As of July 2, 1998,
Crescent had no shares reserved for issuance, except (i) 13,153,702
shares of Crescent Common Stock reserved for issuance upon the
exchange of 6,576,851 units of ownership interest (the "Crescent
Units") of Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership (the "Crescent Operating Partnership"),
(ii) 15,965,924 shares of Crescent Common Stock reserved for issuance
pursuant to the 1994 Crescent Real Estate Equities, Inc. Stock
Incentive Plan, the Second Amended and Restated 1995 Crescent Real
Estate Equities Company Stock Incentive Plan, the 1995 Crescent Real
Estate Equities Limited Partnership Unit Incentive Plan and the 1996
Crescent Real Estate Equities Limited Partnership Unit Incentive Plan,
(iii) the possible issuance of up to 664,294 shares of Crescent Common
Stock upon the exchange of a portion of a partnership interest in
Desert Mountain Properties Limited Partnership, (iv) an outstanding
option to acquire 217,530 shares of Crescent Common Stock, (v) shares
of Crescent Common Stock issuable upon the possible conversion of
Crescent Series A Preferred Shares, (vi) shares of Crescent Common
Stock issuable upon the possible conversion of Crescent Series B
Preferred Shares and (vii) shares of Crescent Common Stock and
Crescent Preferred Shares issuable pursuant to the Merger Agreement
dated as of January 16, 1998, as amended, by and among Crescent and
Station Casinos, Inc., a Nevada corporation, and shares of Crescent
Common Stock issuable upon the possible conversion of the Crescent
Preferred Shares issued pursuant to such Merger Agreement, (viii)
shares of Crescent Common Stock issuable pursuant to a forward
purchase agreement and (ix) shares of Crescent Common Stock issuable
pursuant to a swap agreement. Except as set forth in Schedule 4.2.4
of the Buyer Disclosure Schedule, there are outstanding (A) no shares
of capital stock or other voting securities or partnership interests
of Crescent, (B) no securities of Crescent or any Subsidiary of
Crescent convertible into or exchangeable for shares of capital stock
or voting securities or partnership interests of Crescent and (C) no
options or other rights to acquire from Crescent, and no obligation of
Crescent to issue, any capital stock, voting securities or partnership
interests or securities convertible into or exchangeable for capital
stock or voting securities or partnership interests of Crescent.
4.2.5 SEC Documents. Crescent has timely filed all
required reports, proxy statements, forms and other documents required
to be filed by it with the SEC since January 1, 1997 (collectively,
the "Crescent SEC Documents"). As of their respective dates, and
giving effect to any amendments thereto, (a) the Crescent SEC
Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder and
(b) none of the Crescent SEC Documents (except as to the financial
statements contained therein, which are dealt with in Section 4.2.6
hereof) contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.2.6 Financial Statements. The financial statements of
Crescent (including any notes and schedules thereto) included in the
Crescent SEC Documents (a) comply as to form in all material respects
with all applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, (b) are in conformity
with GAAP, applied on a consistent basis (except in the case of
unaudited statements, as permitted by Form 10-Q as filed with the SEC
under the Exchange Act) during the periods involved (except as may be
indicated in the related notes and schedules thereto) and (c) fairly
present, in all material respects, the consolidated financial position
of Crescent and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
4.2.7 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 4.2.7 of the Crescent Disclosure Schedule or in the
Crescent SEC Documents filed prior to the date hereof, and included in
the Crescent SEC Documents filed prior to the date hereof, neither
Crescent nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance
sheet of Crescent and its consolidated Subsidiaries or in the notes
thereto except for those that would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
4.2.8 Proxy Statement; Form S-4 Registration Statement;
Other Information. None of the information with respect to Crescent
or its Subsidiaries supplied by Crescent in writing specifically for
inclusion in the Proxy Statement or any amendments thereof or
supplements thereto and at the time of the Company Special Meeting or
in the Form S-4 Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement or any amendments thereof
or supplements thereto, and at the time of the Company Special
Meeting, or, in the case of the Form S-4 Registration Statement, at
the time it becomes effective, 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 therein, in light
of the circumstances under which they were made, not misleading,
except that no representation is made by Crescent with respect to
information related to the Company or any affiliate of the Company
included in the Proxy Statement or the Form S-4 Registration
Statement, as the case may be. The Proxy Statement and the Form S-4
Registration Statement will each comply as to form in all material
respects with the provisions of the Exchange Act and the Securities
Act, respectively, and the rules and regulations promulgated under
each of such statutes.
4.2.9 Absence of Material Adverse Changes, etc. Except as
disclosed in the Crescent SEC Documents filed by Crescent and as set
forth in Schedule 4.2.8 of the Crescent Disclosure Schedule, since
March 31, 1998, Crescent and its Subsidiaries have conducted their
business in the ordinary course of business consistent with past
practice and there has not been a Material Adverse Effect.
4.2.10 Taxes. (a) Except as set forth in Schedule 4.2.10
of Crescent Disclosure Schedule, (i) all Tax Returns required to be
filed by or with respect to Taxes of Crescent and its Subsidiaries
have been filed in a timely manner (taking into account all lawful
extensions of due dates), other than those Tax Returns as to which the
failure to file would not reasonably be expected to have a Material
Adverse Effect and all such Tax Returns are true, complete and correct
in all material respects, (ii) all Taxes due and payable have been
paid or adequate provision in accordance with GAAP with respect to the
matters covered by such Tax Returns has been made for the payment
therefor, (iii) Crescent and its Subsidiaries have not received any
written notice of deficiency or assessment from any taxing authority
with respect to liabilities for material Taxes of Crescent or its
Subsidiaries that have not been fully paid, finally settled or
contested in good faith and (iv) there are no Liens with respect to
Taxes upon any of the properties or assets of Crescent or its
Subsidiaries other than Liens for Taxes not yet due or payable or that
are being contested in good faith.
(b) Crescent (i) for all taxable years commencing with its
taxable year ending December 31, 1996 has been subject to taxation as
a REIT within the meaning of the Code and its proposed method of
operation, taking into account the Merger, will enable it to continue
to qualify as a REIT for each taxable year ending after the Closing
and (ii) has not taken or omitted to take any action which would
result in a successful challenge to its status as a REIT.
