EX-99 2 ex8kap1.txt 99.1 - STIPULATION OF SETTLEMENT IN THE CIRCUIT COURT FOR BALTIMORE CITY ----------------------------------------------------- ) SEKUK GLOBAL ENTERPRISES PROFIT ) SHARING PLAN, ) ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., )Civil No. 24-C-03-007496 HERVE A. KEVENIDES, JOHN V.N. KLEIN, )Judge Evelyn Omega Cannon RONALD H. MENAKER, PETER QUICK, ) LEWIS D. RANIERI, DONALD J. RECHLER, ) GREGG M. RECHLER, MITCHELL D. ) RECHLER, ROGER M. RECHLER, SCOTT H. ) RECHLER and CONRAD D. STEPHENSON, ) ) DEFENDANTS. ) ----------------------------------------------------- ) ) CHARLES D. HOFFMAN, et al., ) ) PLAINTIFFS, ) ) v. ) ) DONALD J. RECHLER, et al., )Civil No. 24-C-03-007876 )Judge Evelyn Omega Cannon DEFENDANTS. ) ----------------------------------------------------- ) ) ROBERTA CHIRKO, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., et al., )Civil No. 24-C-03-008010 )Judge Evelyn Omega Cannon DEFENDANTS. ----------------------------------------------------- STIPULATION OF SETTLEMENT ------------------------- STIPULATION OF SETTLEMENT ------------------------- 1. This Stipulation of Settlement dated as of March 14, 2005 (the "Stipulation"), is made and entered into by and among the Settling Parties (as defined in subparagraph 16(r) hereof) through their counsel of record in the Actions (as defined in subparagraph 16(a) hereof). The Stipulation is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released Claims (as defined in subparagraph 16(p) hereof), upon the terms and conditions set forth herein. BACKGROUND ---------- 2. Nominal defendant Reckson Associates Realty Corp. ("Reckson" or the "Company") is a Maryland corporation that operates as a real estate investment trust which owns, develops and manages office and industrial properties in the New York tri-state area. On September 10, 2003, Reckson announced a strategic plan that included: (a) the sale of 95 Industrial Properties (as defined in subparagraph 16(e) hereof) to members of the Rechler family, some of whom were executive officers and directors of the Company; (b) the resignation of Gregg, Roger and Mitchell Rechler from executive management and director positions, and the resignation of Donald Rechler from executive management, but not as non-executive Chairman of the Board of Directors; and (c) various other corporate governance changes, including de-staggering the Board, opting Reckson out of certain Maryland anti-takeover provisions and providing for the appointment of only independent directors to the Audit, Compensation and Nominating/Governance Committees of the reconstituted Board. 3. Six Non-Management Directors (collectively, as defined in subparagraph 16(g) hereof, Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri and Conrad D. Stephenson), who made up a majority of Reckson's then eleven-member -2- Board of Directors, reviewed and approved the transaction on behalf of the Company. They were advised by and received a fairness opinion from Citigroup Global Markets, Inc. ("Citigroup"). 4. Reckson owned its interests in real properties through the Reckson Operating Partnership, L.P. On November 11, 2003, Reckson announced the closing of the sale of the Industrial Properties to the Rechler family for $315.5 million (of which approximately $225.1 million was in cash and debt assumption, and $90.4 million was in Reckson Operating Partnership units owned by the Rechler family). As a result of its purchase of the Industrial Properties, the Rechler family no longer owned any Reckson Operating Partnership units. 5. The first of nine shareholder derivative actions in response to Reckson's announcement of the sale of the Industrial Properties to the Rechler family, LOWINGER V. RECHLER, ET AL., Index No. 03-014162, was filed in the Supreme Court of the State of New York, County of Nassau, on September 16, 2003. Two additional suits, STEINER V. RECHLER, ET AL., Index No. 03-23545, and LIGHTER V. RECHLER, ET AL., Index No. 03-23593, were filed in the Supreme Court of the State of New York, County of Suffolk, on October 2, 2003 and October 3, 2003, respectively. The STEINER and LIGHTER suits are in the process of consolidation with the LOWINGER action before Judge Ira Warshawsky in Nassau County (hereinafter, collectively, the "New York State Court Actions"). 6. On September 26, 2003, the first of three consolidated shareholder derivative suits, TUCKER V. RECHLER, ET AL., Index No. 03-CV-4917, was filed in the United States District Court for the Eastern District of New York. TUCKER was followed by CLINTON CHARTER TOWNSHIP POLICE AND FIRE RET. SYS. V. RECHLER, ET. AL., Index No. 03-CV-5008, on October 1, 2003, and TEACHERS' RET. SYS. OF LOUISIANA V. RECHLER, ET AL., Index No. 03-CV-5178, on October 14, 2003. -3- The First Amended and Consolidated Complaint in TUCKER, ET AL. V. RECHLER, ET AL. (hereinafter the "New York Federal Court Actions") was filed on October 31, 2003. That consolidated complaint was superseded by the Second Amended and Supplemented Consolidated Complaint filed on January 20, 2004, and Judge Thomas C. Platt signed a Stipulation and Order to Consolidate the New York Federal Court Actions on May 12, 2004. 7. The first of three consolidated actions filed in the Circuit Court for Baltimore City, Maryland, SEKUK GLOBAL ENTERS. PROFIT SHARING PLAN V. RECKSON ASSOCS. REALTY CORP., ET AL., Civil No. 24-C-03-007496, was filed on October 16, 2003. SEKUK GLOBAL was followed by HOFFMAN, ET AL. V. RECHLER ET AL., Civil No. 24-C-03-007876, on October 27, 2003, and CHIRKO V. RECKSON ASSOCS. REALTY CORP., ET AL., Civil No. 24-C-03-008010, on October 30, 2003. Judge Evelyn Omega Cannon signed a Stipulation and Order of Consolidation on December 12, 2003, and the Consolidated Amended Complaint in SEKUK GLOBAL, ET AL. V. RECHLER, ET AL., (hereinafter the "Maryland Actions") was filed on January 20, 2004. 