EXHIBIT 4.2
PREFERRED SECURITIES PURCHASE AGREEMENT
among
CAPITAL TRUST,
CT CONVERTIBLE TRUST I
and
INVESTORS NAMED THEREIN
July 27, 1998
730804.14
TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF SECURITIES............................2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS.............2
2.1 Company Organization.......................................2
2.2 Company SEC Reports and Filings............................2
2.3 Company Financial Statements; Material Adverse Changes.....3
2.4 Company Capitalization.....................................4
2.5 Company Subsidiaries.......................................4
2.6 Trust Organization; Authorization, etc.....................4
2.7 Consents and Approvals.....................................5
2.8 Absence of Defaults, Conflicts, etc........................6
2.9 Compliance with Law........................................6
2.10 Pending Actions............................................6
2.11 Private Offering; Integration..............................6
2.12 Brokerage..................................................7
2.13 Subordination..............................................7
2.14 Liabilities................................................7
2.15 Real Property..............................................7
2.16 Environmental Laws.........................................7
2.17 Material Facts.............................................8
2.18 Investment Company Act.....................................8
2.19 Tax Matters................................................8
2.20 Reservation and Valid Issuance of Shares...................8
2.21 Preferred Securities Guarantee.............................8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS............9
3.1 Certain Representations and Warranties.....................9
3.2 Additional Representations and Warranties..................9
SECTION 4. COVENANTS OF THE COMPANY..................................10
4.1 Tax Matters...............................................10
4.2 Additional Matters........................................10
SECTION 5. OFFERORS' CLOSING CONDITIONS..............................10
5.1 Compliance with Agreement.................................10
5.2 Each Investor to Close....................................10
SECTION 6. INVESTORS' CLOSING CONDITIONS.............................10
6.1 No Material Adverse Effect................................11
6.2 Representations and Warranties............................11
6.3 Compliance with Agreement.................................11
6.4 Officer's and Regular Trustee's Certificate...............11
6.5 Approval of Proceedings...................................11
6.6 Injunction................................................11
6.7 Additional Agreements.....................................12
6.8 Each Investor to Close....................................12
6.9 Opinions..................................................12
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Page
SECTION 7. INDEMNIFICATION...........................................14
7.1 Indemnification Generally.................................14
7.2 Indemnification Procedures for Third Party Claims.........14
SECTION 8. INTERPRETATION OF THIS AGREEMENT..........................15
8.1 Terms Defined.............................................15
8.2 Governing Law.............................................17
8.3 Paragraph and Section Headings............................17
SECTION 9. MISCELLANEOUS.............................................17
9.1 Expenses..................................................17
9.2 Notices...................................................17
9.3 Survival..................................................19
9.4 Entire Agreement; Amendment and Waiver....................19
9.5 Counterparts..............................................19
9.6 Successors and Assigns....................................19
SCHEDULES
Schedule 2.3(b) Company Financial Statements; Material Adverse Change
Schedule 2.6(a) Agreements of the Trust
Schedule 2.14 Liabilities
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Co-Investment Agreement
Exhibit C Opinion of Richards, Layton & Finger, P.A.
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PREFERRED SECURITIES PURCHASE AGREEMENT
This PREFERRED SECURITIES PURCHASE AGREEMENT (this
"Agreement") is made as of July 27, 1998 among Capital Trust, a California
business trust (the "Company"), CT Convertible Trust I, a Delaware statutory
business trust (the "Trust" and together with the Company, the "Offerors"), as
issuer, and Vornado Realty L.P., a Delaware limited partnership ("VRLP"), EOP
Operating Limited Partnership, a Delaware limited partnership ("EOPLP"), Mellon
Bank N.A., as trustee for General Motors Hourly-Rate Employes Pension Trust, a
New York trust ("Hourly GM Trust"), and Mellon Bank N.A., as trustee for General
Motors Salaried Employes Pension Trust, a New York trust ("Salaried GM Trust,
and together with the Hourly GM Trust, the "GM Trust"; each of VRLP, EOPLP and
the GM Trust being referred to herein as an "Investor" and collectively as the
"Investors"), as purchasers.
PRELIMINARY STATEMENT
The Trust is a statutory business trust organized under the
Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38,
Title 12, of the Delaware Code, 12 Del. C. Sections 3801 et seq.) pursuant to
the Declaration of Trust, dated and effective as of July 28, 1998, by the
Company and the Trustees as defined therein and the holders, from time to time,
of undivided beneficial interests in the assets of the Trust (the
"Declaration"). The Offerors confirm their agreement with the Investors, with
respect to the offer and sale by the Trust and the purchase by the Investors of
$150,000,000 in aggregate liquidation amount of 8.25% Step Up Convertible Trust
Preferred Securities (Liquidation Amount $1,000 per Security) representing
undivided beneficial interests in the assets of the Trust (the "Preferred
Securities"). The definitions of certain capitalized terms used herein are set
forth in Section 8.1. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned such terms in the Declaration.
The Preferred Securities will be guaranteed by the Company,
with respect to distributions and amounts payable upon liquidation or redemption
and otherwise pursuant to the Preferred Securities Guarantee Agreement, dated as
of July 28, 1998 of the Company (the "Preferred Securities Guarantee").
The entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities") and will be used by
the Trust to purchase $154,650,000 in aggregate principal amount of 8.25% Step
Up Convertible Junior Subordinated Debentures due September 30, 2018 (the
"Subordinated Debentures") issued by the Company. The Preferred Securities and
the Common Securities will be issued pursuant to the Declaration. The
Subordinated Debentures will be issued pursuant to the Indenture between the
Company and Wilmington Trust Company (the "Indenture") and dated as of July 28,
1998.
The Preferred Securities, the Preferred Securities Guarantee
and the Subordinated Debentures are collectively referred to herein as the
"Preferred Instruments." The Declaration, the Indenture, the Preferred
Securities Guarantee and this Agreement are hereinafter referred to collectively
as the "Operative Documents."
The Preferred Securities are offered and sold to the Investors
without registration under the Securities Act, in reliance upon exemptions
therefrom, and Investors may only resell or otherwise transfer such Preferred
Securities if such Preferred Securities are hereafter registered under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available.
The parties hereto desire that the foregoing transaction be
subject to the terms and conditions set forth herein. Accordingly, the parties
agree as follows:
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SECTION 1. PURCHASE AND SALE OF SECURITIES
-------------------------------
(a) Subject to the terms and conditions set forth in this
Agreement and in reliance upon representations and warranties contained in this
Agreement, the Trust agrees to sell to the Investors, and each of the Investors
agrees, severally and not jointly, to purchase from the Trust, at a purchase
price of $970 per Preferred Security, the number of Preferred Securities set
forth opposite its name below:
Applicable Portion
Investor Number of Preferred Securities Purchase Price
-------- ------------------------------ ------------------
EOPLP 50,000 $48,500,000
VRLP 50,000 $48,500,000
GM Trust 50,000 $48,500,000
(b) Such sale and purchase shall be effected at the Closing
Time when deliveries of the certificates, duly registered in the Investors'
names evidencing the Preferred Securities being purchased by them, shall be made
against delivery by the Investors to the Trust of the aggregate purchase price
therefor by wire transfer(s) of immediately available funds to such account as
the Trust shall designate prior to the Closing Time.