4.2.11 Compliance with Laws. Except as set forth in
Schedule 4.2.11 of the Crescent Disclosure Schedule, Crescent and its
Subsidiaries are in compliance with all applicable laws, ordinances,
rules and regulations of any Governmental Entity applicable to their
respective businesses and operations, except for such violations, if
any, which, in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. All Permits required to conduct the
business of Crescent and its Subsidiaries have been obtained, are in
full force and effect and are being complied with except for such
violations and failures to have Permits in full force and effect, if
any, which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
4.2.12 Real Property.
(a) For purposes of this Agreement, "Crescent Permitted
Liens" means (i) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or
incurred in the ordinary course of business for sums not yet due and
payable and such Liens as are being contested by Crescent in good
faith, (ii) Liens arising or resulting from any action taken by the
Company, (iii) matters that would be disclosed by an accurate survey
or inspection of the Crescent Real Property (as defined hereafter)
(iv) Liens for current Taxes not yet due or payable, (v) any
covenants, conditions, restrictions, reservations, rights, Liens,
easements, encumbrances, encroachments and other matters affecting
title which are shown as exceptions on Crescent's title insurance
policies and/or title commitments or reports which have been made
available to the Company, (vi) any other covenants, conditions,
restrictions, reservations, rights, non-monetary Liens, easements,
encumbrances, encroachments and other matters affecting title which do
not individually or in the aggregate materially adversely affect the
value or use of any of the Crescent Real Property as it is presently
used and (vii) matters set forth in Schedule 4.2.12(a) of the Buyer
Disclosure Schedule. "Crescent Leases" means the real property
leases, subleases, licenses and use or occupancy agreements pursuant
to which Crescent or any of its Subsidiaries is the lessee, sublessee,
licensee, user or occupant of Crescent Real Property, or interests
therein. "Crescent Leased Real Property" means all interests in real
property pursuant to Crescent Leases. "Crescent Owned Real Property"
means the real property owned in fee by Crescent and its Subsidiaries
necessary for the conduct of, or otherwise material to, the business
of Crescent and its Subsidiaries as it is currently conducted.
"Crescent Real Property" means Crescent Owned Real Property and
Crescent Leased Real Property.
(b) The Crescent SEC Documents refer to all Crescent Owned
Real Property (in all material respects) as of their respective dates.
Crescent and its Subsidiaries have good, valid and insurable (at
commercially reasonable rates) title to the Crescent Owned Real
Property, free and clear of any Liens other than Crescent Permitted
Liens and other than title defects which would not in the aggregate
have a Material Adverse Effect.
(c) Except for such exceptions as would not, in the
aggregate, have a Material Adverse Effect (i) each Crescent Lease is
valid and binding upon Crescent and its Subsidiaries and in full force
and effect and grants the lessee under the Lease the exclusive right
to use and occupy the premises and (ii) each of Crescent and its
Subsidiaries has good and valid title to the leasehold estate or other
interest created under its respective Crescent Leases. To the
knowledge of Crescent, no non-monetary defaults exist under the
Crescent Leases which, individually or in the aggregate, would have a
Material Adverse Effect.
(d) The Crescent Real Property constitutes all of the fee,
leasehold and other interests in real property, necessary for the
conduct of, or otherwise material to, the business of Crescent and its
Subsidiaries as it is currently conducted in all material respects.
The use and operation of the Crescent Real Property in the conduct of
the business of Crescent and its Subsidiaries does not violate any
instrument of record or agreement affecting the Crescent Real
Property, except for such violations that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
4.2.13 Finders' Fees. There is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Crescent.
4.2.14 Share Ownership; Other Ownership. Crescent does not
beneficially own any shares of Company Common Stock. Since January 1,
1997, Crescent has not acquired any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture,
business trust or other entity which is, or will be, required to be
reported by Crescent in a report to the SEC and which has not been so
reported.
4.2.15 Investment Company Act of 1940. Neither Crescent
nor any of its Subsidiaries is, or at the Effective Time will be,
required to be registered under the 0000 Xxx.
4.2.16 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976. For purposes of determining compliance with the HSR Act,
Crescent confirms that the conduct of its business consists solely of
investing in, owning and operating real estate for the benefit of its
stockholders.
4.2.17 Financing. Crescent has provided, or will provide
to Buyer at the Effective Time, one-half of the funds necessary, when
taken together with cash of the Company available on the date hereof
and on the Closing Date, to (i) pay the Merger Consideration, (ii) pay
all fees and expenses required to be paid by the Buying Entities and
the Company in connection with the Merger and the Financing, (iii)
perform Crescent's obligations hereunder and the obligations of the
Surviving Entity and its Subsidiaries hereunder and (iv) provide the
Surviving Entity with adequate working capital following the Effective
Time.
4.2.18 Authorization for Crescent Common Stock. Crescent
has taken all necessary action to permit it to issue the number of
shares of Crescent Common Stock required to be issued by it pursuant
to this Agreement. Shares of Crescent Common Stock issued pursuant to
this Agreement will, when issued, be validly issued, fully paid and
nonassessable and no Person will have any preemptive right of
subscription or purchase in respect thereof. Shares of Crescent
Common Stock will, when issued, be registered under the Securities Act
and the Exchange Act and registered or exempt from registration under
any applicable state securities laws and will, when issued, be listed
on the NYSE, subject to official notice of issuance.
SECTION 4.3 Each of Reckson, Crescent and Buyer, jointly and
severally, represents and warrants to the Company as follows:
4.3.1 Corporate Existence and Power. Buyer is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all power and
authority to carry on its business as now conducted. Buyer has
heretofore delivered or made available to the Company true and
complete copies of its governing documents or other organizational
documents of like import, as currently in effect.
4.3.2 Authorization. Buyer has the requisite power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and
validly authorized by all requisite action of Buyer and no other
proceedings on the part of Buyer are necessary to authorize the
execution, delivery and performance of this Agreement. This Agreement
has been duly executed and delivered by Buyer, and constitutes,
assuming due authorization, execution and delivery of this Agreement
by the Company, a valid and binding obligation of Buyer enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.3.3 Consents and Approvals; No Violations. (a) Except
as set forth in Schedule 4.3.3(a) of the Buyer Disclosure Schedule,
neither the execution and delivery of this Agreement nor the
performance by Buyer of its obligations hereunder will (i) conflict
with or result in any breach of any provision of the certificate of
formation or operating agreement (or other governing or organizational
documents) of Buyer or (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 obligation to repurchase, repay, redeem or acquire or
any similar right or obligation) under any of the terms, conditions or
provisions of, any note, mortgage, letter of credit, other evidence of
indebtedness, guarantee, license, lease or agreement or similar
instrument or obligation to which Buyer or any of its Subsidiaries is
a party or by which any of them or any of their assets may be bound or
(iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b)
below have been obtained or made, as the case may be, violate any
order, injunction, decree, statute, rule or regulation of any
Governmental Entity to which Buyer or any of its Subsidiaries is
subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and would not reasonably be expected to have a material
adverse effect on the ability of Buyer to perform its obligations
hereunder or (B) that become applicable as a result of the business or
activities in which the Company or any of its affiliates is or
proposes to be engaged or any acts or omissions by, or facts
pertaining to, the Company.
(b) Except as set forth in Schedule 4.3.3(b) of the Buyer
Disclosure Schedule, 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 performance by Buyer of its obligations
hereunder, except (i) the filing of the Articles of Merger in
accordance with the MGCL and the Certificate of Merger in accordance
with the DLLCA and filings to maintain the good standing of the
Surviving Entity; (ii) compliance with any applicable requirements of
the Securities Act and the Exchange Act; (iii) compliance with any
applicable requirements of state takeover laws; (iv) any Tax Returns
that may be required in connection with the Merger and (v) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings (A) the failure of which to be
obtained or made would not reasonably be expected to have a Material
Adverse Effect and would not have a material adverse effect on the
ability of Buyer to perform its obligations hereunder or (B) that
become applicable as a result of the business or activities in which
the Company or any of its affiliates is or proposes to be engaged or
any acts or omissions by, or facts pertaining to, the Company.
