\nARTICLE 1 THE MERGERS…………………………………………………………………….3
\n 1.1 Election by Limited Partners in Cornerstone Partnership to Exercise the
\n Redemption Right; The Partnership Merger……………………………………….3
\n 1.2 The Merger………………………………………………………………….5
\n 1.3 Closing…………………………………………………………………….5
\n 1.4 Effective Time………………………………………………………………5
\n 1.5 Effect of Partnership Mergers on Agreement of Limited Partnership…………………6
\n 1.6 Effect of Merger on Declaration of Trust and Bylaws……………………………..6
\n 1.7 Trustees of EOP……………………………………………………………..6
\n 1.8 Effect on Shares…………………………………………………………….7
\n 1.9 Effect on Partnership Interests……………………………………………….7
\n 1.10 Exchange Ratios and Other Merger Consideration………………………………….7
\n 1.11 Election by Holders of Cornerstone Common Stock to Receive EOP Common Shares or Cash..9
\n 1.12 Proration…………………………………………………………………..11
\n 1.13 Partner Approval…………………………………………………………….13
\n 1.14 No Appraisal Rights………………………………………………………….13
\n 1.15 Exchange of Certificates; Pre-Closing Dividends; Fractional Shares………………..13
\nARTICLE 2 REPRESENTATIONS AND WARRANTIES OF CORNERSTONE AND CORNERSTONE PARTNERSHIP……………..18
\n 2.1 Organization, Standing and Power………………………………………………18
\n 2.2 Cornerstone Subsidiaries……………………………………………………..18
\n 2.3 Capital Structure……………………………………………………………20
\n 2.4 Other Interests……………………………………………………………..22
\n 2.5 Authority; Noncontravention; Consents………………………………………….22
\n 2.6 SEC Documents; Financial Statements; Undisclosed Liabilities……………………..24
\n 2.7 Absence of Certain Changes or Events…………………………………………..25
\n 2.8 Litigation………………………………………………………………….26
\n 2.9 Properties………………………………………………………………….27
\n 2.10 Environmental Matters………………………………………………………..29
\n 2.11 Related Party Transactions……………………………………………………31
\n 2.12 Employee Benefits……………………………………………………………31
\n 2.13 Employee Policies……………………………………………………………33
\n 2.14 Taxes………………………………………………………………………33
\n 2.15 No Payments to Employees, Officers or Directors…………………………………35
\n 2.16 Broker; Schedule of Fees and Expenses………………………………………….36<\/p>\n 2.17 Compliance with Laws…………………………………………………………36
\n 2.18 Contracts; Debt Instruments…………………………………………………..36
\n 2.19 Opinion of Financial Advisor………………………………………………….39
\n 2.20 State Takeover Statutes………………………………………………………39
\n 2.21 Investment Company Act of 1940………………………………………………..39
\n 2.22 Definition of Knowledge of Cornerstone…………………………………………39
\n 2.23 Required Stockholder Approvals and Partner Approvals…………………………….39
\nARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EOP AND EOP PARTNERSHIP……………………………40
\n 3.1 Organization, Standing and Power of EOP………………………………………..40
\n 3.2 EOP Subsidiaries…………………………………………………………….40
\n 3.3 Capital Structure……………………………………………………………41
\n 3.4 Other Interests……………………………………………………………..43
\n 3.5 Authority; Noncontravention; Consents………………………………………….43
\n 3.6 SEC Documents; Financial Statements; Undisclosed Liabilities……………………..45
\n 3.7 Absence of Certain Changes or Events…………………………………………..46
\n 3.8 Litigation………………………………………………………………….46
\n 3.9 Properties………………………………………………………………….47
\n 3.10 Environmental Matters………………………………………………………..48
\n 3.11 Taxes………………………………………………………………………49
\n 3.12 Brokers; Schedule of Fees and Expenses…………………………………………51
\n 3.13 Compliance with Laws…………………………………………………………51
\n 3.14 Contracts; Debt Instruments…………………………………………………..51
\n 3.15 Opinion of Financial Advisor………………………………………………….51
\n 3.16 State Takeover Statutes………………………………………………………52
\n 3.17 Investment Company Act of 1940………………………………………………..52
\n 3.18 Definition of Knowledge of EOP………………………………………………..52
\n 3.19 Required Shareholder Approvals and Partner Approvals…………………………….52
\nARTICLE 4 COVENANTS………………………………………………………………………52
\n 4.1 Conduct of Cornerstone’s and Cornerstone Partnership’s Business Pending Merger……..52
\n 4.2 Conduct of EOP’s and EOP Partnership’s Business Pending Merger……………………56
\n 4.3 No Solicitation……………………………………………………………..58
\n 4.4 Affiliates………………………………………………………………….61
\n 4.5 Other Actions……………………………………………………………….62
\nARTICLE 5 ADDITIONAL COVENANTS…………………………………………………………….62
\n 5.1 Preparation of the Form S-4 and the Proxy Statement; Cornerstone Stockholders
\n Meeting, Cornerstone Unitholders Consent Solicitation and EOP Shareholders Meeting….62
\n 5.2 Access to Information; Confidentiality…………………………………………65
\n 5.3 Commercially Reasonable Efforts; Notification…………………………………..66
\n 5.4 Tax Matters…………………………………………………………………67<\/p>\n
-ii-<\/p>\n
5.5 Public Announcements…………………………………………………………69
\n 5.6 Listing…………………………………………………………………….69
\n 5.7 Transfer and Gains Taxes……………………………………………………..69
\n 5.8 Benefit Plans and Other Employee Arrangements…………………………………..70
\n 5.9 Indemnification……………………………………………………………..72
\n 5.10 Declaration of Dividends and Distributions……………………………………..75
\n 5.11 Transfer of Non-Controlled Subsidiary Voting Shares……………………………..76
\n 5.12 Notices…………………………………………………………………….76
\n 5.13 Resignations………………………………………………………………..76
\n 5.14 Assumption of Existing Tax Protection Agreements………………………………..76
\n 5.15 EOP Partnership Agreement…………………………………………………….76
\n 5.16 Registration Rights Agreements………………………………………………..77
\n 5.17 Cornerstone Convertible Promissory Note………………………………………..77
\nARTICLE 6 CONDITIONS……………………………………………………………………..77
\n 6.1 Conditions to Each Party’s Obligation to Effect the Mergers………………………77
\n 6.2 Conditions to Obligations of EOP and EOP Partnership…………………………….78
\n 6.3 Conditions to Obligations of Cornerstone and Cornerstone Partnership………………79
\nARTICLE 7 TERMINATION, AMENDMENT AND WAIVER…………………………………………………82
\n 7.1 Termination…………………………………………………………………82
\n 7.2 Certain Fees and Expenses…………………………………………………….83
\n 7.3 Effect of Termination………………………………………………………..86
\n 7.4 Amendment…………………………………………………………………..86
\n 7.5 Extension; Waiver……………………………………………………………86
\nARTICLE 8 GENERAL PROVISIONS………………………………………………………………87
\n 8.1 Nonsurvival of Representations and Warranties…………………………………..87
\n 8.2 Notices…………………………………………………………………….87
\n 8.3 Interpretation………………………………………………………………88
\n 8.4 Counterparts………………………………………………………………..88
\n 8.5 Entire Agreement; No Third-Party Beneficiaries………………………………….88
\n 8.6 Governing Law……………………………………………………………….88
\n 8.7 Assignment………………………………………………………………….89
\n 8.8 Enforcement…………………………………………………………………89
\n 8.9 Severability………………………………………………………………..89
\n 8.10 Exculpation…………………………………………………………………89
\n 8.11 Joint and Several Obligations…………………………………………………89
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
-iii-<\/p>\n
EXHIBITS<\/p>\n
Exhibit “A” – Form of Certificate of Merger<\/p>\n
Exhibit “B” – Form of Maryland Articles of Merger<\/p>\n
Exhibit “C” – Form of Nevada Articles of Merger<\/p>\n
Exhibit “D” – Form of Proposed EOP Charter Amendment Relating to
\n Certain Voting Requirements<\/p>\n
Exhibit “E” – Form of Proposed EOP Charter Amendment Relating to
\n Domestically Controlled REIT Status<\/p>\n
-iv-<\/p>\n
Index of Defined Terms<\/p>\n
AICPA Statement………………………………..5.1(b)
\n Acquisition Proposal……………………………4.3(a)(i)
\n Affiliate……………………………………..2.11
\n Agreement……………………………………..Preamble
\n Base Amount……………………………………7.2
\n BeaMet………………………………………..3.11(b)
\n Break-Up Fee…………………………………..7.2
\n Break-Up Fee Tax Opinion………………………..7.2
\n Break-Up Expenses………………………………7.2
\n Cash Election………………………………….1.11(a)
\n Cash Election Shares……………………………1.12(a)
\n Cash Fraction………………………………….1.12(b)
\n CERCLA………………………………………..2.10(a)
\n Certificate of Merger ………………………….C
\n Certificate……………………………………1.10(b)(iv)
\n Closing……………………………………….1.3
\n Closing Date…………………………………..1.3
\n Cornerstone…………………………………… Preamble
\n Cornerstone Acquisition Agreement………………..7.2
\n Cornerstone Articles……………………………2.1
\n Cornerstone Bylaws……………………………..2.1
\n Cornerstone Common Stock………………………..1.10(b)(i)
\n Cornerstone Convertible Promissory Note…………..2.3(c)
\n Cornerstone Disclosure Letter……………………Art. 2
\n Cornerstone Financial Statement Date……………..2.7
\n Cornerstone Material Adverse Change………………2.7
\n Cornerstone Material Adverse Effect………………2.1
\n Cornerstone Non-controlled Subsidiary…………….J
\n Cornerstone OP Unit…………………………….1.1(a)
\n Cornerstone Other Interests……………………..2.4
\n Cornerstone Partner Approvals……………………1.13
\n Cornerstone Partnership…………………………Preamble
\n Cornerstone Partnership Agreement………………..1.5
\n Cornerstone Preferred OP Unit……………………1.10(a)(ii)
\n Cornerstone Properties………………………….2.9(a)
\n Cornerstone Rent Roll…………………………..2.9(e)
\n Cornerstone SEC Documents……………………….2.6
\n Cornerstone 7% Preferred Stock…………………..1.10(b)(iii)
\n Cornerstone Stockholder Approvals………………..2.5(a)<\/p>\n
-v-<\/p>\n
Cornerstone Stockholders Meeting…………………5.1(d)
\n Cornerstone Space Lease…………………………2.9(e)
\n Cornerstone Stock Options……………………….2.3(b)
\n Cornerstone Stock Rights………………………..2.3(b)
\n Cornerstone Subsidiaries………………………..2.2(a)
\n Cornerstone Voting Agreement ……………………K
\n Code………………………………………….F
\n Commitment…………………………………….4.1(i)
\n Common Stock Exchange Ratio……………………..1.10(b)(ii)
\n Confidentiality Agreement……………………….2.18(k)
\n Controlled Group Member…………………………2.12
\n Department…………………………………….1.4
\n DRULPA………………………………………..1.1(b)
\n Effective Time…………………………………1.4
\n Electing Cornerstone OP Units……………………1.11
\n Election………………………………………1.11(a)
\n Election Date………………………………….1.11(d)
\n Employee Plan………………………………….2.12
\n Encumbrances…………………………………..2.9(a)
\n Environmental Law………………………………2.10(a)
\n Environmental Permits…………………………..2.10(b)(iv)
\n EOP………………………………………….. Preamble
\n EOP Bylaws…………………………………….1.6
\n EOP Common Share……………………………….1.10(b)(ii)
\n EOP Counter Proposal……………………………4.3(c)
\n EOP Declaration of Trust………………………..1.6
\n EOP Disclosure Letter…………………………..Art. 3
\n EOP Financial Statement Date…………………….3.7
\n EOP Material Adverse Change……………………..3.7
\n EOP Material Adverse Effect……………………..3.1
\n EOP NCS Sub……………………………………J
\n EOP Options……………………………………3.3(b)
\n EOP OP Unit……………………………………1.10(a)(i)
\n EOP Other Interests…………………………….3.4
\n EOP Partner Approvals…………………………..1.13
\n EOP Partnership………………………………..Preamble
\n EOP Partnership Agreement……………………….1.5
\n EOP Preferred OP Unit…………………………..1.10(a)(ii)
\n EOP Preferred Units…………………………….3.3(e)
\n EOP Preferred Shares……………………………3.3(a)
\n EOP Properties…………………………………3.9(a)
\n EOP Rent Roll………………………………….3.9(g)
\n EOP SEC Documents………………………………3.6
\n EOP Shareholder Approvals……………………….3.5(a)<\/p>\n
-vi-<\/p>\n
EOP Shareholders Meeting………………………..5.1(c)
\n EOP Space Lease………………………………..3.9(g)
\n EOP Subsidiaries……………………………….3.1
\n ERISA…………………………………………2.12
\n Exchange Act…………………………………..2.6
\n Exchange Agent…………………………………1.15(a)
\n Exchange Fund………………………………….1.15(b)
\n Exercise………………………………………1.1(a)(i)
\n Final Company Dividend………………………….1.15(d)(i)
\n Form of Election……………………………….1.11(b)
\n Form S-4………………………………………5.1(a)
\n Former Cornerstone Properties……………………2.10(b)(ii)
\n GAAP………………………………………….2.6
\n Governmental Entity…………………………….2.5(c)
\n Hazardous Materials…………………………….2.10
\n HSR Act……………………………………….2.5(c)
\n Indebtedness…………………………………..2.18(b)
\n Indemnification Parties…………………………5.9(b)
\n Indemnified Parties…………………………….5.9(a)
\n Indemnifying Parties……………………………5.9(a)
\n Joint Proxy Statement…………………………..5.1(a)
\n Knowledge of Cornerstone………………………..2.22
\n Knowledge of EOP……………………………….3.18
\n Laws………………………………………….2.5(c)
\n Liens…………………………………………2.2(b)
\n Maryland Articles of Merger……………………..D
\n Maximum Amount…………………………………7.2
\n Merger………………………………………..A
\n Mergers……………………………………….B
\n Merger Consideration……………………………1.10(b)
\n Nevada Articles of Merger……………………….E
\n Non-Electing Shares…………………………….1.12(e)
\n NRS…………………………………………..1.2
\n NYSE………………………………………….1.15(g)(ii)
\n Partner Approvals………………………………1.13
\n Partnership Merger …………………………….B
\n Payor…………………………………………7.2
\n Pension Plan…………………………………..2.12
\n Permitted Title Exceptions………………………2.9(a)
\n Person………………………………………..2.2(a)
\n PGGM………………………………………….6.3(h)
\n Prohibited Transaction………………………….2.12(c)
\n Property Restrictions…………………………..2.9(a)
\n Proposed EOP Charter Amendment Relating to<\/p>\n
-vii-<\/p>\n
Domestically Controlled REIT Status………….4.2(h)
\n Proposed EOP Charter Amendment Relating to Certain
\n Voting Requirements………………………..4.2(h)
\n Proposed EOP Charter Amendments………………….4.2(h)
\n Qualifying Income………………………………7.2
\n Recipient……………………………………..7.2
\n REIT………………………………………….2.14(b)
\n REIT Requirements………………………………7.2
\n Release……………………………………….2.10(a)
\n Rule 145 Affiliates…………………………….4.4
\n SEC…………………………………………..2.5(c)
\n Section 704(c) values…………………………..5.4(b)
\n Securities Act…………………………………2.3(g)
\n Share Election…………………………………1.11(a)
\n Shareholder Approvals…………………………..3.5(a)
\n Stock Election Shares…………………………..1.12(a)
\n Stock Fraction…………………………………1.12(c)
\n Stock Purchase Agreement………………………..J
\n Subsidiary…………………………………….2.2(a)
\n Substituted Option……………………………..5.8(c)
\n Superior Acquisition Proposal……………………4.3(d)
\n Surviving Trust………………………………..1.2
\n Takeover Statute……………………………….2.20
\n Taxes…………………………………………2.14(a)
\n Tax Protection Agreements……………………….2.18(j)
\n Title 3……………………………………….1.2
\n Title 8……………………………………….1.2
\n Transfer and Gains Taxes………………………..5.7
\n Welfare Plan…………………………………..2.12
\n 1940 Act………………………………………2.21<\/p>\n
-viii-<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of
\nFebruary 11, 2000, by and among EQUITY OFFICE PROPERTIES TRUST, a Maryland real
\nestate investment trust (“EOP”), EOP OPERATING LIMITED PARTNERSHIP, a Delaware
\nlimited partnership (“EOP Partnership”), CORNERSTONE PROPERTIES INC., a Nevada
\ncorporation (“Cornerstone”), and CORNERSTONE PROPERTIES LIMITED PARTNERSHIP, a
\nDelaware limited partnership (“Cornerstone Partnership”).<\/p>\n
R E C I T A L S:<\/p>\n
A. The Board of Trustees of EOP and the Board of Directors of
\nCornerstone deem it advisable and in the best interests of their respective
\nshareholders and stockholders, upon the terms and subject to the conditions
\ncontained herein, that Cornerstone shall merge with and into EOP (the “Merger”).<\/p>\n
B. EOP, as the managing general partner of EOP Partnership, and
\nCornerstone, as the sole general partner of Cornerstone Partnership, deem it
\nadvisable and in the best interests of their respective limited partners,
\nsubject to the conditions and other provisions contained herein, that,
\nimmediately prior to the Merger, Cornerstone Partnership shall merge with and
\ninto EOP Partnership, with the holders of partnership interests in Cornerstone
\nPartnership at the time of the Partnership Merger receiving in any event units
\nof limited partnership interest in EOP Partnership, as set forth herein (the
\n“Partnership Merger” and, together with the Merger, the “Mergers”). As an
\nalternative to receiving units of limited partnership interest in EOP
\nPartnership in connection with the Partnership Merger, limited partners in
\nCornerstone Partnership (other than Cornerstone) shall have the right to elect,
\neffective immediately prior to the Partnership Merger, to exercise their
\nredemption right under the Cornerstone Partnership Agreement (as defined
\nherein), regardless of whether or not they would otherwise be entitled to
\nexercise that redemption right under the Cornerstone Partnership Agreement, and
\nCornerstone shall issue shares of Cornerstone Common Stock (as defined herein)
\nin satisfaction of that right, thereby allowing former limited partners in
\nCornerstone Partnership (other than Cornerstone) to participate in the Merger as
\nholders of Cornerstone Common Stock.<\/p>\n
C. Upon the terms and subject to the conditions set forth herein,
\nimmediately prior to the Merger, EOP Partnership and Cornerstone Partnership
\nshall execute a Certificate of Merger (the “Certificate of Merger”) in
\nsubstantially the form attached hereto as EXHIBIT A and shall file such
\nCertificate of Merger in accordance with Delaware law to effectuate the
\nPartnership Merger.<\/p>\n
D. Upon the terms and subject to the conditions set forth herein,
\nimmediately following the effectiveness of the Partnership Merger, EOP and
\nCornerstone shall execute Articles of Merger (the “Maryland Articles of Merger”)
\nin <\/p>\n
substantially the form attached hereto as EXHIBIT B and shall file such Maryland
\nArticles of Merger in accordance with Maryland law to effectuate the Merger.<\/p>\n
E. Upon the terms and subject to the conditions set forth herein,
\nimmediately following the effectiveness of the Partnership Merger, EOP and
\nCornerstone shall execute Articles of Merger (the “Nevada Articles of Merger”)
\nin substantially the form attached hereto as EXHIBIT C and concurrently with the
\nfiling of the Maryland Articles of Merger, shall file such Nevada Articles of
\nMerger in accordance with Nevada law to effectuate the Merger.<\/p>\n
F. For federal income tax purposes, it is intended that the Merger
\nshall qualify as a reorganization under Section 368(a) of the Internal Revenue
\nCode of 1986, as amended (the “Code”), and that this Agreement shall constitute
\na plan of reorganization under Section 368(a) of the Code.<\/p>\n
G. For federal income tax purposes, it is intended that the Partnership
\nMerger, regardless of form, be treated as a contribution by Cornerstone
\nPartnership of all of its assets to EOP Partnership in exchange for partnership
\ninterests in EOP Partnership, as provided for herein, under Section 721 of the
\nCode, and a distribution of such partnership interests by Cornerstone
\nPartnership to its partners under Section 731 of the Code.<\/p>\n
H. EOP and Cornerstone have each received a fairness opinion relating
\nto the transactions contemplated hereby as more fully described herein.<\/p>\n
I. EOP, EOP Partnership, Cornerstone and Cornerstone Partnership desire
\nto make certain representations, warranties and agreements in connection with
\nthe Mergers.<\/p>\n
J. Concurrently with the execution of this Agreement and as an
\ninducement to EOP and EOP Partnership to enter into this Agreement, William
\nWilson III and John S. Moody, as the owners of 99% of the voting capital stock
\nof WCP Services, Inc., a Delaware corporation (the “Cornerstone Non-controlled
\nSubsidiary”), have entered into a Stock Purchase Agreement, dated as of the date
\nhereof, relating to the voting capital stock of the Cornerstone Non-controlled
\nSubsidiary (the “Stock Purchase Agreement”), providing for the sale of all of
\nthe outstanding voting capital stock of the Cornerstone Non-controlled
\nSubsidiary to EOP Office Properties Management Corporation (“EOP NCS Sub”) or
\nits assigns.<\/p>\n
K. As an inducement to EOP to enter into this Agreement, (a) Stichting
\nPensioenfonds voor de Gezondheid, Geestelijke en Maatschappelijke Belangen, a
\nstichting formed according to the laws of the Kingdom of The Netherlands, each
\nof the directors and certain executive officers of Cornerstone (and the spouses
\nof certain of the foregoing) and certain entities controlled by any of the
\nforegoing have entered into a voting agreement (each, a “Cornerstone Voting
\nAgreement”), pursuant to which such person or entity has agreed, among other
\nthings, to vote his <\/p>\n
-2-<\/p>\n
or its shares of Cornerstone Common Stock and Cornerstone OP Units (as defined
\nherein) to approve this Agreement, the respective Mergers and any other matter
\nwhich requires his or its vote in connection with the transactions contemplated
\nby this Agreement and (b) the holders of the outstanding Cornerstone 7%
\nPreferred Stock (as defined herein) have entered into a stock option agreement,
\npursuant to which such holders have granted Cornerstone and EOP an option to
\nacquire, among other things, all of their Cornerstone 7% Preferred Stock at any
\ntime prior to the Effective Time (as defined herein) of the Merger at a per
\nshare purchase price of $18.00, together with accrued and unpaid dividends to
\nthe Effective Time, in cash (subject to adjustment).<\/p>\n
L. As an inducement to Cornerstone to enter into this Agreement, each
\nof the trustees and certain executive officers of EOP (and the spouses of
\ncertain of the foregoing) and certain entities controlled by any of the
\nforegoing have entered into a voting agreement pursuant to which such person or
\nentity has agreed, among other things, to vote his or its EOP Common Shares (as
\ndefined herein) to approve this Agreement, the Merger and any other matter which
\nrequires his or its vote in connection with the transactions contemplated by
\nthis Agreement.<\/p>\n
NOW, THEREFORE, in consideration of the premises and the
\nmutual representations, warranties, covenants and agreements contained herein,
\nthe parties hereto hereby agree as follows:<\/p>\n
ARTICLE 1<\/p>\n
THE MERGERS<\/p>\n
1.1 ELECTION BY LIMITED PARTNERS IN CORNERSTONE PARTNERSHIP TO
\nEXERCISE THE REDEMPTION RIGHT; THE PARTNERSHIP MERGER.<\/p>\n
(a) Notwithstanding any limitation or
\nrestriction contained in the Cornerstone Partnership Agreement with respect to
\nthe ability of a Limited Partner (as defined in the Cornerstone Partnership
\nAgreement) to exercise the Redemption Right (as defined in the Cornerstone
\nPartnership Agreement) (including, without limitation, any limitation or
\nrestriction contained in Section 8.6A of the Cornerstone Partnership Agreement),
\nevery Limited Partner shall have the right to exercise the Redemption Right by
\nsubmitting to Cornerstone Partnership (with a copy to Cornerstone) during the
\nperiod between the mailing date of the Joint Proxy Statement (as defined herein)
\nfor the Cornerstone Stockholders Meeting (as defined herein) and 5:00 p.m.,
\nEastern time, on the second business day prior to the date of the Cornerstone
\nStockholders Meeting a Notice of Redemption (as defined in the Cornerstone
\nPartnership Agreement) specifying the number of Class A Partnership Common Units
\n(as defined in the Cornerstone Partnership Agreement) of Cornerstone Partnership
\n(the “Cornerstone OP Units”) which such Limited Partner desires to have redeemed
\npursuant to Section 8.6A of the Cornerstone Partnership Agreement (as modified
\nby this Section 1.1(a)), which <\/p>\n
-3-<\/p>\n
Notice of Redemption shall be conditioned upon the closing of the Partnership
\nMerger and can be conditional as set forth in clause (v) below; PROVIDED, THAT,<\/p>\n
(i) with respect to each Notice of Redemption (a copy
\n of the form of which shall accompany or form a part of the Form of
\n Election (as defined herein)) properly submitted by a Limited Partner
\n in accordance with this Section 1.1(a) (an “Exercise”), Cornerstone
\n shall elect in accordance with Section 8.6B of the Cornerstone
\n Partnership Agreement to purchase the Cornerstone OP Units relating to
\n such Exercise by paying the REIT Shares Amount (as defined in the
\n Cornerstone Partnership Agreement) and not the Cash Amount (as defined
\n in the Cornerstone Partnership Agreement);<\/p>\n
(ii) notwithstanding the provisions of Section 8.6B
\n of the Cornerstone Partnership Agreement, Cornerstone shall not be
\n required to notify the Redeeming Partner (as defined in the Cornerstone
\n Partnership Agreement) of Cornerstone’s election to purchase the
\n Cornerstone OP Units as described in the foregoing clause (i);<\/p>\n
(iii) the Specified Redemption Date (as defined in
\n the Cornerstone Partnership Agreement) shall be the Closing Date (as
\n defined herein) at a time prior to the consummation of the Partnership
\n Merger;<\/p>\n
(iv) each Redeeming Partner shall be treated as an
\n owner of the shares of Cornerstone Common Stock issued pursuant to this
\n Agreement at the Effective Time (as defined herein) of the Merger and
\n shall have the same right as each of the other holders of shares of
\n Cornerstone Common Stock to make an Election (as defined herein)
\n pursuant to Section 1.11 as to the form of consideration to be received
\n in the Merger with respect to such shares of Cornerstone Common Stock;
\n and<\/p>\n
(v) a Redeeming Partner shall have the option, in its
\n discretion, to make its Notice of Redemption conditional upon part or
\n all of the shares of Cornerstone Common Stock that would be issued
\n pursuant thereto being converted solely into the right to receive cash
\n in the Merger pursuant to Section 1.10(b)(i) and the procedures set
\n forth in Sections 1.11 and 1.12, in which event the Notice of
\n Redemption shall not be effective with respect to any Cornerstone OP
\n Units for which the shares of Cornerstone Common Stock that would be
\n received therefor would not be converted entirely into the right to
\n receive cash in the Merger (and any Cornerstone OP Units not redeemed
\n as a result thereof would be converted into EOP OP Units (as defined
\n herein) in the Partnership Merger as set forth in Section 1.10(a)(i)).<\/p>\n
(b) Upon the terms and subject to the conditions of
\nthis Agreement, and in accordance with Title 6, Chapter 17 of the Delaware Code
\nAnnotated, as amended (the “DRULPA”), immediately prior to the consummation of<\/p>\n
-4-<\/p>\n
the Merger, Cornerstone Partnership shall be merged with and into EOP
\nPartnership, with EOP Partnership as the surviving limited partnership or
\nlimited liability company, and with the holders of partnership interests in
\nCornerstone Partnership receiving in any event units of partnership interest in
\nEOP Partnership, as set forth in Section 1.10.<\/p>\n
1.2 THE MERGER. Upon the terms and subject to the conditions
\nset forth in this Agreement, and in accordance with Title 3 of the Corporations
\nand Associations Article of the Annotated Code of Maryland, as amended (“Title
\n3”), Title 8 of the Corporations and Associations Article of the Annotated Code
\nof Maryland, as amended (“Title 8”), and Chapter 92A of Title 7 of the Nevada
\nRevised Statutes Annotated (the “NRS”), immediately following the effectiveness
\nof the Partnership Merger, Cornerstone shall be merged with and into EOP, with
\nEOP surviving as a real estate investment trust (the “Surviving Trust”).<\/p>\n
1.3 CLOSING. The closing of the Mergers (the “Closing”) will
\ntake place commencing at 9:00 a.m., local time, on the date to be specified by
\nthe parties, which (subject to satisfaction or waiver of the conditions set
\nforth in Article 6) shall be no later than the third business day after
\nsatisfaction or waiver of the conditions set forth in Section 6.1(a) (the
\n“Closing Date”), at the offices of Hogan & Hartson L.L.P., 555 Thirteenth
\nStreet, N.W., Washington, D.C. 20004, unless another date or place is agreed to
\nin writing by the parties.<\/p>\n
1.4 EFFECTIVE TIME. As soon as practicable following the
\nsatisfaction or waiver of the conditions set forth in Article 6, (i) EOP
\nPartnership and Cornerstone Partnership shall execute and file the Certificate
\nof Merger, executed in accordance with the DRULPA, with the Office of the
\nSecretary of State of the State of Delaware, and (ii) EOP and Cornerstone shall
\nthen execute and file the Maryland Articles of Merger, executed in accordance
\nwith Title 3 and Title 8, with the State Department of Assessments and Taxation
\nof Maryland (the “Department”), and the Nevada Articles of Merger, executed in
\naccordance with Title 7 of the NRS with the Secretary of State of the State of
\nNevada, and shall make all other filings and recordings required, with respect
\nto the Partnership Merger, under the DRULPA or, with respect to the Merger,
\nunder Title 3, Title 8 and the NRS. The Mergers shall become effective (each an
\n“Effective Time” and collectively the “Effective Times”) at such times as EOP
\nand Cornerstone shall agree should be specified in the Certificate of Merger,
\nthe Maryland Articles of Merger and the Nevada Articles of Merger (not to exceed
\nthirty (30) days after the Maryland Articles of Merger are accepted for record
\nby the Department). Unless otherwise agreed, the parties shall cause the
\nEffective Times to occur on the Closing Date, with not less than one hour
\nbetween the Effective Time of the Partnership Merger and the Effective Time of
\nthe Merger.<\/p>\n
1.5 EFFECT OF PARTNERSHIP MERGER ON AGREEMENTS OF LIMITED
\nPARTNERSHIP. The Agreement of Limited Partnership, as amended, of EOP<\/p>\n
-5-<\/p>\n
Partnership, as in effect immediately prior to the Effective Time of the
\nPartnership Merger (the “EOP Partnership Agreement”), shall continue in full
\nforce and effect after the Partnership Merger until further amended in
\naccordance with applicable Delaware law. The Agreement of Limited Partnership,
\nas amended, of Cornerstone Partnership, as in effect immediately prior to the
\nEffective Time of the Partnership Merger (the “Cornerstone Partnership
\nAgreement”) shall terminate at the Effective Time of Partnership Merger.<\/p>\n
1.6 EFFECT OF MERGER ON DECLARATION OF TRUST AND BYLAWS. The
\nArticles of Amendment and Restatement of Declaration of Trust, as amended, of
\nEOP (the “EOP Declaration of Trust”) and the Bylaws of EOP (the “EOP Bylaws”),
\nas in effect immediately prior to the Effective Time of the Merger and, if
\napproved by the EOP shareholders, as amended by the Proposed EOP Charter
\nAmendment Relating to Domestically Controlled REIT Status (as defined herein)
\nand the Proposed EOP Charter Amendment Relating to Certain Voting Requirements
\n(as defined herein), shall continue in full force and effect after the Merger
\nand, until further amended in accordance with applicable Maryland law and, if
\napproved by the EOP shareholders, as amended by the Proposed EOP Charter
\nAmendment Relating to Domestically Controlled REIT Status (as defined herein)
\nand the Proposed EOP Charter Amendment Relating to Certain Voting Requirements
\n(as defined herein).<\/p>\n
1.7 TRUSTEES OF EOP. The trustees of EOP following the Merger
\nshall consist of the trustees of EOP immediately prior to the Effective Time of
\nthe Merger, who shall continue to serve for the balance of their unexpired terms
\nor their earlier death, resignation or removal, together with John S. Moody,
\nWilliam Wilson III and Jan van der Vlist, each of whom shall, no later than the
\nthird business day after the Effective Time of the Merger, become a trustee with
\nterms expiring in 2002, 2003 and 2003, respectively. Upon the expiration of the
\nterms of Mr. van der Vlist in 2003 and 2006, so long as PGGM and its Affiliates
\ncontinue to own in the aggregate 21,000,000 (as adjusted for stock splits,
\nreverse stock splits, stock dividends and similar actions) or more of the issued
\nand outstanding EOP Common Shares at all times up to the meeting of shareholders
\nat which trustees are being elected in such years, EOP shall take all action
\nnecessary to nominate Mr. van der Vlist for re-election as a trustee of EOP for
\nan additional three-year term at any special or annual meeting of shareholders
\nat which trustees are being elected (or in connection with a written consent in
\nlieu of a meeting pursuant to which trustees are proposed to be elected). In the
\nevent that Mr. Van der Vlist shall fail to stand for re-election as aforesaid
\nfor any reason in either 2003 or 2006 or in the event of his earlier death or
\nresignation, and so long as PGGM and its Affiliates continue to own in the
\naggregate 21,000,000 (as adjusted for stock splits, reverse stock splits, stock
\ndividends and similar actions) or more of the issued and outstanding EOP Common
\nShares at such time, EOP shall take all action necessary to nominate a
\nreplacement designated by PGGM, which replacement shall be subject to the
\napproval of EOP if such replacement is not an officer, director or employee of<\/p>\n
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PGGM, for election or re-election as a trustee of EOP for an additional
\nthree-year term at any special or annual meeting of shareholders at which
\ntrustees are being elected (or in connection with a written consent in lieu of a
\nmeeting pursuant to which trustees are proposed to be elected) or, in the case
\nof a vacancy, at a meeting of the Board of Trustees called for such purpose.