(c) The closing (the "Closing") of such sale and purchase
shall take place at 11:00 A.M., New York City time, on July 28, 1998, or at such
other time not later than five business days after such date as the Investors
and the Offerors agree to in writing (such time and date of payment and delivery
being hereinafter referred to as the "Closing Time"), at the offices of Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022, or at such other
location as the Investors and the Offerors shall select and agree to.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS
----------------------------------------------
(a) The Offerors, jointly and severally, represent and warrant
to the Investors as of the date hereof and as of the Closing Time referred to in
Section (1)(c) hereof, and agree with the Investors as follows:
2.1 Company Organization
--------------------
(a) The Company has been duly created and is validly existing
as a business trust under the laws of the State of California, has the trust
power and authority to own, lease and operate its properties and to conduct its
business as described in the SEC Reports and Filings (as defined below), and is
duly qualified to transact business in each jurisdiction in which such
qualification is required, whether by reason of the conduct of its business or
its ownership or leasing of property, except where the failure to be so
qualified would not have a Material Adverse Effect (as hereinafter defined). The
Company is not required to make any submissions or filings with any State in
order to maintain its valid existence or good standing.
2.2 Company SEC Reports and Filings
(a) The Company has caused to be delivered to each of the
Investors copies of the following, without exhibits thereto (collectively, the
"SEC Reports and Filings"):
(i) The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (File No. 1-8063), as filed with the
Commission on February 26, 1998, and amended by the Company's Annual Report on
Form 10-K/A, as filed with the Commission on April 30, 1998;
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(ii) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1998, as filed with the Commission on May 14,
1998;
(iii) The Company's Current Reports on Form 8-K dated
February 9, 1998, February 27, 1998, January 1, 1998, March 12, 1998, April 21,
1998, May 14, 1998, June 2, 1998, June 16, 1998, and June 30 1998 as filed with
the Commission, respectively, on February 23, 1998, March 13, 1998, March 18,
1998, March 19, 1998, April 23, 1998, May 22, 1998, June 12, 1998, June 24,
1998, and July 13, 1998.
(iv) The Company's registration statement on Form S-1
(File No. 333-37271), as filed with the Commission on October 6, 1997, as
amended by Amendments No. 1 and 2 thereto, as filed with the Commission on
October 13, 1997 and December 9, 1997, respectively, the related registration
statement on Form S-1 with respect to the increase in the offering size, as
filed with the Commission on December 10, 1997, and the final form of prospectus
constituting Part I of such registration statements as filed with the Commission
on December 11, 1997; and
(v) The registration statement on Form S-4 of the
Company's wholly-owned subsidiary, Capital Trust, Inc. (File No. 333-21777), as
filed with the Commission on May 14, 1998.
(b) The SEC Reports and Filings, when filed, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder. None of the SEC Reports and Filings, at the time of filing contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances in which they were made.
2.3 Company Financial Statements; Material Adverse Changes
------------------------------------------------------
(a) The audited consolidated balance sheet of the Company as
at December 31, 1997 and the unaudited consolidated balance sheets of the
Company as at March 31, 1998 included in the SEC Reports and Filings fairly
present in all material respects the consolidated financial position of the
Company and its Subsidiaries (as defined below) at the dates thereof, and the
related consolidated statements of operations, equity and cash flows for the
year ended December 31, 1997 and the three months ended March 31, 1998 included
in the SEC Reports and Filings fairly present in all material respects the
results of operations and other information therein of the Company and its
Subsidiaries for the respective periods indicated (except that the interim
reports are subject to adjustments customary in nature and amount which might be
required as a result of year end audit and except as otherwise stated therein)
(collectively, the "Financial Statements"). All such Financial Statements,
including the schedules and notes thereto, were prepared in accordance with
generally accepted accounting principles ("GAAP") applied consistently
throughout the periods involved, except that the interim reports are subject to
customary adjustments which might be required as a result of year end audit and
except as otherwise stated therein.
(b) Except as set forth on Schedule 2.3(b), since December 31,
1997, (A) there has been no material adverse change, and no development
involving a prospective material adverse change, in or affecting the management,
assets, business, business prospects, earnings or condition (financial or
otherwise) of the Trust (a "Trust Material Adverse Effect") or the Company and
its Subsidiaries considered as one enterprise (a "Company Material Adverse
Effect," together with a Trust Material Adverse Effect, a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B) there
have been no transactions entered into by the Trust or the Company or any
Subsidiary which are material with respect to the Trust or the Company and its
Subsidiaries considered as one enterprise, other than those in the ordinary
course of business, and (C) there has not been any material change in the total
assets, except assets acquired in the ordinary course of business, or long term
debt of the Company. Neither the Trust nor the Company nor any of its
Subsidiaries has sustained since December 31, 1997 any material loss or
interference with its business from fire, explosion, flood
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or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree.
2.4 Company Capitalization
----------------------
(a) The authorized, issued and outstanding shares of
beneficial interest in the Company are set forth in the most recent Financial
Statements, since the date of which there has been no change in the consolidated
capitalization of the Company and its Subsidiaries (other than changes in
outstanding Common Shares resulting from share option plan transactions and
changes in shareholders equity resulting from changes in retained earnings). All
the outstanding shares of beneficial interest in the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.
(b) There are no Common Shares issuable upon exercise or
conversion of any security outstanding of the Company nor any rights, options or
warrants outstanding or other agreements to acquire Common Shares nor is the
Company contractually obligated to purchase, redeem or otherwise acquire any of
its outstanding Common Shares except for Common Shares issuable upon (i)
conversion of the 9.5% class A preferred shares of beneficial interest, $1.00
par value, in the Company, and (ii) exercise of options and share units issued
under the Company's employee and trustee share plans.
2.5 Company Subsidiaries.
--------------------
Each of the Persons of which a majority of the outstanding
voting equity securities or interests are owned, directly or indirectly, by the
Company (each a "Subsidiary" and collectively "Subsidiaries") has been duly
incorporated or organized and is validly existing as a corporation or
partnership in good standing under the laws of the jurisdiction of its
incorporation or organization, has the corporate or partnership power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted, and is duly qualified as a foreign corporation or
partnership to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing will not have a Company Material Adverse Effect.