4.3.4 Finders' Fees. There is no investment banker,
broker, finder or other intermediary that might be entitled to any fee
or commission in connection with or upon consummation of the
Transactions based upon arrangements made by or on behalf of Buyer.
4.3.5 Share Ownership; Other Ownership. Buyer does not
beneficially own any shares of Company Common Stock.
4.3.6 Investment Company Act of 1940. Buyer is not, and at
the Effective Time will not be, required to be registered under the
0000 Xxx.
4.3.7 Buyer's Operations. Buyer has been formed by
Crescent and Reckson solely to enter into this Agreement and
consummate the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with
this Agreement and the Transactions.
4.3.8 Surviving Entity After the Merger. At and
immediately after the Effective Time, and after giving effect to the
Merger, the Financing and the other Transactions (and any changes in
the Surviving Entity's assets and liabilities as a result thereof),
the Surviving Entity will not (i) be insolvent (either because its
financial condition is such that the sum of its debts is greater than
the fair value of its assets or because the present fair saleable
value of its assets will be less than the amount required to pay its
probable liabilities on its debts as they mature), (ii) have
unreasonably small capital with which to engage in its business or
(iii) have incurred or plan to incur debts beyond its ability to pay
as they mature.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Company. From the date hereof until the
Effective Time, the Company and its Subsidiaries shall conduct their business in
the ordinary course and in substantially the same manner as heretofore conducted
and shall use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Without limiting the
generality of the foregoing, other than (i) as set forth in Schedule 5.1 of the
Company Disclosure Schedule, (ii) as specifically contemplated by this Agreement
or (iii) with the written consent of Buyer, from the date of hereof until the
Effective Time, the Company shall, and shall cause each of its Subsidiaries to:
(a) confer on a regular basis with one or more representatives of
Reckson and Crescent to report operational matters of materiality and any
proposals to engage in material transactions;
(b) promptly notify Reckson and Crescent after becoming aware of any
material change in the condition (financial or otherwise), business, properties,
assets, liabilities or the normal course of its business or in the operation of
its properties, or of any material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated);
(c) promptly deliver to Reckson and Crescent true and correct copies
of any report, statement or schedule filed with the SEC subsequent to the date
of this Agreement;
(d) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities, subject
to extensions permitted by law, provided the Company notifies Reckson and
Crescent that it is availing itself of such extensions and provided such
extensions do not adversely affect the Company's status as a qualified REIT
under the Code;
(e) not make or rescind any express or deemed election relative to
Taxes (unless required by law or necessary to preserve the Company's status as a
REIT or the status of any noncorporate Subsidiary of the Company as a
partnership for federal income Tax purposes or as a Qualified REIT Subsidiary
under section 856(i) of the Code, as the case may be);
(f) not declare, set aside or pay any dividend (other than regular
quarterly dividends, the Company Special Dividend or regular distributions
pursuant to the Company Operating Partnership Agreement (or as necessary to
maintain REIT status)) or other distribution with respect to any shares of
capital stock of the Company or Company OP Units, or any repurchase, redemption
or other acquisition by the Company or any Subsidiary of the Company of any
outstanding shares of capital stock or other equity securities of, or other
ownership interests in, the Company;
(g) not issue or sell shares of Company Common Stock or any
securities convertible into or exchangeable or exercisable for, or any rights,
warrants or options to acquire any such shares of Company Common Stock except
for the issuance of (i) shares of Company Common Stock issued pursuant to
Company stock-based benefits and options plans in accordance with their terms as
of the date of this Agreement and (ii) shares of capital stock upon the
exercise, exchange or conversion of securities, rights, warrants and options
outstanding on the date of this Agreement or referred to in clause (i) above;
(h) not amend any material term of any outstanding security issued by
the Company or any Subsidiary of the Company;
(i) make all capital expenditures, and expenditures relating to
leasing, in accordance with the budget of the Company approved by Reckson and
Crescent and attached hereto as Section 5.1(i) of the Company Disclosure
Schedule and shall not acquire, enter into any option to acquire, or exercise an
option or other right or election or enter into any Commitment, including any
lease or amendment thereto, for the acquisition of, any real property or other
transaction (other than Commitments referred to in the budget attached as
Schedule 5.1(i) of the Company Disclosure Schedule) involving payments to or by
the Company in excess of $75,000 or which is not included in such budget,
encumber assets or commence construction of, or enter into any Commitment to
develop or construct, other real estate projects;
(j) not amend the Articles of Incorporation, or the Company By- Laws,
or the articles or certificate of incorporation, bylaws, code of regulations,
partnership agreement, operating agreement or joint venture agreement or
comparable charter or organization document of any Active Subsidiary of the
Company;
(k) grant no options or other right or commitment relating to any
Company Securities, or any other security the value of which is measured by
shares of Company Common Stock, or any security subordinated to the claim of its
general creditors;
(l) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company SEC Documents;
(m) not settle any tax certiorari proceeding with respect to the
Company without the written consent of Reckson, Crescent and Buyer (which
consent shall not be unreasonably withheld);
(n) except (1) in order to pay dividends permitted pursuant to this
Agreement and to pay transaction expenses related to the Transactions or (2) to
finance an acquisition permitted by clause (r) below (which is in accordance
with the budget attached hereto as Schedule 5.1(i) of the Company Disclosure
Schedule), not incur, assume or guarantee by the Company or any Subsidiary of
the Company any indebtedness for borrowed money;
(o) except in connection with a transaction that is permitted by the
budget attached as Schedule 5.1(i) to the Company Disclosure Schedule, not
create or assume by the Company or any Subsidiary of the Company any Lien on any
asset other than Company Permitted Liens and Liens which, in the aggregate, do
not have and could not reasonably be expected to have a Material Adverse Effect;
(p) maintain its books and records in accordance with GAAP
consistently applied and not change any method of accounting or accounting
practice by the Company or any Subsidiary of the Company, except for any such
change required by reason of a change in GAAP;
(q) except as set forth in Schedule 5.1(q) of the Company Disclosure
Schedule, not (i) grant any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary of the Company, (ii) enter
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary of the Company, (iii) increase the benefits
payable under any existing severance or termination pay policies or employment
agreement, (iv) increase the compensation, bonus or other benefits payable to
any director, officer or employee of the Company or any Subsidiary of the
Company or (v) adopt any new plan, program or arrangement that would constitute
a Plan under Section 3.12 hereof;
(r) except as permitted by Section 5.4 hereof, not consummate (or
enter into any agreement or agreement in principle with respect to or take any
steps to facilitate) any acquisition of stock or assets or operations of another
entity, other than any acquisition by the Company in respect of which the cash
consideration paid by the Company is less than $100,000 individually and for all
such transactions taken together, the aggregate cash consideration paid by the
Company is less than $1,000,000;
(s) not sell, lease (or amend any existing lease), mortgage, subject
to Lien or otherwise dispose of any Company Real Property, except in connection
with transactions as contemplated by the budget that is attached as Schedule
5.1(i) of the Company Disclosure Schedule or that does not involve any sale,
lease, mortgage, Lien or disposition in excess of 7,500 square feet;
(t) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans, advances and capital
contributions to Subsidiaries of the Company in existence on the date hereof;
(u) not acquire or enter into any option or agreement to acquire, any
real property or other transaction involving in excess of $100,000 which is not
included in the budget that is attached as Schedule 5.1(i) of the Company
Disclosure Schedule; or
(v) authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise permitted by this Agreement; provided that
as soon as reasonably practicable, the Buying Entities shall appoint an
individual as the representative of the Buying Entities for all purposes of this
Section 5.1; provided further that the Buying Entities shall be entitled to
change the identity of such representative upon notice to the Company of such
change.