\nExcept as expressly provided above in this Section 1.7, following their election
\nas trustees, such persons shall serve for their designated terms, subject to
\ntheir earlier death, resignation or removal.<\/p>\n
1.8 EFFECT ON SHARES. The effect of the Merger on the shares
\nof capital stock of Cornerstone shall be as provided in the Articles of Merger
\nand in Section 1.10 hereof. The Merger shall not change the shares of beneficial
\ninterest of EOP outstanding immediately prior to the Merger.<\/p>\n
1.9 EFFECT ON PARTNERSHIP INTERESTS. The effect of the
\nPartnership Merger on the partnership interests of Cornerstone Partnership shall
\nbe as provided in the Certificate of Merger and in Section 1.10 hereof. The
\nPartnership Merger shall not change the partnership interests of EOP Partnership
\noutstanding immediately prior to the Merger.<\/p>\n
1.10 EXCHANGE RATIOS AND OTHER MERGER CONSIDERATION.<\/p>\n
(a) (i) The exchange ratio relating to the
\nPartnership Merger shall be 0.7009 of a Class A Unit (as defined in the EOP
\nPartnership Agreement) of EOP Partnership (“EOP OP Unit”), for each Cornerstone
\nOP Unit outstanding immediately prior to the Effective Time of the Partnership
\nMerger. The holders of the EOP OP Units issued in the Partnership Merger (other
\nthan Cornerstone and Subsidiaries (as defined herein) of Cornerstone) shall be
\nentitled to redeem such EOP OP Units immediately following the consummation of
\nthe Partnership Merger (and thereafter) pursuant to the terms of the EOP
\nPartnership Agreement, except that for purposes of the exchange provisions
\nthereof such EOP OP Units shall be deemed to have been issued as of the date the
\nrelated Cornerstone OP Units were issued by Cornerstone Partnership (or if
\nearlier, one year prior to the Effective Time of the Partnership Merger), and
\nshall be entitled to the same rights and privileges as the holders of EOP OP
\nUnits outstanding on the date hereof.<\/p>\n
(ii) The exchange ratio relating to the Partnership
\nMerger shall be one Class D Preferred Unit (as defined in the EOP Partnership
\nAgreement), designated a Class D 7.0% Cumulative Convertible Preferred Unit, of
\nEOP Partnership (“EOP Preferred OP Units”), for each Class A Partnership
\nPreferred Unit (as defined in the Cornerstone Partnership Agreement), designated
\na Class A 7% Cumulative Convertible Preferred Unit of Cornerstone Partnership
\n(“Cornerstone Preferred OP Unit”) outstanding immediately prior to the Effective
\nTime of the Partnership Merger. EOP, as the holder of the EOP Preferred OP Units
\nissued in the Partnership Merger, shall be entitled to the same rights and
\nprivileges <\/p>\n
-7-<\/p>\n
as Cornerstone, as the holder of the Cornerstone Preferred Units outstanding on
\nthe date hereof.<\/p>\n
(b) The merger consideration to be paid to holders of capital
\nstock of Cornerstone in the Merger (collectively, the “Merger Consideration”) is
\nas follows:<\/p>\n
(i) Each share of common stock with no par value of
\n Cornerstone (“Cornerstone Common Stock”) issued and outstanding
\n immediately prior to the Effective Time of the Merger, which under the
\n terms of Section 1.12 is to be converted into cash, shall be converted
\n into the right to receive $18.00 in cash, without interest;<\/p>\n
(ii) Except as otherwise provided in Sections
\n 1.10(b)(i) and 1.12, and subject to Section 1.15(g), each share of
\n Cornerstone Common Stock issued and outstanding immediately prior to
\n the Effective Time of the Merger (other than shares to be converted
\n into the right to receive cash pursuant to Sections 1.10(b)(i) and
\n 1.12) shall be converted into the right to receive 0.7009 of a validly
\n issued, fully paid and nonassessable common share of beneficial
\n interest, par value $.01 per share, of EOP (an “EOP Common Share”) (the
\n “Common Stock Exchange Ratio”);<\/p>\n
(iii) Each share of 7.0% Cumulative Convertible
\n Preferred Stock with no par value of Cornerstone (“Cornerstone 7%
\n Preferred Stock”) outstanding immediately prior to the Effective Time
\n of the Merger shall be converted into the right to receive $18.00,
\n together with accrued and unpaid dividends to the Effective Time of the
\n Merger, in cash, without interest; and<\/p>\n
(iv) All such shares of Cornerstone Common Stock,
\n when so converted as provided in Section 1.10(b)(i) or (ii), and all
\n such shares of Cornerstone 7% Preferred Stock, when so converted as
\n provided in Section 1.10(b)(iii), shall no longer be outstanding and
\n shall automatically be cancelled and retired and shall cease to exist,
\n and each holder of a certificate (a “Certificate”) theretofore
\n representing any such shares shall cease to have any rights with
\n respect thereto, except the right to receive, upon the surrender of
\n such Certificate in accordance with Section 1.15(c), as applicable, (A)
\n any dividends and other distributions in accordance with Section
\n 1.15(d), (B) certificates representing the EOP Common Shares into which
\n such shares of Cornerstone Common Stock are converted pursuant to
\n Section 1.10(c)(ii) (if any), (C) cash into which such shares of
\n Cornerstone Common Stock are converted pursuant to Section 1.10(c)(i),
\n (D) cash into which such shares of Cornerstone 7% Preferred Stock are
\n converted pursuant to Section 1.10(b)(iii), and (E) any cash, without
\n interest, in lieu of fractional EOP Common Shares to be issued or paid
\n in consideration for Cornerstone Common Stock upon the surrender of
\n such Certificate in accordance with Sections 1.15(c) and 1.15(g).<\/p>\n
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1.11 ELECTION BY HOLDERS OF CORNERSTONE COMMON STOCK TO
\nRECEIVE EOP COMMON SHARES OR CASH. Each holder of shares of Cornerstone Common
\nStock (including, without limitation, Limited Partners of Cornerstone
\nPartnership who elect to exercise, on a conditional or unconditional basis, the
\nRedemption Right with respect to all or a portion of their Cornerstone OP Units
\nheld by such Limited Partners pursuant to Section 1.1(a) (with the Cornerstone
\nOP Units with respect to which such Exercise is made referred to as “Electing
\nCornerstone OP Units”)) shall have the right to submit a Form of Election
\nspecifying the number of shares of Cornerstone Common Stock which such holder
\ndesires to have converted into the right to receive EOP Common Shares in the
\nMerger pursuant to Section 1.10(a)(ii) and the number which such holder desires
\nto have converted into the right to receive cash pursuant to Section 1.10(a)(i)
\nin accordance with the following procedures:<\/p>\n
(a) Each holder of shares of Cornerstone Common Stock
\nand each holder of Electing Cornerstone OP Units may specify in a request made
\nin accordance with the provisions of this Section 1.11 (an “Election”) (i) the
\nnumber of such shares which such holder desires to have converted into the right
\nto receive cash in the Merger pursuant to Section 1.10(a)(i) (a “Cash Election”)
\nand (ii) the number of such shares which such holder desires to have converted
\ninto the right to receive EOP Common Shares in the Merger pursuant to Section
\n1.10(a)(ii) (a “Share Election”).<\/p>\n
(b) EOP and Cornerstone shall prepare, for use by
\nstockholders of Cornerstone (and each holder of Electing Cornerstone OP Units)
\nin surrendering Certificates representing shares of Cornerstone Common Stock, a
\nform of election (the “Form of Election”) pursuant to which each holder of
\nCornerstone Common Stock and each holder of Electing Cornerstone OP Units may
\nmake Elections. The Form of Election shall be mailed to stockholders of record
\nof Cornerstone as of the record date for the Cornerstone Stockholders Meeting
\n(as defined herein) and to each holder of Cornerstone OP Units and shall
\naccompany the Joint Proxy Statement (as defined herein).<\/p>\n
(c) Cornerstone shall use commercially reasonable
\nefforts to make the Form of Election available to all persons who become
\nstockholders of record of Cornerstone and to all Limited Partners of Cornerstone
\nPartnership during the period between such record date and the second business
\nday prior to the date of the Cornerstone Stockholders Meeting, provided that
\nonly a Limited Partner of Cornerstone Partnership who is a holder of Electing
\nCornerstone OP Units may submit a Form of Election and such Form of Election
\nshall apply only with respect to shares of Cornerstone Common Stock issued to
\nsuch Limited Partner prior to the Effective Time of the Partnership Merger
\npursuant to the Redemption Right as set forth in Section 1.1(a).<\/p>\n
-9-<\/p>\n
(d) An Election shall have been properly made only if
\nthe Exchange Agent (as defined herein) shall have received, by 5:00 p.m.,
\nEastern Standard Time, on the second business day (such time on such day being
\nreferred to herein as the “Election Date”) preceding the date of the Cornerstone
\nStockholders Meeting, a Form of Election properly completed and signed (and not
\nrevoked) and accompanied (in the case of holders of shares of Cornerstone Common
\nStock) by the Certificate or Certificates representing the shares of Cornerstone
\nCommon Stock to which such Form of Election relates, duly endorsed in blank or
\notherwise in form acceptable for transfer on the books of Cornerstone (or by an
\nappropriate guarantee of delivery of such Certificate or Certificates as set
\nforth in such Form of Election from a member of any registered national
\nsecurities exchange or of the National Association of Securities Dealers, Inc.
\nor a commercial bank or trust company having an office or correspondent in the
\nUnited States, provided such Certificate or Certificates are in fact delivered
\nby the time set forth in such guarantee of delivery).<\/p>\n
(e) Any holder of record of shares of Cornerstone
\nCommon Stock (and any holder of Electing Cornerstone OP Units) may at any time
\nprior to the Election Date change such holder’s Election by written notice
\nreceived by the Exchange Agent at or prior to the Election Date accompanied by a
\nproperly completed Form of Election. EOP and Cornerstone shall have the right in
\ntheir sole discretion and by mutual agreement to permit changes in Elections
\nafter the Election Date.<\/p>\n
(f) Any holder of record of shares of Cornerstone
\nCommon Stock (and any holder of Electing Cornerstone OP Units) may at any time
\nprior to the Election Date revoke such holder’s Election by written notice
\nreceived by the Exchange Agent at or prior to the Election Date or by withdrawal
\nprior to the Election Date of such holder’s Certificates previously deposited
\nwith the Exchange Agent. Any revocation of an Election may be withdrawn by
\nnotice of such withdrawal delivered at or prior to the Election Date. Any such
\nholder who shall have deposited Certificates with the Exchange Agent shall have
\nthe right to withdraw such Certificates by written notice received by the
\nExchange Agent and thereby revoke such holder’s Election as of the Election Date
\nat any time after the expiration of the period of 60 days following the Election
\nDate if the Merger shall not have been consummated prior thereto. EOP shall
\nobtain from the Exchange Agent an agreement to return all Forms of Election and
\naccompanying Certificates to the stockholders submitting the same in the event
\nthis Agreement shall be terminated in accordance with its terms.<\/p>\n
(g) EOP and Cornerstone by mutual agreement shall
\nhave the right to make rules, not inconsistent with the terms of this Agreement,
\ngoverning the validity of Forms of Election, the manner and extent to which
\nElections are to be taken into account in making the determinations prescribed
\nby Section 1.12, the issuance and delivery of certificates for EOP Common Shares
\ninto which shares of Cornerstone Common Stock are converted in the Merger and
\nthe <\/p>\n
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payment for shares of Cornerstone Common Stock converted into the right to
\nreceive cash in the Merger.<\/p>\n
1.12 PRORATION. The determination of whether shares of
\nCornerstone Common Stock shall be converted in the Merger into EOP Common Shares
\nin accordance with the Common Stock Exchange Ratio or the right to receive
\n$18.00 in cash shall be made as set forth in this Section 1.12.<\/p>\n
(a) As is more fully set forth below, 58,551,525
\nshares of Cornerstone Common Stock shall be converted in the Merger into the
\nright to receive $18.00 per share in cash (which shares of Cornerstone Common
\nStock are referred to as the “Cash Election Shares”), and all shares of
\nCornerstone Common Stock issued and outstanding immediately prior to the
\nEffective Time of the Merger in excess of 58,551,525 shares shall be converted
\nin the Merger into the right to receive EOP Common Shares in accordance with the
\nCommon Stock Exchange Ratio (which shares of Cornerstone Common Stock are
\nreferred to as the “Stock Election Shares”).<\/p>\n
(b) If Cash Elections are received for a number of
\nshares of Cornerstone Common Stock which is greater than 58,551,525 shares of
\nCornerstone Common Stock, each Non-Electing Share (as defined herein) and each
\nshare of Cornerstone Common Stock for which a Share Election has been received
\nshall be converted in the Merger into EOP Common Shares in accordance with the
\nCommon Stock Exchange Ratio, and the shares of Cornerstone Common Stock for
\nwhich Cash Elections have been received shall be converted in the Merger into
\nthe right to receive cash and EOP Common Shares in accordance with the Common
\nStock Exchange Ratio in the following manner:<\/p>\n
each share of Cornerstone Common Stock covered by a
\n Cash Election shall be converted into the right to
\n receive (i) an amount in cash, without interest,
\n equal to the product of (x) $18.00 and (y) a fraction
\n (the “Cash Fraction”) the numerator of which shall be
\n 58,551,525 and the denominator of which shall be the
\n aggregate number of shares of Cornerstone Common
\n Stock covered by all Cash Elections, and (ii) a
\n number of EOP Common Shares equal to the product of
\n (x) the Common Stock Exchange Ratio and (y) a
\n fraction equal to one minus the Cash Fraction.<\/p>\n
(c) If Share Elections are received for a number of
\nshares of Cornerstone Common Stock which is greater than the total number of
\nStock Election Shares issued and outstanding immediately prior to the Effective
\nTime of the Merger, each Non-Electing Share and each share of Cornerstone Common
\nStock for which a Cash Election has been received shall be converted in the
\nMerger into the right to receive $18.00 in cash, without interest, and the
\nshares of Cornerstone <\/p>\n
-11-<\/p>\n
Common Stock for which Share Elections have been received shall be converted in
\nthe Merger into EOP Shares in accordance with the Common Stock Exchange Ratio
\nand the right to receive cash in the following manner:<\/p>\n
each share of Cornerstone Common Stock covered by a
\n Share Election shall be converted into the right to
\n receive (i) a number of EOP Common Shares equal to
\n the product of (x) the Common Stock Exchange Ratio
\n and (y) a fraction (the “Stock Fraction”), the
\n numerator of which shall be a number equal to the
\n total number of Stock Election Shares issued and
\n outstanding immediately prior to the Effective Time
\n of the Merger and the denominator of which shall be
\n the aggregate number of shares of Cornerstone Common
\n Stock covered by all Share Elections, and (ii) an
\n amount in cash, without interest, equal to the
\n product of (x) $18.00 and (y) a fraction equal to one
\n minus the Stock Fraction.<\/p>\n
(d) If Non-Electing Shares (as defined herein) are
\nnot converted under either Section 1.12(b) or Section 1.12(c), then each
\nNon-Electing Share shall be converted into the right to receive EOP Common
\nShares and the right to receive cash on a proportionate basis, relative to all
\nother Non-Electing Shares, so that the aggregate number of shares of Cornerstone
\nCommon Stock converted into the right to receive EOP Common Shares equals, as
\nclosely as possible, the number of Stock Election Shares, and the aggregate
\nnumber of shares of Cornerstone Common Stock converted into the right to receive
\ncash equals, as closely as possible, the number of Cash Election Shares.<\/p>\n
(e) For purposes of this Section 1.12, outstanding
\nshares of Cornerstone as to which an election is not in effect at the Election
\nDate and shares as to which an Election has been withdrawn after the 60-day
\nperiod following the Election Date and prior to the Effective Time of the Merger
\nshall be called “Non-Electing Shares.” If EOP and Cornerstone shall determine
\nfor any reason that any Election was not properly made with respect to shares of
\nCornerstone Common Stock, such Election shall be deemed ineffective and shares
\nof Cornerstone Common Stock covered by such Election shall, for purposes hereof,
\nbe deemed to be Non-Electing Shares.<\/p>\n
1.13 PARTNER APPROVAL. Cornerstone shall seek the requisite
\napproval of the partners of Cornerstone Partnership of the Merger, the
\nwithdrawal of Cornerstone as general partner and the Partnership Merger to the
\nextent required by the Cornerstone Partnership Agreement to effectuate the
\ntransactions contemplated by this Agreement (collectively, the “Cornerstone
\nPartner Approvals”). EOP shall seek the requisite approval of the partners of
\nEOP Partnership of the Merger and the Partnership Merger to the extent required
\nby the EOP Partnership Agreement to effectuate the transactions contemplated by
\nthis <\/p>\n
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Agreement (collectively, the “EOP Partner Approvals,” and together with the
\nCornerstone Partner Approvals, the “Partner Approvals”).<\/p>\n
1.14 NO APPRAISAL RIGHTS. The holders of Cornerstone Common
\nStock, Cornerstone OP Units, EOP Common Shares and EOP OP Units are not entitled
\nunder applicable law to appraisal or similar rights as a result of the Mergers
\nand, in the case of the holders of the Cornerstone 7% Preferred Stock, such
\nholders irrevocably have waived all such rights.<\/p>\n
1.15 EXCHANGE OF CERTIFICATES; PRE-CLOSING DIVIDENDS;
\nFRACTIONAL SHARES.<\/p>\n
(a) EXCHANGE AGENT. Prior to the Effective Time, EOP
\nshall appoint Equiserve LLC as the exchange agent, or another bank or trust
\ncompany reasonably acceptable to Cornerstone, to act as exchange agent (the
\n“Exchange Agent”) for the exchange of the Merger Consideration upon surrender of
\ncertificates representing issued and outstanding shares of Cornerstone Common
\nStock and Cornerstone 7% Preferred Stock.<\/p>\n
(b) EOP TO PROVIDE MERGER CONSIDERATION. EOP shall
\nprovide to the Exchange Agent on or before the Effective Time of the Merger, for
\nthe benefit of the holders of Cornerstone Common Stock and Cornerstone 7%
\nPreferred Stock, the Merger Consideration issuable in exchange for the issued
\nand outstanding Cornerstone Common Stock and Cornerstone 7% Preferred Stock
\npursuant to Section 1.10, together with any cash required to make payments in
\nlieu of any fractional shares pursuant to Section 1.15(g) (the “Exchange Fund”).
\nThe Exchange Agent shall invest any cash included in the Exchange Fund as
\ndirected by EOP, on a daily basis. Any interest or other income resulting from
\nsuch investments shall be paid to EOP. Cornerstone shall provide to the Exchange
\nAgent not later than one business day prior to the Effective Time of the Merger,
\nfor the benefit of the holders of Cornerstone Common Stock, cash payable in
\nrespect of any dividends required pursuant to Section 1.15(d)(i) or (ii). Such
\ncash shall be invested in accordance with written directions delivered by
\nCornerstone to the Exchange Agent not later than one business day prior to the
\nEffective Time of the Merger, with any cash earned on such investments to be
\npaid to EOP as the successor to Cornerstone in the Merger. EOP shall use
\ncommercially reasonable efforts to cause the Exchange Agent to mail the Merger
\nConsideration to the holders of Cornerstone Common Stock (including to holders
\nof Electing Cornerstone OP Units who made an unconditional Exercise of the
\nRedemption Right or who made a conditional exercise thereof and who will receive
\ncash in the Merger, in each case who have properly submitted a Form of Election
\nprior to the Election Date) and Cornerstone 7% Preferred Stock not later than
\nfive business days after the Effective Time of the Merger.<\/p>\n
-13-<\/p>\n
(c) EXCHANGE PROCEDURE. As soon as reasonably
\npracticable after the Effective Time, EOP shall use commercially reasonable
\nefforts to cause the Exchange Agent to mail to each holder of record of a
\nCertificate or Certificates which immediately prior to the Effective Time
\nrepresented outstanding shares of Cornerstone Common Stock (other than to
\nholders of Cornerstone Common Stock who previously surrendered with their Forms
\nof Election their Certificates for Cornerstone Common Stock) or Cornerstone 7%
\nPreferred Stock Certificate whose shares were converted into the right to
\nreceive the Merger Consideration pursuant to Section 1.10, (i) a letter of
\ntransmittal (which shall specify that delivery shall be effected, and risk of
\nloss and title to the Certificates shall pass, only upon delivery of the
\nCertificates to the Exchange Agent and shall be in a form and have such other
\nprovisions as EOP may reasonably specify) and (ii) instructions for use in
\neffecting the surrender of the Certificates in exchange for the Merger
\nConsideration. To the extent not previously surrendered with a Form of Election,
\nupon surrender of a Certificate for cancellation to the Exchange Agent or to
\nsuch other agent or agents as may be appointed by EOP, together with such letter
\nof transmittal, duly executed, and such other documents as may reasonably be
\nrequired by the Exchange Agent, the holder of such Certificate shall be entitled
\nto receive in exchange therefor the Merger Consideration into which the shares
\nof Cornerstone Common Stock or Cornerstone 7% Preferred Stock, as applicable,
\ntheretofore represented by such Certificate shall have been converted pursuant
\nto Section 1.10, together with any dividends or other distributions to which
\nsuch holder is entitled pursuant to Section 1.15(d) and cash, if any, payable in
\nlieu of fractional shares pursuant to Section 1.15(g), to be mailed (or made
\navailable for collection by hand if so elected by the surrendering holder)
\nwithin five business days of receipt thereof, and the Certificate so surrendered
\nshall forthwith be canceled. In the event of a transfer of ownership of shares
\nof Cornerstone Common Stock or Cornerstone 7% Preferred Stock which is not
\nregistered in the transfer records of Cornerstone, payment may be made to a
\nperson other than the person in whose name the Certificate so surrendered is
\nregistered if such Certificate shall be properly endorsed or otherwise be in
\nproper form for transfer and the person requesting such payment either shall pay
\nany transfer or other taxes required by reason of such payment being made to a
\nperson other than the registered holder of such Certificate or establish to the
\nsatisfaction of EOP that such tax or taxes have been paid or are not applicable.
\nUntil surrendered as contemplated by this Section 1.15, each Certificate shall
\nbe deemed at any time after the Effective Time to represent only the right to
\nreceive upon such surrender the Merger Consideration, without interest, into
\nwhich the shares of Cornerstone Common Stock or Cornerstone 7% Preferred Stock
\nheretofore represented by such Certificate shall have been converted pursuant to
\nSection 1.10, and any dividends or other distributions to which such holder is
\nentitled pursuant to Section 1.15(d). No interest will be paid or will accrue on
\nthe Merger Consideration upon the surrender of any Certificate or on any cash
\npayable pursuant to Section 1.15(d) or Section 1.15(g). EOP or the Exchange
\nAgent, as applicable, shall be entitled, in its sole and absolute discretion, to
\ndeduct and withhold from the cash or EOP Common Shares, or any combination<\/p>\n
-14-<\/p>\n
thereof, that otherwise is payable pursuant to this Agreement to any holder of
\nshares of Cornerstone Common Stock or Cornerstone 7% Preferred Stock such
\namounts as EOP or the Exchange Agent is required to deduct and withhold with
\nrespect to the making of such payment under the Code or under any provision of
\nstate, local or foreign tax law, PROVIDED THAT in determining whether
\nwithholding under Section 1445 of the Code is required, EOP shall take into
\naccount (and shall request the Exchange Agent to take into account) Section
\n1445(b)(6) of the Code and Treasury Regulations Section 1.1445-2(c)(2). For this
\npurpose, any EOP Common Shares deducted and withheld by EOP shall be valued at
\nthe last trading price of the EOP Common Shares on the New York Stock Exchange
\non the Effective Date of the Merger. To the extent that amounts are so withheld
\nby EOP or the Exchange Agent, such withheld amounts shall be treated for all
\npurposes of this Agreement as having been paid to the holder of the shares of
\nCornerstone Common Stock or Cornerstone 7% Preferred Stock, as applicable, in
\nrespect of which such deduction and withholding was made by EOP or the Exchange
\nAgent.<\/p>\n
(d) RECORD DATES FOR FINAL DIVIDENDS; DISTRIBUTIONS
\nWITH RESPECT TO UNEXCHANGED SHARES.<\/p>\n
(i) To the extent necessary to satisfy the
\nrequirements of Section 857(a)(1) of the Code for the taxable year of
\nCornerstone ending at the Effective Time of the Merger (and avoid the payment of
\ntax with respect to undistributed income), Cornerstone shall declare a dividend
\n(the “Final Company Dividend”) to holders of shares of Cornerstone Common Stock
\nand Cornerstone 7% Preferred Stock, the record date for which shall be the close
\nof business on the last business day prior to the Effective Time of the Merger,
\nin an amount equal to the minimum dividend sufficient to permit Cornerstone to
\nsatisfy such requirements. If Cornerstone determines it is necessary to declare
\nthe Final Company Dividend, it shall notify EOP at least 10 days prior to the
\ndate for the Cornerstone Stockholders Meeting, and EOP shall declare a dividend
\nper share to holders of shares of EOP Common Shares, the record date for which
\nshall be the close of business on the last business day prior to the Effective
\nTime, in an amount per EOP Common Share equal to the quotient obtained by
\ndividing (x) the Final Company Dividend paid by Cornerstone with respect to each
\nshare of Cornerstone Common Stock by (y) the Common Stock Exchange Ratio. The
\ndividends payable hereunder to holders of Cornerstone Common Stock and
\nCornerstone 7% Preferred Stock shall be paid on the last business day
\nimmediately preceding the Closing Date.<\/p>\n
(ii) No dividends or other distributions
\nwith respect to EOP Common Shares with a record date after the Effective Time
\nshall be paid to the holder of any unsurrendered Certificate with respect to the
\nshares of EOP Common Shares represented thereby, and no cash payment in lieu of
\nfractional shares shall be paid to any such holder pursuant to Section 1.15(g),
\nin each case until the surrender of such Certificate in accordance with this
\nSection 1.15. Subject to the effect of applicable escheat laws, following
\nsurrender of any such Certificate <\/p>\n
-15-<\/p>\n
there shall be paid to the holder of such Certificate, without interest, (i) at
\nthe time of such surrender, the amount of any cash payable pursuant to Section
\n1.10 and\/or in lieu of any fractional EOP Common Shares to which such holder is
\nentitled pursuant to Section 1.15(g) and (ii) if such Certificate is
\nexchangeable for one or more whole EOP Common Shares, (x) at the time of such
\nsurrender the amount of dividends or other distributions with a record date
\nafter the Effective Time theretofore paid with respect to such whole EOP Common
\nShares and (y) at the appropriate payment date, the amount of dividends or other
\ndistributions with a record date after the Effective Time but prior to such
\nsurrender and with a payment date subsequent to such surrender payable with
\nrespect to such whole EOP Common Shares.<\/p>\n
(e) NO FURTHER OWNERSHIP RIGHTS IN CORNERSTONE COMMON
\nSTOCK AND CORNERSTONE 7% PREFERRED STOCK. All Merger Consideration paid upon the
\nsurrender of Certificates in accordance with the terms of this Section 1.15
\n(including any cash paid pursuant to Section 1.15(g)) shall be deemed to have
\nbeen paid in full satisfaction of all rights pertaining to the Cornerstone
\nCommon Stock and Cornerstone 7% Preferred Stock, as applicable, theretofore
\nrepresented by such Certificates; PROVIDED, HOWEVER, that Cornerstone shall
\ntransfer to the Exchange Agent cash sufficient to pay any dividends or make any
\nother distributions with a record date prior to the Effective Time which may
\nhave been declared or made by Cornerstone on such Cornerstone Common Stock or
\nCornerstone 7% Preferred Stock in accordance with the terms of this Agreement or
\nprior to the date of this Agreement and which remain unpaid at the Effective
\nTime and have not been paid prior to such surrender, and there shall be no
\nfurther registration of transfers on the stock transfer books of Cornerstone of
\nthe Cornerstone Common Stock or Cornerstone 7% Preferred Stock which were
\noutstanding immediately prior to the Effective Time. If, after the Effective
\nTime, Certificates are presented to EOP for any reason, they shall be canceled
\nand exchanged as provided in this Section 1.15.<\/p>\n
(f) NO LIABILITY. None of Cornerstone, EOP or the
\nExchange Agent shall be liable to any person in respect of any Merger
\nConsideration or dividends delivered to a public official pursuant to any
\napplicable abandoned property, escheat or similar law. Any portion of the
\nExchange Fund delivered to the Exchange Agent pursuant to this Agreement that
\nremains unclaimed for 12 months after the Effective Time shall be redelivered by
\nthe Exchange Agent to EOP, upon demand, and any holders of Certificates who have
\nnot theretofore complied with Section 1.15(c) shall thereafter look only to EOP
\nfor delivery of the Merger Consideration and any unpaid dividends, subject to
\napplicable escheat and other similar laws.<\/p>\n
(g) NO FRACTIONAL SHARES<\/p>\n
(i) No certificates or scrip representing
\nfractional EOP Common Shares shall be issued upon the surrender for exchange of
\nCertificates, <\/p>\n
-16-<\/p>\n
and such fractional share interests will not entitle the owner thereof to vote,
\nto receive dividends or to any other rights of a shareholder of EOP.<\/p>\n
(ii) No fractional EOP Common Shares shall
\nbe issued pursuant to this Agreement. In lieu of the issuance of any fractional
\nEOP Common Shares pursuant to this Agreement, each holder of Cornerstone Common
\nStock upon surrender of a Certificate for exchange shall be paid an amount in
\ncash (without interest), rounded to the nearest cent, determined by multiplying
\n(i) the average closing price of one EOP Common Share on the New York Stock
\nExchange on the five trading days immediately preceding the Closing Date by (ii)
\nthe fractional amount of 0.7009 of an EOP Common Share which such holder would
\notherwise be entitled to receive under this Section 1.15.<\/p>\n
(h) LOST CERTIFICATES. If any Certificate shall have
\nbeen lost, stolen or destroyed, upon the making of an affidavit of that fact by
\nthe person claiming such Certificate to be lost, stolen or destroyed and, if
\nrequired by EOP or the Exchange Agent, the posting by such person of a bond in
\nsuch reasonable amount as EOP or the Exchange Agent may direct (but consistent
\nwith the practices EOP applies to its own shareholders) as indemnity against any
\nclaim that may be made against them with respect to such Certificate, the
\nExchange Agent will issue in exchange for such lost, stolen or destroyed
\nCertificate the EOP Common Shares or cash to which the holders thereof are
\nentitled pursuant to Section 1.10, any cash payable pursuant to Section 1.15(g)
\nto which the holders thereof are entitled and any dividends or other
\ndistributions to which the holders thereof are entitled pursuant to Section
\n1.15(d).<\/p>\n
(i) APPLICABILITY TO PARTNERSHIP MERGER. Except for
\nthe provisions relating to the Exchange Agent, certificates and the exchange
\nprocedure (which shall not be applicable), all other provisions of this Section
\n1.15 shall apply to Cornerstone Partnership, EOP Partnership, the Cornerstone OP
\nUnits and the Cornerstone OP Preferred Units with respect to the Partnership
\nMerger.<\/p>\n
ARTICLE 2<\/p>\n
REPRESENTATIONS AND WARRANTIES OF CORNERSTONE AND
\n CORNERSTONE PARTNERSHIP<\/p>\n
Except as set forth in the Cornerstone SEC Documents (as
\ndefined herein) or in the letter of even date herewith signed by the President
\nand Chief Executive Officer or the Chief Operating Officer of Cornerstone and
\ndelivered to EOP prior to the execution hereof (the “Cornerstone Disclosure
\nLetter”), Cornerstone and Cornerstone Partnership represent and warrant to EOP
\nand EOP Partnership as follows:<\/p>\n
2.1 ORGANIZATION, STANDING AND POWER. Cornerstone has been
\nduly organized and is validly existing and in good standing under the laws of
\nthe State of <\/p>\n
-17-<\/p>\n
Nevada. Cornerstone has all requisite corporate power and authority to own,
\noperate, lease and encumber its properties and carry on its business as now
\nbeing conducted. The Cornerstone Restated Articles of Incorporation, as amended
\n(the “Cornerstone Articles”) are in effect, and no dissolution, revocation or
\nforfeiture proceedings regarding Cornerstone have been commenced. Cornerstone is
\nduly qualified or licensed to do business as a foreign corporation and is in
\ngood standing in each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties makes such qualification or licensing
\nnecessary, other than in such jurisdictions where the failure to be so qualified
\nor licensed, individually or in the aggregate, would not have a material adverse
\neffect on the business, properties, assets, financial condition or results of
\noperations of Cornerstone, Cornerstone Partnership and the Cornerstone
\nSubsidiaries (as defined herein), taken as a whole (a “Cornerstone Material
\nAdverse Effect”). Cornerstone has delivered to EOP complete and correct copies
\nof the Cornerstone Articles and Cornerstone’s Amended and Restated Bylaws (the
\n“Cornerstone Bylaws”), in each case, as amended or supplemented to the date of
\nthis Agreement.<\/p>\n
2.2 CORNERSTONE SUBSIDIARIES.<\/p>\n
(a) SCHEDULE 2.2 to the Cornerstone Disclosure Letter
\nsets forth (i) each Subsidiary (as defined herein) of Cornerstone (the
\n“Cornerstone Subsidiaries”) and the Cornerstone Non-controlled Subsidiary (which
\nCornerstone Non-controlled Subsidiary constitutes the only entity in which
\nCornerstone owns a non-voting equity interest and has no right to control except
\nas set forth on Schedule 2.4 of the Cornerstone Disclosure Letter), (ii) the
\nownership interest therein of Cornerstone, (iii) if not, directly or indirectly,
\nwholly owned by Cornerstone, the identity and ownership interest of each of the
\nother owners of such Cornerstone Subsidiary or Cornerstone Non-controlled
\nSubsidiary, as applicable, (iv) each office property and other commercial
\nproperty owned by such Cornerstone Subsidiary or Cornerstone Non-controlled
\nSubsidiary, as applicable, and (v) if not wholly owned by such Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary, as applicable, the identity