2.6 Trust Organization; Authorization, etc.
--------------------------------------
(a) The Trust has been duly created and is validly existing
and in good standing as a business trust under the Delaware Act with the trust
power and authority to own its properties and to conduct its business and to
enter into and perform its obligations under this Agreement, the Preferred
Securities, the Common Securities, and the Declaration. The Trust is duly
qualified to transact business and is in good standing in each jurisdiction in
which such qualification is necessary, except to the extent that the failure to
so qualify or be in good standing would not have a Material Adverse Effect; and
except as set forth on Schedule 2.6(a), the Trust is not a party to or otherwise
bound by any agreement. The Trust is and will under current law be classified
for United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and as of the Closing Time, the Trust is
and will be treated as a subsidiary of the Company pursuant to GAAP.
(b) This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and is a valid and legally binding
obligation of the Company and the Offerors, enforceable against the Offerors in
accordance with its terms except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity) (the "Bankruptcy Exceptions").
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(c) The Declaration and the Indenture have been duly
authorized by the Company and, to the Company's knowledge, have been duly
authorized by the other parties thereto, and, at the Closing Time, will have
been duly executed and delivered by the Company and, to the Company's knowledge
by the other parties thereto, and each will be a valid and legally binding
obligation of the Company, and to the Company's knowledge, of the other parties
thereto, enforceable against the parties thereto in accordance with its terms,
except to the extent that enforcement thereof may be limited by Bankruptcy
Exceptions.
(d) The Registration Rights Agreement and the Co-Investment
Agreement have been duly authorized by the Company and, at the Closing Time,
will have been duly executed and delivered by the Company and assuming the due
authorization, execution and delivery by the Investors, the Registration Rights
Agreement and the Co-Investment Agreement will, at the Closing Time, be valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent that enforcement thereof
may be limited by (i) Bankruptcy Exceptions or (ii) the effect of applicable
public policy on the enforceability of provisions relating to indemnification
and contribution.
(e) The Preferred Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Investors
pursuant to this Agreement against payment therefor as provided herein, will be
validly issued and fully paid and non-assessable undivided beneficial interests
in the assets of the Trust. The issuance of the Preferred Securities is not
subject to preemptive or other similar rights; and (subject to the terms of the
Declaration) holders of Preferred Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the laws of the State of Delaware.
(f) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor, will be validly issued and will represent undivided common
beneficial interests in the assets of the Trust. The issuance of the Common
Securities is not subject to preemptive or other similar rights; and, at the
Closing Time, all of the issued and outstanding Common Securities of the Trust
will be directly or indirectly owned by the Company, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equitable
right.
(g) The Preferred Securities Guarantee has been duly
authorized by the Company and, at the Closing Time, the Preferred Securities
Guarantee will have been duly executed and delivered by the Company and will
constitute a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions.
(h) The Subordinated Debentures have been duly authorized by
the Company and, at the Closing Time, the Subordinated Debentures will have been
duly executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Indenture, enforceable in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions.
2.7 Consents and Approvals
----------------------
No order, license, consent, authorization or approval of, or
exemption by, or the giving of notice to, or the registration with any
Governmental Authority, and no filing, recording, publication or registration in
any public office or any other place, was or is now required in connection with
the issuance and sale of the Preferred Instruments hereunder, except for (A)
such as may be required under the Securities Act, the Exchange Act or state
securities laws and (B) the filing of the Certificate of Trust with the
Secretary of State (which filing will be duly made).
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2.8 Absence of Defaults, Conflicts, etc.
-----------------------------------
The execution and delivery of the Operative Agreements, the
Registration Rights Agreement and the Co-Investment Agreement, the issuance,
sale and delivery of the Preferred Instruments and the consummation of the
transactions contemplated herein and therein do not and will not conflict with,
or result in a breach or violation of any of the terms, conditions or provisions
of, or constitute a default under, or permit the acceleration of rights under or
termination of, any of the Key Agreements and Instruments of the Company, any
Subsidiary or the Trust or result in the creation or imposition of any lien,
charge, encumbrance upon any property or assets of the Company, any Subsidiary
or the Trust, and will not result in any violation of the Organizational
Documents of the Company, any Subsidiary or the Trust, or any existing
Requirements of Law applicable to the Company, any Subsidiary or the Trust.
2.9 Compliance with Law
-------------------
(a) The Company is not in violation of any Requirements of Law
to which it is subject, which violation could reasonably be expected to result
in a Company Material Adverse Effect.
(b) The Company has all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to the
conduct of its business, which if violated or not obtained could reasonably be
expected to result in a Company Material Adverse Effect. The Company has not
finally been denied any application for any such licenses, permits, franchises
or other governmental authorizations necessary to its business.
2.10 Pending Actions
---------------
There is no action, suit, investigation or proceeding pending
or, to the Company's knowledge, threatened or contemplated against the Company
or any of its properties or assets by or before any Governmental Authority,
which questions the validity of the Operative Agreements, the issuance or
validity of the Preferred Securities or any action taken or to be taken pursuant
hereto or thereto, or which could reasonably be expected individually or in the
aggregate to result in any Material Adverse Effect.
2.11 Private Offering; Integration
-----------------------------
(a) None of the Offerors, their affiliates (as such term is
defined in Rule 501(b) under the Securities Act for any person or entity)
("Affiliates"), or any person acting on their or any of their Affiliates' behalf
has engaged, or will engage, in connection with the offering of the Preferred
Securities, in any communication or other form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities Act.
Based upon the representations of the Investors set forth in Section 3, the
offer, issuance and sale of the Preferred Securities in the manner contemplated
by this Agreement are exempt from the registration and prospectus delivery
requirements of the Securities Act, and have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.
(b) The Offerors have not, directly or indirectly, solicited
any offer to buy or offered to sell, and will not, directly or indirectly,
solicit any offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be integrated with
the sale of the Preferred Securities in a manner that would require the
Preferred Securities to be registered under the Securities Act.
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2.12 Brokerage
---------
There are no claims for brokerage commissions or finder's fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company or the
Trust with any other person.
2.13 Subordination
-------------
Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness (as defined in the Subordinated Debentures)
of the Company.
2.14 Liabilities
-----------
Except as set forth in Schedule 2.14, the Company and its
Subsidiaries have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent or otherwise) except for
liabilities or obligations reflected or reserved against in the preliminary
non-public unaudited consolidated balance sheet of the Company as at June 30,
1998 provided to each of the Investors and current liabilities incurred in the
ordinary and usual course of business consistent with the past practices of the
Company and its Subsidiaries since June 30, 1998 and that could not,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect. The Trust has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent or
otherwise).
2.15 Real Property
-------------
Except as otherwise disclosed in the SEC Reports and Filings,
and except as could not reasonably be expected to result in a Material Adverse
Effect (i) neither the Company nor any of its Subsidiaries owns any real
property; (ii) all of the leases under which the Company or any of its
Subsidiaries holds or uses real property or assets as a lessee are in full force
and effect, and neither the Company nor any of its Subsidiaries is in default in
respect of any of the terms or provisions of any of such leases and no claim has
been asserted by anyone adverse to any such party's rights as lessee under any
of such leases, or affecting or questioning any such party's rights to the
continued possession or use of the leased property or assets under any such
leases; and (iii) neither the Company nor any of its Subsidiaries has knowledge
of any pending or threatened condemnation, zoning change or other proceeding or
action that will in any manner affect the size or use of, improvements or
construction on or access to the leased properties of the Company or any of its
Subsidiaries.