SECTION 5.2 Stockholders' Meetings; Proxy Material.
(a) Subject to the duties of the Board of Directors of the Company,
the Company shall, in accordance with applicable law and the Articles of
Incorporation and the Company By-laws, duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Company Special Meeting") as
promptly as practicable after the date hereof for the purpose of considering and
taking action upon this Agreement and the Merger and such other matters as may
in the reasonable judgment of the Company be appropriate for consideration at
the Company Special Meeting. The Proxy Statement shall, subject to the proviso
set forth below, include the recommendation of the Board of Directors of the
Company that the stockholders of the Company vote in favor of approval and
adoption of this Agreement and the Merger; provided that the Board of Directors
of the Company may withdraw, modify or change such recommendation if it has
determined in good faith, after consultation with outside legal counsel, that
the failure to withdraw, modify or change such recommendation would present a
reasonable risk of a breach of the duties of the Board of Directors of the
Company under applicable law.
(b) The Company shall, subject to the duties of the Board of
Directors of the Company, (i) as promptly as practicable following the date of
this Agreement, prepare and file with the SEC, shall use its reasonable best
efforts to have cleared by the SEC and shall thereafter mail to its stockholders
as promptly as practicable, a proxy statement and a form of proxy, in connection
with the vote of the Company's stockholders with respect to the Merger (such
proxy statement, together with any amendments thereof or supplements thereto, in
each case in the form or forms mailed to the Company's stockholders is herein
called the "Proxy Statement"), (ii) use its reasonable best efforts to obtain
the necessary approvals by its stockholders of this Agreement and the
Transactions and (iii) otherwise comply in all material respects with all legal
requirements applicable to the Company Special Meeting. The Company will notify
the Buying Entities promptly of the receipt of any comments from the SEC or its
staff and or any government officials for amendments or supplements to the Proxy
Statement or for additional information and will supply the Buying Entities with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC, or its staff or any other government official, on
the other hand, with respect to the Proxy Statement. The Proxy Statement 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 to the Proxy Statement, the Company shall promptly inform the Buying
Entities of such occurrence and cooperate in filing with the SEC or its staff or
any other governmental officials, and/or mailing to stockholders of the Company,
such amendment or supplement.
SECTION 5.3 Access to Information; Confidentiality Agreement. Upon
reasonable advance notice, between the date hereof and the Effective Time, the
Company shall (a) give each of the Buying Entities, and their respective
counsel, financial advisors, auditors and other authorized representatives
(collectively, "Buyer's Representatives"), reasonable access during normal
business hours to the offices, properties, books and records of the Company and
its Subsidiaries, (b) furnish to Buyer's Representatives such financial and
operating data and other information as such Persons may reasonably request and
(c) instruct the Company's employees, counsel and financial advisors to fully
cooperate with the Buying Entities in their investigation of the business of the
Company and its Subsidiaries; provided that all requests for information, to
visit plants or facilities or to interview the Company's employees or agents
should be directed to and coordinated with the chief financial officer of the
Company or such person or persons as he shall designate; and provided further
that any information and documents received by any of the Buying Entities or
Buyer's Representatives (whether furnished before or after the date of this
Agreement) shall be held in strict confidence in accordance with the
Confidentiality Agreement dated April 20, 1998 between Reckson and the Company
(the "Reckson Confidentiality Agreement") and the Confidentiality Agreement
dated May 20, 1998 between Crescent (the "Crescent Confidentiality Agreement"
and, together with the Reckson Confidentiality Agreement, the "Confidentiality
Agreements"), which shall remain in full force and effect pursuant to the terms
thereof, notwithstanding the execution and delivery of this Agreement or the
termination hereof. Notwithstanding anything to the contrary in this Agreement,
neither the Company nor any of its Subsidiaries shall be required to disclose
any information to any Buying Entity or the Buyer Representatives if doing so
would violate any agreement, law, rule or regulation to which the Company or any
of its Subsidiaries is a party or to which the Company or any of its
Subsidiaries is subject.
SECTION 5.4 No Solicitation of Transactions by the Company.
(a) From the date hereof until the termination of this Agreement, the
Company shall not (whether directly or indirectly through advisors, agents or
other intermediaries), and the Company shall use its reasonable best efforts to
ensure that the respective officers, directors, advisors, representatives or
other agents (other than Xxxxxxxx Xxxxxxx) of the Company will not, directly or
indirectly, (i) solicit, initiate or encourage any Acquisition Proposal (as
defined hereafter) or (ii) engage in discussions (other than to disclose the
provisions of this Agreement) or negotiations with, or disclose any non-public
information relating to the Company or its Subsidiaries or afford access to the
properties, books or records of the Company or its Subsidiaries to, any Person
that has made, or has indicated its interest in making, an Acquisition Proposal;
provided that, if the Company's Board of Directors determines in good faith,
after consultation with outside legal counsel, that the failure to engage in
such negotiations or discussions or provide such information would present a
reasonable risk of a breach of the duties of the Board of Directors of the
Company under applicable law, the Company may furnish information with respect
to the Company and its Subsidiaries and participate in negotiations and
discussions and enter into agreements regarding such Acquisition Proposal with a
third party ("Company Acquisition Agreements"); provided that prior to approving
or recommending such an Acquisition Proposal or entering into a Company
Acquisition Agreement or withdrawing, amending or modifying its recommendation
of this Agreement and the Transactions, the Company shall (A) notify Reckson and
Crescent in writing that it intends to approve, recommend or accept such an
Acquisition Proposal or enter into such a Company Acquisition Agreement or
withdraw, amend or modify its recommendation, and (B) attach the most current
version of any such Company Acquisition Proposal or Company Acquisition
Agreement to such notice. Reckson and Crescent shall have the opportunity,
within three days of receipt of the Company's written notification of its
intention to accept such Acquisition Proposal or to enter into such Company
Acquisition Agreement or to withdraw, amend or modify its recommendation, to
make an offer relating to the acquisition of the Company (a "Counter Offer").