\nand ownership interest of each of the other owners of such property. As used in
\nthis Agreement, “Subsidiary” of any Person (as defined herein) means any
\ncorporation, partnership, limited liability company, joint venture, trust or
\nother legal entity of which such Person owns (either directly or through or
\ntogether with another Subsidiary of such Person) either (i) a general partner,
\nmanaging member or other similar interest, or (ii)(A) 10% or more of the voting
\npower of the voting capital stock or other equity interests, or (B) 10% or more
\nof the outstanding voting capital stock or other voting equity interests of such
\ncorporation, partnership, limited liability company, joint venture or other
\nlegal entity. As used herein, “Person” means an individual, corporation,
\npartnership, limited liability company, joint venture, association, trust,
\nunincorporated organization or other entity. SCHEDULE 2.4 of the Cornerstone
\nDisclosure Letter sets forth a true and complete list of the equity securities
\nowned by Cornerstone, directly or indirectly, in any corporation, partnership,
\nlimited liability company, joint <\/p>\n
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venture or other legal entity, excluding Cornerstone Subsidiaries and the
\nCornerstone Non-controlled Subsidiary.<\/p>\n
(b) Except as set forth in SCHEDULE 2.2 to the
\nCornerstone Disclosure Letter, (i) all of the outstanding shares of capital
\nstock of each Cornerstone Subsidiary and Cornerstone Non-controlled Subsidiary
\nthat is a corporation have been duly authorized, validly issued and are (A)
\nfully paid and nonassessable and not subject to preemptive rights, (B) owned by
\nCornerstone or by another Cornerstone Subsidiary or Cornerstone Non-controlled
\nSubsidiary and (C) owned free and clear of all pledges, claims, liens, charges,
\nencumbrances and security interests of any kind or nature whatsoever
\n(collectively, “Liens”) and (ii) all equity interests in each Cornerstone
\nSubsidiary that is a partnership, joint venture, limited liability company or
\ntrust which are owned by Cornerstone, by another Cornerstone Subsidiary or
\nCornerstone Non-controlled Subsidiary or by Cornerstone and another Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary are owned free and clear of
\nall Liens other than pledges, if any, contained in organizational documents of
\nsuch Cornerstone Subsidiary and given to secure performance thereunder. Each
\nCornerstone Subsidiary and Cornerstone Non-controlled Subsidiary that is a
\ncorporation is duly incorporated, validly existing and in good standing under
\nthe laws of its jurisdiction of incorporation and has the requisite corporate
\npower and authority to own, operate, lease and encumber its properties and carry
\non its business as now being conducted, and each Cornerstone Subsidiary that is
\na partnership, limited liability company or trust is duly organized, validly
\nexisting and in good standing under the laws of its jurisdiction of organization
\nand has the requisite power and authority to own, operate, lease and encumber
\nits properties and carry on its business as now being conducted. Each
\nCornerstone Subsidiary and Cornerstone Non-controlled Subsidiary is duly
\nqualified or licensed to do business and is in good standing in each
\njurisdiction in which the nature of its business or the ownership or leasing of
\nits properties makes such qualification or licensing necessary, other than in
\nsuch jurisdictions where the failure to be so qualified or licensed,
\nindividually or in the aggregate, would not reasonably be expected to have a
\nCornerstone Material Adverse Effect. Complete and correct copies of the Articles
\nof Incorporation, Bylaws, organization documents and partnership, joint venture
\nand operating agreements of each Cornerstone Subsidiary and Cornerstone
\nNon-controlled Subsidiary, as amended to the date of this Agreement, have been
\npreviously delivered or made available to EOP. No effective amendment has been
\nmade to the Cornerstone Partnership Agreement since January 21, 2000.<\/p>\n
2.3 CAPITAL STRUCTURE.<\/p>\n
(a) The authorized shares of capital stock of
\nCornerstone consist of 250,000,000 shares of Cornerstone Common Stock,
\n129,638,245 of which are issued and 129,280,012 of which are outstanding on the
\ndate of this Agreement, and 65,000,000 shares of preferred stock with no par
\nvalue, of which 3,030,303 <\/p>\n
-19-<\/p>\n
shares of Cornerstone 7% Preferred Stock are issued and outstanding and 344,828
\nshares of Redeemable Preferred Stock are designated with none outstanding on the
\ndate of this Agreement.<\/p>\n
(b) Set forth in SCHEDULE 2.3(B) to the Cornerstone
\nDisclosure Letter is a true and complete list of the following: (i) each
\nqualified or nonqualified option to purchase shares of Common Stock granted
\nunder Cornerstone’s 1998 Long-Term Incentive Plan or any other formal or
\ninformal arrangement (collectively, the “Cornerstone Stock Options”); and (ii)
\nall other warrants or other rights to acquire Cornerstone Common Stock, all
\nstock appreciation rights, restricted stock, dividend equivalents, deferred
\ncompensation accounts, performance awards, restricted stock unit awards and
\nother awards which are outstanding on the date of this Agreement (“Cornerstone
\nStock Rights”). SCHEDULE 2.3(B) to the Cornerstone Disclosure Letter sets forth
\nfor each Cornerstone Stock Option and Cornerstone Stock Right the name of the
\ngrantee, the date of the grant, the number of shares of Cornerstone Common Stock
\nsubject to each option or other award, and the exercise price per share. On the
\ndate of this Agreement, except as set forth in this Section 2.3 or in SCHEDULE
\n2.3(B) to the Cornerstone Disclosure Letter, no shares of Cornerstone Common
\nStock were outstanding or reserved for issuance.<\/p>\n
(c) All outstanding shares of Cornerstone Common
\nStock are duly authorized, validly issued, fully paid and nonassessable and not
\nsubject to preemptive rights. There are no bonds, debentures, notes or other
\nindebtedness of Cornerstone having the right to vote (or convertible into, or
\nexchangeable for, securities having the right to vote) on any matters on which
\nshareholders of Cornerstone may vote, except for the Cornerstone convertible
\npromissory note dated as of January 1, 1996 which does not have voting rights
\nbut is convertible into Cornerstone Common Stock (the “Cornerstone Convertible
\nPromissory Note”).<\/p>\n
(d) Other than (i) as set forth in this Section 2.3
\nor in SCHEDULE 2.3(B), 2.3(C), or 2.3(D) to the Cornerstone Disclosure Letter,
\n(ii) Cornerstone OP Units, which may be redeemed for cash or, at the option of
\nCornerstone, Cornerstone Common Stock at a rate of one share of Cornerstone
\nCommon Stock for each Cornerstone OP Unit, (iii) shares of Cornerstone Common
\nStock issuable upon the conversion of Cornerstone 7% Preferred Stock, and (iv)
\nshares of Cornerstone Common Stock issuable pursuant to the Cornerstone
\nConvertible Promissory Note, as of the date of this Agreement, there are no
\noutstanding securities, options, warrants, calls, rights, commitments,
\nagreements, arrangements or undertakings of any kind to which Cornerstone or any
\nCornerstone Subsidiary or Cornerstone Non-controlled Subsidiary is a party or by
\nwhich such entity is bound, obligating Cornerstone or any Cornerstone Subsidiary
\nor Cornerstone Non-controlled Subsidiary to issue, deliver or sell, or cause to
\nbe issued, delivered or sold, additional shares of capital stock, voting
\nsecurities or other ownership interests of Cornerstone or any Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary or obligating Cornerstone or
\nany <\/p>\n
-20-<\/p>\n
Cornerstone Subsidiary or Cornerstone Non-controlled Subsidiary to issue, grant,
\nextend or enter into any such security, option, warrant, call, right,
\ncommitment, agreement, arrangement or undertaking (other than to Cornerstone or
\na Cornerstone Subsidiary or a Cornerstone Non-controlled Subsidiary).<\/p>\n
(e) As of the date of this Agreement, 148,735,829
\nCornerstone OP Units are validly issued and outstanding, fully paid and
\nnonassessable and not subject to preemptive rights, of which 129,638,245 are
\nowned by Cornerstone and 3,030,303 Cornerstone Preferred OP Units are validly
\nissued and outstanding, fully paid and nonassessable and not subject to
\npreemptive rights, all of which are owned by Cornerstone. SCHEDULE 2.3(E) to the
\nCornerstone Disclosure Schedule sets forth the name of each holder of
\nCornerstone OP Units and the number of Cornerstone OP Units owned by each such
\nholder as of the date of this Agreement. Except as provided in the Cornerstone
\nPartnership Agreement or as set forth on SCHEDULE 2.3(D), Cornerstone
\nPartnership has not issued or granted and is not a party to any outstanding
\ncommitments of any kind relating to, or any presently effective agreements or
\nunderstandings with respect to, the issuance or sale of interests in Cornerstone
\nPartnership, whether issued or unissued, or securities convertible or
\nexchangeable into interests in Cornerstone Partnership.<\/p>\n
(f) Except for the distribution of $0.31 per share of
\nCornerstone Common Stock and per Cornerstone OP Unit declared on January 20,
\n2000, and payable on February 29, 2000, to holders of record on January 31,
\n2000, of shares of Cornerstone Common Stock and Cornerstone OP Units, all
\ndividends on Cornerstone Common Stock and Cornerstone 7% Preferred Stock and all
\ndistributions on Cornerstone OP Units, which have been declared prior to the
\ndate of this Agreement, have been paid in full.<\/p>\n
(g) Set forth on SCHEDULE 2.3(G) to the Cornerstone
\nDisclosure Letter is a list of each registration rights agreement or other
\nagreement between Cornerstone and\/or Cornerstone Partnership, on the one hand,
\nand one or more other parties, on the other hand, which sets forth the rights of
\nany such other party or parties to cause the registration of any securities of
\nCornerstone and\/or Cornerstone Partnership pursuant to the Securities Act of
\n1933, as amended (the “Securities Act”).<\/p>\n
2.4 OTHER INTERESTS. Except for interests in the Cornerstone
\nSubsidiaries, the Cornerstone Non-controlled Subsidiary and certain other
\nentities as set forth in SCHEDULE 2.4 to the Cornerstone Disclosure Letter (the
\n“Cornerstone Other Interests”), none of Cornerstone, Cornerstone Partnership,
\nany Cornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary owns
\ndirectly or indirectly any interest or investment (whether equity or debt) in
\nany corporation, partnership, joint venture, business, trust, limited liability
\ncompany or other entity (other than investments in short-term investment
\nsecurities). With respect to the Cornerstone Other Interests, Cornerstone
\nPartnership owns such interests free and clear of all <\/p>\n
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Liens other than pledges, if any, contained in organizational documents of such
\nCornerstone Other Interests and given to secure performance thereunder. None of
\nCornerstone, Cornerstone Partnership, any Cornerstone Subsidiary or the
\nCornerstone Non-controlled Subsidiary is in material breach of any provision of
\nany agreement, document or contract which is of a material nature governing its
\nrights in or to the Cornerstone Other Interests, all of which agreements,
\ndocuments and contracts are (a) listed in Schedule 2.4 to the Cornerstone
\nDisclosure Letter, (b) unmodified except as described therein and (c) in full
\nforce and effect. To the Knowledge of Cornerstone (as defined herein), the other
\nparties to any such agreement, document or contract which is of a material
\nnature are not in material breach of any of their respective obligations under
\nsuch agreements, documents or contracts.<\/p>\n
2.5 AUTHORITY; NONCONTRAVENTION; CONSENTS.<\/p>\n
(a) Cornerstone has the requisite corporate power and
\nauthority to enter into this Agreement and, subject to the requisite Cornerstone
\nstockholder approval of the Merger Agreement and the Merger and any other
\nmatters reasonably and timely requested by any other party to effectuate the
\ntransactions contemplated by this Agreement (collectively, the “Cornerstone
\nStockholder Approvals”), to consummate the transactions contemplated by this
\nAgreement to which Cornerstone is a party. The execution and delivery of this
\nAgreement by Cornerstone and the consummation by Cornerstone of the transactions
\ncontemplated by this Agreement to which Cornerstone is a party have been duly
\nauthorized by all necessary action on the part of Cornerstone, except for and
\nsubject to the Cornerstone Stockholder Approvals and the Cornerstone Partner
\nApprovals. This Agreement has been duly executed and delivered by Cornerstone
\nand constitutes a valid and binding obligation of Cornerstone, enforceable
\nagainst Cornerstone in accordance with and subject to its terms, subject to
\napplicable bankruptcy, insolvency, moratorium or other similar laws relating to
\ncreditors’ rights and general principles of equity.<\/p>\n
(b) Cornerstone Partnership has the requisite
\npartnership power and authority to enter into this Agreement and, subject to the
\nrequisite Cornerstone Partner Approvals, to consummate the transactions
\ncontemplated by this Agreement to which Cornerstone Partnership is a party. The
\nexecution and delivery of this Agreement by Cornerstone Partnership and the
\nconsummation by Cornerstone Partnership of the transactions contemplated by this
\nAgreement to which Cornerstone Partnership is a party have been duly authorized
\nby all necessary action on the part of Cornerstone Partnership, except for and
\nsubject to the Cornerstone Stockholder Approvals and the Cornerstone Partner
\nApprovals. This Agreement has been duly executed and delivered by Cornerstone
\nPartnership and constitutes a valid and binding obligation of Cornerstone
\nPartnership, enforceable against Cornerstone Partnership in accordance with and
\nsubject to its <\/p>\n
-22-<\/p>\n
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
\nlaws relating to creditors’ rights and general principles of equity.<\/p>\n
(c) Except as set forth in SCHEDULE 2.5(C)(1) to the
\nCornerstone Disclosure Letter, the execution and delivery of this Agreement by
\nCornerstone do not, and the consummation of the transactions contemplated by
\nthis Agreement to which Cornerstone is a party and compliance by Cornerstone
\nwith the provisions of this Agreement will not, conflict with, or result in any
\nviolation of, or default (with or without notice or lapse of time, or both)
\nunder, or give rise to a right of termination, cancellation or acceleration of
\nany material obligation or to material loss of a benefit under, or result in the
\ncreation of any Lien upon any of the properties or assets of Cornerstone or any
\nCornerstone Subsidiary under, (i) the Cornerstone Articles or Cornerstone Bylaws
\nor the comparable charter or organizational documents or partnership, operating,
\nor similar agreement (as the case may be) of any Cornerstone Subsidiary or
\nCornerstone Non-controlled Subsidiary, each as amended or supplemented, (ii) any
\nloan or credit agreement, note, bond, mortgage, indenture, merger or other
\nacquisition agreement, reciprocal easement agreement, lease or other agreement,
\ninstrument, permit, concession, franchise or license applicable to Cornerstone
\nor any Cornerstone Subsidiary or Cornerstone Non-controlled Subsidiary or their
\nrespective properties or assets or (iii) subject to the governmental filings and
\nother matters referred to in the following sentence, any judgment, order,
\ndecree, statute, law, ordinance, rule or regulation (collectively, “Laws”)
\napplicable to Cornerstone or any Cornerstone Subsidiary or Cornerstone
\nNon-controlled Subsidiary, or their respective properties or assets, other than,
\nin the case of clause (ii) or (iii), any such conflicts, violations, defaults,
\nrights, loss or Liens that individually or in the aggregate would not (x) have a
\nCornerstone Material Adverse Effect or (y) prevent the consummation of the
\ntransactions contemplated by this Agreement. No consent, approval, order or
\nauthorization of, or registration, declaration or filing with, any federal,
\nstate or local government or any court, administrative or regulatory agency or
\ncommission or other governmental authority or agency, domestic or foreign (a
\n“Governmental Entity”), is required by or with respect to Cornerstone or any
\nCornerstone Subsidiary or Cornerstone Non-controlled Subsidiary in connection
\nwith the execution and delivery of this Agreement by Cornerstone or the
\nconsummation by Cornerstone of the transactions contemplated by this Agreement,
\nexcept for (i) the filing with the Securities and Exchange Commission (the
\n“SEC”) of the Joint Proxy Statement (as defined herein), (ii) the acceptance for
\nrecord of the Maryland Articles of Merger by the Department, (iii) the filing of
\nthe Nevada Articles of Merger with the Secretary of State of the State of
\nNevada, (iv) the filing of the Certificate of Merger with the Office of the
\nSecretary of State of the State of Delaware and (v) such other consents,
\napprovals, orders, authorizations, registrations, declarations and filings (A)
\nas are set forth in SCHEDULE 2.5(C)(2) to the Cornerstone Disclosure Letter, (B)
\nas may be required under (w) the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976, as amended (the “HSR Act”), (x) laws requiring transfer, recordation or
\ngains tax filings, (y) federal, state or local environmental laws or (z) <\/p>\n
-23-<\/p>\n
the “blue sky” laws of various states, to the extent applicable or (C) which, if
\nnot obtained or made, would not prevent or delay in any material respect the
\nconsummation of any of the transactions contemplated by this Agreement or
\notherwise prevent Cornerstone from performing its obligations under this
\nAgreement in any material respect or reasonably be expected to have,
\nindividually or in the aggregate, a Cornerstone Material Adverse Effect.<\/p>\n
2.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
\nLIABILITIES. Cornerstone has filed all required reports, schedules, forms,
\nstatements and other documents with the SEC since January 1, 1997 through the
\ndate hereof (the “Cornerstone SEC Documents”). SCHEDULE 2.6(A) to the
\nCornerstone Disclosure Letter contains a complete list of all Cornerstone SEC
\nDocuments filed by Cornerstone with the SEC under the Securities Exchange Act of
\n1934, as amended (the “Exchange Act”), between January 1, 1997 and the date of
\nthis Agreement. All of the Cornerstone SEC Documents (other than preliminary
\nmaterial), as of their respective filing dates, complied in all material
\nrespects with all applicable requirements of the Securities Act and the Exchange
\nAct and, in each case, the rules and regulations promulgated thereunder
\napplicable to such Cornerstone SEC Documents. None of the Cornerstone SEC
\nDocuments at the time of filing contained any untrue statement of a material
\nfact or omitted to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they were made, not misleading, except to the extent such statements
\nhave been modified or superseded by later Cornerstone SEC Documents filed and
\npublicly available prior to the date of this Agreement. The consolidated
\nfinancial statements of Cornerstone included in the Cornerstone SEC Documents
\ncomplied as to form in all material respects with applicable accounting
\nrequirements and the published rules and regulations of the SEC with respect
\nthereto, have been prepared in accordance with generally accepted accounting
\nprinciples (“GAAP”) (except, in the case of unaudited statements, as permitted
\nby the applicable rules and regulations of the SEC) applied on a consistent
\nbasis during the periods involved (except as may be indicated in the notes
\nthereto) and fairly presented in all material respects, in accordance with the
\napplicable requirements of GAAP and the applicable rules and regulations of the
\nSEC, the consolidated financial position of Cornerstone and its Subsidiaries
\ntaken as a whole, as of the dates thereof and the consolidated results of
\noperations and cash flows for the periods then ended (subject, in the case of
\nunaudited statements, to normal year-end audit adjustments). Except as set forth
\nin SCHEDULE 2.6(B) to the Cornerstone Disclosure Letter, Cornerstone has no
\nSubsidiaries which are not consolidated for accounting purposes. Except for
\nliabilities and obligations set forth in the Cornerstone SEC Documents or in
\nSCHEDULE 2.6(C) to the Cornerstone Disclosure Letter, none of Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary has any
\nliabilities or obligations of any nature (whether accrued, absolute, contingent
\nor otherwise) required by GAAP to be set forth on a consolidated balance sheet
\nof <\/p>\n
-24-<\/p>\n
Cornerstone or in the notes thereto and which, individually or in the aggregate,
\nwould have a Cornerstone Material Adverse Effect.<\/p>\n
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
\nin the Cornerstone SEC Documents or in SCHEDULE 2.7 to the Cornerstone
\nDisclosure Letter, since the date of the most recent audited financial
\nstatements included in Cornerstone SEC Documents (the “Cornerstone Financial
\nStatement Date”), Cornerstone, its Subsidiaries and the Cornerstone
\nNon-controlled Subsidiary have conducted their business only in the ordinary
\ncourse (taking into account prior practices, including the acquisition and
\ndisposition of properties and issuance of securities) and there has not been (a)
\nany material adverse change in the business, financial condition or results of
\noperations of Cornerstone and its Subsidiaries taken as a whole (a “Cornerstone
\nMaterial Adverse Change”), nor has there been any occurrence or circumstance
\nthat with the passage of time would reasonably be expected to result in a
\nCornerstone Material Adverse Change, (b) except for regular quarterly
\ndistributions not in excess of $0.31 per share of Cornerstone Common Stock or
\nCornerstone OP Unit and except for regular annual distributions not in excess of
\n$1.155 per share of Cornerstone 7% Preferred Stock (or, in each case, with
\nrespect to the period commencing on the date hereof and ending on the Closing
\nDate, distributions as necessary to maintain REIT (as defined herein) status),
\nin each case with customary record and payment dates, any authorization,
\ndeclaration, setting aside or payment of any dividend or other distribution
\n(whether in cash, stock or property) with respect to the Cornerstone Common
\nStock, the Cornerstone OP Units or the Cornerstone 7% Preferred Stock, (c) any
\nsplit, combination or reclassification of the Cornerstone Common Stock, the
\nCornerstone OP Units or the Cornerstone 7% Preferred Stock or any issuance or
\nthe authorization of any issuance of any other securities in respect of, in lieu
\nof or in substitution for, or giving the right to acquire by exchange or
\nexercise, shares of stock of Cornerstone or partnership interests in Cornerstone
\nPartnership or any issuance of an ownership interest in, any Cornerstone
\nSubsidiary or the Cornerstone Non-controlled Subsidiary, (d) any damage,
\ndestruction or loss, whether or not covered by insurance, that has or would have
\na Cornerstone Material Adverse Effect, (e) any change in accounting methods,
\nprinciples or practices by Cornerstone or any Cornerstone Subsidiary or the
\nCornerstone Non-controlled Subsidiary materially affecting its assets,
\nliabilities or business, except insofar as may have been disclosed in
\nCornerstone SEC Documents or required by a change in GAAP, or (f) any amendment
\nof any employment, consulting, severance, retention or any other agreement
\nbetween Cornerstone and any officer or director of Cornerstone.<\/p>\n
2.8 LITIGATION. Except as disclosed in the Cornerstone SEC
\nDocuments or in SCHEDULE 2.8 to the Cornerstone Disclosure Letter, and other
\nthan personal injury and other routine tort litigation arising from the ordinary
\ncourse of operations of Cornerstone, the Cornerstone Subsidiaries and the
\nCornerstone Non-controlled Subsidiary (a) which are covered by adequate
\ninsurance subject to a <\/p>\n
-25-<\/p>\n
reasonable deductible or retention limit or (b) for which all material costs and
\nliabilities arising therefrom are reimbursable pursuant to common area
\nmaintenance or similar agreements, there is no suit, action or proceeding
\npending (in which service of process has been received by an employee of
\nCornerstone, a Cornerstone Subsidiary or a Cornerstone Non-controlled
\nSubsidiary) or, to the Knowledge of Cornerstone (as hereinafter defined),
\nthreatened in writing against or affecting Cornerstone, or any Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary that, individually or in the
\naggregate, would reasonably be expected to (i) have a Cornerstone Material
\nAdverse Effect or (ii) prevent the consummation of any of the transactions
\ncontemplated by this Agreement, nor is there any judgment, decree, injunction,
\nrule or order of any court or Governmental Entity or arbitrator outstanding
\nagainst Cornerstone, any Cornerstone Subsidiary or the Cornerstone
\nNon-controlled Subsidiary having, or which, insofar as reasonably can be
\nforeseen, in the future would have, any such effect. Notwithstanding the
\nforegoing, (y) SCHEDULE 2.8 to the Cornerstone Disclosure Letter sets forth each
\nand every material uninsured claim, equal employment opportunity claim and claim
\nrelating to sexual harassment and\/or discrimination pending or, to the Knowledge
\nof Cornerstone, threatened as of the date hereof, and (z) no claim has been made
\nunder any directors’ and officers’ liability insurance policy maintained at any
\ntime by Cornerstone, any of the Cornerstone Subsidiaries or the Cornerstone
\nNon-controlled Subsidiary.<\/p>\n
2.9 PROPERTIES.<\/p>\n
(a) Except as provided in SCHEDULE 2.2 or SCHEDULE
\n2.9(A) to the Cornerstone Disclosure Letter, Cornerstone or the Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary set forth on SCHEDULE 2.2 to
\nthe Cornerstone Disclosure Letter owns fee simple title to or holds a leasehold
\ninterest in each of the real properties identified in SCHEDULE 2.2 to the
\nCornerstone Disclosure Letter (the “Cornerstone Properties”), which are all of
\nthe real estate properties owned by them, in each case (except for the Permitted
\nTitle Exceptions (as defined herein)) free and clear of liens, mortgages or
\ndeeds of trust, claims against title, charges which are liens, security
\ninterests or other encumbrances on title (“Encumbrances”). SCHEDULE 2.2 to the
\nCornerstone Disclosure Letter further identifies which of the Cornerstone
\nProperties are owned in fee simple by Cornerstone or the Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary and which of the Cornerstone
\nProperties are subject to a ground lease. Except as set forth in SCHEDULE 2.2 to
\nthe Cornerstone Disclosure Letter, no other Person has any ownership interest in
\nany of the Cornerstone Properties, and any such ownership interest so scheduled
\ndoes not materially detract from the value of the Cornerstone Subsidiary’s or
\nCornerstone Non-controlled Subsidiary’s (as the case may be) interest in, or
\nmaterially interfere with the present use of, any of the Cornerstone Properties
\nsubject thereto or affected thereby. Except as set forth in SCHEDULE 2.9(A) to
\nthe Cornerstone Disclosure Letter, none of the Cornerstone Properties is subject
\nto any restriction on the sale or other disposition thereof or on the financing
\nor <\/p>\n
-26-<\/p>\n
release of financing thereon. The Cornerstone Properties are not subject to any
\nrights of way, written agreements, laws, ordinances and regulations affecting
\nbuilding use or occupancy, or reservations of an interest in title
\n(collectively, “Property Restrictions”) or Encumbrances, except for the
\nfollowing (collectively, the “Permitted Title Exceptions”) (i) Property
\nRestrictions and Encumbrances set forth in the Cornerstone Disclosure Letter,
\n(ii) Property Restrictions imposed or promulgated by law or any governmental
\nbody or authority with respect to real property, including zoning regulations,
\nwhich do not materially adversely affect the current use of any Cornerstone
\nProperty, (iii) Property Restrictions and Encumbrances disclosed on existing
\ntitle reports or policies or existing surveys or subsequently granted by
\nCornerstone or the Cornerstone Subsidiary or Cornerstone Non-controlled
\nSubsidiary, which Property Restrictions and Encumbrances, in any event, do not
\nmaterially detract from the value of, or materially interfere with the present
\nuse of, any of the Cornerstone Properties subject thereto or affected thereby
\nand (iv) liens for real estate taxes not yet due and payable, mechanics’,
\ncarriers’, workmen’s, repairmen’s liens and other Encumbrances and Property
\nRestrictions, if any, which, individually or in the aggregate, do not materially
\ndetract from the value of or materially interfere with the present use of any of
\nthe Cornerstone Properties subject thereto or affected thereby. SCHEDULE 2.9(A)
\nto the Cornerstone Disclosure Letter lists each of the Cornerstone Properties
\nwhich are under development as of the date of this Agreement and describes the
\nstatus of such development as of the date hereof.<\/p>\n
(b) Except as provided in SCHEDULE 2.2 or SCHEDULE
\n2.9(B) to the Cornerstone Disclosure Letter, valid policies of title insurance
\nor fully-paid and enforceable commitments therefor have been issued insuring the
\napplicable Cornerstone Subsidiary’s or Cornerstone Non-controlled Subsidiary’s
\n(as the case may be) fee simple title or leasehold estate, as the case may be,
\nto the Cornerstone Properties owned by it in amounts approximately equal to the
\npurchase price therefor paid by such Cornerstone Subsidiary or Cornerstone
\nNon-controlled Subsidiary, subject only to the matters disclosed above and in
\nthe Cornerstone Disclosure Letter. Such policies are, at the date hereof, in
\nfull force and effect. No claim has been made against any such policy.<\/p>\n
(c) Except as provided in SCHEDULE 2.9(C) to the
\nCornerstone Disclosure Letter, Cornerstone has no Knowledge (i) that, any
\ncertificate, permit or license from any governmental authority having
\njurisdiction over any of the Cornerstone Properties or any agreement, easement
\nor other right which is necessary to permit the lawful use and operation of the
\nbuildings and improvements on any of the Cornerstone Properties or which is
\nnecessary to permit the lawful use and operation of all driveways, roads and
\nother means of egress and ingress to and from any of the Cornerstone Properties
\nhas not been obtained and is not in full force and effect, or of any pending
\nthreat of modification or cancellation of any of the same which would have a
\nmaterial adverse effect on such Cornerstone Property, (ii) of any written notice
\nof any violation of any federal, state or municipal law, <\/p>\n
-27-<\/p>\n
ordinance, order, regulation or requirement affecting any of the Cornerstone
\nProperties issued by any governmental authority which would have a material
\nadverse effect on such Cornerstone Property, (iii) of any structural defects
\nrelating to any Cornerstone Property which would have a material adverse effect
\non such Cornerstone Property, (iv) of any Cornerstone Property whose building
\nsystems are not in working order so as to have a material adverse effect on such
\nCornerstone Property, or (v) of any physical damage to any Cornerstone Property
\nwhich would have a material adverse effect on such Cornerstone Property for
\nwhich there is no insurance in effect covering the cost of the restoration.<\/p>\n
(d) None of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary has received any written or
\npublished notice to the effect that (i) any condemnation or rezoning proceedings
\nare pending or threatened with respect to any of the Cornerstone Properties or
\n(ii) any zoning, building or similar law, code, ordinance, order or regulation
\nis or will be violated by the continued maintenance, operation or use of any
\nbuildings or other improvements on any of the Cornerstone Properties or by the
\ncontinued maintenance, operation or use of the parking areas which would have a
\nmaterial adverse effect on such Cornerstone Property. Except as set forth in
\nSCHEDULE 2.9(D) to the Cornerstone Disclosure Letter, all work required to be
\nperformed, payments required to be made and actions required to be taken prior
\nto the date hereof pursuant to any agreement entered into with a governmental
\nbody or authority in connection with a site approval, zoning reclassification or
\nother similar action relating to any Cornerstone Properties (E.G., Local
\nImprovement District, Road Improvement District, Environmental Mitigation) have
\nbeen performed, paid or taken, as the case may be, and Cornerstone has no
\nKnowledge of any planned or proposed work, payments or actions that may be
\nrequired after the date hereof pursuant to such agreements, except as set forth
\nin development or operating budgets for such Cornerstone Properties delivered to
\nEOP and EOP Partnership prior to the date hereof and other than those which
\nwould not reasonably be expected to have a material adverse effect on any of
\nCornerstone or the Cornerstone Subsidiaries or the Cornerstone Non-controlled
\nSubsidiary.<\/p>\n
(e) The rent rolls previously provided by Cornerstone
\nto EOP (the “Cornerstone Rent Roll”) list each Cornerstone Space Lease (as
\ndefined herein) in effect as of the dates set forth therein, none of which are
\nearlier than December 31, 1999. “Cornerstone Space Lease” means each lease or
\nother right of occupancy affecting or relating to a property in which
\nCornerstone Partnership (or an entity in which it directly or indirectly has an
\ninterest) is the landlord, either pursuant to the terms of the lease agreement
\nor as successor to any prior landlord, but excluding any ground lease.
\nCornerstone has made available to EOP true, correct and complete copies of all
\nCornerstone Space Leases, including all amendments, modifications, supplements,
\nrenewals, extensions and guarantees related thereto, as of the date hereof.
\nExcept for discrepancies that, either individually or in the aggregate, would
\nnot reasonably be expected to have a <\/p>\n
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Cornerstone Material Adverse Effect, all information set forth in the
\nCornerstone Rent Roll is true, correct and complete as of the date thereof.
\nExcept as set forth in a delinquency report made available to EOP, none of
\nCornerstone, any Cornerstone Subsidiary or the Cornerstone Non-controlled
\nSubsidiary, on the one hand, nor, to the knowledge of Cornerstone or Cornerstone
\nPartnership, any other party, on the other hand, is in monetary default under
\nany Cornerstone Space Lease, except for such defaults that would not reasonably
\nbe expected to have a Cornerstone Material Adverse Effect.<\/p>\n
2.10 ENVIRONMENTAL MATTERS.<\/p>\n
(a) “Environmental Law” shall mean all applicable Laws
\nrelating to the protection of human health or safety and natural resources or
\nthe environment, including, without limitation, Laws relating to the use,
\nmanufacturing, generation, recycling, reuse, sale, storage, handling, transport,
\ntreatment or disposal of any Hazardous Materials (including the Comprehensive
\nEnvironmental Response, Compensation, and Liability Act, as amended, 42 U.S.C.