2.16 Environmental Laws
------------------
Except as otherwise disclosed in the SEC Reports and Filings,
or as is not reasonably likely to result in a Material Adverse Effect:
(a) Each of the Company and its Subsidiaries is in compliance
with all applicable laws relating to pollution or the discharge of materials
into the environment, including common law relating to damage to property or
injury to persons ("Environmental Laws"). Each of the Company and its
Subsidiaries currently holds all governmental authorizations required under
Environmental Laws in order to conduct their businesses as described in the SEC
Reports and Filings, and none of the above has any basis to believe that any
such governmental authorization may be modified, suspended or revoked, or cannot
be renewed in the ordinary course of business;
(b) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, threatened release, or disposal of any material (including
radiation and noise), that could form the basis of any claim (whether by a
governmental authority or other person or entity) under Environmental Laws for
cleanup costs, damages, penalties, fines, or otherwise, against any of
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the Company or its subsidiaries, or against any person or entity whose liability
for such claim may have been retained by any of the Company or its subsidiaries,
whether by contract or law; and
(c) The Company and its Subsidiaries have made available to
the Investors and their counsel all studies, reports, assessments, audits and
other information in their possession or control relating to any pollution or
release, and, to the Company's knowledge, threatened release or disposal of
materials regulated under Environmental Laws on, at, under, from or transported
from any of their currently or formerly owned, leased or operated properties,
including, without limitation, all information relating to underground storage
tanks and asbestos containing materials.
2.17 Material Facts
--------------
This Agreement, the schedules furnished contemporaneously
herewith, and the other agreements, documents, certificates or written
statements furnished or to be furnished to the Investors, including the SEC
Reports and Filings, through the Closing Time by or on behalf of the Company in
connection with the transactions contemplated hereby, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein or herein, in light of the circumstances in
which they were made, not misleading.
2.18 Investment Company Act
----------------------
None of the Offerors is, and after giving effect to the
offering and sale of the Preferred Securities and the Subordinated Debentures,
none of the Offerors will be, an "investment company" or a "company controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act").
2.19 Tax Matters
-----------
(a) The Company is taxed under subchapter C of the Code as a
corporation for United States federal income tax purposes.
(b) The Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation.
(c) The Subordinated Debentures will be classified for United
States federal income tax purposes as indebtedness of the Company.
2.20 Reservation and Valid Issuance of Shares
----------------------------------------
The Common Shares issuable upon conversion of the Subordinated
Debentures and the Preferred Securities have been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Indenture and
the Declaration, will be duly and validly issued, fully paid and non-assessable
and free of restrictions on transfer other than restrictions on transfer under
the Indenture and under applicable federal and state securities laws. Holders of
Common Shares shall not be personally liable as such for any liabilities, debts
or obligations of, or claims against, the Company, whether arising before or
after such holder became the owner or holder of the Common Shares.
2.21 Preferred Securities Guarantee
------------------------------
The Preferred Securities Guarantee, when taken together with
the Company's obligations under the Subordinated Debentures, the Declaration and
the Indenture, including its obligations to pay costs, expenses, debts and other
obligations of the Trust, provides a full and unconditional guarantee on a
subordinated basis by
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the Company of amounts due on the Preferred Securities and the Subordinated
Debentures. The obligations of the Company under the Preferred Securities
Guarantee and the Subordinated Debentures are subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
-----------------------------------------------
3.1 Certain Representations and Warranties
--------------------------------------
Each Investor, severally and not jointly, represents and
warrants to the Offerors as follows:
(a) It is acquiring the Preferred Securities for its own
account for investment and not with a view towards the resale, transfer or
distribution thereof, nor with any present intention of distributing the
Preferred Securities, but subject, nevertheless, to any requirement of law that
the disposition of the Investor's property shall at all times be within the
Investor's control, and without prejudice to the Investor's right at all times
to sell or otherwise dispose of all or any part of such securities under a
registration under the Securities Act or under an exemption from said
registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver
this Agreement and to perform its obligations hereunder.
(c) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement shall
constitute the valid and binding obligations of such Investor, enforceable
against such Investor in accordance with its terms, except as such enforcement
may be limited by Bankruptcy Exceptions.
(d) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of such Investor.
(e) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Trust and Company as contemplated by this Agreement, and is
able to bear the economic risk of such investment for an indefinite period of
time. It has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of the Company and the Trust concerning the terms
and conditions of this Agreement and the purchase of the Preferred Securities
contemplated hereby and the business and financial condition of the Company and
the Trust.
(f) It is an "accredited investor" as such term is defined in
Rule 501 under the Securities Act.
(g) It acknowledges that the Preferred Securities have not
been registered under the Securities Act and may not be offered or sold within
the United States, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. It has not
offered or sold, and will not offer or sell, the Preferred Securities within the
United States, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
3.2 Additional Representations and Warranties
-----------------------------------------
(a) VRLP represents and warrants to the Offerors that it is a
limited partnership, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
730804.14
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(b) EOPLP represents and warrants to the Offerors that it is a
limited partnership, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(c) GM Trust represents and warrants to the Offerors that each
of its constituents is a trust, duly formed and validly existing under the laws
of the State of New York.
SECTION 4. COVENANTS OF THE COMPANY
------------------------
4.1 Tax Matters
-----------
(a) The Company shall continue to file tax returns under
subchapter C of the Internal Revenue Code as a corporation for federal income
tax purposes as long as any of (i) the Investors, (ii) any Affiliate of Vornado
Realty Trust or VRLP, (iii) any Affiliate of Equity Office Properties Trust or
EOPLP. or (iv) any Affiliate of the GM Trust are holders of Preferred
Securities, Subordinated Debentures or Common Shares.
(b) The Company and the Trust shall treat the Subordinated
Debentures as indebtedness for United States federal income tax purposes.
4.2 Additional Matters.
------------------
(a) The Company shall promptly notify the Investors upon the
commencement by the Company of a repurchase program of Shares, a tender offer
for its outstanding Shares or other redemption or repurchase of its outstanding
Shares.
(b) The Company shall increase the number of trustees
comprising the board of trustees of the Company to ten and fill all vacancies
created thereby by September 30, 1998 and shall not decrease such number for so
long as (i) VRLP or any Affiliate of Vornado Realty Trust or VRLP, or (ii) GM
Trust or any Affiliate of GM Trust are holders of Preferred Securities or
Subordinated Debentures.