Unless the Board of Directors of the Company determines, in good faith after
consultation with its outside legal counsel and financial advisors, that such
Counter Offer is not at least as favorable to the shareholders of the Company,
taking into account such factors (including, without limitation, the
consideration (both as to amount and form) offered in, and the other terms and
conditions of, the Counter Offer and such other Acquisition Proposal or Company
Acquisition Agreement) as and to the extent it deems relevant, the Company shall
not accept such other Acquisition Proposal or Company Acquisition Agreement, but
shall have the right to accept the Counter Offer. If accepted, the Counter Offer
shall become a binding and irrevocable agreement among the Company, Buyer,
Reckson and Crescent upon such acceptance. The Company agrees that it will not
enter into a Company Acquisition Agreement referred to in clause (A) above until
at least the fourth day after it has provided the notice to Reckson and Crescent
required hereby. For purposes of this Agreement, "Acquisition Proposal" means
any offer or proposal for a merger, consolidation, recapitalization, liquidation
or other business combination involving the Company or any of its Subsidiaries
or the acquisition or purchase of 50% or more of any class of equity securities
of the Company or any of its Subsidiaries, or any tender offer (including
self-tenders) or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of any class of equity securities of the Company
or any of its Subsidiaries, or all or substantially all of the assets of, the
Company and its Subsidiaries, other than the Transactions. Furthermore, nothing
contained in this Section 5.4 shall prohibit the Company or the Company's Board
of Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act if failure to so disclose
would be inconsistent with its obligations under applicable law or to make any
other disclosures required in its judgment by applicable law. On the date of
this Agreement, the Company shall immediately terminate discussions, if any,
with all third parties relating to an Acquisition Proposal.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.4, the Company shall reasonably promptly advise
Buyer orally and in writing of any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal and the identity of the Person making
such Acquisition Proposal.
SECTION 5.5 Voting of Shares of Company Common Stock. Each of the
Buying Entities shall vote all shares of Company Common Stock, if any,
beneficially owned by it or its affiliates in favor of adoption and approval of
the Merger and this Agreement at the Company Special Meeting.
SECTION 5.6 Director and Officer Liability.
(a) From and after the Effective Time, Buyer shall provide
exculpation and indemnification for each Indemnitee (as defined hereafter) which
is the same as the exculpation and indemnification provided to such parties by
the Company immediately prior to the Effective Time in the Articles of
Incorporation, Company By-Laws or in its partnership, operating or similar
agreement or an agreement between an Indemnitee and the Company or a Subsidiary
of the Company, in each case as in effect on the date hereof. To the extent
permitted by the DLLCA, advancement of expenses pursuant to this Section 5.6
shall be mandatory rather than permissive and the Surviving Entity shall advance
Costs (as defined in Section 5.6(b) hereof) in connection with such
indemnification.
(b) In addition to the other rights provided for in this Section 5.6
and not in limitation thereof, for a period of six years and ninety days after
the Effective Time, Buyer shall, and shall cause the Surviving Entity to the
fullest extent permitted by law to, (i) indemnify and hold harmless the
individuals who on or prior to the Effective Time were officers, directors,
employees or agents of the Company and any of its Subsidiaries (the
"Indemnitees") against all losses, expenses (including, without limitation,
attorneys' fees and the cost of any investigation or preparation incurred in
connection thereof), claims, damages, liabilities, judgments, or amounts paid in
settlement (collectively, "Costs") in respect to any threatened, pending or
contemplated claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the Transactions) (an
"Indemnifiable Claim") and (ii) advance to such Indemnitees all Costs incurred
in connection with any Indemnifiable Claim. In the event any Indemnifiable Claim
is asserted or made within such six-year-and-ninety-day period, all rights to
indemnification and advancement of costs in respect of any such Indemnifiable
Claim shall continue until such Indemnifiable Claim is disposed of or all
judgments, orders, decrees or other rulings in connection with such
Indemnifiable Claim are fully satisfied.
(c) Buyer shall, and shall cause the Surviving Entity to, expressly
assume and honor in accordance with their terms all indemnity agreements listed
in Schedule 5.6 of the Company Disclosure Schedule. For a period of three years
and ninety days after the Effective Time, Buyer will, and will cause the
Surviving Entity to, provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering each
such Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided,
however, that in no event shall Buyer or Surviving Entity be required to expend
more than an amount per year equal to 200% of current annual premiums paid by
the Company for such insurance (the "Maximum Amount") to maintain or procure
insurance coverage pursuant hereto (which the Company represents and warrants
aggregates currently to $133,000 per annum); provided, further, that if the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Buyer and Surviving Entity shall maintain
or procure, for such three-year-and-ninety-day period, the most advantageous
policies of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Amount. In the event that any Indemnitee is entitled to
coverage under an officers' and directors' liability insurance policy pursuant
to this Section 5.6(c) and such policy has lapsed, terminated, been repudiated
or is otherwise in breach or default as a result of Buyer's failure to maintain
and fulfill its obligations pursuant to such policy to the extent required by as
provided in this Section 5.6(c); Buyer shall, and shall cause the Surviving
Entity to, pay to the Indemnitee such amounts and provide any other coverage or
benefits as the Indemnitee shall have received pursuant to such policy. Buyer
agrees that, should the Surviving Entity fail to comply with the obligations of
this Section 5.6, Buyer shall be responsible therefor.
(d) Notwithstanding any other provisions hereof, the obligations of
the Company, the Surviving Entity and Buyer contained in this Section 5.6 shall
be binding upon the successors and assigns of Buyer and the Surviving Entity. In
the event the Company or the Surviving Entity or any of their respective
successors or assigns (i) consolidates with or merges into any other Person or
(ii) transfers all or substantially all of its properties or assets to any
Person, then, and in each case, proper provision shall be made so that
successors and assigns of the Company or the Surviving Entity, as the case may
be, honor the indemnification obligations set forth in this Section 5.6.
(e) The obligations of the Company, the Surviving Entity and Buyer
under this Section 5.6 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 5.6 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 5.6 applies shall be third party beneficiaries
of this Section 5.6).
(f) Buyer shall, and shall cause the Surviving Entity to, advance all
Costs to any Indemnitee incurred by enforcing the indemnity or other obligations
provided for in this Section 5.6.
(g) Each of Crescent and Reckson unconditionally and irrevocably
guarantee the obligations of Buyer under this Section 5.6 up to a maximum
amount, in the case of each of them separately, of fifty percent (50%) of the
aggregate of such obligations.
SECTION 5.7 Reasonable Best Efforts. Upon the terms and subject to
the conditions of this Agreement, each party hereto shall use its reasonable
best efforts (including with respect to the consents set forth in Schedule 5.7
of the Company Disclosure Schedule) to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Transactions. The Company
shall use its reasonable best efforts to obtain the consent of The Carlyle Group
to the transfer of the Company's interest in 2800 Associates, L.P.
SECTION 5.8 Certain Filings. The Company and Buyer shall cooperate
with one another (a) in connection with the preparation of the Proxy Statement,
(b) in determining whether any action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the consummation of the Transactions and (c) in seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Proxy Statement and
seeking timely to obtain any such actions, consents, approvals or waivers.
SECTION 5.9 Public Announcements. None of the Company, Reckson,
Crescent, or Buyer nor any of their respective affiliates shall issue or cause
the publication of any press release or other public announcement with respect
to the Merger, this Agreement or the other Transactions without the prior
consultation with the other party, except as may be required by law or by any
listing agreement with, or the policies of, a national securities exchange.