\nss 9601 et seq. (“CERCLA”)). “Hazardous Materials” shall mean substances, wastes
\nor materials listed, regulated or defined under any Environmental Law, and shall
\ninclude “hazardous wastes,” “hazardous substances,” “hazardous materials,”
\npetroleum or any fraction thereof, asbestos, lead-paint, urea-formaldehyde, and
\npolychlorinated biphenyls. “Release” shall have the meaning set forth in Section
\n101 of CERCLA, without regard to the exclusions set forth therein.<\/p>\n
(b) Except as disclosed in the Cornerstone SEC Documents or in
\nSCHEDULE 2.10(A) to the Cornerstone Disclosure Letter,<\/p>\n
(i) none of Cornerstone, any of the Cornerstone
\nSubsidiaries or the Cornerstone Non-controlled Subsidiary or, to Cornerstone’s
\nKnowledge, any other Person has caused or permitted the presence of any
\nHazardous Materials at, on or under any of the Cornerstone Properties and none
\nof Cornerstone, any of the Cornerstone Subsidiaries or the Cornerstone
\nNon-controlled Subsidiary has any knowledge of the presence of any Hazardous
\nMaterials at, on or under any of the Cornerstone Properties, in each of the
\nforegoing cases, such that the presence of such Hazardous Materials (including
\nthe presence of asbestos in any buildings or improvements at the Cornerstone
\nProperties) would, individually or in the aggregate, reasonably be expected to
\nhave a Cornerstone Material Adverse Effect;<\/p>\n
(ii) except in accordance with the Environmental
\nPermits (as defined herein) there have been no Releases of Hazardous Materials
\nat, on, under or from (A) the Cornerstone Properties or (B) any real property
\npreviously owned, operated or leased by Cornerstone, the Cornerstone
\nSubsidiaries, or the Cornerstone Non-controlled Subsidiary (the “Former
\nCornerstone Properties”) during the period of such ownership, operation or
\ntenancy, and none of Cornerstone, any of the Cornerstone Subsidiaries or the
\nCornerstone Non-controlled Subsidiary <\/p>\n
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has any knowledge of any Releases of Hazardous Materials having occurred or
\npresently occurring at, on, under or from the Cornerstone Properties or the
\nFormer Cornerstone Properties, which would, individually or in the aggregate,
\nreasonably be expected to have a Cornerstone Material Adverse Effect;<\/p>\n
(iii) Cornerstone, the Cornerstone Subsidiaries and
\nthe Cornerstone Non-controlled Subsidiary have not failed to comply with all
\nEnvironmental Laws, and none of Cornerstone, any of the Cornerstone Subsidiaries
\nor the Cornerstone Non-controlled Subsidiary has any liability under the
\nEnvironmental Laws, except to the extent that any such failure to comply or any
\nsuch liability, individually or in the aggregate, would not reasonably be
\nexpected to have a Cornerstone Material Adverse Effect; and<\/p>\n
(iv) Cornerstone, the Cornerstone Subsidiaries and
\nthe Cornerstone Non-controlled Subsidiary have been duly issued, and currently
\nhave and will maintain through the Closing Date, all permits, licenses,
\ncertificates and approvals required under any Environmental Law (collectively,
\nthe “Environmental Permits”) necessary to operate their businesses as currently
\noperated except where the failure to obtain and maintain such Environmental
\nPermit would not have a material adverse effect on the Cornerstone Property.
\nCornerstone, the Cornerstone Subsidiaries and the Cornerstone Non-controlled
\nSubsidiary have timely filed applications for all Environmental Permits. All of
\nthe Environmental Permits are transferable and none require consent,
\nnotification or other action to remain in full force and effect following
\nconsummation of the transactions contemplated hereby.<\/p>\n
(c) Cornerstone has previously delivered or made available to
\nEOP complete copies of all material information, documents and reports,
\nincluding, without limitation, environmental investigations and testing or
\nanalysis that are in the possession or control of any of Cornerstone, the
\nCornerstone Subsidiaries and the Cornerstone Non-controlled Subsidiary and which
\nrelate to compliance with Environmental Laws by any of them or to the past or
\ncurrent environmental condition of the Cornerstone Properties.<\/p>\n
2.11 RELATED PARTY TRANSACTIONS. Set forth in SCHEDULE 2.11 to
\nthe Cornerstone Disclosure Letter is a list of all material arrangements,
\nagreements and contracts entered into by Cornerstone, any Cornerstone Subsidiary
\nand the Cornerstone Non-controlled Subsidiary with (a) any investment banker or
\nfinancial advisor, (b) any person who is an officer, director or Affiliate (as
\ndefined herein) of Cornerstone or any Subsidiary or the Cornerstone
\nNon-controlled Subsidiary, any relative of any of the foregoing or any entity of
\nwhich any of the foregoing is an Affiliate or (c) any person who acquired
\nCornerstone Common Stock, Cornerstone OP Units or Cornerstone 7% Preferred Stock
\nin a private placement, in each case which remain in effect and are not
\notherwise disclosed in the SEC Documents. Such documents, copies of all of which
\nhave previously been delivered or made available to EOP, are listed in SCHEDULE
\n2.11 to the Cornerstone Disclosure Letter.<\/p>\n
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As used in this Agreement, the term “Affiliate” shall have the same meaning as
\nsuch term is defined in Rule 405 promulgated under the Securities Act.<\/p>\n
2.12 EMPLOYEE BENEFITS. As used herein, the term “Employee
\nPlan” includes any pension, retirement, savings, disability, medical, dental,
\nhealth, life, death benefit, group insurance, profit sharing, deferred
\ncompensation, stock option, bonus, incentive, vacation pay, tuition
\nreimbursement, severance pay, or other employee benefit plan, trust, agreement,
\ncontract, agreement, policy or commitment (including, without limitation, any
\npension plan, as defined in Section 3(2) of the Employee Retirement Income
\nSecurity Act of 1974, as amended, and the rules and regulations promulgated
\nthereunder (“ERISA”) (“Pension Plan”), and any welfare plan as defined in
\nSection 3(1) of ERISA (“Welfare Plan”)), whether any of the foregoing is funded,
\ninsured or self-funded, written or oral, (i) sponsored or maintained by
\nCornerstone, any Cornerstone Subsidiary or the Cornerstone Non-controlled
\nSubsidiary (each, a “Controlled Group Member”) and covering any Controlled Group
\nMember’s active or former employees (or their beneficiaries), (ii) to which any
\nControlled Group Member is a party or by which any Controlled Group Member (or
\nany of the rights, properties or assets thereof) is bound or (iii) with respect
\nto which any current Controlled Group Member may otherwise have any material
\nliability (whether or not such Controlled Group Member still maintains such
\nEmployee Plan). Each Employee Plan is listed on SCHEDULE 2.12 to the Cornerstone
\nDisclosure Letter. Except as disclosed in SCHEDULE 2.12 to the Cornerstone
\nDisclosure Letter, with respect to the Employee Plans:<\/p>\n
(a) No Controlled Group Member has any continuing
\nliability under any Welfare Plan which provides for continuing benefits or
\ncoverage for any participant or any beneficiary of a participant after such
\nparticipant’s termination of employment, except as may be required by Section
\n4980B of the Code or Section 601 (et seq.) of ERISA, or under any applicable
\nstate law, and at the expense of the participant or the beneficiary of the
\nparticipant.<\/p>\n
(b) Each Employee Plan complies in all material
\nrespects with the applicable requirements of ERISA and any other applicable law
\ngoverning such Employee Plan, and, to the Knowledge of Cornerstone, each
\nEmployee Plan has at all times been properly administered in all material
\nrespects in accordance with all such requirements of law, and in accordance with
\nits terms and the terms of any applicable collective bargaining agreement to the
\nextent consistent with all such requirements of law. Each Pension Plan which is
\nintended to be qualified is qualified under Section 401(a) of the Code, has
\nreceived a favorable determination letter from the IRS stating that such Plan
\nmeets the requirements of Section 401(a) of the Code and that the trust
\nassociated with such Plan is tax-exempt under Section 501(a) of the Code and, to
\nthe Knowledge of Cornerstone, no event has occurred which would jeopardize the
\nqualified status of any such plan or the tax exempt status of any such trust
\nunder Sections 401(a) and Section 501(a) of the Code, respectively. No lawsuits,
\nclaims (other than routine claims for benefits) or <\/p>\n
-31-<\/p>\n
complaints to, or by, any person or governmental entity have been filed, are
\npending or, to the Knowledge of Cornerstone, threatened with respect to any
\nEmployee Plan and, to the Knowledge of Cornerstone, there is no fact or
\ncontemplated event which would be expected to give rise to any such lawsuit,
\nclaim (other than routine claims for benefits) or complaint with respect to any
\nPension Plan. Without limiting the foregoing, the following are true with
\nrespect to each Employee Plan:<\/p>\n
(i) all Controlled Group Members have complied in all
\n material respects with the reporting and disclosure
\n requirements of ERISA, the Code, or both, with respect to each
\n Employee Plan and no Controlled Group Member has incurred any
\n material liability in connection with such reporting or
\n disclosure;<\/p>\n
(ii) all contributions and payments with respect to
\n Employee Plans that are required to be made by a Controlled
\n Group Member with respect to periods ending on or before the
\n Closing Date (including periods from the first day of the
\n current plan or policy year to the Closing Date) have been, or
\n will be, made or accrued before the Closing Date in accordance
\n with the appropriate plan document, actuarial report,
\n collective bargaining agreements or insurance contracts or
\n arrangements or as otherwise required by ERISA or the Code;
\n and<\/p>\n
(iii) with respect to each such Employee Plan, to the
\n extent applicable, Cornerstone has delivered to or has made
\n available to EOP true and complete copies of (A) plan
\n documents, or any and all other documents that establish the
\n existence of the plan, trust, arrangement, contract, policy or
\n commitment and all amendments thereto, (B) the most recent
\n determination letter, if any, received from the IRS, (C) the
\n three most recent Form 5500 Annual Reports (and all schedules
\n and reports relating thereto) and actuarial reports and (D)
\n all related trust agreements, insurance contract or other
\n funding agreements that implement each such Employee Plan.<\/p>\n
(c) With respect to each Employee Plan, to the
\nKnowledge of Cornerstone, there has not occurred, and no person or entity is
\ncontractually bound to enter into, any “prohibited transaction” within the
\nmeaning of Section 4975(c) of the Code or Section 406 of ERISA, which
\ntransaction is not exempt under Section 4975(d) of the Code or Section 408 of
\nERISA and which could subject Cornerstone or any Controlled Group Member to
\nmaterial liability.<\/p>\n
(d) No Controlled Group Member has maintained or been
\nobligated to contribute to any Employee Plan subject to Code Section 412 or
\nTitle IV of ERISA. No Employee Plan subject to Code Section 412 or Title IV of
\nERISA has been terminated.<\/p>\n
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(e) With respect to each Pension Plan maintained by
\nany Controlled Group Member, such Plan provides the Plan Sponsor the authority
\nto amend or terminate the Plan at any time, subject to applicable requirements
\nof ERISA and the Code.<\/p>\n
2.13 EMPLOYEE POLICIES. The employee handbooks of Cornerstone,
\nthe Cornerstone Subsidiaries and the Cornerstone Non-controlled Subsidiary
\ncurrently in effect are attached as SCHEDULE 2.13 to the Cornerstone Disclosure
\nLetter and fairly and accurately summarize all material employee policies,
\nvacation policies and payroll policies.<\/p>\n
2.14 TAXES.<\/p>\n
(a) Each of Cornerstone, the Cornerstone Subsidiaries
\nand the Cornerstone Non-controlled Subsidiary (A) has filed all Tax returns and
\nreports required to be filed by it (after giving effect to any filing extension
\nproperly granted by a Governmental Entity having authority to do so) and all
\nsuch returns and reports are accurate and complete in all material respects, (B)
\nhas paid (or Cornerstone has paid on its behalf) all Taxes (as defined herein)
\nshown on such returns and reports as required to be paid by it, and (C) has
\ncomplied in all material respects with all applicable laws, rules and
\nregulations relating to the payment and withholding of Taxes (including, without
\nlimitation, withholding of Taxes pursuant to Sections 1441, 1442, 1445, 3121,
\nand 3402 of the Code or similar provisions under any foreign laws) and has,
\nwithin the time period prescribed by law, withheld and paid over to the proper
\ngovernmental entities all amounts required to be so withheld and paid over under
\napplicable laws and regulations, except, with respect to all of the foregoing,
\nwhere the failure to file such tax returns and reports or failure to pay such
\nTaxes or failure to comply with such withholding requirements would not
\nreasonably be expected to have a Cornerstone Material Adverse Effect. The most
\nrecent audited financial statements contained in the Cornerstone SEC Documents
\nreflect an adequate reserve for all material Taxes payable by Cornerstone, the
\nCornerstone Subsidiaries and the Cornerstone Non-controlled Subsidiary for all
\ntaxable periods and portions thereof through the date of such financial
\nstatements. Since the Cornerstone Financial Statement Date, Cornerstone has
\nincurred no liability for Taxes under Sections 857(b), 860(c) or 4981 of the
\nCode, including without limitation any Tax arising from a prohibited transaction
\ndescribed in Section 857(b)(6) of the Code, and none of Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary has incurred
\nany material liability for Taxes other than in the ordinary course of business.
\nNo event has occurred, and no condition or circumstance exists, which presents a
\nmaterial risk that any material Tax described in the preceding sentences will be
\nimposed upon Cornerstone, any Cornerstone Subsidiary, or the Cornerstone
\nNon-controlled Subsidiary. None of Cornerstone, any Cornerstone Subsidiary or
\nthe Cornerstone Non-controlled Subsidiary is the subject of any audit,
\nexamination, or other proceeding in respect of federal income Taxes, and to
\nCornerstone’s <\/p>\n
-33-<\/p>\n
Knowledge, no audit, examination or other proceeding in respect of federal
\nincome Taxes involving any of Cornerstone, any Cornerstone Subsidiary, or the
\nCornerstone Non-controlled Subsidiary is being considered by any Tax authority.
\nTo the Knowledge of Cornerstone, no deficiencies for any Taxes have been
\nproposed, asserted or assessed against Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary, and no requests for waivers of the
\ntime to assess any such Taxes are pending. As used in this Agreement, “Taxes”
\nshall include all taxes, charges, fees, levies and other assessments, including,
\nwithout limitation, income, gross receipts, excise, property, sales, withholding
\n(including, without limitation, dividend withholding and withholding required
\npursuant to Sections 1445 and 1446 of the Code), social security, occupation,
\nuse, service, license, payroll, franchise, transfer and recording taxes, fees
\nand charges, including estimated taxes, imposed by the United States or any
\ntaxing authority (domestic or foreign), whether computed on a separate,
\nconsolidated, unitary, combined or any other basis, and any interest, fines,
\npenalties or additional amounts attributable to, or imposed upon, or with
\nrespect to any such taxes, charges, fees, levies or other assessments.<\/p>\n
(b) Cornerstone (i) for all taxable years for which
\nthe Internal Revenue Service could assert a tax liability, has been subject to
\ntaxation as a real estate investment trust (a “REIT”) within the meaning of
\nSection 856 of the Code and has satisfied all requirements to qualify as a REIT
\nfor all such years, (ii) has operated since December 31, 1999 to the date of
\nthis representation, and intends to continue to operate, in such a manner as to
\nqualify as a REIT for the taxable year ending on the earlier of December 31,
\n2000 or the Closing Date and, if later, for the taxable year of Cornerstone
\nending on the Closing Date, and (iii) has not taken or omitted to take any
\naction which would reasonably be expected to result in a challenge to its status
\nas a REIT and, to Cornerstone’s Knowledge, no such challenge is pending or
\nthreatened. Each Cornerstone Subsidiary which is a partnership, joint venture or
\nlimited liability company (i) has been since its formation and continues to be
\ntreated for federal income tax purposes as a partnership and not as a
\ncorporation or an association taxable as a corporation and (ii) has not since
\nthe later of its formation or the acquisition by Cornerstone of a direct or
\nindirect interest therein, owned any assets (including, without limitation,
\nsecurities) that would cause Cornerstone to violate Section 856(c)(4) of the
\nCode. Cornerstone Partnership is not a publicly traded partnership within the
\nmeaning of Section 7704(b) of the Code that is taxable as a corporation pursuant
\nto Section 7704(a) of the Code. Each Cornerstone Subsidiary which is a
\ncorporation has been since its formation a qualified REIT subsidiary under
\nSection 856(i) of the Code. Neither Cornerstone nor any Cornerstone Subsidiary
\nholds any asset (x) the disposition of which would be subject to rules similar
\nto Section 1374 of the Code as a result of an election under IRS Notice 88-19 or
\nTemporary Treas. Reg. ss.1.337(d)-5T or (y) which is subject to a consent filed
\npursuant to Section 341(f) of the Code and the regulations thereunder.<\/p>\n
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2.15 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS. SCHEDULE
\n2.15 to the Cornerstone Disclosure Letter contains a true and complete list of
\nall arrangements, agreements or plans pursuant to which cash and non-cash
\npayments which will become payable (and the maximum aggregate amount which may
\nbe payable thereunder) to each employee, officer or director of Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary as a result
\nof the Merger or a termination of service subsequent to the consummation of the
\nMerger. Except as described in SCHEDULE 2.15 to the Cornerstone Disclosure
\nLetter, or as otherwise provided for in this Agreement, there is no employment
\nor severance contract, or other agreement requiring payments, cancellation of
\nindebtedness or other obligation to be made on a change of control or otherwise
\nas a result of the consummation of any of the transactions contemplated by this
\nAgreement or as a result of a termination of service subsequent to the
\nconsummation of any of the transactions contemplated by this Agreement, with
\nrespect to any employee, officer or director of Cornerstone, any Cornerstone
\nSubsidiary or the Cornerstone Non-controlled Subsidiary. There is no agreement
\nor arrangement with any employee, officer or other service provider under which
\nCornerstone, any Cornerstone Subsidiary or any Cornerstone Non-controlled
\nSubsidiary has agreed to pay any tax that might be owed under Section 4999 of
\nthe Code with respect to payments to such individuals.<\/p>\n
2.16 BROKER; SCHEDULE OF FEES AND EXPENSES. No broker,
\ninvestment banker, financial advisor or other person, other than Lazard Freres & Co. L.L.C. the fees and expenses of which are described in the engagement letter
\ndated January 28, 2000, between Lazard Freres & Co. L.L.C. and Cornerstone, a
\ntrue, correct and complete copy of which has previously been given to EOP, is
\nentitled to any broker’s, finder’s, financial advisor’s or other similar fee or
\ncommission in connection with the transactions contemplated hereby based upon
\narrangements made by or on behalf of Cornerstone or any Cornerstone Subsidiary.<\/p>\n
2.17 COMPLIANCE WITH LAWS. None of Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary has violated
\nor failed to comply with any statute, law, ordinance, regulation, rule,
\njudgment, decree or order of any Governmental Entity applicable to its business,
\nproperties or operations, except to the extent that such violation or failure
\nwould not reasonably be expected to have a Cornerstone Material Adverse Effect.<\/p>\n
2.18 CONTRACTS; DEBT INSTRUMENTS.<\/p>\n
(a) None of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary has received a written notice that
\nit is in violation of or in default under (nor to the Knowledge of Cornerstone
\ndoes there exist any condition which upon the passage of time or the giving of
\nnotice or both would cause such a violation of or default under) any material
\nloan or credit agreement, note, bond, mortgage, indenture, lease, permit,
\nconcession, franchise, <\/p>\n
-35-<\/p>\n
license or any other material contract, agreement, arrangement or understanding,
\nto which it is a party or by which it or any of its properties or assets is
\nbound, nor to the Knowledge of Cornerstone does such a violation or default
\nexist, except to the extent that such violation or default, individually or in
\nthe aggregate, would not reasonably be expected to have a Cornerstone Material
\nAdverse Effect.<\/p>\n
(b) Except for any of the following expressly
\nidentified in Cornerstone SEC Documents, SCHEDULE 2.18(B) to the Cornerstone
\nDisclosure Letter sets forth a list of each material loan or credit agreement,
\nnote, bond, mortgage, indenture and any other agreement or instrument pursuant
\nto which any Indebtedness (as defined herein) of Cornerstone, the Cornerstone
\nSubsidiaries and the Cornerstone Non-controlled Subsidiary, other than
\nIndebtedness payable to Cornerstone, a Cornerstone Subsidiary or a Cornerstone
\nNon-controlled Subsidiary, is outstanding or may be incurred. For purposes of
\nthis Section 2.18, “Indebtedness” shall mean (i) indebtedness for borrowed
\nmoney, whether secured or unsecured, (ii) obligations under conditional sale or
\nother title retention agreements relating to property purchased by such person,
\n(iii) capitalized lease obligations, (iv) obligations under interest rate cap,
\nswap, collar or similar transaction or currency hedging transactions (valued at
\nthe termination value thereof) and (v) guarantees of any such indebtedness of
\nany other person.<\/p>\n
(c) To the extent not set forth in response to the
\nrequirements of Section 2.18(b), SCHEDULE 2.18(C) to the Cornerstone Disclosure
\nLetter sets forth each interest rate cap, interest rate collar, interest rate
\nswap, currency hedging transaction, and any other agreement relating to a
\nsimilar transaction to which Cornerstone, any Cornerstone Subsidiary or the
\nCornerstone Non-controlled Subsidiary is a party or an obligor with respect
\nthereto.<\/p>\n
(d) Except as set forth in SCHEDULE 2.18(D) of the
\nCornerstone Disclosure Letter, none of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary is a party to any agreement which
\nwould restrict any of them from prepaying any of their Indebtedness without
\npenalty or premium at any time or which requires any of them to maintain any
\namount of Indebtedness with respect to any of the Cornerstone Properties.<\/p>\n
(e) Except as set forth in SCHEDULE 2.18(E) to the
\nCornerstone Disclosure Letter, none of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary is a party to any agreement
\nrelating to the management of any Cornerstone Property by any Person other than
\nCornerstone, a Cornerstone Subsidiary or a Cornerstone Non-controlled
\nSubsidiary.<\/p>\n
(f) None of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary is a party to any agreement
\npursuant to which Cornerstone, any Cornerstone Subsidiary or the Cornerstone
\nNon-controlled Subsidiary manages or provides services with respect to any real
\nproperties other <\/p>\n
-36-<\/p>\n
than Cornerstone Properties, except for the agreements described in SCHEDULE
\n2.18(F) to the Cornerstone Disclosure Letter.<\/p>\n
(g) Cornerstone has delivered to EOP prior to the
\ndate of this Agreement a true and complete capital budget for the year 2000
\nrelating to budgeted capital improvements and development. SCHEDULE 2.18(G) to
\nthe Cornerstone Disclosure Letter lists all material agreements entered into by
\nCornerstone, each of the Cornerstone Subsidiaries and the Cornerstone
\nNon-controlled Subsidiary relating to the development or construction of, or
\nadditions or expansions to, any Cornerstone Real Properties (or any properties
\nwith respect to which Cornerstone has executed as of the date of this Agreement
\na purchase agreement or other similar agreement) which are currently in effect
\nand under which Cornerstone or any of the Cornerstone Subsidiaries or the
\nCornerstone Non-controlled Subsidiary currently has, or expects to incur, an
\nobligation in excess of $250,000 in the aggregate. True, correct and complete
\ncopies of such agreements have previously been delivered or made available to
\nEOP.<\/p>\n
(h) SCHEDULE 2.18(H) to the Cornerstone Disclosure
\nLetter lists all agreements entered into by Cornerstone, any Cornerstone
\nSubsidiary or the Cornerstone Non-controlled Subsidiary providing for the sale
\nof, or option to sell, any Cornerstone Properties or the purchase of, or option
\nto purchase, by Cornerstone, any Cornerstone Subsidiary or the Cornerstone
\nNon-controlled Subsidiary, on the one hand, or the other party thereto, on the
\nother hand, any real estate which are currently in effect.<\/p>\n
(i) Except as set forth in SCHEDULE 2.18(I) to the
\nCornerstone Disclosure Letter, none of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary has any material continuing
\ncontractual liability (A) for indemnification or otherwise under any agreement
\nrelating to the sale of real estate previously owned, whether directly or
\nindirectly, by Cornerstone, any Cornerstone Subsidiary or Cornerstone
\nNon-controlled Subsidiary or (B) to pay any additional purchase price for any of
\nthe Cornerstone Properties.<\/p>\n
(j) Except as set forth in SCHEDULE 2.18(J) to the
\nCornerstone Disclosure Letter, none of Cornerstone, any Cornerstone Subsidiary
\nor the Cornerstone Non-controlled Subsidiary has entered into or is subject,
\ndirectly or indirectly, to any “Tax Protection Agreements.” As used herein, a
\nTax Protection Agreement is an agreement, oral or written, (A) that has as one
\nof its purposes to permit a person or entity to take the position that such
\nperson or entity could defer federal taxable income that otherwise might have
\nbeen recognized upon a transfer of property to the Cornerstone Partnership or
\nany other Cornerstone Subsidiary that is treated as a partnership for federal
\nincome tax purposes, and that (i) prohibits or restricts in any manner the
\ndisposition of any assets of Cornerstone, any Cornerstone Subsidiary or the
\nCornerstone Non-controlled Subsidiary, (ii) requires that Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-<\/p>\n
-37-<\/p>\n
controlled Subsidiary maintain, or put in place, or replace, indebtedness,
\nwhether or not secured by one or more of the Cornerstone Properties, or (iii)
\nrequires that Cornerstone, any Cornerstone Subsidiary or the Cornerstone
\nNon-controlled Subsidiary offer to any person or entity at any time the
\nopportunity to guarantee or otherwise assume, directly or indirectly (including,
\nwithout limitation, through a “deficit restoration obligation,” indemnification
\nagreement or other similar arrangement), the risk of loss for federal income tax
\npurposes for indebtedness or other liabilities of Cornerstone, any Cornerstone
\nSubsidiary or the Cornerstone Non-controlled Subsidiary, (B) that specifies or
\nrelates to a method of taking into account book-tax disparities under Section
\n704(c) of the Code with respect to one or more assets of Cornerstone or a
\nCornerstone Subsidiary, or (C) that requires a particular method for allocating
\none or more liabilities of Cornerstone or any Cornerstone Subsidiary under
\nSection 752 of the Code. None of Cornerstone, any Cornerstone Subsidiary or the
\nCornerstone Non-controlled Subsidiary is in violation of or in default under any
\nTax Protection Agreement.<\/p>\n
(k) Except as set forth in SCHEDULE 2.18(K) to the
\nCornerstone Disclosure Letter and for the Confidentiality Agreement, dated
\nJanuary 13, 2000 between Cornerstone and EOP (the “Confidentiality Agreement”)
\nand other confidentiality agreements entered into in the ordinary course of
\nbusiness, neither Cornerstone nor any Cornerstone Subsidiary or the Cornerstone
\nNon-controlled Subsidiary is a party to any confidentiality, standstill, lock-up
\nor voting agreement.<\/p>\n
2.19 OPINION OF FINANCIAL ADVISOR. Cornerstone has received
\nthe written opinion of Lazard Freres & Co. L.L.C. Cornerstone’s financial
\nadvisor, to the effect that the proposed consideration to be received by the
\nholders of Cornerstone Common Stock is fair to such holders from a financial
\npoint of view.<\/p>\n
2.20 STATE TAKEOVER STATUTES. Cornerstone has taken all action
\nnecessary to exempt the transactions contemplated by this Agreement between EOP
\nand Cornerstone and its Affiliates from the operation of any “fair price,”
\n“moratorium,” “control share acquisition” or any other anti-takeover statute or
\nsimilar statute enacted under the laws of the State of Nevada and the State of
\nDelaware or federal laws of the United States or similar statute or regulation
\n(a “Takeover Statute”).<\/p>\n
2.21 INVESTMENT COMPANY ACT OF 1940. None of Cornerstone, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary is, or at
\nthe Effective Time will be, required to be registered under the Investment
\nCompany Act of 1940, as amended (the “1940 Act”).<\/p>\n
2.22 DEFINITION OF “KNOWLEDGE OF CORNERSTONE”. As used in this
\nAgreement, the phrase “Knowledge of Cornerstone” (or words of similar import)
\nmeans the actual knowledge of those individuals identified in SCHEDULE 2.22 to
\nthe Cornerstone Disclosure Letter.<\/p>\n
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2.23 REQUIRED STOCKHOLDER APPROVALS AND PARTNER APPROVALS. The
\naffirmative vote of the holders of at least a majority of the outstanding
\nCornerstone Common Stock and the holders of at least a majority of the
\noutstanding Cornerstone 7% Preferred Stock are the only votes of the holders of
\nany class or series of Cornerstone capital stock necessary or required under
\nthis Agreement or under applicable law to approve the Merger and this Agreement.