SECTION 5. OFFERORS' CLOSING CONDITIONS
----------------------------
The obligation of the Offerors to sell the Preferred
Securities at the Closing Time, as provided in Section 1 hereof shall be subject
to:
5.1 Compliance with Agreement
-------------------------
The Investors shall have performed and complied with in all
material respects all of their obligations and conditions contained in this
Agreement which are required to be performed or complied with by the Investors
prior to or at the Closing Time.
5.2 Each Investor to Close
All of the Investors shall have purchased and paid for the
Preferred Securities at the Closing Time pursuant to Section 1 hereof.
SECTION 6. INVESTORS' CLOSING CONDITIONS
-----------------------------
The obligation of the Investors to purchase and pay for the
Preferred Securities at the Closing Time, as provided in Section 1 hereof, shall
be subject, in their discretion, to the performance by the Offerors of
730804.14
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all of their agreements theretofore to be performed hereunder and to the
satisfaction, prior thereto or concurrently therewith, of the following further
conditions:
6.1 No Material Adverse Effect
--------------------------
At the Closing Time, there shall not have occurred, since
December 31, 1997, any development or event which has resulted in or could be
expected to result in a Material Adverse Effect. On or after the date hereof
there shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or on Nasdaq; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by federal or New York State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war.
6.2 Representations and Warranties
------------------------------
The representations and warranties of the Offerors contained
in this Agreement shall be true and correct at and as of the Closing Time as
though such representations and warranties were made at such time (unless any
such representation and warranty is made as of a specific date and then it shall
be true and correct as of such date).
6.3 Compliance with Agreement
-------------------------
The Offerors shall have performed and complied in all material
respects with all of their obligations and conditions contained in this
Agreement which are required to be performed or complied with by the Offerors
prior to or at the Closing Time.
6.4 Officer's and Regular Trustee's Certificate
-------------------------------------------
The Investors shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, and a certificate
of Regular Trustee of the Trust, dated as of the Closing Time, to the effect
that, (i) there has been no Material Adverse Effect or development or event
which could be expected to result in a Material Adverse Effect, (ii) the
representations and warranties of the Offerors contained in this Agreement are
true and correct with the same force and effect as though expressly made at and
as of the Closing Time, and (iii) the Offerors have complied with all
obligations and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Time, and as to such other matters as the
Investors may reasonably request.
6.5 Approval of Proceedings
-----------------------
All proceedings to be taken in connection with the
transactions contemplated by the Operative Documents, the Registration Rights
Agreement, the Co-Investment Agreement and the other Preferred Instruments and
all documents incident thereto, shall be satisfactory in form and substance to
the Investors and their counsel; and the Investors shall have received copies of
all documents or other evidence which they and such counsel may request in
connection with such transactions and of all records of corporate proceedings in
connection therewith in form and substance satisfactory to the Investors, and
their counsel.
6.6 Injunction
----------
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or in the other
Operative Documents or any of them not be consummated as herein or therein
provided.
730804.14
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6.7 Additional Agreements.
---------------------
The Company and each Investor or certain Affiliates thereof
shall have entered into this Agreement, the Registration Rights Agreement and
the Co-Investment Agreement. The Company and the trustees shall have entered
into the Indenture, the Declaration and the Preferred Securities Guarantee.
6.8 Each Investor to Close
----------------------
All of the Investors shall have purchased and paid for the
Preferred Securities at the Closing Time pursuant to Section 1 hereof.
6.9 Opinions
--------
(a) The Investors shall have received an opinion of counsel,
dated as of the Closing Time, of Greenberg Glusker Fields Claman & Machtinger
LLP, in form and substance satisfactory to the Investors to the effect that:
(i) The Company has been duly created and is validly
existing as a business trust under the laws of the State of California
with the trust power and authority to own its properties and conduct
its business as described in the SEC Reports and Filings.
(ii) The Indenture, this Agreement, the Registration
Rights Agreement and the Co-Investment Agreement have been duly
authorized by the Company and have been duly executed and delivered by
the Company, and constitute valid and legally binding obligations of
the Company and are enforceable against the Company in accordance with
their terms, subject, as to enforcement, to (i) Bankruptcy Exceptions,
and (ii) the effect of applicable public policy on the enforceability
of provisions relating to indemnification and contribution in the case
of the Indenture, this Agreement and the Registration Rights Agreement.
(iii) The Preferred Securities Guarantee has been
duly authorized by the Company, has been duly executed and delivered by
the Company and, constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its
terms, except to the extent that enforcement thereof may be limited by
Bankruptcy Exceptions.
(iv) The Subordinated Debentures have been duly
authorized, executed, issued and delivered by the Company, when duly
authenticated by the Trustee and delivered against payment therefor,
will constitute the valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be limited by
the Bankruptcy Exceptions.
(v) The Common Shares issuable upon the conversion of
the Subordinated Debentures and/or the Preferred Securities have been
duly authorized and reserved for issuance in accordance with the terms
of the Subordinated Debentures, the Indenture and the Declaration; such
Common Shares, when issued and delivered upon such conversion in
accordance with the terms of the Subordinated Debentures and the
Indenture and the Declaration, will be validly issued, fully paid and
non-assessable; and, as of the date hereof, the issuance of such Common
Shares upon the conversion of the Subordinated Debentures and/or the
Preferred Securities is not subject to any preemptive or similar
rights. Holders of Common Shares shall not be personally liable as such
for any liabilities, debts or obligations of, or claims against, the
Company, whether arising before or after such holder became the owner
or holder of the Common Shares.
730804.14
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In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of California and the
federal law of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of Richards, Layton & Finger, P.A. and Battle
Fowler LLP.
(b) The Investors shall have received an opinion of counsel,
dated as of the Closing Time, of Richards, Layton & Finger, P.A. in form set
forth in Exhibit C hereto.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of Delaware and federal
law of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of Greenberg Glusker Fields Claman & Machtinger LLP
and Battle Fowler LLP.
(c) The Investors shall have received an opinion of counsel,
dated as of the Closing Time, of Battle Fowler LLP, in form and substance
satisfactory to the Investors, to the effect that:
(i) The Company is duly qualified to transact
business in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified would not have
a Material Adverse Effect. The Company is not required to make any
submissions or filings with any state in order to maintain its valid
existence or good standing.
(ii) The execution, delivery and performance of the
Operative Documents, the Registration Rights Agreement and the
Co-Investment Agreement and the issuance and delivery of the Preferred
Instruments and the consummation of the transactions contemplated
herein and therein, and the compliance by each of the Offerors with
their respective obligations hereunder and thereunder, do not and will
not conflict with, result in a breach or violation of, or constitute a
default under the Organizational Documents of the Company or any
Subsidiary or the terms of any Key Agreement and Instrument known to
such counsel and to which the Company or any Subsidiary is a party or
bound, or result in a violation of any Requirement of Law known to such
counsel to be applicable to the Company or any Subsidiary.