SECTION 5.10 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Entity will be authorized to execute and
deliver, in the name and on behalf of the Company or Buyer, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
the Company or Buyer, any other actions to vest, perfect or confirm of record or
otherwise in the Surviving Entity any and all right, title and interest in, to
and under any of the rights, properties or assets of the Company acquired or to
be acquired by the Surviving Entity as a result of, or in connection with, the
Merger.
SECTION 5.11 Employee Matters.
(a) The Buying Entities shall, and shall cause their Subsidiaries to,
honor in accordance with their terms all agreements, contracts, arrangements,
commitments and understandings described in Schedule 5.11 of the Company
Disclosure Schedule.
(b) Except with respect to accruals under any defined benefit pension
plans, the Buying Entities will, or will cause the Surviving Entity and its
Subsidiaries to, give all active employees of the Company who continue to be
employed by the Company as of the Effective Time ("Continuing Employees") full
credit for purposes of eligibility, vesting and determination of the level of
benefits under any employee benefit plans or arrangements maintained by Buyer,
the Surviving Entity or any Subsidiary of Buyer or the Surviving Entity for such
Continuing Employees' service with the Company or any Subsidiary of the Company
to the same extent recognized by the Company immediately prior to the Effective
Time. The Buying Entities will, or will cause the Surviving Entity and its
Subsidiaries to, (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Continuing Employees under any welfare plan that
such employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Effective Time under
any welfare plan maintained for the Continuing Employees immediately prior to
the Effective Time, and (ii) provide each Continuing Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any applicable deductible or out- of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the Effective Time.
(c) The Buying Entities shall not, and shall not permit the Surviving
Entity or any of its Subsidiaries to, at any time prior to 90 days following the
date of the Closing, without complying fully with the notice and other
requirements of the Worker Adjustment Retraining and Notification Act of 1988
(the "WARN Act"), effectuate (i) a "plant closing" as defined in the WARN Act
affecting any single site of employment or one or more facilities or operating
units within any single site of employment of the Surviving Entity or any of its
Subsidiaries; or (ii) a "mass layoff" as defined in the WARN Act affecting any
single site of employment of the Surviving Entity or any of its Subsidiaries; or
any similar action under applicable state, local or foreign law requiring notice
to employees in the event of a plant closing or layoff.
SECTION 5.12 Transfer Taxes. The Buying Entities and the Company
shall cooperate in the preparation, execution and filing of all Tax Returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
Taxes which become payable in connection with the Transactions (together with
any related interest, penalties or additions thereto, "Transfer Taxes"). The
Surviving Entity shall pay all Transfer Taxes.
SECTION 5.13 Advice of Changes. Each party hereto shall promptly
advise the other parties hereto orally and in writing to the extent it has
knowledge of (i) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect, (ii) the failure by it to
comply in any material respect with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, and (iii) any change or event having a Material Adverse Effect
on the Company or on the truth of its representations and warranties or the
ability of the conditions set forth in Article 7 to be satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.14 Guaranty. Each of Crescent and Reckson hereby agrees to
take all actions within their respective powers to cause Buyer to perform its
obligations under this Agreement, except as limited with respect to the
financial obligations contemplated by Sections 4.1.17, 4.2.17 and 5.6(g) hereof.
SECTION 5.15 Form S-4 Registration Statement. The Buying Entities
shall, as promptly as practicable following the date of this Agreement, prepare
and file with the SEC a registration statement on Form S-4 (the "Form S-4
Registration Statement"), containing the Proxy Statement and prospectus, in
connection with the registration under the Securities Act of Buying Entity
Common Stock issuable upon conversion of the Company Common Stock and the other
Transactions. The Buying Entities and the Company shall, and shall cause their
accountants and attorneys to, use their reasonable best efforts to have or cause
the Form S-4 Registration Statement declared effective as promptly as
practicable, including, without limitation, causing their accountants to deliver
necessary or required instruments such as opinions and certificates, and will
take any other action reasonably required or necessary to be taken under federal
or state securities laws or otherwise in connection with the registration
process.
SECTION 5.16 Blue Sky Permits. The Buying Entities shall use their
reasonable best efforts to obtain, prior to the effective date of the Form S-4
Registration Statement, all necessary state securities laws or "blue sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement and the Merger, and will pay all expenses incident thereto.
SECTION 5.17 NYSE Listing. Each of Reckson and Crescent shall use its
reasonable best efforts to cause the shares of Reckson Common Stock and Crescent
Common Stock, respectively, to be issued in the Merger to be listed on the NYSE,
subject to notice of official issuance thereof, prior to the Closing Date.
SECTION 5.18 Affiliates. Prior to the Closing, the Company shall
deliver to Buyer a list identifying all Persons who are, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Each Party's Obligations. The respective
obligations of the Company and the Buying Entities to consummate the Merger are
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of the
Company in accordance with applicable law;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(c) no action or proceeding by any Governmental Entity shall have
been commenced (and be pending), or, to the knowledge of the parties hereto,
threatened, against the Company, Reckson, Crescent or Buyer or any of their
respective affiliates, partners, associates, officers or directors, or any
officers or directors of such partners, seeking to prevent or delay the
Transactions or challenging any of the terms or provisions of this Agreement or
seeking material damages in connection therewith;
(d) the Form S-4 Registration Statement shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and other state
securities laws applicable to the registration and qualification of the shares
of Buying Entities' Common Stock following the Merger shall have been complied
with; and
(e) the shares of Buying Entities' Common Stock issuable in
accordance with the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 6.2 Conditions to the Company's Obligations. The obligation
of the Company to consummate the Merger shall be further subject to the
satisfaction or, to the extent permitted by applicable law, the waiver on or
prior to the Effective Time of each of the following conditions:
(a) Reckson, Crescent and Buyer shall have performed in all material
respects each of their respective agreements and covenants contained in or
contemplated by this Agreement (other than Section 5.13 hereof) that are
required to be performed by it at or prior to the Effective Time pursuant to the
terms hereof;
(b) the representations and warranties of Reckson, Crescent and Buyer
contained in Article IV hereof that are qualified by materiality shall be true
and correct in all respects as of the Closing Date, and the representations and
warranties contained in Article IV hereof that are not qualified by materiality
shall be true and correct in all material respects, except (i) to the extent
such representations and warranties speak as of an earlier date, in which case
they shall be true in all respects as of such earlier date, (ii) as otherwise
contemplated by this Agreement and (iii) as may result from any actions or
transactions by or involving the Company or any of its affiliates;
(c) the Company shall have received a certificate signed by the chief
executive officer, general partner or managing member, as the case may be, of
each of Reckson, Crescent and Buyer, dated the Closing Date, to the effect that,
to such officer's knowledge, the conditions set forth in Sections 6.2(a), 6.2(b)
and 6.2(d) hereof have been satisfied or waived; and
(d) the Company shall have received an opinion of Xxxxx & Xxxx LLP,
counsel to Reckson and Shaw, Pittman, Xxxxx & Xxxxxxxxxx, counsel to Crescent,
dated as of the Closing Date, reasonably satisfactory to the Company, that for
its taxable year ended December 31, 1997 and all subsequent taxable years ending
on or before the Closing Date, each of Reckson and Crescent was organized and
has operated in conformity with the requirements for qualification as a REIT
under the Code (with customary exceptions, assumptions and qualifications and
based on customary representations and covenants).