\nThe approval of Cornerstone and the affirmative vote of at least a majority of
\nall Cornerstone limited partner interests entitled to be cast, voting in
\naccordance with the Cornerstone Partnership Agreement, is the only vote of the
\nholders of any class or series of Cornerstone Partnership’s partnership
\ninterests necessary or required under this Agreement or under applicable law to
\napprove the Merger, the withdrawal of Cornerstone as general partner and the
\nPartnership Merger.<\/p>\n
ARTICLE 3<\/p>\n
REPRESENTATIONS AND WARRANTIES OF EOP AND EOP
\n PARTNERSHIP<\/p>\n
Except as set forth in the EOP SEC Documents (as defined
\nherein) or in the letter of even date herewith signed by the President or an
\nExecutive Vice President of EOP and delivered to Cornerstone prior to the
\nexecution hereof (the “EOP Disclosure Letter”), EOP and EOP Partnership
\nrepresent and warrant to Cornerstone and Cornerstone Partnership as follows:<\/p>\n
3.1 ORGANIZATION, STANDING AND POWER OF EOP. EOP is a real
\nestate investment trust duly organized, validly existing and in good standing
\nunder the laws of Maryland and has all requisite power and authority to own,
\noperate, lease and encumber its properties and carry on its business as now
\nbeing conducted. EOP is duly qualified or licensed to do business as a foreign
\ntrust and is in good standing in each jurisdiction in which the nature of its
\nbusiness or the ownership or leasing of its properties makes such qualification
\nor licensing necessary, other than in such jurisdictions where the failure to be
\nso qualified or licensed, individually or in the aggregate, would not reasonably
\nbe expected to have a material adverse effect on the business, properties,
\nassets, financial condition or results of operations of EOP and the Subsidiaries
\nof EOP (collectively, “EOP Subsidiaries”), taken as a whole (an “EOP Material
\nAdverse Effect”). EOP has delivered to Cornerstone complete and correct copies
\nof the EOP Declaration of Trust (as the same is proposed to be modified by each
\nof the Proposed EOP Charter Amendments (as defined herein)) and the EOP Bylaws,
\nas amended or supplemented to the date of this Agreement.<\/p>\n
3.2 EOP SUBSIDIARIES.<\/p>\n
(a) SCHEDULE 3.2(A) to the EOP Disclosure Letter sets
\nforth (i) each EOP Subsidiary and each entity in which EOP holds non-voting
\nequity <\/p>\n
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securities (but no voting equity securities) (collectively, the “EOP
\nNon-controlled Subsidiaries”), (ii) the ownership interest therein of EOP, (iii)
\nif not wholly owned by EOP, the identity and ownership interest of each of the
\nother owners of such EOP Subsidiary, (iv) each office property and other
\ncommercial property owned by such Subsidiary, and (v) if not wholly owned by
\nsuch Subsidiary, the identity and ownership interest of each of the other owners
\nof such property.<\/p>\n
(b) Except as set forth in SCHEDULE 3.2(B) to the EOP
\nDisclosure Letter, (i) all the outstanding shares of capital stock of each EOP
\nSubsidiary and each EOP Non-controlled Subsidiary that is a corporation have
\nbeen duly authorized, validly issued and are (A) fully paid and nonassessable
\nand not subject to preemptive rights, (B) owned by EOP or by another EOP
\nSubsidiary and (C) owned free and clear of all Liens and (ii) all equity
\ninterests in each EOP Subsidiary that is a partnership, joint venture, limited
\nliability company or trust which are owned by EOP, by another EOP Subsidiary or
\nby EOP and another EOP Subsidiary are owned free and clear of all Liens other
\nthan pledges, if any, contained in organizational documents of such EOP
\nSubsidiary and given to secure performance thereunder. Each EOP Subsidiary that
\nis a corporation is duly incorporated, validly existing and in good standing
\nunder the laws of its jurisdiction of incorporation and has the requisite
\ncorporate power and authority to own, operate, lease and encumber its properties
\nand carry on its business as now being conducted, and each EOP Subsidiary that
\nis a partnership, limited liability company or trust is duly organized, validly
\nexisting and in good standing under the laws of its jurisdiction of organization
\nand has the requisite power and authority to own, operate, lease and encumber
\nits properties and carry on its business as now being conducted. Each EOP
\nSubsidiary is duly qualified or licensed to do business and is in good standing
\nin each jurisdiction in which the nature of its business or the ownership or
\nleasing of its properties makes such qualification or licensing necessary, other
\nthan in such jurisdictions where the failure to be so qualified or licensed,
\nindividually or in the aggregate, would not reasonably be expected to have an
\nEOP Material Adverse Effect. Complete and correct copies of the Articles of
\nIncorporation, Bylaws, organization documents and partnership, joint venture and
\noperating agreements of each EOP Subsidiary, as amended to the date of this
\nAgreement, have been previously delivered or made available to Cornerstone. No
\neffective amendment has been made to the EOP Partnership Agreement since January
\n31, 2000.<\/p>\n
3.3 CAPITAL STRUCTURE.<\/p>\n
(a) The authorized shares of beneficial interest of
\nEOP consist of 750,000,000 EOP Common Shares, 248,812,828 of which were issued
\nand outstanding as of January 31, 2000, and 100,000,000 preferred shares of
\nbeneficial interest, 18,562,900 of which were issued or outstanding as of
\nJanuary 31, 2000 (collectively, the “EOP Preferred Shares”).<\/p>\n
-40-<\/p>\n
(b) Set forth in SCHEDULE 3.3(B) to the EOP
\nDisclosure Letter is a true and complete list of the following: (i) each
\nqualified or nonqualified option to purchase EOP’s shares of beneficial interest
\ngranted under the Employee Share Option and Restricted Share Plan or any other
\nformal or informal arrangement (collectively, the “EOP Options”); and (ii) all
\nother warrants or other rights to acquire EOP’s shares of beneficial interest,
\nall share appreciation rights, phantom shares, dividend equivalents, performance
\nunits and performance shares which are outstanding on the date of this
\nAgreement. SCHEDULE 3.3(B) to the EOP Disclosure Letter sets forth the EOP
\nOptions granted to EOP’s Chief Executive Officer and four other most highly
\ncompensated officers, the date of each grant, the status of each EOP Option as
\nqualified or nonqualified under Section 422 of the Code, the number of EOP
\nCommon Shares subject to each EOP Option, the number and type of EOP’s Common
\nShares subject to EOP Options that are currently exercisable, the exercise price
\nper share, and the number and type of such shares subject to share appreciation
\nrights. On the date of this Agreement, except as set forth in this Section 3.3
\nor in SCHEDULE 3.3(B) to the EOP Disclosure Letter, no shares of beneficial
\ninterest of EOP were outstanding or reserved for issuance (except for EOP Common
\nShares reserved for issuance upon redemption of EOP OP Units).<\/p>\n
(c) All outstanding shares of beneficial interest of
\nEOP are duly authorized, validly issued, fully paid and nonassessable and not
\nsubject to preemptive rights. There are no bonds, debentures, notes or other
\nindebtedness of EOP having the right to vote (or convertible into, or
\nexchangeable for, securities having the right to vote) on any matters on which
\nshareholders of EOP may vote.<\/p>\n
(d) Except (i) as set forth in this Section 3.3 or in
\nSCHEDULE 3.3(D) to the EOP Disclosure Letter and (ii) EOP OP Units, which may be
\nredeemed for EOP Common Shares, as of the date of this Agreement, there are no
\noutstanding securities, options, warrants, calls, rights, commitments,
\nagreements, arrangements or undertakings of any kind to which EOP or any EOP
\nSubsidiary is a party or by which such entity is bound, obligating EOP or any
\nEOP Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
\nsold, additional shares of beneficial interest, voting securities or other
\nownership interests of EOP or any EOP Subsidiary or obligating EOP or any EOP
\nSubsidiary to issue, grant, extend or enter into any such security, option,
\nwarrant, call, right, commitment, agreement, arrangement or undertaking (other
\nthan to EOP or an EOP Subsidiary).<\/p>\n
(e) As of January 31, 2000, 282,476,889 EOP OP Units,
\n8,000,000 8.98% Series A Preferred Units of Limited Partnership Interest,
\n6,000,000 5.25% Series B Preferred Units of Limited Partnership Interest, and
\n4,562,900 8 5\/8% Series C Preferred Units of Limited Partnership Interest
\n(collectively, the “EOP Preferred Units”) are validly issued and outstanding,
\nfully paid and nonassessable and not subject to preemptive rights, of which
\n248,812,828 EOP OP Units and all of the EOP Preferred Units are owned by EOP and
\nEOP Subsidiaries. SCHEDULE 3.3(E) to the EOP Disclosure Schedule sets forth the
\nname of <\/p>\n
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each holder of EOP OP Units and the number of EOP OP Units owned by each such
\nholder as of the date of this Agreement. The EOP OP Units and EOP Preferred
\nUnits are subject to no restrictions except as set forth in the EOP Partnership
\nAgreement. EOP Partnership has not issued or granted and is not a party to any
\noutstanding commitments of any kind relating to, or any presently effective
\nagreements or understandings with respect to, interests in EOP Partnership,
\nwhether issued or unissued, or securities convertible or exchangeable into
\ninterests in EOP Partnership.<\/p>\n
(f) All dividends on EOP Common Shares and all
\ndistributions on EOP OP Units and EOP Preferred Units, which have been declared
\nprior to the date of this Agreement have been paid in full, except that the
\ndividends payable on EOP Common Shares (along with the corresponding
\ndistributions payable on EOP OP Units) which were declared on February 1, 2000
\nand are payable on April 14, 2000 have not yet been paid.<\/p>\n
(g) The EOP Common Shares and the EOP Preferred
\nShares to be issued by EOP, and the EOP OP Units to be issued by the EOP
\nPartnership pursuant to this Agreement have been duly authorized for issuance,
\nand upon issuance will be duly and validly issued, fully paid and nonassessable.<\/p>\n
3.4 OTHER INTERESTS. Except for interests in the EOP
\nSubsidiaries and certain other entities as set forth in SCHEDULE 3.2(A), 3.2(B)
\nOR 3.4(A) to the EOP Disclosure Letter (the “EOP Other Interests”), neither EOP
\nnor any of its Subsidiaries owns directly or indirectly any interest or
\ninvestment (whether equity or debt) in any corporation, partnership, joint
\nventure, business, trust or other entity (other than investments in short-term
\ninvestment securities). With respect to such other interests, EOP or EOP
\nPartnership is a partner or shareholder in good standing, and owns such
\ninterests free and clear of all Liens other than pledges, if any, contained in
\norganizational documents of such EOP Other Interests and given to secure
\nperformance. Neither EOP nor any of the EOP Subsidiaries is in breach of any
\nprovision of any agreement, document or contract governing its rights in or to
\nthe interests owned or held by it, all of which agreements, documents and
\ncontracts are (a) listed in SCHEDULE 3.4(B) to the EOP Disclosure Letter (or
\ndisclosed in the EOP SEC Documents (as defined herein)), (b) unmodified except
\nas described therein and (c) in full force and effect. To the Knowledge of EOP
\n(as defined herein), the other parties to any such agreement, document or
\ncontract which is of a material nature are not in breach of any of their
\nrespective obligations under such agreements, documents or contracts.<\/p>\n
3.5 AUTHORITY; NONCONTRAVENTION; CONSENTS.<\/p>\n
(a) EOP has the requisite power and authority to
\nenter into this Agreement and, subject to the requisite shareholder approval of
\nthe Merger (the “EOP Shareholder Approvals” and, together with the Cornerstone
\nStockholder <\/p>\n
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Approvals, the “Shareholder Approvals”), to consummate the transactions
\ncontemplated by this Agreement to which EOP is a party. The execution and
\ndelivery of this Agreement by EOP and the consummation by EOP of the
\ntransactions contemplated by this Agreement to which EOP is a party have been
\nduly authorized by all necessary action on the part of EOP, except for and
\nsubject to the EOP Shareholder Approvals and the requisite approval, if any is
\nrequired, of the partners of EOP Partnership. This Agreement has been duly
\nexecuted and delivered by EOP and constitutes a valid and binding obligation of
\nEOP, enforceable against EOP in accordance with and subject to its terms,
\nsubject to applicable bankruptcy, insolvency, moratorium or other similar laws
\nrelating to creditors’ rights and general principles of equity.<\/p>\n
(b) EOP Partnership has the requisite partnership
\npower and, subject to the requisite partner approval of the Partnership Merger
\n(if any), authority to enter into this Agreement and to consummate the
\ntransactions contemplated by this Agreement to which EOP Partnership is a party.
\nThe execution and delivery of this Agreement by EOP Partnership and the
\nconsummation by EOP Partnership of the transactions contemplated by this
\nAgreement to which EOP Partnership is a party have been duly authorized by all
\nnecessary action on the part of EOP Partnership, except for and subject to the
\nEOP Partnership Approvals. This Agreement has been duly executed and delivered
\nby EOP Partnership and constitutes a valid and binding obligation of EOP
\nPartnership, enforceable against EOP Partnership in accordance with and subject
\nto its terms, subject to applicable bankruptcy, insolvency, moratorium or other
\nsimilar laws relating to creditors’ rights and general principles of equity.<\/p>\n
(c) Except as set forth in SCHEDULE 3.5(C)(1) to the
\nEOP Disclosure Letter, the execution and delivery of this Agreement by EOP and
\nEOP Partnership do not, and the consummation of the transactions contemplated by
\nthis Agreement to which EOP or EOP Partnership is a party and compliance by EOP
\nor EOP Partnership with the provisions of this Agreement will not, conflict
\nwith, or result in any violation of or default (with or without notice or lapse
\nof time, or both) under, or give rise to a right of termination, cancellation or
\nacceleration of any material obligation or to loss of a material benefit under,
\nor result in the creation of any Lien upon any of the properties or assets of
\nEOP or any EOP Subsidiary under, (i) the EOP Declaration of Trust or the EOP
\nBylaws or the comparable charter or organizational documents or partnership,
\noperating or similar agreement (as the case may be) of any other EOP Subsidiary,
\neach as amended or supplemented to the date of this Agreement, (ii) any loan or
\ncredit agreement, note, bond, mortgage, indenture, reciprocal easement
\nagreement, lease or other agreement, instrument, permit, concession, franchise
\nor license applicable to EOP or any EOP Subsidiary or their respective
\nproperties or assets or (iii) subject to the governmental filings and other
\nmatters referred to in the following sentence, any Laws applicable to EOP or any
\nEOP Subsidiary or their respective properties or assets, other than, in the case
\nof clause (ii) or (iii), any such conflicts, violations, defaults, rights, loss
\nor Liens that <\/p>\n
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individually or in the aggregate would not (x) reasonably be expected to have an
\nEOP Material Adverse Effect or (y) prevent the consummation of the transactions
\ncontemplated by this Agreement. No consent, approval, order or authorization of,
\nor registration, declaration or filing with, any Governmental Entity is required
\nby or with respect to EOP or any EOP Subsidiary in connection with the execution
\nand delivery of this Agreement or the consummation by EOP of any of the
\ntransactions contemplated by this Agreement, except for (i) the filing with the
\nSEC of (x) the Form S-4 (as defined herein) and (y) such reports under Section
\n13 (a) of the Exchange Act as may be required in connection with this Agreement
\nand the transactions contemplated by this Agreement, (ii) the acceptance for
\nrecord of the Articles of Merger by the Department, (iii) the filing of the
\nCertificate of Merger with the Office of the Secretary of State of the State of
\nDelaware, (iv) such filings as may be required in connection with the payment of
\nany transfer and gains taxes and (v) such other consents, approvals, orders,
\nauthorizations, registrations, declarations and filings (A) as are set forth in
\nSCHEDULE 3.5(C)(2) to the EOP Disclosure Letter or (B) as may be required under
\n(x) federal, state or local environmental laws or (y) the “blue sky” laws of
\nvarious states, to the extent applicable, or (C) which, if not obtained or made,
\nwould not prevent or delay in any material respect the consummation of any of
\nthe transactions contemplated by this Agreement or otherwise prevent EOP from
\nperforming its obligations under this Agreement in any material respect or
\nreasonably be expected to have, individually or in the aggregate, an EOP
\nMaterial Adverse Effect.<\/p>\n
3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
\nLIABILITIES. EOP and EOP Partnership have filed all required reports, schedules,
\nforms, statements and other documents with the SEC since July 8, 1997 and
\nNovember 19, 1997, respectively, through the date hereof (the “EOP SEC
\nDocuments”). SCHEDULE 3.6(A) to the EOP Disclosure Letter contains a complete
\nlist of all EOP SEC Documents filed by EOP and EOP Partnership with the SEC
\nunder the Exchange Act on or prior to the date of this Agreement. All of the EOP
\nSEC Documents (other than preliminary material), as of their respective filing
\ndates, complied in all material respects with all applicable requirements of the
\nSecurities Act and the Exchange Act and, in each case, the rules and regulations
\npromulgated thereunder applicable to such EOP SEC Documents. None of the EOP SEC
\nDocuments at the time of filing contained any untrue statement of a material
\nfact or omitted to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they were made, not misleading, except to the extent such statements
\nhave been modified or superseded by later EOP SEC Documents filed and publicly
\navailable prior to the date of this Agreement. The consolidated financial
\nstatements of EOP and the EOP Subsidiaries included in the EOP SEC Documents
\ncomplied as to form in all material respects with applicable accounting
\nrequirements and the published rules and regulations of the SEC with respect
\nthereto, have been prepared in accordance with GAAP (except, in the case of
\nunaudited statements, as permitted by the applicable rules and regulations of
\nthe SEC) applied on a consistent basis <\/p>\n
-44-<\/p>\n
during the periods involved (except as may be indicated in the notes thereto)
\nand fairly presented in all material respects, in accordance with the applicable
\nrequirements of GAAP and the applicable rules and regulations of the SEC, the
\nconsolidated financial position of EOP and the EOP Subsidiaries, taken as a
\nwhole, as of the dates thereof and the consolidated results of operations and
\ncash flows for the periods then ended (subject, in the case of unaudited
\nstatements, to normal year-end audit adjustments). Except for liabilities and
\nobligations set forth in the EOP SEC Documents or in SCHEDULE 3.6(B) to the EOP
\nDisclosure Letter, neither EOP nor any EOP Subsidiary has any liabilities or
\nobligations of any nature (whether accrued, absolute, contingent or otherwise)
\nrequired by GAAP to be set forth on a consolidated balance sheet of EOP or in
\nthe notes thereto and which, individually or in the aggregate, would reasonably
\nbe expected to have an EOP Material Adverse Effect.<\/p>\n
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
\nin the EOP SEC Documents or in SCHEDULE 3.7 to the EOP Disclosure Letter, since
\nthe date of the most recent audited financial statements included in the EOP SEC
\nDocuments (the “EOP Financial Statement Date”), EOP and the EOP Subsidiaries
\nhave conducted their business only in the ordinary course (taking into account
\nprior practices, including the acquisition of properties and issuance of
\nsecurities) and there has not been (a) any material adverse change in the
\nbusiness, financial condition or results of operations of EOP and the EOP
\nSubsidiaries taken as a whole (a “EOP Material Adverse Change”), nor has there
\nbeen any occurrence or circumstance that with the passage of time would
\nreasonably be expected to result in an EOP Material Adverse Change, (b) except
\nfor regular quarterly distributions not in excess of $0.42 per EOP Common Share
\nor EOP OP Unit or the stated distribution rate for each EOP Preferred Share or
\nEOP Preferred Unit, subject to rounding adjustments as necessary and with
\ncustomary record and payment dates, any authorization, declaration, setting
\naside or payment of any dividend or other distribution (whether in cash, shares
\nor property) with respect to EOP Common Shares, EOP OP Units, EOP Preferred
\nShares or EOP Preferred Units, (c) any split, combination or reclassification of
\nany of EOP’s shares of beneficial interest, (d) any damage, destruction or loss,
\nwhether or not covered by insurance, that has or would reasonably be expected to
\nhave an EOP Material Adverse Effect or (e) any change made prior to the date of
\nthis Agreement in accounting methods, principles or practices by EOP or any EOP
\nSubsidiary materially affecting its assets, liabilities or business, except
\ninsofar as may have been disclosed in the EOP SEC Documents or required by a
\nchange in GAAP.<\/p>\n
3.8 LITIGATION. Except as disclosed in the EOP SEC Documents
\nor in SCHEDULE 3.8 to the EOP Disclosure Letter, and other than personal injury
\nand other routine tort litigation arising from the ordinary course of operations
\nof EOP and the EOP Subsidiaries (a) which are covered by adequate insurance
\nsubject to a reasonable deductible or retention limit or (b) for which all
\nmaterial costs and liabilities arising therefrom are reimbursable pursuant to
\ncommon area <\/p>\n
-45-<\/p>\n
maintenance or similar agreements, there is no suit, action or proceeding
\npending (in which service of process has been received by an employee of EOP or
\nan EOP Subsidiary) or, to the Knowledge of EOP (as defined herein), threatened
\nin writing against or affecting EOP or any EOP Subsidiary that, individually or
\nin the aggregate, would reasonably be expected to (i) have an EOP Material
\nAdverse Effect or (ii) prevent the consummation of any of the transactions
\ncontemplated by this Agreement, nor is there any judgment, decree, injunction,
\nrule or order of any Governmental Entity or arbitrator outstanding against EOP
\nor any EOP Subsidiary having, or which, insofar as reasonably can be foreseen,
\nin the future would have, any such effect.<\/p>\n
3.9 PROPERTIES.<\/p>\n
(a) Except as set forth in SCHEDULE 3.9(A) to the EOP
\nDisclosure Letter, EOP or one of the EOP Subsidiaries owns fee simple title to
\neach of the real properties listed in the EOP SEC Filings as owned by it (the
\n“EOP Properties”), except where the failure to own such title would not have an
\nEOP Material Adverse Effect.<\/p>\n
(b) The EOP Properties are not subject to any
\nEncumbrances or Property Restrictions which reasonably could be expected to
\ncause an EOP Material Adverse Effect.<\/p>\n
(c) Valid policies of title insurance or fully-paid
\nand enforceable commitments therefor have been issued insuring EOP’s or the
\napplicable EOP Subsidiary’s fee simple title or leasehold estate, as the case
\nmay be, to the EOP Properties in amounts which are, except in the case of San
\nFelipe Plaza, at least equal to the purchase price thereof paid by EOP or the
\napplicable EOP Subsidiaries therefor, except where the failure to obtain such
\ntitle insurance would not reasonably be expected to have an EOP Material Adverse
\nEffect.<\/p>\n
(d) EOP has no Knowledge (i) that it has failed to
\nobtain a certificate, permit or license from any governmental authority having
\njurisdiction over any of the EOP Properties where such failure would reasonably
\nbe expected to have an EOP Material Adverse Effect or of any pending threat of
\nmodification or cancellation of any of the same which would reasonably be
\nexpected to have an EOP Material Adverse Effect, (ii) of any written notice of
\nany violation of any federal, state or municipal law, ordinance, order, rule,
\nregulation or requirement affecting any of the EOP Properties issued by any
\ngovernmental authorities which would reasonably be expected to have an EOP
\nMaterial Adverse Effect or (iii) of any structural defects relating to EOP
\nProperties, EOP Properties whose building systems are not in working order,
\nphysical damage to any EOP Property for which there is no insurance in effect
\ncovering the cost of restoration, any current renovation or uninsured
\nrestoration, except such structural defects, building systems not in working
\norder, physical damage, renovation and restoration which, <\/p>\n
-46-<\/p>\n
in the aggregate, would not reasonably be expected to have an EOP Material
\nAdverse Effect.<\/p>\n
(e) Except as set forth in SCHEDULE 3.9(E) to the EOP
\nDisclosure Letter, neither EOP nor any of the EOP Subsidiaries has received any
\nwritten or published notice to the effect that (i) any condemnation or rezoning
\nproceedings are pending or threatened with respect to any of the EOP Properties
\nor (ii) any zoning, building or similar law, code, ordinance, order or
\nregulation is or will be violated by the continued maintenance, operation or use
\nof any buildings or other improvements on any of the EOP Properties or by the
\ncontinued maintenance, operation or use of the parking areas, other than such
\nnotices which, in the aggregate, would not reasonably be expected to have an EOP
\nMaterial Adverse Effect.<\/p>\n
(f) Except as set forth on SCHEDULE 3.9(F) to the EOP
\nDisclosure Letter, all work to be performed, payments to be made and actions to
\nbe taken by EOP or the EOP Subsidiaries prior to the date hereof pursuant to any
\nagreement entered into with a governmental body or authority in connection with
\na site approval, zoning reclassification or similar action relating to any EOP
\nProperties (E.G., Local Improvement District, Road Improvement District,
\nEnvironmental Mitigation), has been performed, paid or taken, as the case may
\nbe, except where the failure to do so would, in the aggregate, not reasonably be
\nexpected to have an EOP Material Adverse Effect, and EOP has no Knowledge of any
\nplanned or proposed work, payments or actions that may be required after the
\ndate hereof pursuant to such agreements.<\/p>\n
(g) The rent roll previously provided by EOP to
\nCornerstone (the “EOP Rent Roll”) lists each EOP Space Lease (as defined herein)
\nin effect as of the respective dates indicated in the EOP Rent Roll. “EOP Space
\nLease” means each lease or other right of occupancy affecting or relating to a
\nproperty in which EOP Partnership (or an entity in which it directly or
\nindirectly has an interest) is the landlord, either pursuant to the terms of the
\nlease agreement or as successor to any prior landlord, but excluding any ground
\nlease. EOP has made available to Cornerstone true, correct and complete copies
\nof all EOP Space Leases, including all amendments, modifications, supplements,
\nrenewals, extensions and guarantees related thereto, as of the date hereof.
\nExcept for discrepancies that, either individually or in the aggregate, would
\nnot reasonably be expected to have an EOP Material Adverse Effect, all
\ninformation set forth in the EOP Rent Roll is true, correct, and complete as of
\nthe date thereof. Except as set forth in a delinquency report made available to
\nCornerstone, neither EOP nor any EOP Subsidiary, on the one hand, nor, to the
\nKnowledge of EOP or EOP Partnership, any other party, on the other hand, is in
\nmonetary default under any EOP Space Lease, except for such defaults that would
\nnot reasonably be expected to have an EOP Material Adverse Effect.<\/p>\n
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3.10 ENVIRONMENTAL MATTERS.<\/p>\n
Except as disclosed in the EOP SEC Documents,<\/p>\n
(i) none of EOP, any of the EOP Subsidiaries or, to
\nEOP’s Knowledge, any other Person has caused or permitted the presence of any
\nHazardous Materials at, on or under any of the EOP Properties, such that the
\npresence of such Hazardous Materials (including the presence of asbestos in any
\nbuildings or improvements at the EOP Properties) would, individually or in the
\naggregate, reasonably be expected to have an EOP Material Adverse Effect;<\/p>\n
(ii) except in accordance with the Environmental
\nPermits, there have been no Releases of Hazardous Materials at, on, under or
\nfrom (A) the EOP Properties, or (B) any real property formerly owned, operated
\nor leased by EOP or the EOP Subsidiaries during the period of such ownership,
\noperation or tenancy, which would, individually or in the aggregate, reasonably
\nbe expected to have an EOP Material Adverse Effect;<\/p>\n
(iii) EOP and the EOP Subsidiaries have not failed to
\ncomply in any material respect with all Environmental Laws, and neither EOP nor
\nany of the EOP Subsidiaries has any liability under the Environmental Laws,
\nexcept to the extent such failure to comply or any such liability, individually
\nor in the aggregate, would not reasonably be expected to have an EOP Material
\nAdverse Effect; and<\/p>\n
(iv) EOP and the EOP Subsidiaries have been duly
\nissued, and currently have and will maintain through the Closing Date, all
\nEnvironmental Permits except where the failure to obtain and maintain such
\nEnvironmental Permits would not have a material adverse effect on the EOP
\nProperty necessary to operate their businesses as currently operated. EOP and
\nthe EOP Subsidiaries have timely filed applications for all Environmental
\nPermits.<\/p>\n
3.11 TAXES.<\/p>\n
(a) Each of EOP and the EOP Subsidiaries (i) has
\nfiled all Tax returns and reports required to be filed by it (after giving
\neffect to any filing extension properly granted by a Governmental Entity having
\nauthority to do so), and all such returns and reports are accurate and complete
\nin all material respects, (ii) has paid (or EOP has paid on its behalf) all
\nTaxes shown on such returns and reports as required to be paid by it and (iii)
\nhas complied in all material respects with all applicable laws, rules and
\nregulations relating to the payment and withholding of Taxes (including, without
\nlimitation, withholding of Taxes pursuant to Sections 1441, 1442, 1445, 3121,
\nand 3402 of the Code or similar provisions under any foreign laws) and has,
\nwithin the time period prescribed by law, withheld and paid over to the proper
\ngovernmental entities all amounts required to be so withheld and paid over under
\napplicable laws and regulations, except, with respect <\/p>\n
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to all of the foregoing, where the failure to file such tax returns or reports
\nor failure to pay such Taxes or failure to comply with such requirements would
\nnot reasonably be expected to have an EOP Material Adverse Effect. The most
\nrecent audited financial statements contained in the EOP SEC Documents reflect
\nan adequate reserve for all material Taxes payable by EOP and the EOP
\nSubsidiaries for all taxable periods and portions thereof through the date of
\nsuch financial statements. Since the EOP Financial Statement Date, EOP has
\nincurred no liability for Taxes under Sections 857(b), 860(c) or 4981 of the
\nCode, including without limitation any Tax arising from a prohibited transaction
\ndescribed in Section 857(b)(6) of the Code, and neither EOP nor any EOP
\nSubsidiary has incurred any material liability for Taxes other than in the
\nordinary course of business. No event has occurred, and no condition or
\ncircumstance exists, which presents a material risk that any material Tax
\ndescribed in the preceding sentence will be imposed upon EOP or any EOP
\nSubsidiary. Neither EOP nor any EOP Subsidiary is the subject of any audit,
\nexamination, or other proceeding in respect of federal income Taxes, and to
\nEOP’s Knowledge, no audit, examination or other proceeding in respect of federal
\nincome Taxes involving any of EOP or any EOP Subsidiary is being considered by
\nany Tax authority. To the Knowledge of EOP, no deficiencies for any Taxes have
\nbeen proposed, asserted or assessed against EOP or any of the EOP Subsidiaries,
\nand no requests for waivers of the time to assess any such Taxes are pending.<\/p>\n
(b) EOP (i) for all taxable years commencing with
\n1997, which is the first year of EOP’s existence for federal income tax
\npurposes, through December 31, 1999, has been subject to taxation as a REIT
\nwithin the meaning of Section 856 of the Code and has qualified as a REIT for
\nall such years, (ii) has operated since December 31, 1999 to the date of this
\nrepresentation, and intends to continue to operate, in such a manner as to
\nqualify as a REIT for the taxable year that includes the Closing Date and (iii)
\nhas not taken or omitted to take any action which would reasonably be expected
\nto result in a challenge to its status as a REIT and, to EOP’s Knowledge, no
\nsuch challenge is pending or threatened. BeaMetFed, Inc. (“BeaMet”) (i) for all
\ntaxable years commencing with 1997 through December 31, 1999 has been subject to
\ntaxation as a REIT within the meaning of Section 856 of the Code and has
\nqualified as a REIT for all such years, (ii) has operated since December 31,
\n1999 to the date of this representation, and intends to continue to operate, in
\nsuch a manner as to qualify as a REIT for the taxable year that includes the
\nClosing Date and (iii) has not taken or omitted to take any action which would
\nreasonably be expected to result in a challenge to its status as a REIT and, to
\nEOP’s Knowledge, no such challenge is pending or threatened. Each EOP Subsidiary
\nwhich is a partnership, joint venture or limited liability company (i) has been
\ntreated since its formation and continues to be treated for federal income tax
\npurposes as a partnership and not as a corporation or as an association taxable
\nas a corporation and (ii) has not since the later of its formation or the
\nacquisition by EOP of a direct or indirect interest therein, owned any assets
\n(including, without limitation, securities) that would cause EOP to violate
\nSection 856(c)(4) of the Code. EOP Partnership is not a publicly traded
\npartnership within the meaning of Section <\/p>\n
-49-<\/p>\n
7704(b) of the Code that is taxable as a corporation pursuant to Section 7704(a)
\nof the Code. Each EOP Subsidiary which is a corporation has been since its
\nformation a qualified REIT subsidiary under Section 856(i) of the Code. Except
\nas set forth in SCHEDULE 3.11 to the EOP Disclosure Letter, neither EOP nor any
\nEOP Subsidiary holds any asset (x) the disposition of which would be subject to
\nrules similar to Section 1374 of the Code as a result of an election under IRS
\nNotice 88-19 or Temporary Treas. Reg. ss.1.337(d)-5T or (y) which is subject to
\na consent filed pursuant to Section 341(f) of the Code and the regulations
\nthereunder.<\/p>\n
(c) To EOP’s knowledge, as of the date hereof, EOP is
\na “domestically-controlled REIT” within the meaning of Section 897(h)(4)(B) of
\nthe Code.<\/p>\n
3.12 BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
\ninvestment banker, financial advisor or other person, other than J.P. Morgan & Co. Incorporated, the fees and expenses of which will be paid by EOP and are
\ndescribed in the engagement letters between J.P. Morgan & Co. Incorporated and
\nEOP, a true, correct and complete copy of which has previously been given to
\nCornerstone, is entitled to any broker’s, finder’s, financial advisor’s or other
\nsimilar fee or commission in connection with the transactions contemplated
\nhereby based upon arrangements made by or on behalf of EOP or any EOP
\nSubsidiary.<\/p>\n
3.13 COMPLIANCE WITH LAWS. Neither EOP nor any of the EOP
\nSubsidiaries has violated or failed to comply with any statute, law, ordinance,
\nregulation, rule, judgment, decree or order of any Governmental Entity
\napplicable to its business, properties or operations, except to the extent that
\nsuch violation or failure would not reasonably be expected to have an EOP
\nMaterial Adverse Effect.<\/p>\n
3.14 CONTRACTS; DEBT INSTRUMENTS. Neither EOP nor any EOP
\nSubsidiary has received a written notice that EOP or any EOP Subsidiary is in
\nviolation of or in default under (nor to the Knowledge of EOP does there exist
\nany condition which upon the passage of time or the giving of notice or both
\nwould cause such a violation of or default under) any material loan or credit
\nagreement, note, bond, mortgage, indenture, lease, permit, concession,
\nfranchise, license or any other material contract, agreement, arrangement or
\nunderstanding, to which it is a party or by which it or any of its properties or
\nassets is bound, nor to the Knowledge of EOP does such a violation or default
\nexist, except to the extent such violation or default, individually or in the
\naggregate, would not reasonably be expected to have an EOP Material Adverse
\nEffect, except as set forth in the EOP SEC Documents or in SCHEDULE 3.14 to the
\nEOP Disclosure Letter.<\/p>\n
3.15 OPINION OF FINANCIAL ADVISOR. EOP has received the
\nopinion of J.P. Morgan & Co. Incorporated, EOP’s financial advisor, to the
\neffect that the consideration to be paid by EOP in connection with the Merger is
\nfair, from a financial point of view, to EOP.<\/p>\n
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3.16 STATE TAKEOVER STATUTES. EOP has taken all action
\nnecessary to exempt transactions between EOP and Cornerstone and its Affiliates
\nfrom the operation of Takeover Statutes.<\/p>\n
3.17 INVESTMENT COMPANY ACT OF 1940. Neither EOP nor any of
\nthe EOP Subsidiaries is, or at the Effective Time will be, required to be
\nregistered under the 1940 Act.<\/p>\n
3.18 DEFINITION OF “KNOWLEDGE OF EOP”. As used in this
\nAgreement, the phrase “Knowledge of EOP” (or words of similar import) means the
\nactual knowledge of those individuals identified in SCHEDULE 3.19 to the EOP
\nDisclosure Letter.<\/p>\n
3.19 REQUIRED SHAREHOLDER APPROVALS AND PARTNER APPROVALS. The
\naffirmative vote of the holders of not less than a majority of all votes
\nentitled to be cast by holders of EOP Common Shares, and the affirmative vote of
\nthe partners of EOP Partnership holding at least a majority of the outstanding