(iii) There is no claim, suit, action or legal,
administrative, arbitration or other proceeding or governmental
investigation pending, or threatened, against the Company, the Company
is not a target or subject of any pending or threatened criminal
investigation or proceeding, and the Company is not the subject of any
order, judgment, stipulation or decree, which has not been subsequently
reversed, suspended, vacated or satisfied.
(iv) All legally required proceedings in connection
with the authorization, issuance and validity of the Preferred
Securities and the sale of the Preferred Securities in accordance with
this Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Preferred Securities invalid)
have been taken and all legally required orders, consents or other
authorizations or approvals of any public boards or bodies in
connection with the authorization, issuance and the sale of the
Preferred Securities in accordance with this Agreement (other than in
connection with or in compliance with the provisions of the securities
laws of any jurisdictions, as to which no opinion need be expressed)
have been obtained and are in full force and effect.
(v) Based solely upon the factual representations and
warranties made by the Offerors and the Investors in the Purchase
Agreement, the offer, issue, sale and delivery of the Preferred
Securities in the manner contemplated in the Purchase Agreement does
not require registration under the Securities Act.
730804.14
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(vi) Neither the Company nor the Trust are, and after
giving effect to the purchase and sale of the Subordinated Debentures
and the Preferred Securities, neither of them will be, required to
register as an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of New York and federal
law of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of Greenberg Glusker Fields Claman & Machtinger LLP
and Richards, Layton & Finger, P.A.
(d) The Investors shall receive an opinion of Battle Fowler
LLP, special tax counsel to the Offerors, in form and substance satisfactory to
the Investors to the effect that:
(i) based on current law and the assumptions stated
or referred to therein, the Subordinated Debentures will be classified
for United States federal income tax purposes as indebtedness of the
Company, and
(ii) the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
Such opinion may be conditioned on, among other things, the
initial and continuing accuracy of the facts, financial and other information,
covenants and representations set forth in certificates of officers of the
Company and the Trust and other documents deemed necessary for such opinion.
SECTION 7. INDEMNIFICATION
---------------
7.1 Indemnification Generally
-------------------------
The Offerors on the one hand, and each Investor, on the other
hand (each an "Indemnifying Party"), shall indemnify the other from and against
any and all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, attorneys' fees and expenses) or deficiencies
resulting from any breach of a representation, warranty or covenant by the
Indemnifying Party and all claims, charges, actions or proceedings incident to
or arising out of the foregoing. Except with respect to third party claims being
defended in good faith or claims for indemnification with respect to which there
exists a good faith dispute, the Indemnifying Party shall satisfy its
obligations hereunder within thirty (30) days of receipt of a notice of claim
under this Section 7.1.
7.2 Indemnification Procedures for Third Party Claims
-------------------------------------------------
If a claim by a third party is made against a Person entitled
to indemnification under this Section (an "Indemnified Party") and such
Indemnified Party intends to seek indemnity with respect thereto from any
Indemnifying Party, such Indemnified Party shall give notice in writing as
promptly as reasonably practicable to each such Indemnifying Party of any action
commenced against or by it in respect of which indemnity may be sought
hereunder, but failure to so notify an Indemnified Party shall not relieve such
Indemnifying Party from any liability that it may have otherwise than on account
of this indemnity agreement so long as such failure shall not have materially
prejudiced the position of the Indemnifying Party. Upon such notification, the
Indemnifying Party shall assume the defense of such action brought by a third
party, and after such assumption the Indemnified Party shall not be entitled to
reimbursement of any expenses incurred by it in connection with such action
except as described below. In any such action, any Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party shall have failed to promptly assume and thereafter vigorously conduct
such defense, (ii) the Indemnifying Party and the Indemnified Party shall have
mutually
730804.14
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agreed to the contrary or (iii) the named parties in any such action (including
any impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing or conflicting interests
between them. No Indemnifying Party, in the defense of a third party claim
shall, except with the consent of the Indemnifying Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent (which shall not be unreasonably withheld
or delayed by such Indemnifying Party), but if settled with such consent or if
there be final judgment for the plaintiff, the Indemnifying Party shall
indemnify the Indemnified Party from and against any loss, damage or liability
by reason of such settlement or judgment.
SECTION 8. INTERPRETATION OF THIS AGREEMENT
--------------------------------
8.1 Terms Defined
-------------
As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
Affiliates: shall have the meaning set forth in Section
2.11(a).
Bankruptcy Exceptions: shall have the meaning set forth in
Section 2.6(b).
Business Day: shall mean a day other than a Saturday, Sunday
or other day on which banking institutions in New York, New York are permitted
or required by any applicable law to close.
Certificate of Trust: shall mean the organizational document
filed on July 28, 1998 in Delaware with respect to the Trust.
Code: shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
Closing: shall mean the consummation of the purchase and sale
of the Preferred Securities described in Section 1(a).
Closing Time: shall have the meaning set forth in Section
1(b).
Co-Investment Agreement: shall mean the co-investment
agreement in the form attached hereto as Exhibit B.
Company: shall have the meaning set forth in the preamble
hereof.
Company Material Adverse Effect: shall have the meaning set
forth in Section 2.3(b).
Declaration: shall have the meaning set forth in the
preliminary statement hereof.
Delaware Act: shall have the meaning set forth in the
preliminary statement hereof.
Environmental Laws: shall have the meaning set forth in
Section 2.16(a).
EOPLP: shall have the meaning set forth in the preamble
hereof.
730804.14
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Financial Statements: shall have the meaning set forth in
Section 2.3(a).
GAAP: shall have the meaning set forth in Section 2.3(a).
GM Trust: shall have the meaning set forth in the preamble
hereof.
Governmental Authority: shall mean any nation or government,
any state or other political subdivision thereof, and any department, agency,
instrumentality, bureau, entity or official exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Indemnified Party: shall have the meaning set forth in Section
7.2.
Indemnifying Party: shall have the meaning set forth in
Section 7.1.
Indenture: shall have the meaning set forth in the preliminary
statement hereof.
Investors: shall have the meaning set forth in the preamble
hereof.
Key Agreements and Instruments: shall mean as to any Person
any indenture, mortgage, deed of trust, credit agreement, note or other evidence
of indebtedness, or other material agreement or instrument to which such Person
is a party or by which it is bound or, to which any of its property or assets is
subject.
Material Adverse Effect: shall have the meaning set forth in
Section 2.3(b).
1940 Act: shall have the meaning set forth in Section 2.18.
Offerors: shall have the meaning set forth in the preamble
hereof.
Operative Documents: shall have the meaning set forth in the
preliminary statement hereof.
Organizational Documents: shall mean as to any Person the
articles or certificate of incorporation, declaration of trust, bylaws,
partnership agreement or other organizational or governing documents of such
Person.
Person: shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
Preferred Instruments: shall have the meaning set forth in the
preliminary statement hereof.
Preferred Securities: shall have the meaning set forth in the
preliminary statement hereof.