SECTION 6.3 Conditions to Obligations of the Buying Entities. The
obligations of Reckson, Crescent and Buyer to effect the Merger shall be further
subject to the satisfaction, or to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) the Company shall have performed in all material respects each of
its agreements and covenants contained in or contemplated by this Agreement
(other than Section 5.13 hereof) that are required to be performed by it at or
prior to the Effective Time pursuant to the terms hereof;
(b) the representations and warranties of the Company contained in
Article III hereof that are qualified by materiality shall be true and correct
in all respects as of the Closing Date, and the representations and warranties
contained in Article III hereof that are not qualified by materiality shall be
true and correct in all material respects, except (i) to the extent such
representations and warranties speak as of an earlier date, they shall be true
in all respects as of such earlier date, (ii) as otherwise contemplated by this
Agreement and (iii) as may result from any actions or transactions by or
involving any of the Buying Entities or any of their respective affiliates;
(c) the Buying Entities shall have received a certificate signed by
the chief executive officer of the Company, dated the Closing Date, to the
effect that, to such officer's knowledge, the conditions set forth in Sections
6.3(a), 6.3(b) and 6.3(d) hereof have been satisfied or waived;
(d) the Buying Entities shall have received an opinion of Battle
Xxxxxx LLP, counsel to the Company, dated as of the Closing Date, in the form
previously delivered to the Buying Entities as to the qualification of the
Company as a REIT under the Code; and
(e) all consents, authorizations, orders and approvals of (or filings
or registration with) any governmental commission, board, other regulatory body
or third parties required in connection with the execution, delivery and
performance of this Agreement by the Company shall have been obtained or made,
except for filings in connection with the Merger and any other documents
required to be filed after the Effective Time, and except for (i) such consents,
authorizations, orders and approvals under the financing agreements related to
the properties located at or known as Corporate Center and 2800 North Central
and (ii) such consents, authorizations, orders and approvals which, if not
obtained or made, would not in the aggregate have a Material Adverse Effect on
the Company, Reckson, Crescent and their respective Subsidiaries, taken as a
whole.
(f) all consents, authorizations and approvals required to waive any
default which may arise as a result of the Merger under the agreement set forth
in Schedule 6.3(f) of the Company Disclosure Schedule shall have been obtained.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether before or after the parties hereto
have obtained stockholder approval:
(a) by the mutual written consent of the Company and the Buying
Entities;
(b) by either the Company, on the one hand, or the Buying Entities,
on the other hand, if the Merger has not been consummated by March 30, 1999, or
such other date, if any, as the Company, on the one hand, and the Buying
Entities, on the other hand, shall agree upon (the "Outside Termination Date");
provided that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date;
(c) by either the Company, on the one hand, or the Buying Entities,
on the other hand, if there shall be any law or regulation that makes
consummation of the Merger illegal or if any judgment, injunction, order or
decree enjoining the Buying Entities or the Company from consummating the Merger
is entered and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by the Buying Entities, (i) upon a material breach of any
covenant or agreement of the Company set forth in this Agreement which remains
uncured for twenty (20) business days after notice of such breach has been
delivered by the Buying Entities to the Company, or (ii) if any representation
or warranty of the Company shall become untrue, in either case such that the
conditions set forth in Section 6.3(a) hereof or Section 6.3(b) hereof, as the
case may be, would be incapable of being satisfied;
(e) by the Company, (i) upon a material breach of any covenant or
agreement of any of the Buying Entities set forth in this Agreement which
remains uncured for twenty (20) business days after notice of such breach has
been delivered by the Company to the Buying Entities, or (ii) if any
representation or warranty of Reckson Operating Partnership, Crescent Operating
Partnership or Buyer shall become untrue, in either case such that the
conditions set forth in Section 6.2(a) hereof or Section 6.2(b) hereof, as the
case may be, would be incapable of being satisfied;
(f) by the Company, if the Board of Directors of the Company
determines to accept an Acquisition Proposal; provided, however, that in order
for the termination of this Agreement pursuant to this Section 7.1(i) to be
deemed effective, the Company shall have complied with the provisions contained
in Section 5.4 hereof, and shall simultaneously make payment of all amounts due
under 7.3 hereof;
(g) by Buyer, if prior to the Company Special Meeting, the Board of
Directors of the Company (i) shall have withdrawn or modified or amended (or
publicly announced an intention to withdraw) in any manner adverse to Buyer its
approval or recommendation of the Merger; (ii) makes any recommendation with
respect to any Acquisition Proposal other than a recommendation to reject such
Acquisition Proposal; (iii) enters into any agreement which would result in
consummation of an Acquisition Proposal other than this Agreement; or (iv)
resolves to do any of the foregoing; or
(h) by the Company or the Buyer, if the stockholders of the Company
fail to approve and adopt this Agreement and the Merger at the Company Special
Meeting or any postponement thereof.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
SECTION 7.2 Effect of Termination.
(a) Except for any breach of this Agreement by any party hereto
(which breach and liability therefor shall not be affected by the termination of
this Agreement), if this Agreement is terminated pursuant to Section 7.1 hereof,
then this Agreement shall become void and of no effect with no liability on the
part of any party hereto; provided that the agreements contained in Sections
7.2, 7.3, 8.2, 8.4 hereof and the second proviso to the first sentence of
Section 5.3 hereof shall survive the termination hereof; and provided further
that the Confidentiality Agreements shall remain in full force and effect.
(b) Buyer agrees that neither the Company nor its directors,
officers, employees, representatives or agents, nor any Person who shall make an
Acquisition Proposal shall be deemed, by reason of the making of such proposal
or any actions taken in connection with it not otherwise in violation of this
Agreement, to have tortiously or otherwise wrongfully interfered with or caused
a breach of this Agreement, or other agreements, instruments and documents
executed in connection herewith, or the rights of Buyer or any of its affiliates
hereunder.
SECTION 7.3 Fees and Expenses.