\nEOP Partnership interests (including partnership interests held by EOP), are the
\nonly votes of the holders of any class or series of EOP capital shares necessary
\nor required under this Agreement or under applicable law to approve the Merger
\nand this Agreement. The approval of the Partnership Merger by EOP is the only
\nvote necessary or required under this Agreement or under applicable law to
\napprove the Partnership Merger and this Agreement.<\/p>\n
ARTICLE 4<\/p>\n
COVENANTS<\/p>\n
4.1 CONDUCT OF CORNERSTONE’S AND CORNERSTONE
\nPARTNERSHIP’S BUSINESS PENDING Merger. During the period from the date of this
\nAgreement to the Effective Times, except as consented to in writing by EOP or as
\nexpressly provided for in this Agreement, Cornerstone and Cornerstone
\nPartnership shall, and shall cause (or, in the case of Cornerstone Subsidiaries
\nand the Cornerstone Non-controlled Subsidiary that Cornerstone or Cornerstone
\nPartnership do not control, shall use commercially reasonable efforts to cause)
\neach of the Cornerstone Subsidiaries and Cornerstone Non-controlled Subsidiary
\nto:<\/p>\n
(a) conduct its business only in the usual, regular
\nand ordinary course and in substantially the same manner as heretofore
\nconducted;<\/p>\n
(b) preserve intact its business organizations and
\ngoodwill and use commercially reasonable efforts to keep available the services
\nof its officers and employees;<\/p>\n
-51-<\/p>\n
(c) confer on a regular basis with one or more
\nrepresentatives of EOP to report operational matters of materiality and, subject
\nto Section 4.3, any proposals to engage in material transactions;<\/p>\n
(d) promptly notify EOP of any material emergency or
\nother material change in the condition (financial or otherwise), business,
\nproperties, assets, liabilities or the normal course of its businesses or in the
\noperation of its properties, or of any material governmental complaints,
\ninvestigations or hearings (or communications indicating that the same may be
\ncontemplated);<\/p>\n
(e) promptly deliver to EOP true and correct copies
\nof any report, statement or schedule filed with the SEC subsequent to the date
\nof this Agreement;<\/p>\n
(f) maintain its books and records in accordance with
\nGAAP consistently applied and not change in any material manner any of its
\nmethods, principles or practices of accounting in effect at the Cornerstone
\nFinancial Statement Date, except as may be required by the SEC, applicable law
\nor GAAP;<\/p>\n
(g) duly and timely file all reports, tax returns and
\nother documents required to be filed with federal, state, local and other
\nauthorities, subject to extensions permitted by law, provided Cornerstone
\nnotifies EOP that it is availing itself of such extensions and provided such
\nextensions do not adversely affect Cornerstone’s status as a qualified REIT
\nunder the Code;<\/p>\n
(h) not make or rescind any express or deemed
\nelection relative to Taxes (unless required by law or necessary to preserve
\nCornerstone’s status as a REIT or the status of any Cornerstone Subsidiary as a
\npartnership for federal income tax purposes or as a qualified REIT subsidiary
\nunder Section 856(i) of the Code, as the case may be);<\/p>\n
(i) not (A) acquire, enter into any option to
\nacquire, or exercise an option or other right or election or enter into any
\nother commitment or contractual obligation (each, a “Commitment”) for the
\nacquisition of any real property or, except as permitted in a budget approved in
\nwriting by EOP, other transaction (other than Commitments referred to in
\nSCHEDULE 4.1(I) to the Cornerstone Disclosure Letter) involving in excess of
\n$100,000, encumber assets or commence construction of, or enter into any
\nCommitment to develop or construct other real estate projects, except in the
\nordinary course of its office property business, including leasing activities
\npursuant to EOP-approved guidelines (B) incur or enter into any Commitment to
\nincur additional indebtedness (secured or unsecured) except for working capital
\nunder its revolving line(s) of credit and Commitments for indebtedness described
\non SCHEDULE 4.1(I) to the Cornerstone Disclosure Letter or (C) modify, amend or
\nterminate, or enter into any Commitment to modify, amend or terminate, any
\nindebtedness (secured or unsecured) in existence as of the date hereof;<\/p>\n
-52-<\/p>\n
(j) not amend the Cornerstone Articles or the
\nCornerstone Bylaws, or the articles or certificate of incorporation, bylaws,
\ncode of regulations, partnership agreement, operating agreement or joint venture
\nagreement or comparable charter or organization document of any Cornerstone
\nSubsidiary or Cornerstone Non-controlled Subsidiary;<\/p>\n
(k) make no change in the number of shares of capital
\nstock or units of limited partnership interest issued and outstanding, other
\nthan pursuant to (i) the exercise of options disclosed in SCHEDULE 2.3 to the
\nCornerstone Disclosure Letter, (ii) the conversion of the Cornerstone 7%
\nPreferred Stock or the Cornerstone Convertible Promissory Note if required by
\ntheir terms, (iii) the redemption of Cornerstone OP Units under existing
\ncontracts described on SCHEDULE 2.18, (iv) the redemption of Cornerstone OP
\nUnits pursuant to Section 1.1 of this Agreement, (v) the redemption of
\nCornerstone OP Units under the Cornerstone Partnership Agreement solely for
\nshares of Cornerstone Common Stock, or (vi) Cornerstone OP Units issuable upon
\nthe exercise of the First and Howard option;<\/p>\n
(l) grant no options or other right or commitment
\nrelating to its shares of capital stock or units of limited partnership interest
\nor any security convertible into its shares of capital stock or units of limited
\npartnership interest, or any security the value of which is measured by shares
\nof beneficial interest, or any security subordinated to the claim of its general
\ncreditors and, other than or pursuant to Section 5.8(c) or (d) of this
\nAgreement, not amend or waive any rights under any of the Cornerstone Stock
\nOptions or Cornerstone Stock Rights;<\/p>\n
(m) except as provided in Section 5.10 and in
\nconnection with the use of Cornerstone Common Stock to pay the exercise price or
\ntax withholding in connection with equity-based employee benefit plans by the
\nparticipants therein, not (i) authorize, declare, set aside or pay any dividend
\nor make any other distribution or payment with respect to any Cornerstone Common
\nStock, Cornerstone 7% Preferred Stock or Cornerstone OP Units or (ii) directly
\nor indirectly redeem, purchase or otherwise acquire any shares of capital stock
\nor units of partnership interest or any option, warrant or right to acquire, or
\nsecurity convertible into, shares of capital stock or units of partnership
\ninterest of Cornerstone, except for (A) deemed transfers of Cornerstone excess
\nshares required under Article 8 of the Cornerstone Articles in order to preserve
\nthe status of Cornerstone as a REIT under the Code or Article 9 of the
\nCornerstone Articles, and (B) redemptions of Cornerstone OP Units, whether or
\nnot outstanding on the date of this Agreement, under the Cornerstone Partnership
\nAgreement in which solely Cornerstone Common Stock is utilized;<\/p>\n
(n) not sell, lease, mortgage, subject to Lien or
\notherwise dispose of any of the Cornerstone Properties, except in connection
\nwith a transaction that is permitted by Section 4.1(i), that is made in the
\nordinary course of business and is the subject of a binding contract in
\nexistence on the date of this <\/p>\n
-53-<\/p>\n
Agreement and disclosed in SCHEDULE 2.18 to the Cornerstone Disclosure Letter or
\nin connection with a transaction that is permitted by the leasing guidelines set
\nforth on SCHEDULE 4.1(N) to the Cornerstone Disclosure Letter;<\/p>\n
(o) not sell, lease, mortgage, subject to Lien or
\notherwise dispose of any of its personal property or intangible property, except
\nin the ordinary course of business and is not material, individually or in the
\naggregate;<\/p>\n
(p) not make any loans, advances or capital
\ncontributions to, or investments in, any other Person, other than loans,
\nadvances and capital contributions to Cornerstone Subsidiaries or the
\nCornerstone Non-controlled Subsidiary in existence on the date hereof and
\nordinary course expense advances to employees and except in connection with a
\ntransaction permitted by Section 4.1(i), and not enter into any new, or amend or
\nsupplement any existing, contract, lease or other agreement with the Cornerstone
\nNon-controlled Subsidiary;<\/p>\n
(q) not pay, discharge or satisfy any claims,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise), other than the payment, discharge or satisfaction, in
\nthe ordinary course of business consistent with past practice or in accordance
\nwith their terms, of liabilities reflected or reserved against in, or
\ncontemplated by, the most recent consolidated financial statements (or the notes
\nthereto) furnished to EOP or incurred in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(r) not guarantee the indebtedness of another Person,
\nenter into any “keep well” or other agreement to maintain any financial
\nstatement condition of another Person or enter into any arrangement having the
\neconomic effect of any of the foregoing;<\/p>\n
(s) except as disclosed in Schedule 4.1(s) of the
\nCornerstone Disclosure Letter, not enter into any Commitment with any officer,
\ndirector or Affiliate of Cornerstone or any of the Cornerstone Subsidiaries or
\nthe Cornerstone Non-controlled Subsidiary or any material Commitment with any
\nconsultant;<\/p>\n
(t) except as disclosed in SCHEDULE 4.1(T) of the
\nCornerstone Disclosure Letter, not increase any compensation or enter into or
\namend any employment agreement described in SCHEDULE 2.18 to the Cornerstone
\nDisclosure Letter with any of its officers, directors or employees earning more
\nthan $100,000 per annum, other than as required by any contract or Plan or in
\naccordance with waivers by employees of benefits under such agreements;<\/p>\n
(u) not adopt any new employee benefit plan or amend
\nany existing plans or rights;<\/p>\n
-54-<\/p>\n
(v) not settle any stockholder derivative or class
\naction claims arising out of or in connection with any of the transactions
\ncontemplated by this Agreement;<\/p>\n
(w) not change the ownership of any of its
\nSubsidiaries or the Cornerstone Non-controlled Subsidiary, except changes which
\narise as a result of the acquisition of Cornerstone OP Units in exchange for
\nCornerstone Common Stock pursuant to exercise of the Cornerstone OP Unit
\nredemption right under Section 8.6 of the Cornerstone Partnership Agreement;<\/p>\n
(x) not accept a promissory note in payment of the
\nexercise price payable under any option to purchase shares of Cornerstone Common
\nStock;<\/p>\n
(y) not enter into any Tax Protection Agreement;<\/p>\n
(z) not settle or compromise any material federal,
\nstate, local or foreign tax liability; and<\/p>\n
(aa) not authorize, recommend, propose or announce an
\nintention to do any of the foregoing prohibited actions, or enter into any
\ncontract, agreement, commitment or arrangement to do any of the foregoing
\nprohibited actions.<\/p>\n
4.2 CONDUCT OF EOP’S AND EOP PARTNERSHIP’S BUSINESS PENDING
\nMERGER. During the period from the date of this Agreement to the Effective
\nTimes, except as consented to in writing by Cornerstone or as expressly provided
\nfor in this Agreement, EOP and EOP Partnership shall, and shall cause (or, in
\nthe case of Cornerstone Subsidiaries that Cornerstone or Cornerstone Partnership
\ndo not control, shall use commercially reasonable efforts to cause) each of the
\nEOP Subsidiaries to:<\/p>\n
(a) preserve intact its business organizations and
\ngoodwill and use commercially reasonable efforts to keep available the services
\nof its officers and employees;<\/p>\n
(b) confer on a regular basis with one or more
\nrepresentatives of Cornerstone to report operational matters of materiality
\nwhich would reasonably be expected to have an EOP Material Adverse Effect;<\/p>\n
(c) promptly notify Cornerstone of any material
\nemergency or other material change in the condition (financial or otherwise),
\nbusiness, properties, assets, liabilities, prospects or the normal course of its
\nbusinesses or in the operation of its properties, or of any material
\ngovernmental complaints, investigations or hearings (or communications
\nindicating that the same may be contemplated);<\/p>\n
-55-<\/p>\n
(d) promptly deliver to Cornerstone true and correct
\ncopies of any report, statement or schedule filed with the SEC subsequent to the
\ndate of this Agreement;<\/p>\n
(e) maintain its books and records in accordance with
\nGAAP consistently applied and not change in any material manner any of its
\nmethods, principles or practices of accounting in effect at the EOP Financial
\nStatement Date, except as may be required by the SEC, applicable law or GAAP;<\/p>\n
(f) duly and timely file all reports, tax returns and
\nother documents required to be filed with federal, state, local and other
\nauthorities, subject to extensions permitted by law, provided such extensions do
\nnot adversely affect EOP’s status as a qualified REIT under the Code;<\/p>\n
(g) not make or rescind any express or deemed
\nelection relative to Taxes (unless required by law or necessary to preserve
\nEOP’s status as a REIT or the status of any EOP Subsidiary as a partnership for
\nfederal income tax purposes or as a qualified REIT subsidiary under Section
\n856(i) of the Code, as the case may be);<\/p>\n
(h) not amend the EOP Declaration of Trust, the EOP
\nBylaws or the EOP Partnership Agreement (except for the Proposed EOP Charter
\nRelating to Voting Requirements, the Proposed EOP Charter Amendment Relating to
\nDomestically Controlled REIT Status (as defined herein), the proposed amendment
\nto Section 7.4 of the EOP Partnership Agreement, the amendments to the EOP
\nPartnership Agreement described in Section 5.4(c), the filing of Articles
\nSupplementary to elect to be subject to the provisions of Section 3-804(c) of
\nthe Maryland General Corporation Law and to the extent necessary to reflect the
\nadmission of additional limited partners and other amendments in connection
\ntherewith that can be made by EOP without a vote of limited partners and that
\nwill not, individually or in the aggregate, materially adversely affect the
\nrights or obligations of holders of EOP OP Units); as used herein, (i) “Proposed
\nEOP Charter Amendment Relating to Certain Voting Requirements” means the
\nproposed amendment to EOP’s Declaration of Trust, substantially the form
\nattached hereto as EXHIBIT D, which has been approved by the Board of Trustees
\nof EOP and is proposed to be submitted to a vote of the shareholders of EOP,
\n(ii) “Proposed EOP Charter Amendment Relating to Domestically Controlled REIT
\nStatus” means the proposed amendment to EOP’s Declaration of Trust,
\nsubstantially the form attached hereto as EXHIBIT E, which has been approved by
\nthe Board of Trustees of EOP and is proposed to be submitted to a vote of the
\nshareholders of EOP at the EOP Shareholders Meeting (as defined below) and (iii)
\n“Proposed EOP Charter Amendments” means, collectively, the Proposed EOP Charter
\nRelating to Voting Requirements and the Proposed EOP Charter Amendment Relating
\nto Domestically Controlled REIT Status;<\/p>\n
-56-<\/p>\n
(i) except as provided in Section 5.10 hereof and in
\nconnection with the use of EOP Common Shares to pay the exercise price or tax
\nwithholding in connection with equity-based employee benefit plans by the
\nparticipants therein, not (i) authorize, declare, set aside or pay any dividend
\nor make any other distribution or payment with respect to any EOP Common Shares
\nor EOP OP Units or (ii) directly or indirectly redeem, purchase or otherwise
\nacquire any shares of capital stock, membership interests or units of
\npartnership interest or any option, warrant or right to acquire, or security
\nconvertible into, shares of capital stock, membership interests, or units of
\npartnership interest of EOP, except for (A) redemptions of EOP Common Shares
\nrequired under Section 7.3.6 of the EOP Declaration of Trust in order to
\npreserve the status of EOP as a REIT under the Code, (B) redemptions of EOP OP
\nUnits, whether or not outstanding on the date of this Agreement, under the EOP
\nPartnership Agreement in which EOP Common Shares are utilized, and (C)
\nrepurchases of EOP Common Shares pursuant to its publicly announced share
\nrepurchase program;<\/p>\n
(j) not (A) enter into or agree to effect any merger,
\nacquisition, consolidation, reorganization or other business combination with
\nany third party in which EOP is not the surviving party thereto or (B) enter
\ninto or agree to effect any merger, acquisition, exchange offer or other
\nbusiness combination with a third party in which EOP is the surviving party that
\nwould result in the issuance of equity securities representing in excess of 20%
\nof the outstanding EOP Common Shares on the date any such business combination
\nis entered into or agreed to unless, in either such case, such business
\ncombination is approved by Cornerstone, which approval shall not be unreasonably
\nwithheld or delayed, or the business combination agreement provides that the
\nrequired vote of EOP shareholders for approval of such business combination is
\nno less than the affirmative vote of holders of EOP Common Shares representing
\nmore than 50% of the sum of (x) the number of EOP Common Shares outstanding at
\nthe time of such approval plus (y) 50,000,000; and<\/p>\n
(k) not authorize, recommend, propose or announce an
\nintention to do any of the foregoing prohibited actions, or enter into any
\ncontract, agreement, commitment or arrangement to do any of the foregoing
\nprohibited actions.<\/p>\n
4.3 NO SOLICITATION.<\/p>\n
(a) Prior to the Effective Time of the Merger,
\nCornerstone agrees, for itself and in its capacity as the sole general partner
\nof the Cornerstone Partnership, that:<\/p>\n
(i) none of it, Cornerstone Partnership, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary shall
\ninvite, initiate, solicit or encourage, directly or indirectly, any inquiries,
\nproposals, discussions or <\/p>\n
-57-<\/p>\n
negotiations or the making or implementation of any proposal or offer
\n(including, without limitation, any proposal or offer to its stockholders) with
\nrespect to a merger, acquisition, tender offer, exchange offer, transaction
\nresulting in the issuance of securities representing 10% or more of the
\noutstanding equity securities of Cornerstone or Cornerstone Partnership,
\nconsolidation, business combination, recapitalization, liquidation, dissolution,
\nshare exchange, business combination, sale, lease, exchange, mortgage, pledge,
\ntransfer or other disposition of 10% or more of the assets or equity securities
\n(including, without limitation, partnership interests and units) of Cornerstone
\nor Cornerstone Partnership, other than the Mergers (any such proposal or offer
\nbeing hereinafter referred to as an “Acquisition Proposal”), or engage in any
\ndiscussions or negotiations with or provide any confidential or non-public
\ninformation or data to, any person relating to, or that may reasonably be
\nexpected to lead to, an Acquisition Proposal, or enter into any letter of
\nintent, agreement in principle or agreement relating to an Acquisition Proposal,
\nor propose publicly to agree to do any of the foregoing, or otherwise facilitate
\nany effort or attempt to make or implement an Acquisition Proposal;<\/p>\n
(ii) none of it, Cornerstone Partnership, any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary will permit
\nany officer, director, employee, affiliate, agent, investment banker, financial
\nadvisor, attorney, accountant, broker, finder, consultant or other agent or
\nrepresentative of Cornerstone to engage in any of the activities described in
\nSection 4.3(a);<\/p>\n
(iii) it, Cornerstone Partnership and the Cornerstone
\nSubsidiaries and Cornerstone Non-controlled Subsidiary will immediately cease
\nand cause to be terminated any existing activities, discussions or negotiations
\nwith any parties conducted heretofore with respect to any of the foregoing and
\nwill take the necessary steps to inform the individuals or entities referred to
\nin Section 4.3(b) of the obligations undertaken in this Section 4.3; and<\/p>\n
(iv) it will notify EOP promptly (but in any event
\nwithin 24 hours) if Cornerstone, Cornerstone Partnership, any Cornerstone
\nSubsidiary, the Cornerstone Non-controlled Subsidiary or any individual or
\nentity referred to in Section 4.3(b) receives any such inquiries or proposals,
\nor any requests for such information, or if any such negotiations or discussions
\nare sought to be initiated or continued with it, and include in such notice the
\nidentity of the Person making such inquiry, proposal or request, the material
\nterms of such inquiry, proposal or request and, if in writing, shall promptly
\ndeliver to EOP a copy of such inquiry, proposal or request along with all other
\nrelated documentation and correspondence;<\/p>\n
(b) Notwithstanding Section 4.3(a), the Board of
\nDirectors of Cornerstone (including with respect to Cornerstone’s capacity as
\nthe sole general partner of Cornerstone Partnership) shall not be prohibited
\nfrom furnishing information to or entering into discussions or negotiations
\nwith, any person or entity that makes an unsolicited bona fide written
\nAcquisition Proposal, if, and only <\/p>\n
-58-<\/p>\n
to the extent that (i) a majority of the Board of Directors of Cornerstone
\ndetermines in good faith, after consultation with its outside counsel, that such
\naction is required for the Board of Directors of Cornerstone to comply with its
\nfiduciary duties to stockholders imposed by applicable law, (ii) prior to
\nfurnishing such information to, or entering into discussions or negotiations
\nwith, such person or entity, Cornerstone provides written notice to EOP to the
\neffect that it is furnishing information to, or entering into discussions with
\nsuch person or entity and (iii) Cornerstone enters into a confidentiality
\nagreement with such Person on terms in the aggregate not more favorable to such
\nPerson than the terms of the Confidentiality Agreement.<\/p>\n
(c) Notwithstanding anything to the contrary set
\nforth in Section 4.3(a) or 4.3(b), in the event that an Acquisition Proposal
\nconstitutes a Superior Acquisition Proposal (as defined herein), nothing
\ncontained in this Section 4.3 shall prohibit the Board of Directors of
\nCornerstone from withdrawing, modifying, amending or qualifying its
\nrecommendation of this Agreement and the Merger as required under Section 5.1(d)
\nhereof and recommending such Superior Acquisition Proposal to its stockholders:
\n(i) if but only if, Cornerstone: (A) complies fully with this Section 4.3 and
\n(B) provides EOP with at least three (3) business days’ prior written notice of
\nits intent to withdraw, modify, amend or qualify its recommendation of this
\nMerger Agreement and the Merger, (ii) if, in the event that during such three
\n(3) business days EOP makes a counter proposal to such Superior Acquisition
\nProposal (any such counter proposal being referred to in this Agreement as the
\n“EOP Counter Proposal”), Cornerstone’s Board of Directors in good faith, taking
\ninto account the advice of its outside financial advisors of nationally
\nrecognized reputation, determines (A) that the EOP Counter Proposal is not at
\nleast as favorable to Cornerstone’s stockholders as the Superior Acquisition
\nProposal, from a financial point of view, and (B) the EOP Counter Proposal is
\nnot at least as favorable generally to Cornerstone’s stockholders (taking into
\naccount all financial and strategic considerations and other relevant factors,
\nincluding relevant legal, financial, regulatory and other aspects of such
\nproposals, and the conditions, prospects and time required for completion of
\nsuch proposal), and (iii) Cornerstone shall have terminated this Agreement in
\naccordance with Section 7.1(h).<\/p>\n
(d) For all purposes of this Agreement, “Superior
\nAcquisition Proposal” means a bona fide written proposal made by a third party
\nto acquire, directly or indirectly, Cornerstone and\/or Cornerstone Partnership
\npursuant to a tender or exchange offer, merger, share exchange, consolidation or
\nsale of all or substantially all of the assets of Cornerstone, Cornerstone
\nPartnership, and the Cornerstone Subsidiaries or otherwise (i) on terms which a
\nmajority of the Board of Directors of Cornerstone determines in good faith, (A)
\ntaking into account the advice of Cornerstone’s financial advisors of nationally
\nrecognized reputation, are superior, from a financial point of view, to
\nCornerstone’s stockholders to those provided for in the Merger and (B) to be
\nmore favorable generally to Cornerstone’s stockholders (taking into account all
\nfinancial and strategic considerations and <\/p>\n
-59-<\/p>\n
other relevant factors, including relevant legal, financial, regulatory and
\nother aspects of such proposals, and the conditions, prospects and time required
\nfor completion of such proposal), (ii) for which financing, to the extent
\nrequired, is then fully committed and capable of being obtained and (iii) which
\nthe Board of Directors of Cornerstone determines in good faith is reasonably
\ncapable of being consummated.<\/p>\n
(e) Any disclosure that the Board of Directors of
\nCornerstone may be compelled to make with respect to the receipt of an
\nAcquisition Proposal in order to comply with its duties to shareholders imposed
\nby applicable law or Rule 14d-9 or 14e-2 of the Exchange Act will not constitute
\na violation of this Section 4.3.<\/p>\n
(f) Nothing in this Section 4.3 shall (i) permit
\nCornerstone to terminate this Agreement (except as expressly provided in Article
\n7) or (ii) affect any other obligations of Cornerstone under this Agreement.<\/p>\n
4.4 AFFILIATES. Prior to the Effective Time of the Merger,
\nCornerstone shall cause to be prepared and delivered to EOP a list (reasonably
\nsatisfactory to counsel for EOP) identifying all persons who, at the time of the
\nCornerstone Stockholders Meeting and the EOP Shareholders Meeting, may be deemed
\nto be “affiliates” of Cornerstone or Cornerstone Partnership as that term is
\nused in paragraphs (c) and (d) of Rule 145 under the Securities Act (the “Rule
\n145 Affiliates”). Cornerstone shall use its commercially reasonable efforts to
\ncause each person who is identified as a Rule 145 Affiliate in such list to
\ndeliver to EOP on or prior to the Effective Time a written agreement, in the
\nform previously approved by the parties hereto, that such Rule 145 Affiliate
\nwill not sell, pledge, transfer or otherwise dispose of any EOP Common Shares
\nand EOP OP Units issued to such Rule 145 Affiliate pursuant to the Merger,
\nexcept pursuant to an effective registration statement under the Securities Act
\nor in compliance with paragraph (d) of Rule 145 or as otherwise permitted by the
\nSecurities Act. EOP shall be entitled to place legends as specified in such
\nwritten agreements on the certificates representing any EOP Common Shares to be
\nreceived pursuant to the terms of this Agreement by such Rule 145 Affiliates who
\nhave executed such agreements and to issue appropriate stop transfer
\ninstructions to the transfer agent for the EOP Common Shares and EOP OP Units
\nissued to such Rule 145 Affiliates, consistent with the terms of such
\nagreements. EOP and EOP OP shall timely file the reports required to be filed by
\nit under the Exchange Act and the rules and regulations adopted by the SEC
\nthereunder, and it will take such further action as any Rule 145 Affiliate of
\nCornerstone or EOP may reasonably request, all to the extent required from time
\nto time to enable such Rule 145 Affiliate to sell shares of beneficial interest
\nof EOP received by such Rule 145 Affiliate in the Merger without registration
\nunder the Securities Act pursuant to (i) Rule 145(d)(1) under the Securities
\nAct, as such rule may be amended from to time, or (ii) any successor rule or
\nregulation hereafter adopted by the SEC.<\/p>\n
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4.5 OTHER ACTIONS. Each of Cornerstone and Cornerstone
\nPartnership, on the one hand, and EOP and EOP Partnership, on the other hand,
\nshall not take, and shall use commercially reasonable efforts to cause their
\nrespective Subsidiaries not to take, any action that would result in (i) any of
\nthe representations and warranties of such party (without giving effect to any
\n“knowledge” qualification) set forth in this Agreement that are qualified as to
\nmateriality becoming untrue, (ii) any of such representations and warranties
\n(without giving effect to any “knowledge” qualification) that are not so
\nqualified becoming untrue in any material respect or (iii) except as
\ncontemplated by Section 4.3, any of the conditions to the Merger set forth in
\nArticle 6 not being satisfied.<\/p>\n
ARTICLE 5<\/p>\n
ADDITIONAL COVENANTS<\/p>\n
5.1 PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
\nCORNERSTONE STOCKHOLDERS MEETING, CORNERSTONE UNITHOLDERS CONSENT SOLICITATION
\nAND EOP SHAREHOLDERS MEETING.<\/p>\n
(a) As promptly as practicable after execution of
\nthis Agreement, (i) each of Cornerstone and EOP shall prepare and file with the
\nSEC (with appropriate requests for confidential treatment, unless the parties
\nhereto otherwise agree) under the Exchange Act, one or more joint proxy
\nstatements\/prospectuses, forms of proxies and information statements (such joint
\nproxy statement(s)\/prospectus(es) and information statements together with any
\namendments to supplements thereto, the “Joint Proxy Statement”) relating to the
\nstockholder meeting of Cornerstone and the shareholder meeting of EOP, the vote
\nof the stockholders of Cornerstone with respect to this Agreement and the
\nshareholders of EOP with respect to the Merger and the Proposed EOP Charter
\nAmendment Relating to Domestically Controlled REIT Status, and the consent, if
\nany, of partners of Cornerstone Partnership and EOP Partnership in connection
\nwith any required Partner Approvals and (ii) in connection with the clearance by
\nthe SEC of the Joint Proxy Statement, EOP and Cornerstone, if applicable, shall
\nprepare and file with the SEC under the Securities Act one or more registration
\nstatements on Form S-4 (such registration statements, together with any
\namendments or supplements thereto, the “Form S-4”), in which the Joint Proxy
\nStatement will be included, as one or more prospectuses in connection with the
\nregistration under the Securities Act of the EOP Common Shares and EOP OP Units
\nto be distributed to the holders of Cornerstone Common Stock and Cornerstone OP
\nUnits in the Mergers. The respective parties will cause the Proxy Statement and
\nthe Form S-4 to comply as to form in all material respects with the applicable
\nprovisions of the Securities Act, the Exchange Act and the rules and regulations
\nthereunder. Each of Cornerstone, Cornerstone Partnership, EOP and <\/p>\n
-61-<\/p>\n
EOP Partnership shall furnish all information about itself and its business and
\noperations and all necessary financial information to the other as the other may
\nreasonably request in connection with the preparation of the Joint Proxy
\nStatement and the Form S-4. EOP and Cornerstone, if applicable, shall use its
\ncommercially reasonable efforts, and Cornerstone will cooperate with it, to have
\nthe Form S-4 declared effective by the SEC as promptly as practicable (including
\nclearing the Proxy Statement with the SEC. Each of Cornerstone and Cornerstone
\nPartnership, on the one hand, and EOP and EOP Partnership, on the other hand,
\nagree promptly to correct any information provided by it for use in the Joint
\nProxy Statement and the Form S-4 if and to the extent that such information
\nshall have become false or misleading in any material respect, and each of the
\nparties hereto further agrees to take all steps necessary to amend or supplement
\nthe Joint Proxy Statement and the Form S-4 and to cause the Joint Proxy
\nStatement and the Form S-4 as amended or supplemented to be filed with the SEC
\nand to be disseminated to their respective stockholders and shareholders and
\npartners, in each case as and to the extent required by applicable federal and
\nstate securities laws. Each of Cornerstone, Cornerstone Partnership, EOP and EOP
\nPartnership agrees that the information provided by it for inclusion in the
\nJoint Proxy Statement or the Form S-4 and each amendment or supplement thereto,
\nat the time of mailing thereof and at the time of the respective meetings of
\nstockholders and shareholders of Cornerstone and EOP and at the time of the
\nrespective taking of consents, if any, of partners of Cornerstone Partnership
\nand EOP Partnership, will not include an untrue statement of a material fact or
\nomit to state a material fact required to be stated therein or necessary to make
\nthe statements therein, in light of the circumstances under which they were
\nmade, not misleading. EOP will advise and deliver copies (if any) to
\nCornerstone, promptly after it receives notice thereof, of any request by the
\nSEC for amendment of the Joint Proxy Statement or the Form S-4 or comments
\nthereon and responses thereto or requests by the SEC for additional information
\n(regardless of whether such requests relate to EOP or EOP Partnership, on the
\none hand, and Cornerstone or Cornerstone Partnership, on the other hand), and
\nEOP shall promptly notify Cornerstone, and Cornerstone shall promptly notify
\nEOP, if applicable, of (i) the time when the Form S-4 has become effective, (ii)
\nthe filing of any supplement or amendment thereto, (iii) the issuance of any
\nstop order, and (iv) the suspension of the qualification and registration of the
\nEOP Common Shares and EOP OP Units issuable in connection with the Mergers.<\/p>\n
(b) Each of Cornerstone, Cornerstone Partnership, EOP
\nand EOP Partnership shall use its commercially reasonable efforts to timely mail
\nthe joint proxy statement\/prospectus contained in the Form S-4 to its
\nstockholders or shareholders. It shall be a condition to the mailing of the
\njoint proxy statement\/prospectus that (i) EOP and EOP Partnership shall have
\nreceived a “comfort” letter from PricewaterhouseCoopers LLP, independent public
\naccountants for Cornerstone and Cornerstone Partnership, of the kind
\ncontemplated by the Statement of Auditing Standards with respect to Letters to
\nUnderwriters promulgated by the American Institute of Certified Public
\nAccountants (the “AICPA <\/p>\n
-62-<\/p>\n
Statement”), dated as of the date on which the Form S-4 shall become effective
\nand as of the Effective Time, addressed to EOP and EOP Partnership, in form and
\nsubstance reasonably satisfactory to EOP and EOP Partnership, concerning the
\nprocedures undertaken by PricewaterhouseCoopers LLP with respect to the
\nfinancial statements and information of Cornerstone and Cornerstone Partnership
\nand their subsidiaries and the Cornerstone Non-controlled Subsidiary contained
\nin the Form S-4 and the other matters contemplated by the AICPA Statement and
\notherwise customary in scope and substance for letters delivered by independent
\npublic accountants in connection with transactions such as those contemplated by
\nthis Agreement and (ii) Cornerstone shall have received a “comfort” letter from
\nErnst & Young LLP, independent public accountants for EOP and EOP Partnership,
\nof the kind contemplated by the AICPA Statement, dated as of the date on which
\nthe Form S-4 shall become effective and as of the Effective Time, addressed to
\nCornerstone and Cornerstone Partnership, in form and substance reasonably
\nsatisfactory to Cornerstone, concerning the procedures undertaken by Ernst & Young LLP with respect to the financial statements and information of EOP, EOP
\nPartnership and their subsidiaries contained in the Form S-4 and the other
\nmatters contemplated by the AICPA Statement and otherwise customary in scope and
\nsubstance for letters delivered by independent public accountants in connection
\nwith transactions such as those contemplated by this Agreement.<\/p>\n
(c) EOP will duly call and give notice of and, as
\nsoon as practicable following the date of this Agreement (but in no event sooner
\nthan 20 business days following the date the Joint Proxy Statement is mailed to
\nthe shareholders of EOP), convene and hold a meeting of its shareholders (the
\n“EOP Shareholders Meeting”) for the purpose of obtaining the EOP Shareholder
\nApprovals. EOP shall, through its Board of Trustees, recommend to its
\nshareholders approval of this Agreement, the Merger and the transactions
\ncontemplated by this Agreement.<\/p>\n
(d) Cornerstone will duly call and give notice of
\nand, as soon as practicable following the date of this Agreement (but in no
\nevent sooner than 20 business days following the date the Joint Proxy Statement
\nis mailed to the stockholders of Cornerstone), convene and hold a meeting of its
\nstockholders (the “Cornerstone Stockholders Meeting”) for the purpose of
\nobtaining the Cornerstone Stockholder Approvals. Cornerstone shall, through its
\nBoard of Directors, recommend to its stockholders approval of this Agreement,
\nthe Merger and the transactions contemplated by this Agreement and include such
\nrecommendation in the Proxy Statement; PROVIDED, HOWEVER, that prior to the
\nCornerstone Stockholders Meeting, such recommendation may be withdrawn,
\nmodified, amended or qualified if and only to the extent permitted by Section
\n4.3(c) hereof.<\/p>\n
(e) EOP and Cornerstone shall use their commercially
\nreasonable efforts to convene their respective shareholder and stockholder
\nmeetings on the same day, which day, subject to the provisions of Sections
\n5.1(c), 5.1(d) and <\/p>\n
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5.3, shall be a day not later than 60 days after the date the Joint Proxy
\nStatement is mailed.<\/p>\n
(f) If on the date for the EOP Shareholders Meeting
\nand Cornerstone Stockholders Meeting established pursuant to Section 5.1(e) of
\nthis Agreement, either EOP or Cornerstone has not received duly executed proxies
\nfor a sufficient number of votes to approve the Merger, then both parties shall
\nrecommend the adjournment of their respective shareholders and stockholders
\nmeetings until one or more dates not later than the date 10 days after the
\noriginally scheduled date of the shareholders meetings.<\/p>\n
(g) Cornerstone shall request written consents for
\napproval by the limited partners of Cornerstone Partnership of each of the
\nmatters described in the definition of Cornerstone Partner Approvals.