Preferred Securities Guarantee: shall have the meaning set
forth in the preliminary statement hereof.
Registration Rights Agreement: shall mean the registration
rights agreement in the form attached hereto as Exhibit A.
Requirements of Law: means as to any Person, any domestic or
foreign and federal, state or local law, rule, regulation, statute or ordinance
or judgment, order, decree or determination of any arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
730804.14
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SEC Reports and Filings: shall have the meaning set forth in
Section 2.2(a).
Share: shall mean a beneficial interest in the Company.
Subordinated Debentures: shall have the meaning set forth in
the preliminary statement hereof.
Subsidiary or Subsidiaries: shall have the meaning set forth
in Section 2.5.
Trust: shall have the meaning set forth in the preamble
hereof.
Trust Material Adverse Effect: shall have the meaning set
forth in Section 2.3(b).
VRLP: shall have the meaning set forth in the preamble hereof.
8.2 Governing Law
-------------
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
principles of conflicts of law.
8.3 Paragraph and Section Headings
------------------------------
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof.
SECTION 9. MISCELLANEOUS
-------------
9.1 Expenses
--------
Each party to this Agreement shall bear its own respective
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and the agreements and transactions contemplated
hereby.
9.2 Notices. All notices or other communications under this
Agreement shall be sufficient if in writing and delivered by hand or sent by
telecopy, or sent, postage prepaid by registered, certified or express mail, or
by recognized overnight air courier service and shall be deemed given when so
delivered by hand or telecopied, or if mailed or sent by overnight courier
service, on the third (3rd) Business Day after mailing (one Business Day in the
case of express mail or overnight courier service) to the parties at the
following addresses:
(a) if to the Investors, to:
Vornado Realty L.P.
c/o Vornado Realty Trust
Park 80 West, Plaza II
Saddle Brook, New Jersey 07663
Attention: Joseph Macnow
Executive Vice President,
Finance and Administration
730804.14
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with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Alan J. Sinsheimer
EOP Operating Limited Partnership
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Stanley M. Stevens
Richard D. Kincaid
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza, Suite 1600
Chicago, Illinois 60606
Attention: Jonathan Wasserman
Mellon Bank N.A., as trustee for
General Motors Hourly-Rate Employes Pension Trust
Mellon Bank N.A., as trustee for
General Motors Salaried Employes Pension Trust
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: Bernadette Rist,
Legal Department
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Gerald S. Backman, P.C.
(b) if to the Company, to:
Capital Trust
605 Third Avenue
26th Floor
New York, New York 10016
Attention: John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas E. Kruger
730804.14
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(c) if to the Trust, to:
CT Convertible Trust I
c/o Capital Trust
605 Third Avenue
26th Floor
New York, New York 10016
Attention: John R. Klopp
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas E. Kruger
or at such other address as the addressee may have furnished in writing to the
sender as provided herein.
9.3 Survival
--------
All warranties, representations, and covenants made by the
Investors and the Offerors herein or in any certificate or other instrument
delivered by the Investors or the Offerors under this Agreement shall be
considered to have been relied upon by the Offerors or the Investors, as the
case may be, and shall survive all deliveries to the Investors of the Preferred
Securities, or payment by the Investors for such Preferred Securities,
regardless of any investigation made by the Offerors or the Investors, as the
case may be, or on the Offerors' or the Investors' behalf. All statements in any
such certificate or other instrument shall constitute warranties and
representations by the Offerors or the Investors, as the case may be, hereunder.
9.4 Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of each of the parties. This Agreement
and the agreements attached as Exhibits hereto constitute the entire
understandings of the parties hereto and supersede all prior agreements or
understandings with respect to the subject matter hereof between such parties.
This Agreement may be amended, and the observance of any term of this Agreement
may be waived, with (and only with) the written consent of the Offerors and the
Investors.
9.5 Counterparts
------------
This Agreement may be executed in one or more counterparts
with the same effect as if the parties executing the counterparts had each
executed one instrument as of the day and year first above written.
9.6 Successors and Assigns
----------------------
This Agreement and all of the provisions hereof, including all
of the rights of the Investors hereunder, shall inure to the benefit of the
parties hereto and their respective successors and assigns.
[The rest of this page intentionally left blank]
730804.14
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
OFFERORS:
CAPITAL TRUST
By: /s/ John R. Klopp
---------------------------------------------
Name: John R. Klopp
Title: Chief Executive Officer
CT CONVERTIBLE TRUST I
By: /s/ John R. Klopp
---------------------------------------------
Name: John R. Klopp
Title: Regular Trustee
INVESTORS:
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust,
its general partner
By: /s/ Debra L. Ferruzzi
-------------------------------------------
Name: Debra L. Ferruzzi
Title: Senior Vice President
VORNADO REALTY L.P.
By: Vornado Realty Trust,
its general partner
By: /s/ Michael D. Fascitelli
----------------------------------------
Name: Michael D. Fascitelli
Title: President
MELLON BANK N.A., as trustee for
General Motors Hourly-Rate Employes Pension Trust
By: /s/ Bernadette Rist
---------------------------------------------
Name: Bernadette Rist
Title: Authorized Signatory
730804.14
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MELLON BANK N.A., as trustee for
General Motors Salaried Employes Pension Trust
By: /s/ Bernadette Rist
---------------------------------------------
Name: Bernadette Rist
Title: Authorized Signatory
730804.14
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Schedule 2.3(b)
---------------
Company Financial Statements; Material Adverse Changes
(1) Two (2) revolving credit facilities in the aggregate principal amount
of up to $300,000,000, made by (i) Morgan Stanley Mortgage Capital Inc.
("MSMCI"), pursuant to a certain Master Loan Agreement dated as of June
8, 1998, between the Company and MSMCI, and (ii) Morgan Stanley & Co.
International Limited ("MSIL"), pursuant to a certain CMBS Loan
Agreement dated as of June 30, 1998, between the Company and MSIL.
(2) Increases of a certain credit facility ("GACC Credit Facility") made by
German American Capital Corporation ("GACC") to the Company, pursuant
to a certain Credit Agreement dated as of September 30, 1997, between
the Company and GACC, in the original maximum principal amount of
$150,000,000, pursuant to the terms and provisions of:
(i) a certain Amended and Restated Credit Agreement, dated as of
January 1, 1998, between the Company and GACC, whereby the
maximum principal amount of the GACC Credit Facility was
increased from $150,000,000 to $250,000,000;
(ii) a certain First Amendment to Amended and Restated Credit
Agreement, dated as of June 22, 1998, between the Company
and GACC, whereby the maximum principal amount of the GACC
Credit Facility was increased from $250,000,000 to
$300,000,000; and
(iii) a certain Second Amendment to Amended and Restated Credit
Agreement, dated as of July 23, 1998, between the Company
and GACC, whereby the maximum principal amount of the GACC
Credit Facility was increased from $300,000,000 to
$360,000,000.