(a) If this Agreement shall have been terminated (i) pursuant to
Section 7.1(f) or 7.1(g) hereof or (ii) pursuant to Section 7.1(h) hereof and,
at the time of such stockholder vote, an Acquisition Proposal shall have been
publicly announced and not withdrawn, terminated or lapsed, which provides for
consideration per share of Common Stock for all such shares which is greater
than $24 and which is reasonably capable of being financed by the Person making
such proposal or (iii) pursuant to Section 7.1(h) in circumstances where clause
(ii) above does not apply, then the Company shall, promptly, but in no event
later than one business day after the termination of this Agreement (or in the
case of clause (i) above by reason of a termination pursuant to Section 7.1(f)
hereof, simultaneously with such termination), pay each of Reckson and Crescent
an amount equal to the Applicable Break-Up Fee (as defined hereafter); provided
that none of Reckson, Crescent or Buyer was in material breach of any of its
representations, warranties, covenants or agreements hereunder at the time of
termination. Only one fee in an amount not to exceed the amount of the
Applicable Break-up Fee shall be payable to each of Reckson and Crescent
pursuant to this Section 7.3(a). Payment of the Applicable Break-Up Fee shall be
made, as directed by the Party entitled thereto, by wire transfer in immediately
available funds promptly, but in no event later than two (2) business days
following such termination. Each "Applicable Break-Up Fee" shall be an amount
equal to the lesser of (x) $9 million in the case of clause (i), $4.5 million in
the case of clause (ii) and $1.75 million in the case of clause (iii) plus, in
the case of a Break-Up Fee payable pursuant to clause (i) or (ii) above, the
Expense Amount (as defined hereafter) (the "Base Amount") and (y) the maximum
amount that can be paid to the party entitled to the Applicable Breakup Fee in
the year in which this Agreement is terminated (the "Termination Year") and in
all relevant taxable years thereafter without causing it to fail to meet the
requirements of sections 856(c)(2) and (3) of the Code (the "REIT Requirements")
for such year, determined as if the payment of such amount did not constitute
income described in sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by independent accountants to the party
entitled to the Applicable Breakup Fee. Notwithstanding the foregoing, in the
event the party entitled to the Applicable Breakup Fee receives a ruling from
the Internal Revenue Service (a "Break-Up Fee Ruling") holding that such party's
receipt of the Base Amount would either constitute Qualifying Income or would be
excluded from gross income within the meaning of the REIT Requirements, such
party's Applicable Break-Up Fee shall be an amount equal to the Base Amount. If
the amount payable for the Termination Year to the party entitled to the
Applicable Break-up Fee under the preceding sentence is less than the Base
Amount, the Company shall place the remaining portion of the Base Amount in
escrow and shall not release any portion thereof to such party unless and until
the Company receives either of the following: (i) a letter from such party's
independent accountants indicating that additional amounts can be paid at that
time to such party without causing such party to fail to meet the REIT
Requirements for any relevant taxable year, in which event the Company shall pay
to such party such amount, or (ii) a Break-Up Fee Ruling, in which event the
Company shall pay to such party the unpaid Base Amount. The Company's obligation
to pay any unpaid portion of either party's Applicable Break-Up Fee shall
terminate three years from the date of this Agreement and the Company shall have
no obligation to make any further payments notwithstanding that the entire Base
Amount relating to such Applicable Break-Up Fee has not been paid as of such
date. The "Expense Amount" relating to each Applicable Break-Up Fee shall be the
amount of actual, direct out-of-pocket expenses incurred by the party entitled
to the Applicable Break-Up Fee in connection with the transactions contemplated
by this Agreement; provided, however, in no event shall the Expense Amount
relating to each Applicable Break-Up Fee exceed $1.75 million in the aggregate.
(b) Except as provided otherwise in this Section 7.3, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses.
(c) In the event of a suit by any party hereto for a breach of this
Agreement, the prevailing party shall be entitled to actual, out-of- pocket
litigation expenses incurred by such prevailing party in such action.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement to
any party hereunder shall be in writing and deemed given upon (a) personal
delivery, (b) transmitter's confirmation of a receipt of a facsimile
transmission, (c) confirmed delivery by a standard overnight carrier or when
delivered by hand or (d) when received in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by notice given hereunder):
If to Reckson to:
Reckson Associates Realty Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx, General Counsel
with a copy to:
Xxxxx & Wood LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx Xx., Esq.
Xxxxx X. Xxxxx, Esq.
If to Crescent to:
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxx X. Xxxx, Esq.
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Fax: (000) 000-0000
and with a copy to:
Shaw, Pittman, Xxxxx & Xxxxxxxxxx
0000 X. Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
If to Buyer, to:
Metropolitan Partners LLC
c/o Reckson Associates Realty Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
with a copy to:
Metropolitan Partners LLC
c/o Crescent Real Estate Equities Company
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to the Company, to:
Tower Realty Trust, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
and with a copy to:
Battle Xxxxxx L.L.P.
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
SECTION 8.2 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other representations, warranties and covenants contained herein which by their
terms are to be performed in whole or in part, or which prohibit actions,
subsequent to the Effective Time, shall survive the Merger in accordance with
their terms.
SECTION 8.3 Interpretation. References in this Agreement to
"reasonable best efforts" shall not require a Person obligated to use its
reasonable best efforts to incur other than de minimis out-of-pocket expenses or
indebtedness in connection with such obligation under this Agreement, including
to obtain any consent of a third party or, except as expressly provided herein,
to institute litigation. References herein to the "knowledge of the Company"
shall mean the actual knowledge of the officers (as such term is defined in Rule
3b-2 promulgated under the Exchange Act) of the Company or its Subsidiaries, or
such knowledge that such officers would have had but for the gross negligence or
bad faith of such officers. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." The phrase "made available" when used in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. As used
in this Agreement, the terms "affiliate(s)" and "associates" shall have the
meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation of
this Agreement. Any matter disclosed pursuant to any Schedule of the Company
Disclosure Schedule or the Buyer Disclosure Schedule shall not be deemed to be
an admission or representation as to the materiality of the item so disclosed.
SECTION 8.4 Amendments, Modification and Waiver.
(a) Except as may otherwise be provided herein, any provision of this
Agreement may be amended, modified or waived by the parties hereto, by action
taken by or authorized by their respective Board of Directors, prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company and the Buying Entities or,
in the case of a waiver, by the party against whom the waiver is to be
effective; provided that after the adoption of this Agreement by the
stockholders of the Company, no such amendment shall be made except as allowed
under applicable law.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.5 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 8.6 Specific Performance. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
SECTION 8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof and except to the extent that the validity and effectiveness of the
Merger are required to be governed by the laws of the State of Maryland or the
State of Delaware) as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies. Each of the Company
and the Buying Entities hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State of New York and
of the United States of America located in the State of New York (the "New York
Courts") for any litigation arising out of or relating to this Agreement or the
Transactions (and agrees not to commence litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in any inconvenient forum.
SECTION 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions are not affected in any manner materially adverse
to any party hereto. 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 a mutually acceptable manner.
SECTION 8.9 Third Party Beneficiaries. This Agreement is solely for
the benefit of the Company and its successors and permitted assigns, with
respect to the obligations of Buyer under this Agreement, and for the benefit of
the Buying Entities, and their respective successors and permitted assigns, with
respect to the obligations of the Company under this Agreement, and this
Agreement shall not, except to the extent necessary to enforce the provisions of
Section 5.6 hereof be deemed to confer upon or give to any other third party any
remedy, claim, liability, reimbursement, cause of action or other right.
SECTION 8.10 Entire Agreement. This Agreement, including any exhibits
or schedules hereto, and the Confidentiality Agreement, constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements or understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
SECTION 8.11 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be deemed an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
TOWER REALTY TRUST, INC.
By: /s/ Xxxxxx X. Xxx
---------------------------------
Name: Xxxxxx X. Xxx
Title: Executive Vice President &
Chief Operating Officer
METROPOLITAN PARTNERS LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title:
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President &
Chief Operating Officer
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President,
Law & Secretary