\nCornerstone hereby agrees to vote in favor of or consent to, as applicable, the
\nPartnership Merger, to the extent approval thereof is required by the
\nCornerstone Partnership Agreement. Cornerstone shall recommend to the limited
\npartners of Cornerstone Partnership that they approve such matters. EOP shall
\nrequest written consents, if any is required, by the limited partners, of EOP
\nPartnership of each of the matters described in the definition of EOP Partner
\nApprovals. EOP hereby agrees to vote, if any is required, in favor of such
\nmatters and to recommend to the limited partners of EOP Partnership that they
\napprove such matters.<\/p>\n
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the
\nrequirements of confidentiality agreements with third parties in existence on
\nthe date hereof, each of the parties shall, and shall cause each of its
\nSubsidiaries (and, in the case of Cornerstone, the Cornerstone Non-controlled
\nSubsidiary) to, afford to the other parties and to the officers, employees,
\naccountants, counsel, financial advisors and other representatives of such other
\nparties, reasonable access during normal business hours prior to the Effective
\nTime to all their respective properties, books, contracts, commitments,
\npersonnel and records and, during such period, each of the parties shall, and
\nshall cause each of its Subsidiaries (and, in the case of Cornerstone, the
\nCornerstone Non-controlled Subsidiary) to, furnish promptly to the other parties
\n(a) a copy of each report, schedule, registration statement and other document
\nfiled by it during such period pursuant to the requirements of federal or state
\nsecurities laws and (b) all other information concerning its business,
\nproperties and personnel as such other party may reasonably request. Each of the
\nparties shall, and shall cause its Subsidiaries (and in the case of Cornerstone,
\nthe Cornerstone Non-controlled Subsidiary) to, use commercially reasonable
\nefforts to cause its officers, employees, accountants, counsel, financial
\nadvisors and other representatives and affiliates to, hold any nonpublic
\ninformation in confidence in accordance with the Confidentiality Agreement,
\nwhich shall remain in full force and effect pursuant to the terms thereof,
\nnotwithstanding the execution and delivery of this Agreement or the termination
\nhereof.<\/p>\n
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5.3 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.<\/p>\n
(a) Subject to the terms and conditions herein
\nprovided, each of the parties shall: (i) use commercially reasonable efforts to
\ncooperate with one another in (A) determining which filings are required to be
\nmade prior to the Effective Time with, and which consents, approvals, permits or
\nauthorizations are required to be obtained prior to the Effective Time from,
\ngovernmental or regulatory authorities of the United States, the several states
\nand foreign jurisdictions and any third parties in connection with the execution
\nand delivery of this Agreement, and the consummation of the transactions
\ncontemplated hereby, including, without limitation, any filing under the HSR
\nAct, and (B) timely making all such filings and timely seeking all such
\nconsents, approvals, permits and authorizations; (ii) use commercially
\nreasonable efforts (other than the payment of money which is not contractually
\nrequired to be paid) to obtain in writing any consents required from third
\nparties to effectuate the Mergers, such consents to be in form reasonably
\nsatisfactory to each of the parties (including, without limitation, taking the
\nactions contemplated under Schedule 5.3(a)(ii)); and (iii) use commercially
\nreasonable efforts to take, or cause to be taken, all other action and do, or
\ncause to be done, all other things necessary, proper or appropriate to
\nconsummate and make effective the transactions contemplated by this Agreement.
\nIf at any time after the Effective Time any further action is necessary or
\ndesirable to carry out the purpose of this Agreement, each party shall take all
\nsuch necessary action.<\/p>\n
(b) Cornerstone and Cornerstone Partnership shall use
\ncommercially reasonable efforts to obtain from PricewaterhouseCoopers LLP access
\nto all work papers relating to audits of Cornerstone and Cornerstone Partnership
\nperformed by PricewaterhouseCoopers LLP, and the continued cooperation of
\nPricewaterhouseCoopers LLP with regard to the preparation of consolidated
\nfinancial statements for the Surviving Trust.<\/p>\n
(c) Cornerstone and Cornerstone Partnership shall
\ngive prompt notice to EOP and EOP Partnership, and EOP and EOP Partnership shall
\ngive prompt notice to Cornerstone and Cornerstone Partnership, (i) if any
\nrepresentation or warranty made by it contained in this Agreement that is
\nqualified as to materiality becomes untrue or inaccurate in any respect or any
\nsuch representation or warranty that is not so qualified becomes untrue or
\ninaccurate in any material respect or (ii) of the failure by it to comply with
\nor satisfy in any material respect any covenant, condition or agreement to be
\ncomplied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that
\nno such notification shall affect the representations, warranties, covenants or
\nagreements of the parties or the conditions to the obligations of the parties
\nunder this Agreement.<\/p>\n
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5.4 TAX MATTERS.<\/p>\n
(a) Each of EOP and Cornerstone shall use its commercially
\nreasonable efforts before and after the Effective Time to cause the Merger to
\nqualify as a reorganization under the provisions of Sections 368(a) of the Code
\nand to obtain the opinions of counsel referred to in Sections 6.2(e) and 6.3(e).<\/p>\n
(b) Unless, and only to the extent, expressly provided
\notherwise in the Tax Protection Agreements described in Schedule 2.18(j) to the
\nCornerstone Disclosure Letter to be assumed by EOP pursuant to Section 5.14, EOP
\nPartnership and its Subsidiaries shall use the “traditional method” under
\nTreasury Regulations Section 1.704-3(b) for purposes of making allocations under
\nSection 704(c) of the Code with respect to the properties of Cornerstone
\nPartnership and its Subsidiaries acquired in the Partnership Merger to take into
\naccount differences as of the Effective Time of the Partnership Merger between
\nthe adjusted tax bases of such properties and their respective fair market
\nvalues (referred to as the “Section 704(c) values”), with no curative
\nallocations to offset the effect of the “ceiling rule.” EOP Partnership and
\nCornerstone Partnership shall negotiate in good faith to agree upon the “Section
\n704(c) values” of the properties of Cornerstone Partnership and its Subsidiaries
\nas of the Effective Time of the Partnership Merger. Unless, and only to the
\nextent, expressly provided otherwise in the Tax Protection Agreements described
\nin Schedule 2.18(j) to the Cornerstone Disclosure Letter to be assumed by EOP
\npursuant to Section 5.14, EOP Partnership and its Subsidiaries shall determine
\nin their reasonable discretion the method to be used for allocating “excess
\nnonrecourse liabilities” of EOP Partnership pursuant to Treasury Regulations
\nSection 1.752-3(a)(3) following the Closing Date, PROVIDED THAT (i) EOP
\nPartnership shall not use with respect to the former limited partners in
\nCornerstone Partnership a method that is less favorable than the method used by
\nEOP Partnership with respect to the other limited partners of EOP Partnership
\nwho are not parties to an express agreement specifying a particular method to be
\nused for such purposes, and (ii) in the case of a Cornerstone Partner who, prior
\nto the Partnership Merger, had been specially allocated a portion of a
\nCornerstone Partnership nonrecourse liability secured by a property with respect
\nto which such Cornerstone Partner has a built-in gain under Section 704(c) of
\nthe Code to take into account such Cornerstone Partner’s share of such built-in
\ngain that was not taken into account in making the allocation of such liability
\nunder Treasury Regulation Section 1.752-3(a)(2), EOP Partnership shall continue
\nsuch method of allocating such liability following the Merger.<\/p>\n
(c) EOP Partnership shall amend the EOP Partnership Agreement
\nat or prior to the Effective Time of the Partnership Merger to incorporate
\nprovisions relating to the restoration of deficit capital accounts that will
\npermit each limited partner of Cornerstone Partnership who has entered into an
\nagreement with Cornerstone Partnership prior to the Partnership Merger relating
\nto the restoration of deficit capital accounts to continue to be obligated to
\nrestore any deficit in its <\/p>\n
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capital account in EOP Partnership in an amount that is not less than the
\nmaximum potential amount that such limited partner was obligated to restore to
\nCornerstone Partnership immediately prior to the Effective Time of the
\nPartnership Merger. Such deficit capital account restoration provisions to be
\nincorporated in the EOP Partnership Agreement shall be in substantially the form
\nof the deficit capital account restoration provisions incorporated in the
\nCornerstone Partnership Agreement pursuant to the Fourth Amendment of Agreement
\nof Limited Partnership of Cornerstone Properties Limited Partnership, with such
\nchanges thereto as shall be approved by Cornerstone Partnership, PROVIDED,
\nHOWEVER, that except as set forth in the next sentence below or in the Tax
\nProtection Agreements listed on SCHEDULE 2.18(J) to the Cornerstone Disclosure
\nLetter, no Cornerstone Partner shall have the right to increase the amount of
\nits deficit restoration obligation following the Partnership Merger to an amount
\nin excess of the maximum potential amount that such limited partner was
\nobligated to restore to Cornerstone Partnership immediately prior to the
\nEffective Time of the Partnership Merger. Notwithstanding the PROVISO in the
\nimmediately preceding sentence, the Cornerstone Partners as a group shall have
\nthe right, at any time following the Merger and without the consent of EOP, to
\nincrease their maximum potential deficit restoration obligations as a group (as
\ndetermined immediately prior to the Merger) by an aggregate amount of up to $50
\nmillion, reduced by the amount of any increase therein that shall occur under
\nthe Cornerstone Partnership Agreement during the period commencing on the date
\nhereof and ending immediately prior to the Effective Time of the Partnership
\nMerger. Any election to increase or to take on a deficit restoration obligation
\nelection permitted under a Tax Protection Agreement listed on SCHEDULE 2.18(J)
\nto the Cornerstone Disclosure Letter shall not be taken into account in applying
\nthe foregoing $50 million limitation. Notwithstanding any the foregoing, EOP
\nPartnership shall not be obligated to maintain any level of partnership recourse
\ndebt in excess of the amounts otherwise specifically required to be maintained
\nunder the Tax Protection Agreements listed on SCHEDULE 2.18(J) to the
\nCornerstone Disclosure Letter. In addition, the amendment to the EOP Partnership
\nAgreement will contain a provision to the effect that (i) EOP Partnership will
\nconsider in good faith a request from a former Cornerstone Partner to increase
\nthe amount of its deficit restoration obligation from time to time after the
\nPartnership Merger if the former Cornerstone Partner shall provide information
\nfrom its professional tax advisor satisfactory to EOP Partnership showing that,
\nin the absence of such an increase, such former Cornerstone Partner would not
\nlikely be allocated from EOP Partnership sufficient indebtedness under Section
\n752 of the Code and the at-risk provisions under Section 465 of the Code to
\navoid the recognition of gain (other than gain required to be recognized by
\nreason of actual cash distributions from EOP Partnership following the
\nPartnership Merger); (ii) EOP Partnership and its professional tax advisors will
\ncooperate in good faith with the former Cornerstone Partner and its professional
\ntax advisor to provide such information regarding the allocation of the EOP
\nPartnership liabilities and the nature of such liabilities as is reasonably
\nnecessary in order to determine the former Cornerstone Partner’s adjusted tax
\nbasis in its EOP OP Units <\/p>\n
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and at-risk amount; (iii) in deciding whether or not to grant such request, EOP
\nPartnership shall be entitled to take into account all factors related to EOP
\nPartnership, including, without limitation, the existing and anticipated debt
\nstructure of EOP Partnership, the tax situations of other holders of EOP OP
\nUnits and the effect that such a deficit restoration commitment might have on
\ntheir tax situation, and the anticipated term long term business needs of EOP;
\n(iv) in no event shall EOP Partnership be required to incur additional
\nindebtedness that would be considered a “recourse liability” for purposes of
\nSection 752 of the Code to facilitate such additional deficit capital account
\nrestoration commitments; and (v) EOP Partnership’s only obligation shall be to
\nact in good faith, and a former Cornerstone Partner’s exclusive remedy under
\nsuch provision would be an action for specific performance, with no entitlement
\nto monetary damages.<\/p>\n
5.5 PUBLIC ANNOUNCEMENTS. Each party will consult with each
\nother party before issuing, and provide each other the opportunity to review and
\ncomment upon, any press release or other written public statements, including,
\nwithout limitation, any press release or other written public statement which
\naddress in any manner the transactions contemplated by this Agreement, and shall
\nnot issue any such press release or make any such written public statement prior
\nto such consultation, except as may be required by applicable law, court process
\nor by obligations pursuant to any listing agreement with any national securities
\nexchange. The parties agree that the initial press release to be issued with
\nrespect to the transactions contemplated by this Agreement will be in the form
\nagreed to by the parties prior to the execution of this Agreement.<\/p>\n
5.6 LISTING. EOP shall use commercially reasonable efforts to
\ncause the EOP Common Shares to be issued in the Merger, and the EOP Common
\nShares reserved for issuance upon redemption of EOP OP Units issued in the
\nPartnership Merger, to be approved for listing on the NYSE, subject to official
\nnotice of issuance, prior to the Effective Time.<\/p>\n
5.7 TRANSFER AND GAINS TAXES. Each party shall cooperate in
\nthe preparation, execution and filing of all returns, questionnaires,
\napplications or other documents regarding any real property transfer or gains,
\nsales, use, transfer, value added stock transfer and stamp taxes, any transfer,
\nrecording, registration and other fees and any similar taxes which become
\npayable in connection with the transactions contemplated by this Agreement
\n(together with any related interests, penalties or additions to tax, “Transfer
\nand Gains Taxes”). From and after the Effective Time, EOP shall pay or cause EOP
\nOperating Partnership, as appropriate, to pay or cause to be paid, without
\ndeduction or withholding from any amounts payable to the holders of EOP Common
\nShares or EOP OP Units, as applicable, all Transfer and Gains Taxes (which term
\nshall not in any event be construed to include for these purposes any Tax
\nimposed under the Code).<\/p>\n
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5.8 BENEFIT PLANS AND OTHER EMPLOYEE ARRANGEMENTS.<\/p>\n
(a) BENEFIT PLANS. After the Effective Time, all
\nemployees of Cornerstone who are employed by the Surviving Trust shall, at the
\noption of the Surviving Trust, either continue to be eligible to participate in
\nan “employee benefit plan”, as defined in Section 3(3) of ERISA, of Cornerstone
\nwhich is, at the option of the Surviving Trust, continued by the Surviving
\nTrust, or alternatively shall be eligible to participate in the same manner as
\nother similarly situated employees of the Surviving Trust who were formerly
\nemployees of EOP in any “employee benefit plan,” as defined in Section 3(3) of
\nERISA, sponsored or maintained by the Surviving Trust after the Effective Time.
\nWith respect to each such employee benefit plan, service with Cornerstone or any
\nCornerstone Subsidiary (as applicable) and the predecessor of any of them shall
\nbe included for purposes of determining eligibility to participate, vesting (if
\napplicable) and determination of the level of entitlement to, benefits under
\nsuch employee benefit plan. EOP shall, or shall cause the Surviving Trust and
\nits Subsidiaries to, (i) waive all limitations, as to preexisting conditions
\nexclusions and waiting periods with respect to participation and coverage
\nrequirements applicable to all employees of Cornerstone who are employed by the
\nSurviving Trust under any welfare plan that such employees may be eligible to
\nparticipate in after the Effective Time, other than limitations or waiting
\nperiods that are already in effect with respect to such employees and that have
\nnot been satisfied as of the Effective Time under any welfare plan maintained
\nfor such employees immediately prior to the Effective Time, and (ii) provide
\neach such employee of Cornerstone who is employed by the Surviving Trust with
\ncredit for any co-payments and deductibles paid prior to the Effective Time in
\nsatisfying any applicable deductible or out-of-pocket requirements under any
\nwelfare plans that such employees are eligible to participate in after the
\nEffective Time.<\/p>\n
(b) STOCK OPTION AND RESTRICTED STOCK PLANS. The
\nstock option plans or programs of Cornerstone and the restricted stock plans or
\nprograms of Cornerstone shall be discontinued.<\/p>\n
(c) CORNERSTONE STOCK OPTIONS. As of the Effective
\nTime, each outstanding Cornerstone Stock Option shall, whether or not then
\nvested or exercisable, effective as of the Effective Time, become fully
\nexercisable and vested and each such Cornerstone Stock Option shall be
\nautomatically converted at the Effective Time into an option (a “Substituted
\nOption”) to purchase a number of shares of EOP Common Shares equal to the number
\nof shares of Cornerstone Common Stock that could have been purchased (assuming
\nfull vesting) under such Cornerstone Stock Option multiplied by 0.7009 (rounded
\ndown to the nearest whole number of shares of Cornerstone Common Stock) at an
\nexercise price per share of EOP Common Shares equal to the per-share option
\nexercise price specified in the Cornerstone Stock Option divided by 0.7009
\n(rounded up to the nearest whole cent). Such Substituted Option shall otherwise
\nbe subject to the same terms and <\/p>\n
-69-<\/p>\n
conditions as such Cornerstone Stock Option. For purposes of expiration and
\notherwise, the date of grant of the Substituted Option shall be the date on
\nwhich the corresponding Cornerstone Stock Option was granted. If the holder of
\nsuch Cornerstone Stock Option surrenders such option after the Effective Time
\nand prior to 11:59 p.m., Eastern Time, on the second business day immediately
\nfollowing the Effective Time, EOP shall, subject to reduction for required
\nwithholding taxes, pay to each such holder of Cornerstone Stock Options an
\namount in cash in respect thereof equal to the product of (i) the excess, if
\nany, of $18.00 over the exercise price of such Cornerstone Stock Option and (ii)
\nthe number of shares of Cornerstone Common Stock subject thereto. At the
\nEffective Time, (i) all references in the related stock option agreements to
\nCornerstone shall be deemed to refer to EOP and (ii) EOP shall assume all of
\nCornerstone’s obligations with respect to Cornerstone Stock Options as so
\namended. As promptly as reasonably practicable after the Effective Time, EOP
\nshall issue to each holder of an outstanding Cornerstone Stock Option a document
\nevidencing the foregoing assumption by EOP.<\/p>\n
In respect of each Cornerstone Stock Option assumed by EOP and
\nconverted into a Substituted Option, and the EOP Common Shares underlying such
\nSubstituted Option, EOP shall, as soon as practicable after the Effective Time,
\nfile and keep current a Registration Statement on Form S-8 or other appropriate
\nregistration statement for as long as Substituted Options remain outstanding.<\/p>\n
(d) RESTRICTED STOCK. All unvested shares of
\nrestricted stock of Cornerstone set forth in SCHEDULE 5.8(D) of the Cornerstone
\nDisclosure Schedule, shall, by virtue of this Agreement and without further
\naction of Cornerstone, EOP or the holder of such shares of restricted stock, to
\nthe extent required in the plan, agreement or instrument pursuant to which such
\nshares of restricted stock were granted, vest and become free of all
\nrestrictions immediately prior to the Effective Time and shall be converted into
\nthe Merger Consideration pursuant to Section 1.10.<\/p>\n
(e) RETENTION AGREEMENTS AND RETENTION PLAN. From and
\nafter the Effective Time, EOP or EOP Partnership shall assume the obligations of
\nCornerstone under the Retention Agreements and the Cornerstone retention plan
\nset forth on SCHEDULE 5.9(E) of the Cornerstone Disclosure Letter. The
\ntransactions contemplated by this Agreement shall be deemed a “Change in
\nControl” for purposes of such agreements, and EOP shall perform the obligations
\nof Cornerstone under such agreements and plan in accordance with the terms
\nthereof.<\/p>\n
(f) WITHHOLDING. To the extent required by applicable
\nlaw, Cornerstone shall require each employee who exercises a Cornerstone Stock
\nOption or who receives Cornerstone Common Stock pursuant to any existing
\ncommitment to pay to Cornerstone in cash or Cornerstone Common Stock an amount
\nsufficient to satisfy in full Cornerstone’s obligation to withhold Taxes
\nincurred by reason of such <\/p>\n
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exercise or issuance (unless and to the extent such withholding is satisfied
\npursuant to the provision regarding withholding in Section 1.15(c)).<\/p>\n
5.9 INDEMNIFICATION.<\/p>\n
(a) From and after the Effective Time, EOP and EOP
\nPartnership (collectively, the “Indemnifying Parties”) shall provide exculpation
\nand indemnification for each person who is now or has been at any time prior to
\nthe date hereof or who becomes prior to the Effective Time of the Merger, an
\nofficer or director of Cornerstone or any Cornerstone Subsidiary (the
\n“Indemnified Parties”) which is the same as the exculpation and indemnification
\nprovided to the Indemnified Parties by Cornerstone and the Cornerstone
\nSubsidiaries immediately prior to the Effective Time of the Merger in its
\ncharter, Bylaws or in its partnership, operating or similar agreement, as in
\neffect on the date hereof.<\/p>\n
(b) In addition to the rights provided in Section
\n5.9(a) above, in the event of any threatened or actual claim, action, suit,
\nproceeding or investigation, whether civil, criminal or administrative,
\nincluding, without limitation, any action by or on behalf of any or all security
\nholders of Cornerstone or EOP, or any Cornerstone Subsidiary or EOP Subsidiary,
\nor by or in the right of Cornerstone or EOP, or any Cornerstone Subsidiary or
\nEOP Subsidiary, or any claim, action, suit, proceeding or investigation in which
\nany person who is now, or has been, at any time prior to the date hereof, or who
\nbecomes prior to the Effective Time of the Merger, an officer, employee or
\ndirector of Cornerstone or any Cornerstone Subsidiary (the “Indemnification
\nParties”) is, or is threatened to be, made a party based in whole or in part on,
\nor arising in whole or in part out of, or pertaining to (i) the fact that he is
\nor was an officer, employee or director of Cornerstone or any of the Cornerstone
\nSubsidiaries or any action or omission by such person in his capacity as a
\ndirector, or (ii) this Agreement or the transactions contemplated by this
\nAgreement, whether in any case asserted or arising before or after the Effective
\nTime of the Merger, the Indemnifying Parties shall, from and after the Effective
\nTime of the Merger, indemnify and hold harmless, as and to the full extent
\npermitted by applicable law, each Indemnification Party against any losses,
\nclaims, liabilities, expenses (including reasonable attorneys’ fees and
\nexpenses), judgments, fines and amounts paid in settlement in accordance
\nherewith in connection with any such threatened or actual claim, action, suit,
\nproceeding or investigation. Any Indemnification Party proposing to assert the
\nright to be indemnified under this Section 5.9(b) shall, promptly after receipt
\nof notice of commencement of any action against such Indemnification Party in
\nrespect of which a claim is to be made under this Section 5.9(b) against the
\nIndemnifying Parties, notify the Indemnifying Parties of the commencement of
\nsuch action, enclosing a copy of all papers served; PROVIDED, HOWEVER, that the
\nfailure to provide such notice shall not affect the obligations of the
\nIndemnifying Parties except to the extent such failure to notify materially
\nprejudices the Indemnifying Parties’ ability to defend such claim, action, suit,
\nproceeding or investigation; and PROVIDED, FURTHER, HOWEVER, <\/p>\n
-71-<\/p>\n
that, in the case of any action pending at the Effective Time of the Merger,
\nnotification pursuant to this Section 5.9(b) shall be received by EOP prior to
\nsuch Effective Time. If any such action is brought against any of the
\nIndemnification Parties and such Indemnification Parties notify the Indemnifying
\nParties of its commencement, the Indemnifying Parties will be entitled to
\nparticipate in and, to the extent that they elect by delivering written notice
\nto such Indemnification Parties promptly after receiving notice of the
\ncommencement of the action from the Indemnification Parties, to assume the
\ndefense of the action and after notice from the Indemnifying Parties to the
\nIndemnification Parties of their election to assume the defense, the
\nIndemnifying Parties will not be liable to the Indemnification Parties for any
\nlegal or other expenses except as provided below. If the Indemnifying Parties
\nassume the defense, the Indemnifying Parties shall have the right to settle such
\naction without the consent of the Indemnification Parties; PROVIDED, HOWEVER,
\nthat the Indemnifying Parties shall be required to obtain such consent (which
\nconsent shall not be unreasonably withheld) if the settlement includes any
\nadmission of wrongdoing on the part of the Indemnification Parties or any decree
\nor restriction on the Indemnification Parties; PROVIDED, FURTHER, that no
\nIndemnifying Parties, in the defense of any such action shall, except with the
\nconsent of the Indemnification Parties (which consent shall not be unreasonably
\nwithheld), consent to entry of any judgment or enter into any settlement that
\ndoes not include as an unconditional term thereof the giving by the claimant or
\nplaintiff to such Indemnification Parties of a release from all liability with
\nrespect to such action. The Indemnification Parties will have the right to
\nemploy their own counsel in any such action, but the fees, expenses and other
\ncharges of such counsel will be at the expense of such Indemnification Parties
\nunless (i) the employment of counsel by the Indemnification Parties has been
\nauthorized in writing by the Indemnifying Parties, (ii) the Indemnification
\nParties have reasonably concluded (based on written advice of counsel to the
\nIndemnification Parties) that there may be legal defenses available to them that
\nare different from or in addition to and inconsistent with those available to
\nthe Indemnifying Parties, (iii) a conflict or potential conflict exists (based
\non written advice of counsel to the Indemnification Parties) between the
\nIndemnification Parties and the Indemnifying Parties (in which case the
\nIndemnifying Parties will not have the right to direct the defense of such
\naction on behalf of the Indemnification Parties) or (iv) the Indemnifying
\nParties have not in fact employed counsel to assume the defense of such action
\nwithin a reasonable time after receiving notice of the commencement of the
\naction from the Indemnification Parties, in each of which cases the reasonable
\nfees, disbursements and other charges of counsel will be at the expense of the
\nIndemnifying Parties and shall promptly be paid by each Indemnifying Party as
\nthey become due and payable in advance of the final disposition of the claim,
\naction, suit, proceeding or investigation to the fullest extent and in the
\nmanner permitted by law; PROVIDED, HOWEVER, that in no event shall any
\ncontingent fee arrangement be considered reasonable. Notwithstanding the
\nforegoing, the Indemnifying Parties shall not be obligated to advance any
\nexpenses or costs prior to receipt of an undertaking by or on behalf of the
\nIndemnification Party to repay any expenses advanced if it shall ultimately be<\/p>\n
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determined that the Indemnification Party is not entitled to be indemnified
\nagainst such expense. It is understood that the Indemnifying Parties shall not,
\nin connection with any proceeding or related proceedings in the same
\njurisdiction, be liable for the reasonable fees, disbursements and other charges
\nof more than one separate firm admitted to practice in such jurisdiction at any
\none time for all such Indemnification Parties unless (a) the employment of more
\nthan one counsel has been authorized in writing by the Indemnifying Parties, (b)
\nany of the Indemnification Parties have reasonably concluded (based on written
\nadvice of counsel to the Indemnification Parties) that there may be legal
\ndefenses available to them that are different from or in addition to and
\ninconsistent with those available to other Indemnification Parties or (c) a
\nconflict or potential conflict exists (based on written advice of counsel to the
\nIndemnification Parties) between any of the Indemnification Parties and the
\nother Indemnification Parties, in each case of which the Indemnifying Parties
\nshall be obligated to pay the reasonable fees and expenses of such additional
\ncounsel or counsels. Notwithstanding anything to the contrary set forth in this
\nAgreement, the Indemnifying Parties (i) shall not be liable for any settlement
\neffected without their prior written consent and (ii) shall not have any
\nobligation hereunder to any Indemnification Party to the extent that a court of
\ncompetent jurisdiction shall determine in a final and non-appealable order that
\nsuch indemnification is prohibited by applicable law. In the event of a final
\nand non-appealable determination by a court that any payment of expenses is
\nprohibited by applicable law, the Indemnification Parties shall promptly refund
\nto the Indemnifying Parties the amount of all such expenses theretofore advanced
\npursuant hereto.<\/p>\n
(c) At or prior to the Effective Time of the Merger,
\nEOP shall purchase directors’ and officers’ liability insurance covering acts or
\nomissions occurring prior to the Effective Time of the Merger for a period of
\nsix years with respect to those persons who are currently covered by
\nCornerstone’s directors’ and officers’ liability insurance policy on terms with
\nrespect to such coverage and amount no less favorable to Cornerstone’s directors
\nand officers currently covered by such insurance than those of such policy in
\neffect on the date hereof.<\/p>\n
(d) This Section 5.9 is intended for the irrevocable
\nbenefit of, and to grant third-party rights to, the Indemnified Parties, the
\nIndemnification Parties and their successors, assigns and heirs and shall be
\nbinding on all successors and assigns of EOP and EOP Operating Partnership. Each
\nof the Indemnified Parties and the Indemnification Parties shall be entitled to
\nenforce the covenants contained in this Section 5.9 and EOP and EOP Partnership
\nacknowledge and agree that each Indemnified Party and Indemnification Party
\nwould suffer irreparable harm and that no adequate remedy at law exists for a
\nbreach of such covenants and such Indemnified Party or such Indemnification
\nParty shall be entitled to injunctive relief and specific performance in the
\nevent of any breach of any provision in this Section 5.9.<\/p>\n
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(e) If EOP or EOP Partnership or any of its
\nrespective successors or assigns (i) consolidates with or merges into any other
\nperson and shall not be the continuing or surviving corporation or entity of
\nsuch consolidation or merger or (ii) transfers all or substantially all of its
\nproperties and assets to any person, then, and in each such case the successors
\nand assigns of such entity shall assume the obligations set forth in this
\nSection 5.9, which obligations are expressly intended to be for the irrevocable
\nbenefit of, and shall be enforceable by, each director and officer covered
\nhereby.<\/p>\n
5.10 DECLARATION OF DIVIDENDS AND DISTRIBUTIONS. From and
\nafter the date of this Agreement, neither Cornerstone nor EOP shall make any
\ndividend or distribution to its respective stockholders or shareholders without
\nthe prior written consent of the other party; PROVIDED, HOWEVER, the written
\nconsent of the other party shall not be required for the authorization and
\npayment of (a) distributions at their respective stated dividend or distribution
\nrates with respect to EOP Preferred Shares or Cornerstone 7% Preferred Stock,
\n(b) quarterly distribution with respect to the Cornerstone Common Stock of up to
\n$0.24 per share for the quarter ending March 31, 2000 and up to $0.31 per share
\nthereafter and (c) quarterly distributions with respect to the EOP Common Share
\nof up to $0.42 per share for the quarter ending March 31, 2000 and for each
\nquarter thereafter; PROVIDED, HOWEVER, except for the record date previously set
\non January 31, 2000, the record date for each distribution with respect to the
\nCornerstone Common Stock shall be the same date as the record date for the
\nquarterly distribution for the EOP Common Shares, as provided to Cornerstone by
\nnotice not less than twenty (20) business days prior to the record date for any
\nquarterly EOP distribution. From and after the date of this Agreement,
\nCornerstone Partnership shall not make any distribution to the holders of
\nCornerstone OP Units except a distribution per Cornerstone OP Unit in the same
\namount as a dividend per share of Cornerstone Common Stock permitted pursuant to
\nthis Section 5.10, with the same record and payment dates as such dividend on
\nthe Cornerstone Common Stock. The foregoing restrictions shall not apply,
\nhowever, to the extent a distribution (or an increase in a distribution) by
\nCornerstone or EOP is necessary for Cornerstone or EOP, as applicable, to
\nmaintain REIT status, avoid the incurrence of any taxes under Section 857 of the
\nCode, avoid the imposition of any excise taxes under Section 4981 of the Code,
\nor avoid the need to make one or more extraordinary or disproportionately larger
\ndistributions to meet any of the three preceding objectives.<\/p>\n
5.11 TRANSFER OF NON-CONTROLLED SUBSIDIARY VOTING SHARES. At
\nthe Closing and pursuant to the Stock Purchase Agreement, each of the holders of
\nvoting capital stock of the Cornerstone Non-controlled Subsidiary (other than
\nCornerstone Partnership, to the extent it owns any such voting capital stock)
\nshall transfer to EOP NCS Sub or such person or persons as EOP NCS Sub shall
\ndesignate by written notice delivered to them prior to the Closing, all of the
\nshares of each such Company owned by them, constituting all the outstanding
\nshares of such companies which are not owned by Cornerstone Partnership, for an
\naggregate <\/p>\n
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consideration in an amount equal to the purchase price set forth in the Stock