730804.14
Schedule 2.6(a)
---------------
Agreements of the Trust
NONE
730804.14
Schedule 2.14
-------------
Liabilities
Capital Trust Balance Sheet Adjustments
---------------------------------------
(July 23, 1998 - $000s)
Significant asset and liability adjustments to 6/30/98 preliminary unaudited
Capital Trust balance sheet as of 7/23/98:
Assets
Sale of CSFB floating rate CMBS ($23,978)
Satisfaction of Troast loan (10,738)
Addition of Buffalo loan 23,000
Funding of improvements under Wanamaker loan 2,510
Cash and other assets (1) (6,100)
----------------------
Total ($15,306)
======================
Liabilities
Repayment of CSFB repo ($23,244)
Satisfaction of Troast borrowings (10,000)
Principal re-payment on VCG notes (500)
Principal re-payment under FNMA repo (582)
Buffalo borrowing (Morgan Stanley) 19,000
----------------------
Total ($15,306)
======================
(1) Includes estimates to balance the Balance Sheet.
730804.14
EXHIBIT C
---------
July 28, 1998
To Each of the Persons Listed
on Schedule I Hereto
Re: CT Convertible Trust I
----------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for CT Convertible
Trust I, a Delaware business trust (the "Trust"), in connection with the matters
set forth herein. This opinion is being furnished to you pursuant to Section
6.9(b) of the Preferred Securities Purchase Agreement dated as of July 28, 1998
(the "Purchase Agreement") among Capital Trust, a California business trust (the
"Company"), the Trust, Vornado Realty L.P., a Delaware limited partnership, EOP
Operating Limited Partnership, a Delaware limited partnership, Mellon Bank,
N.A., as trustee for General Motors Hourly-Rate Employes Pension Trust, a New
York trust, and Mellon Bank N.A., as trustee for General Motors Salaried
Employes Pension Trust, a New York trust. Capitalized terms used and not
otherwise defined herein shall have the meaning ascribed to such terms in the
Declaration (as hereinafter defined).
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated July 28, 1998
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on July 28, 1998;
To Each of the Persons Listed
on Schedule I Hereto
July 28, 1998
Page 2
(b) The Declaration of Trust of the Trust, dated as of July
28, 1998, among Capital Trust, as sponsor, the Trustee and the holders, from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to the Declaration.;
(c) The Purchase Agreement;
(d) The Indenture;
(e) The Preferred Securities Guarantee Agreement;
(f) The Common Securities Guarantee Agreement; and
(g) A Certificate of Good Standing for the Trust, dated
July 28, 1998, obtained from the Secretary of State.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (g) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (g) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed that (i) the
Declaration and the Certificate of Trust are in full force and effect and have
not been amended, (ii) except to the extent provided in paragraph 1 below, each
of the parties to the documents examined by us has been duly organized or duly
formed, as the case may be, and is validly existing in good standing under the
laws of the jurisdiction governing its organization or formation, (iii) each
natural person who is a party to the documents examined by us has the legal
capacity to execute, deliver and perform such documents, (iv) except to the
extent provided
To Each of the Persons Listed
on Schedule I Hereto
July 28, 1998
Page 3
in paragraph 4 below, each of the parties to the documents examined by us has
the power and authority to execute and deliver, and to perform its obligations
under, such documents, (v) except to the extent provided in paragraph 5 below,
each of the parties to the documents examined by us has duly authorized,
executed and delivered such documents, (vi) each Person to whom a Convertible
Preferred Security or a Common Security is to be issued by the Trust (each, a
"Holder" and collectively, the "Holders") has received an appropriate
Certificate for such Security, and the Trust has received payment for the
Security acquired by each such Holder, in accordance with the Declaration and
the Prospectus, and (vii) the Securities are issued and sold to the Holders in
accordance with the Declaration and the Purchase Agreement.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act, and all filings
required under the laws of the State of Delaware with respect to the creation
and valid existence of the Trust as a business trust have been made.
2. Under the Business Trust Act and the Declaration, the
Trust has the business trust power and authority to own property and conduct its
business, all as described in the Declaration.
3. The Declaration constitutes a valid and binding obligation
of the Company and the Trustees and is enforceable against the Company and the
Trustees, in accordance with its terms.
To Each of the Persons Listed
on Schedule I Hereto
July 28, 1998
Page 4
4. Under the Business Trust Act and the Declaration, the
Trust has the trust power and authority to (i) execute and deliver, and to
perform its obligations under the Purchase Agreement and (ii) issue and perform
its obligations under the Securities.
5. Under the Business Trust Act and the Declaration, the
execution and delivery by the Trust of the Purchase Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary action on the part of the Trust. The Purchase
Agreement has been duly authorized, executed and delivered by the Trust.
6. The Convertible Preferred Securities have been duly
authorized by the Declaration and are duly and validly issued and, subject to
the qualifications set forth herein, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust, entitled to the benefits of the
Declaration. The Holders of the Convertible Preferred Securities and Common
Securities, as beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders of the Convertible Preferred Securities
may be obligated to make payments as set forth in the Declaration.
7. The Common Securities have been duly authorized by the
Declaration and are duly and validly issued and, subject to the qualifications
set forth herein, fully paid and represent undivided beneficial interests in the
assets of the Trust, entitled to the benefits of the Declaration.
8. Under the Business Trust Act and the Declaration, the
issuance of the Securities is not subject to preemptive rights.
9. The purchase by the Trust of the Debentures, the
distribution of the Debentures by the Trust in the circumstances contemplated by
the Declaration, the execution, delivery and performance by the Trust of the
Purchase Agreement and the Registration Rights Agreement, the consummation by
the Trust of the transactions contemplated thereby and compliance by the Trust
with its obligations thereunder will not violate, conflict with or result in a
breach of (i) any of the provisions of the Certificate of Trust or the
Declaration or (ii) any applicable Delaware law or administrative regulation.
To Each of the Persons Listed
on Schedule I Hereto
July 28, 1998
Page 5
The opinion expressed in paragraph 3 above regarding the
enforceability of the Declaration is subject to (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
This opinion may be relied upon by you in connection with the
matters set forth herein. We also consent to Greenberg Glusker Fields Claman &
Machtinger LLP and Battle Fowler LLC relying as to matters of Delaware law upon
this opinion in connection with opinions to be rendered by them pursuant to the
Purchase Agreement. Except as stated above, without our prior written consent,
this opinion may not be furnished or quoted to, or relied upon by, any other
Person for any purpose.
Very truly yours,
/S/ Richards, Layton & Finger, P.A.
-------------------------------
GCK/ks
Schedule I
Vornado Realty L.P.
EOP Operating Limited Partnership
Mellon Bank N.A., as trustee for
General Motors Hourly-Rate Employes Pension Trust
Mellon Bank N.A., as trustee for
General Motors Salaried Employes Pension Trust