\nPurchase Agreement. EOP shall use commercially reasonable efforts to cause EOP
\nNCS Sub to perform its obligations under the Stock Purchase Agreement<\/p>\n
5.12 NOTICES. EOP shall provide such notice to its preferred
\nshareholders of the Merger as is required under Maryland law or the EOP
\nDeclaration of Trust.<\/p>\n
5.13 RESIGNATIONS. On the Closing Date, Cornerstone shall
\ncause the directors and officers of Cornerstone and of each of the Cornerstone
\nSubsidiaries to submit their resignations from such positions, effective as of
\nthe Effective Time of the Merger.<\/p>\n
5.14 ASSUMPTION OF EXISTING TAX PROTECTION AGREEMENTS.
\nEffective as of the Effective Time of the Partnership Merger, EOP and EOP
\nPartnership shall assume the obligations of Cornerstone, Cornerstone Partnership
\nand\/or the applicable Cornerstone Subsidiary, as the case may be, under the Tax
\nProtection Agreements as described in SCHEDULE 2.18(J) to the Cornerstone
\nDisclosure Letter. Immediately prior to the Effective Time of the Partnership
\nMerger, EOP and EOP Partnership shall enter into agreements with Cornerstone and
\nCornerstone Partnership, for the benefit of and enforceable by the individuals
\nand entities who are intended to be protected by the provisions of the Tax
\nProtection Agreements, confirming such assumption effective as of the Effective
\nTime of the Partnership Merger.<\/p>\n
5.15 EOP PARTNERSHIP AGREEMENT. At the Closing, EOP
\nPartnership shall assume and perform any obligations that Cornerstone
\nPartnership or any Cornerstone Subsidiary has immediately prior to the Effective
\nTime to issue securities in accordance with the terms of any partnership or
\nother agreement to which Cornerstone Partnership or such Cornerstone Subsidiary
\nis a party and that are described on SCHEDULE 5.15, in the same manner and to
\nthe same extent that Cornerstone Partnership or such Cornerstone Subsidiary
\nwould be required to perform such obligation if no Merger had been consummated.<\/p>\n
5.16 REGISTRATION RIGHTS AGREEMENTS. At the Closing, (a)
\nCornerstone shall assign and EOP shall assume by appropriate instrument the
\nRegistration Rights Agreements described on SCHEDULE 5.16 to the Cornerstone
\nDisclosure Letter, and (b) Cornerstone shall assign and EOP shall assume the
\nobligations of Cornerstone under the Amended and Restated Registration Rights
\nand Voting Agreement dated December 16, 1998 between Cornerstone, PGGM and Dutch
\nInstitutional Holding Company, Inc., as and to the extent set forth in PGGM’s
\nCornerstone Voting Agreement.<\/p>\n
5.17 CORNERSTONE CONVERTIBLE PROMISSORY NOTE. Following the
\nEffective Time of the Mergers, the holders of the Cornerstone Convertible
\nPromissory Note shall have the right to obtain upon the exercise of its
\nconversion <\/p>\n
-75-<\/p>\n
rights pursuant to such Cornerstone Convertible Promissory Note, in lieu of each
\nshare of Cornerstone Common Stock theretofor issuable upon exercise of such
\nconversion rights, EOP Common Shares that it would have owned immediately after
\nthe Merger if it had converted the Cornerstone Convertible Promissory Note
\nimmediately before the Effective Time of the Merger.<\/p>\n
ARTICLE 6<\/p>\n
CONDITIONS<\/p>\n
6.1 CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE
\nMERGERS. The obligations of each party to effect the Mergers and to consummate
\nthe other transactions contemplated by this Agreement to occur on the Closing
\nDate shall be subject to the fulfillment at or prior to the Closing Date of the
\nfollowing conditions:<\/p>\n
(a) SHAREHOLDER AND PARTNER APPROVALS. The
\nCornerstone Stockholder Approvals, the EOP Shareholder Approvals and the Partner
\nApprovals shall have been obtained.<\/p>\n
(b) HSR ACT. The waiting period (and any extension
\nthereof) applicable to the Partnership Merger, the Merger or the transactions
\ncontemplated by the Stock Purchase Agreement under the HSR Act, if applicable to
\nthe Partnership Merger, the Merger or and the transactions contemplated by the
\nStock Purchase Agreement, shall have expired or been terminated.<\/p>\n
(c) LISTING OF SHARES. The NYSE shall have approved
\nfor listing the EOP Common Shares to be issued in the Merger and the EOP Common
\nShares reserved for issuance upon redemption of EOP OP Units issued in the
\nPartnership Merger, subject to official notice of issuance.<\/p>\n
(d) FORM S-4. The Form S-4 shall have become
\neffective under the Securities Act and shall not be the subject of any stop
\norder or proceedings by the SEC seeking a stop order.<\/p>\n
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
\nrestraining order, preliminary or permanent injunction or other order issued by
\nany court of competent jurisdiction or other legal restraint or prohibition
\npreventing the consummation of the Mergers or any of the other transactions
\ncontemplated hereby shall be in effect.<\/p>\n
(f) BLUE SKY LAWS. EOP and EOP Partnership shall have
\nreceived all state securities or “blue sky” permits and other authorizations
\nnecessary to issue the EOP Common Shares and EOP OP Units issuable in the
\nMergers.<\/p>\n
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6.2 CONDITIONS TO OBLIGATIONS OF EOP AND EOP PARTNERSHIP. The
\nobligations of EOP and EOP Partnership to effect the Mergers and to consummate
\nthe other transactions contemplated to occur on the Closing Date are further
\nsubject to the following conditions, any one or more of which may be waived by
\nEOP:<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES. Each of the
\nrepresentations and warranties of Cornerstone and Cornerstone Partnership set
\nforth in this Agreement, disregarding all qualifications and exceptions
\ncontained therein relating to materiality or Cornerstone Material Adverse
\nEffect, shall be true and correct as of the date of this Agreement and as of the
\nClosing Date as though made on and as of the Closing Date (except to the extent
\nthat such representations and warranties are expressly limited by their terms to
\nanother date, in which case such representations and warranties shall be true
\nand correct as of such other date), except where the failure of such
\nrepresentations and warranties to be true and correct would not, individually or
\nin the aggregate, reasonably be expected to have a Cornerstone Material Adverse
\nEffect; and EOP shall have received a certificate (which certificate may be
\nqualified by Knowledge to the same extent as the representations and warranties
\nof Cornerstone and Cornerstone Partnership contained herein are so qualified)
\nsigned on behalf of Cornerstone by the chief executive officer or the chief
\nfinancial officer of Cornerstone, in such capacity, to such effect.<\/p>\n
(b) PERFORMANCE OF OBLIGATIONS OF CORNERSTONE AND
\nCORNERSTONE PARTNERSHIP. Cornerstone and Cornerstone Partnership shall have
\nperformed in all material respects all obligations required to be performed by
\nthem under this Agreement at or prior to the Effective Time, and EOP shall have
\nreceived a certificate signed on behalf of Cornerstone by the chief executive
\nofficer or the chief operating officer of Cornerstone, in such capacity, to such
\neffect.<\/p>\n
(c) MATERIAL ADVERSE CHANGE. Since the date of this
\nAgreement, there shall have been no Cornerstone Material Adverse Change and EOP
\nshall have received a certificate of the chief executive officer or chief
\noperating officer of Cornerstone, in such capacity, certifying to such effect.<\/p>\n
(d) TAX OPINIONS RELATING TO REIT STATUS AND
\nPARTNERSHIP STATUS. EOP shall have received (i) an opinion of King & Spalding or
\nother counsel to Cornerstone reasonably satisfactory to EOP, dated as of the
\nClosing Date, to the effect that, commencing with its taxable year ended
\nDecember 31, 1997, (x) Cornerstone was organized and has operated in conformity
\nwith the requirements for qualification as a REIT under the Code, and (y)
\nCornerstone Partnership has been during and since December 23, 1997, and
\ncontinues to be, treated for federal income tax purposes as a partnership and
\nnot as a corporation or association taxable as a corporation (with customary
\nexceptions, assumptions and qualifications and based upon customary
\nrepresentations) and (ii) an opinion of Hogan & Hartson L.L.P. or other counsel
\nto EOP reasonably satisfactory to <\/p>\n
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Cornerstone, dated as of the Closing Date, to the effect that, commencing with
\nits taxable year ended December 31, 1997, EOP was organized and has operated in
\nconformity with the requirements for qualification as a REIT under the Code and
\nthat, after giving effect to the Merger, EOP’s proposed method of operation will
\nenable it to continue to meet the requirements for qualification and taxation as
\na REIT under the Code (with customary exceptions, assumptions and qualifications
\nand based upon customary representations and based upon and subject to the
\nopinion of counsel to Cornerstone described in clause (i) above).<\/p>\n
(e) TAX OPINION RELATING TO THE MERGER. EOP shall
\nhave received an opinion dated the Closing Date from Hogan & Hartson L.L.P. or
\nother counsel reasonably satisfactory to EOP, based upon customary certificates
\nand letters, which letters and certificates are to be in a form to be agreed
\nupon by the parties and dated the Closing Date, to the effect that the Merger
\nwill qualify as a reorganization under the provisions of Section 368(a) of the
\nCode.<\/p>\n
(f) “COMFORT” LETTER. EOP and EOP Partnership shall
\nhave received a “comfort” letter from PricewaterhouseCoopers LLP, as described
\nin Section 5.1(b).<\/p>\n
(g) NONCOMPETITION AGREEMENTS. Each of William Wilson
\nIII and John S. Moody shall have entered into noncompetition and confidentiality
\nagreements substantially in the forms set forth in SCHEDULE 6.2(G) hereto.<\/p>\n
6.3 CONDITIONS TO OBLIGATIONS OF CORNERSTONE AND CORNERSTONE
\nPARTNERSHIP. The obligations of Cornerstone and Cornerstone Partnership to
\neffect the Mergers and to consummate the other transactions contemplated to
\noccur on the Closing Date is further subject to the following conditions, any
\none or more of which may be waived by Cornerstone:<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES. Each of the
\nrepresentations and warranties of EOP and EOP Partnership set forth in this
\nAgreement, disregarding all qualifications and exceptions contained therein
\nrelating to materiality or EOP Material Adverse Effect, shall be true and
\ncorrect as of the date of this Agreement and as of the Closing Date as though
\nmade on and as of the Closing Date (except to the extent that such
\nrepresentations and warranties are expressly limited by their terms to another
\ndate, in which case such representations and warranties shall be true and
\ncorrect as of such other date), except where the failure of such representations
\nand warranties to be true and correct would not, individually or in the
\naggregate, reasonably be expected to have a EOP Material Adverse Effect; and
\nCornerstone shall have received a certificate (which certificate may be
\nqualified by Knowledge to the same extent as the representations and warranties
\nof EOP and EOP Partnership contained herein are so qualified) signed on behalf
\nof EOP by the chief executive officer or the chief financial officer of EOP, in
\nsuch capacity, to such effect.<\/p>\n
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(b) PERFORMANCE OF OBLIGATIONS OF EOP AND EOP
\nPARTNERSHIP. EOP and EOP Partnership shall have performed in all material
\nrespects all obligations required to be performed by it under this Agreement at
\nor prior to the Effective Time, and Cornerstone shall have received a
\ncertificate of EOP signed on behalf of EOP by a duly authorized executive
\nofficer of EOP, in such capacity, to such effect.<\/p>\n
(c) MATERIAL ADVERSE CHANGE. Since the date of this
\nAgreement, there shall have been no EOP Material Adverse Change and Cornerstone
\nshall have received a certificate of a duly authorized executive officer of EOP,
\nin such capacity, certifying to such effect.<\/p>\n
(d) TAX OPINIONS RELATING TO REIT STATUS AND
\nPARTNERSHIP STATUS. Cornerstone shall have received the opinion of Hogan & Hartson L.L.P. or other counsel to EOP reasonably satisfactory to Cornerstone,
\ndated as of the Closing Date, that, commencing with its taxable year ended
\nDecember 31, 1997, (i) EOP was organized and has operated in conformity with the
\nrequirements for qualification as a REIT under the Code and that, after giving
\neffect to the Merger, EOP’s proposed method of operation will enable it to
\ncontinue to meet the requirements for qualification and taxation as a REIT under
\nthe Code (with customary exceptions, assumptions and qualifications and based
\nupon customary representations and based upon and subject to the opinion of
\ncounsel to Cornerstone described in Section 6.2(d) of this Agreement), (ii)
\nBeaMet was organized and has operated in conformity with the requirements for
\nqualification as a REIT under the Code (with customary exceptions, assumptions
\nand qualifications and based upon customary representations), and (iii) EOP
\nPartnership has been during and since 1997, and continues to be, treated for
\nfederal income tax purposes as a partnership and not as a corporation or
\nassociation taxable as a corporation (with customary exceptions, assumptions and
\nqualifications and based upon customary representations).<\/p>\n
(e) TAX OPINION RELATING TO THE MERGER. Cornerstone
\nshall have received an opinion dated the Closing Date from King & Spalding or
\nother counsel reasonably satisfactory to Cornerstone, based upon customary
\ncertificates and letters, which letters and certificates are to be in a form to
\nbe agreed upon by the parties and dated the Closing Date, to the effect that the
\nMerger will qualify as a reorganization under the provisions of Section 368(a)
\nof the Code.<\/p>\n
(f) PROPOSED EOP CHARTER AMENDMENT RELATING TO
\nDOMESTICALLY CONTROLLED REIT Status. The EOP Shareholders shall have approved
\nthe Proposed EOP Charter Amendment Relating to Domestically Controlled REIT
\nStatus at the EOP Shareholders Meeting.<\/p>\n
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(g) “COMFORT” LETTER. Cornerstone and Cornerstone
\nPartnership shall have received a “comfort” letter from Ernst & Young LLP, as
\ndescribed in Section 5.1(b).<\/p>\n
(h) CERTIFICATE REGARDING “DOMESTICALLY CONTROLLED
\nREIT” STATUS TO PGGM. EOP shall have delivered to Stichting Pensioenfonds voor
\nde Gezondheid, Geestelijke en Maatschappelijke Belangen (“PGGM”) a certification
\ndated within fifteen (15) days of the Closing Date that to EOP’s knowledge,
\nafter reasonable inquiry, EOP is a “domestically controlled REIT” within the
\nmeaning of Section 897(h)(4)(B) of the Code as of the date thereof. For purposes
\nof such certification, reasonable inquiry shall include (but not necessarily be
\nlimited to) review of all Schedule 13D and 13G filings made under the Exchange
\nAct with the SEC with respect to EOP, all IRS Form 1042 filings made by or on
\nbehalf of EOP, the list of EOP’s registered shareholders as of a date within 60
\ndays of such certificate (and to the extent reasonably available, as of a date
\nwithin 60 days of the end of each of 1997, 1998, and 1999), a list of
\n“non-objecting beneficial owners” of shares of EOP obtained as of a date within
\n60 days of such certificate (and to the extent reasonably available, as of a
\ndate within 60 days of the end of each of 1997, 1998, and 1999), and a report of
\na shareholder tracking service obtained within 60 days of such certificate
\n(together with such other reports as are in the possession of EOP). Such
\ncertificate shall be accompanied by copies of information that has been obtained
\nor relied upon by EOP for purposes of such certificate, provided that PGGM shall
\nhave executed an agreement with EOP to treat such information as confidential
\nand to use such information solely for the purposes of evaluating the accuracy
\nof such certification.<\/p>\n
ARTICLE 7<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 TERMINATION. This Agreement may be terminated at any time
\nprior to the Effective Time of the Partnership Merger, whether such action
\noccurs before or after any of the Cornerstone Stockholder Approvals, the EOP
\nShareholder Approvals or either of the Cornerstone Partner Approvals are
\nobtained:<\/p>\n
(a) by mutual written consent duly authorized by the
\nBoard of Trustees of EOP and the Board of Directors of Cornerstone;<\/p>\n
(b) by EOP, upon a breach of or failure to perform
\nany representation, warranty, covenant, obligation or agreement on the part of
\nCornerstone or Cornerstone Partnership set forth in this Agreement, or if any
\nrepresentation or warranty of Cornerstone or Cornerstone Partnership shall
\nbecome untrue, in either case such that the conditions set forth in Section
\n6.2(a) or Section 6.2(b), as the case may be, would be incapable of being
\nsatisfied by December 31, 2000 (or as otherwise extended);<\/p>\n
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(c) by Cornerstone, upon a breach of any
\nrepresentation, warranty, covenant obligation or agreement on the part of EOP or
\nEOP Partnership set forth in this Agreement, or if any representation or
\nwarranty of EOP or EOP Partnership shall become untrue, in either case such that
\nthe conditions set forth in Section 6.3(a) or Section 6.3(b), as the case may
\nbe, would be incapable of being satisfied by December 31, 2000 (or as otherwise
\nextended);<\/p>\n
(d) by either EOP or Cornerstone, if any judgment,
\ninjunction, order, decree or action by any Governmental Entity of competent
\nauthority preventing the consummation of either of the Mergers shall have become
\nfinal and non-appealable;<\/p>\n
(e) by either EOP or Cornerstone, if the Mergers
\nshall not have been consummated before December 31, 2000; PROVIDED, HOWEVER,
\nthat a party may not terminate pursuant to this clause (e) if the terminating
\nparty shall have breached in any material respect its obligations under this
\nAgreement in any manner that shall have caused either of the Mergers not to have
\nbeen consummated by such date;<\/p>\n
(f) by either EOP or Cornerstone (unless Cornerstone
\nor Cornerstone Partnership is in breach in any material respect of its
\nobligations under Section 5.1) if, upon a vote at a duly held Cornerstone
\nStockholders Meeting or any adjournment thereof, the Cornerstone Stockholder
\nApprovals shall not have been obtained as contemplated by Section 5.1 or if the
\nCornerstone Partner Approvals have not been obtained as contemplated by Section
\n5.1;<\/p>\n
(g) by either Cornerstone or EOP (unless EOP or EOP
\nPartnership is in breach in any material respect of its obligations under
\nSection 5.1 if, upon a vote at a duly held EOP Shareholders Meeting or any
\nadjournment thereof, the EOP Shareholder Approvals shall not have been obtained
\nas contemplated by Section 5.1 or if the EOP Partner Approvals have not been
\nobtained as contemplated by Section 5.1;<\/p>\n
(h) by Cornerstone (i) if the Board of Directors of
\nCornerstone shall have withdrawn, modified, amended or qualified in any manner
\nadverse to EOP its approval or recommendation of either of the Merger or this
\nAgreement in connection with, or approved or recommended, any Superior
\nAcquisition Proposal, or, (ii) in order to enter into a binding written
\nagreement with respect to a Superior Acquisition Proposal, provided that, in
\neach case, Cornerstone shall have complied with the terms of Section 4.3 and,
\nprior to terminating pursuant to this Section 7.1(h), has paid to EOP
\nPartnership the Break-Up Fee (as defined herein) as provided by Section 7.2
\nhereof; and<\/p>\n
(i) by EOP, if (1) the Board of Directors of
\nCornerstone shall have failed to recommend or withdrawn, modified, amended or
\nqualified, or proposed publicly not to recommend or to withdraw, modify, amend
\nor qualify, in <\/p>\n
-81-<\/p>\n
any manner adverse to EOP its approval or recommendation of either of the
\nMergers or this Agreement or approved or recommended any Superior Acquisition
\nProposal, (2) following the announcement or receipt of an Acquisition Proposal,
\nCornerstone shall have failed to call the Cornerstone Stockholders Meeting in
\naccordance with Section 5.1(a) or failed to prepare and mail to its stockholders
\nthe Joint Proxy Statement in accordance with Section 5.1(a) or 5.1(b), or (3)
\nthe Board of Directors of Cornerstone or any committee thereof shall have
\nresolved to do any of the foregoing.<\/p>\n
7.2 CERTAIN FEES AND EXPENSES. If this Agreement shall be
\nterminated (i) pursuant to Section 7.1(h), 7.1(i)(1) or 7.1(i)(3), then
\nCornerstone and Cornerstone Partnership thereupon shall pay to EOP Partnership a
\nfee equal to the Break-Up Fee (as defined herein), and (ii) pursuant to Section
\n7.1(b) or 7.1(f), then Cornerstone and Cornerstone Partnership shall pay to EOP
\nPartnership (provided that Cornerstone was not entitled to terminate this
\nAgreement pursuant to Section 7.1(c) at the time of such termination) an amount
\nequal to the Break-Up Expenses (as defined herein). If this Agreement shall be
\nterminated pursuant to Section 7.1(c) or 7.1(g), then EOP and EOP Partnership
\nshall pay to Cornerstone Partnership (provided that EOP was not entitled to
\nterminate this Agreement pursuant to Section 7.1(b) at the time of such
\ntermination) an amount equal to the Break-Up Expenses. If this Agreement shall
\nbe terminated pursuant to Section 7.1(b), 7.1(d) (if primarily resulting from
\nany action or inaction of Cornerstone, Cornerstone Partnership or any
\nCornerstone Subsidiary or the Cornerstone Non-controlled Subsidiary), 7.1(e),
\n7.1(f), 7.1(i)(2) and prior to the time of such termination an Acquisition
\nProposal has been received by Cornerstone or Cornerstone Partnership, and either
\nprior to the termination of this Agreement or within twelve (12) months
\nthereafter, Cornerstone or Cornerstone Partnership enters into any written
\nagreement to consummate a transaction or series of transactions which, had such
\nagreement been proposed or negotiated during the term of this Agreement, would
\nhave constituted an Acquisition Proposal pursuant to Section 4.3 (each, a
\n“Cornerstone Acquisition Agreement”), which is subsequently consummated (whether
\nor not any Cornerstone Acquisition Agreement relates to the same Acquisition
\nProposal which had been received at the time of the termination of this
\nAgreement), then Cornerstone and Cornerstone Partnership shall pay the Break-Up
\nFee to EOP Partnership.<\/p>\n
The payment of the Break-Up Fee shall be compensation for the
\nloss suffered by EOP and EOP Partnership as a result of the failure of the
\nMergers to be consummated (including, without limitation, opportunity costs and
\nout-of-pocket costs and expenses) and to avoid the difficulty of determining
\ndamages under the circumstances. The Break-Up Fee shall be paid by Cornerstone
\nand Cornerstone Partnership to EOP Partnership, or the Break-Up Expenses shall
\nbe paid by Cornerstone and Cornerstone Partnership to EOP Partnership or EOP
\nPartnership to Cornerstone Partnership (as applicable), in immediately available
\nfunds within two (2) business days after the date the event giving rise to the
\nobligation to make <\/p>\n
-82-<\/p>\n
such payment occurred (except as otherwise provided in Section 7.1(h) or
\n7.1(i)). Cornerstone acknowledges that the agreements contained in this Section
\n7.2 are integral parts of this Agreement; accordingly, if Cornerstone and
\nCornerstone Partnership fail to promptly pay the Break-Up Fee or Break-Up
\nExpenses due pursuant to this Section 7.2 and, in order to obtain payment, EOP
\ncommences a suit which results in a judgment against Cornerstone or Cornerstone
\nPartnership for any amounts owed pursuant to this Section 7.2, Cornerstone and
\nCornerstone Partnership shall pay to EOP its costs and expenses (including
\nattorneys’ fees and expenses) in connection with such suit, together with
\ninterest on the amount owed at the rate on six-month U.S. Treasury obligations
\nin effect on the date such payment was required to be made plus 300 basis
\npoints.<\/p>\n
As used in this Agreement, “Break-Up Fee” shall be an amount
\nequal to the lesser of (i) $100,000,000 less Break-Up Expenses paid or payable
\nunder this Section 7.2 (the “Base Amount”) and (ii) the sum of (A) the maximum
\namount that can be paid to EOP Partnership without causing EOP to fail to meet
\nthe requirements of Sections 856(c)(2) and (3) of the Code determined as if the
\npayment of such amount did not constitute income described in Sections
\n856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code (“Qualifying Income”), as
\ndetermined by independent accountants to EOP, and (B) in the event EOP receives
\na letter from outside counsel (the “Break-Up Fee Tax Opinion”) indicating that
\nEOP has received a ruling from the IRS holding that EOP Partnership’s receipt of
\nthe Base Amount would either constitute Qualifying Income or would be excluded
\nfrom gross income of EOP within the meaning of Sections 856(c)(2) and (3) of the
\nCode (the “REIT Requirements”) or that the receipt by EOP Partnership of the
\nremaining balance of the Base Amount following the receipt of and pursuant to
\nsuch ruling would not be deemed constructively received prior thereto, the Base
\nAmount less the amount payable under clause (A) above. Cornerstone’s and
\nCornerstone Partnership’s obligation to pay any unpaid portion of the Break-Up
\nFee shall terminate three years from the date of this Agreement. In the event
\nthat EOP Partnership is not able to receive the full Base Amount, Cornerstone
\nand Cornerstone Partnership shall place the unpaid amount in escrow and shall
\nnot release any portion thereof to EOP Partnership unless and until Cornerstone
\nreceives either one of the following: (i) a letter from EOP’s independent
\naccountants indicating the maximum amount that can be paid at that time to EOP
\nPartnership without causing EOP to fail to meet the REIT Requirements or (ii) a
\nBreak-Up Fee Tax Opinion, in either of which events Cornerstone and Cornerstone
\nPartnership shall pay to EOP Partnership the lesser of the unpaid Base Amount or
\nthe maximum amount stated in the letter referred to in (i) above.<\/p>\n
The “Break-Up Expenses” payable to EOP Partnership or
\nCornerstone Partnership, as the case may be (the “Recipient”), shall be an
\namount equal to the lesser of (i) $7,500,000 or (ii) the Recipient’s
\nout-of-pocket expenses incurred in connection with this Agreement and the
\ntransactions contemplated hereby (including, without limitation, all attorneys’,
\naccountants’ and investment bankers’ <\/p>\n
-83-<\/p>\n
fees and expenses). If the Break-Up Expenses payable to the Recipient exceed the
\nmaximum amount that can be paid to the Recipient without causing the Recipient
\nto fail to meet the requirements of Sections 856(c)(2) and (3) of the Code
\ndetermined as if the payment of such amount did not constitute Qualifying
\nIncome, as determined by independent accountants to the Recipient (the “Maximum
\nAmount”), the amount initially payable to the Recipient shall be limited to the
\nMaximum Amount. If, however, within the three-year period commencing on the date
\nof this Agreement, the Recipient receives a Break-Up Fee Tax Opinion indicating
\nthat it has received a ruling from the IRS holding that the Recipient’s receipt
\nof the Break-Up Expenses would either constitute Qualifying Income or would be
\nexcluded from gross income of the Recipient within the meaning of the REIT
\nRequirements or that receipt by the Recipient of the balance of the Break-Up
\nExpenses above the Maximum Amount following the receipt of and pursuant to such
\nruling would not be deemed constructively received prior thereto, the Recipient
\nshall be entitled to have payable to it the full amount of the Break-Up
\nExpenses. The obligation of EOP and EOP Partnership or Cornerstone and
\nCornerstone Partnership, as applicable (“Payor”), to pay any unpaid portion of
\nthe Break-Up Expenses shall terminate three years from the date of this
\nAgreement. In the event that the Recipient is not able to receive the full
\nBreak-Up Expenses, the Payor shall place the unpaid amount in escrow and shall
\nnot release any portion thereof to the Recipient unless and until the Payor
\nreceives either one of the following: (i) a letter from the independent
\naccountants of EOP or Cornerstone, as the case may be, indicating the maximum
\namount that can be paid at that time to the Recipient without causing it to fail
\nto meet the REIT Requirements or (ii) a Break-Up Expense Tax Opinion, in either
\nof which events the Payor shall pay to the Recipient the lesser of the unpaid
\nBreak-Up Expenses or the maximum amount stated in the letter referred to in (i)
\nabove.<\/p>\n
7.3 EFFECT OF TERMINATION. In the event of termination of this
\nAgreement by either Cornerstone or EOP as provided in Section 7.1, this
\nAgreement shall forthwith become void and have no effect, without any liability
\nor obligation on the part of EOP, EOP Partnership, Cornerstone or Cornerstone
\nPartnership, other than the last sentence of Section 5.2, Section 7.2, this
\nSection 7.3 and Article 8, and except to the extent that such termination
\nresults from a material breach by any party of any of its representations,
\nwarranties, covenants or agreements set forth in this Agreement.<\/p>\n
7.4 AMENDMENT. This Agreement may be amended by the parties in
\nwriting by action of the respective Board of Trustees or Board of Directors of
\nEOP and Cornerstone at any time before or after any Shareholder Approvals are
\nobtained and prior to the filing of the Articles of Merger with the Department;
\nprovided, HOWEVER, that, after the Shareholder Approvals and Partner Approvals
\nare obtained, no such amendment, modification or supplement shall be made which
\nby law requires the further approval of shareholders or partners without
\nobtaining such further approval. The parties agree to amend this Agreement in
\nthe manner <\/p>\n
-84-<\/p>\n
provided in the immediately preceding sentence to the extent required to (a)
\ncontinue the status of each party as a REIT or (b) preserve the Merger as a
\nreorganization under Section 368(a) of the Code.<\/p>\n
7.5 EXTENSION; WAIVER. At any time prior to the Effective
\nTime, the parties may (a) extend the time for the performance of any of the
\nobligations or other acts of the other party, (b) waive any inaccuracies in the
\nrepresentations and warranties of the other party contained in this Agreement or
\nin any document delivered pursuant to this Agreement or (c) subject to the
\nproviso of Section 7.4, waive compliance with any of the agreements or
\nconditions of the other party contained in this Agreement. Any agreement on the
\npart of a party to any such extension or waiver shall be valid only if set forth
\nin an instrument in writing signed on behalf of such party. The failure of any
\nparty to this Agreement to assert any of its rights under this Agreement or
\notherwise shall not constitute a waiver of those rights.<\/p>\n
ARTICLE 8<\/p>\n
GENERAL PROVISIONS<\/p>\n
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
\nrepresentations and warranties in this Agreement or in any instrument delivered
\npursuant to this Agreement confirming the representations and warranties in this
\nAgreement shall survive the Effective Time. This Section 8.1 shall not limit any
\ncovenant or agreement of the parties which by its terms contemplates performance
\nafter the Effective Time.<\/p>\n
8.2 NOTICES. All notices, requests, claims, demands and other
\ncommunications under this Agreement shall be in writing and shall be delivered
\npersonally, sent by overnight courier (providing proof of delivery) to the
\nparties or sent by telecopy (providing confirmation of transmission) at the
\nfollowing addresses or telecopy numbers (or at such other address or telecopy
\nnumber for a party as shall be specified by like notice):<\/p>\n
(a) if to EOP or EOP Partnership, to:<\/p>\n
Equity Office Properties Trust
\n Two North Riverside Plaza, 22nd Floor
\n Chicago, Illinois 60606
\n Attention: Timothy H. Callahan, President
\n Stanley M. Stevens, Chief Counsel
\n Fax No.: (312) 559-5021<\/p>\n
-85-<\/p>\n
with a copy to:<\/p>\n
Hogan & Hartson L.L.P.
\n 555 Thirteenth Street, N.W.
\n Washington, D.C. 20004-1109
\n Attention: J. Warren Gorrell, Jr., Esq.
\n George P. Barsness, Esq.
\n Fax No.: (202) 637-5910<\/p>\n
(b) if to Cornerstone or Cornerstone Partnership, to:<\/p>\n
Cornerstone Properties Inc.
\n Tower 56
\n 126 East 56th Street, 6th Floor
\n New York, New York 10022
\n Attention: John S. Moody, President
\n Fax No.: (212) 605-7199<\/p>\n
with a copy to:<\/p>\n
King & Spalding
\n 191 Peachtree Street
\n Atlanta, GA 30303-1763
\n Attention: William B. Fryer, Esq.
\n Fax No.: (404) 572-5100<\/p>\n
All notices shall be deemed given only when actually received.<\/p>\n
8.3 INTERPRETATION. When a reference is made in this Agreement
\nto a Section, such reference shall be to a Section of this Agreement unless
\notherwise indicated. The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement. Whenever the words “include”,
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation.”<\/p>\n
8.4 COUNTERPARTS. This Agreement may be executed in one or
\nmore counterparts, all of which shall be considered one and the same agreement
\nand shall become effective when one or more counterparts have been signed by
\neach of the parties and delivered to the other party.<\/p>\n
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
\nAgreement, the Cornerstone Disclosure Letter, the EOP Disclosure Letter, the
\nConfidentiality Agreement, the Voting Agreements and the other agreements
\nentered into in connection with the Mergers (a) constitute the entire agreement
\nand supersede all prior agreements and understandings, both written and oral
\nbetween the parties with respect to the subject matter of this Agreement and (b)
\nexcept as <\/p>\n
-86-<\/p>\n
provided in Section 5.9 (“Third Party Provisions”), are not intended to confer
\nupon any person other than the parties hereto any rights or remedies.<\/p>\n
8.6 GOVERNING LAW. THE PARTNERSHIP MERGER SHALL BE GOVERNED
\nBY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
\nREGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
\nOF CONFLICT OF LAWS THEREOF. EXCEPT AS PROVIDED IN THE IMMEDIATELY PRECEDING
\nSENTENCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
\nTHE LAWS OF THE STATE OF MARYLAND, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
\nGOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.<\/p>\n
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
\ninterests or obligations under this Agreement shall be assigned or delegated, in
\nwhole or in part, by operation of law or otherwise by any of the parties without
\nthe prior written consent of the other parties. Subject to the preceding
\nsentence, this Agreement will be binding upon, inure to the benefit of, and be
\nenforceable by, the parties and their respective successors and assigns.<\/p>\n
8.8 ENFORCEMENT. The parties agree that irreparable damage
\nwould occur in the event that any of the provisions of this Agreement were not
\nperformed in accordance with their specific terms or were otherwise breached. It
\nis accordingly agreed that the parties shall be entitled to an injunction or
\ninjunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions of this Agreement in any federal court located in
\nMaryland or in any state court located in Maryland this being in addition to any
\nother remedy to which they are entitled at law or in equity. In addition, each
\nof the parties hereto (a) consents to submit itself (without making such
\nsubmission exclusive) to the personal jurisdiction of any federal court located
\nin Maryland or any state court located in Maryland in the event any dispute
\narises out of this Agreement or any of the transactions contemplated by this
\nAgreement and (b) agrees that it will not attempt to deny or defeat such
\npersonal jurisdiction by motion or other request for leave from any such court.<\/p>\n
8.9 SEVERABILITY. Any term or provision of this Agreement
\nwhich is invalid or unenforceable in any jurisdiction shall, as to that
\njurisdiction, be ineffective to the extent of such invalidity or
\nunenforceability without rendering invalid or unenforceable the remaining terms
\nand provisions of this Agreement or affecting the validity or enforceability of
\nany of the terms or provisions of this Agreement in any other jurisdiction. If
\nany provision of this Agreement is so broad as to be unenforceable, the
\nprovision shall be interpreted to be only so broad as is enforceable.<\/p>\n
-87-<\/p>\n
8.10 EXCULPATION. This Agreement shall not impose any personal
\nliability on any shareholder, trustee, trust manager, officer, employee or agent
\nof EOP or Cornerstone, and all Persons shall look solely to the property of EOP
\nor Cornerstone for the payment of any claim hereunder or for the performance of
\nthis Agreement.<\/p>\n
8.11 JOINT AND SEVERAL OBLIGATIONS. In each case where both
\nCornerstone and Cornerstone Partnership, on the one hand, or EOP and EOP
\nPartnership, on the other hand, are obligated to perform the same obligation
\nhereunder, such obligation shall be joint and several.<\/p>\n
-88-<\/p>\n
IN WITNESS WHEREOF, EOP, EOP Partnership, Cornerstone and
\nCornerstone Partnership have caused this Agreement to be signed by their
\nrespective officers (or general partners) thereunto duly authorized all as of
\nthe date first written above.<\/p>\n
EQUITY OFFICE PROPERTIES TRUST<\/p>\n
By: \/s\/ Timothy H. Callahan
\n —————————
\n Name: Timothy H. Callahan
\n Title: President and Chief
\n Executive Officer<\/p>\n
EOP OPERATING LIMITED PARTNERSHIP<\/p>\n
By: Equity Office Properties Trust, its
\n managing general partner<\/p>\n
By: \/s\/ Timothy H. Callahan
\n —————————
\n Name: Timothy H. Callahan
\n Title: President and Chief
\n Executive Officer<\/p>\n
CORNERSTONE PROPERTIES INC.<\/p>\n
By: \/s\/ John S. Moody
\n —————————
\n Name: John S. Moody
\n Title: President and Chief
\n Executive Officer<\/p>\n
CORNERSTONE PROPERTIES LIMITED PARTNERSHIP<\/p>\n
By: Cornerstone Properties Inc.,
\n its sole general partner<\/p>\n
By: \/s\/ John S. Moody
\n —————————
\n Name: John S. Moody
\n Title: President and Chief
\n Executive Officer<\/p>\n
-89-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7468],"corporate_contracts_industries":[9489],"corporate_contracts_types":[9622,9626],"class_list":["post-43050","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-equity-office-properties-trust","corporate_contracts_industries-real__reits","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43050","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43050"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43050"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43050"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43050"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}