8. The complaints in the New York State Court Actions, the New York Federal Court Actions and the Maryland Actions all allege substantially the same facts and claims and purport, derivatively on behalf of Reckson, to challenge the sale of the Industrial Properties to the Rechler family. The gravamen of the complaints, which each include one or more claims of breach of statutory and common law fiduciary duties, breach of contract, abuse of control, gross mismanagement, waste of corporate assets and/or unjust enrichment, is that the Industrial Properties were sold to the Rechler family for insufficient consideration and that Reckson settled its contractual obligations to the Rechler family members who resigned their employment as executive officers of the Company for excessive consideration. The complaints seek primarily money damages, as well as restitution, disgorgement of profits and extraordinary equitable and -4- injunctive relief. None of the plaintiffs made a demand on Reckson's Board of Directors to take remedial action before commencing suit. 9. On March 2, 2004, the defendants in the Maryland Actions filed a motion to dismiss the Consolidated Amended Complaint on the ground that the plaintiffs in those actions had failed to make a pre-suit demand on Reckson's Board of Directors or to allege facts showing that such a demand would have been futile. That motion was heard by Judge Cannon on May 13, 2004. The defendants in the New York Federal Court Actions filed a motion to dismiss the Second Amended and Supplemented Consolidated Complaint on May 11, 2004, on the same ground. On May 21, 2004, the date of the scheduled hearing on that motion, Judge Platt entered an Order in the New York Federal Court Actions directing the defendants to withdraw their motions to dismiss without prejudice to renew and extending the time for the defendants to respond to the Second Amended and Supplemented Consolidated Complaint until thirty days after the ruling on the motion to dismiss the Maryland Actions. On May 25, 2004, Judge Cannon granted the defendants' motions to dismiss the Maryland Actions. Final judgment in the Maryland Actions was entered on June 8, 2004. On June 30, 2004, the plaintiffs in the Maryland Actions filed a notice of appeal from that judgment to the Maryland Court of Special Appeals. On November 30, 2004, the Maryland Court of Special Appeals issued a briefing schedule for the appeal. On December 23, 2004, the parties to the Maryland Actions filed with the Maryland Court of Special Appeals a Stipulation to Extend Time, and on January 26, 2005, they filed a Joint Motion to Postpone Oral Argument until after September 2005. 10. By Stipulations and Orders signed by Judge Platt on June 23, 2004, July 23, 2004, August 31, 2004, October 20, 2004 and December 21, 2004, the parties to the New York Federal Court Actions extended the time for the defendants in those actions to respond to the Second -5- Amended and Supplemented Consolidated Complaint so that the parties could engage in settlement discussions. The response(s) of the defendants in the New York Federal Court Actions are now due on March 28, 2005. 11. By stipulations dated January 20, 2004 and so ordered on January 22, 2004, the parties to the New York State Court Actions agreed that the plaintiffs would file an amended complaint five days after an order was entered consolidating the New York State Court Actions and that the defendants' time to answer, move against or otherwise respond to the amended complaint would be due ten days after the amended complaint was filed. The New York State Court Actions have not yet been consolidated. DISCOVERY, INVESTIGATION AND RESEARCH CONDUCTED BY PLAINTIFFS' COUNSEL ---------------------------------------------------------------------- 12. Plaintiffs' Counsel (as defined in subparagraph 16(j) hereof) represent that they have conducted extensive formal and informal discovery and investigation during the development and prosecution of the Actions. Plaintiffs' Counsel represent that this discovery and investigation has included, among other things: (a) research regarding the valuation of the Industrial Properties; (b) preparation for and conduct of a deposition of Citigroup concerning the fairness opinion that Citigroup provided to the Non-Management Directors for their consideration in connection with the review and approval of the sale of the Industrial Properties to the Rechler family; (c) extensive review and analysis of the documents provided by Citigroup; and (d) review and analysis of the Individual Defendants' and Reckson's public statements including press releases, Reckson's public filings with the United States Securities and Exchange Commission (the "SEC"), analyst reports and news articles. 13. Plaintiffs' Counsel also represent that they retained several experts to assist them in their discovery and investigation, including two valuation experts and an accounting expert. -6- INDIVIDUAL DEFENDANTS' AND RECKSON'S DENIALS OF WRONGDOING AND LIABILITY ------------------------------------------------------------------------ 14. The Individual Defendants (as defined in subparagraph 16(d) hereof) and Reckson have denied and continue to deny all of the claims and contentions alleged by the Plaintiffs in the Actions, including allegations that Reckson, Reckson Operating Partnership, L.P., the Plaintiffs or any other Reckson stockholders have suffered any damages as a result of the conduct that was alleged, or that could have been alleged, in the Actions. The Individual Defendants and Reckson have further asserted and continue to assert that, at all relevant times, they acted in good faith and in a manner they reasonably believed to be in the best interests of Reckson and Reckson stockholders. The Individual Defendants and Reckson are entering into the Stipulation because they believe that it will benefit Reckson by eliminating the substantial expense and the concomitant distraction of resources and effort from the business of Reckson that continued litigation would inevitably engender, and by providing for the implementation of the provisions of the Stipulation that the Individual Defendants and Reckson believe to be beneficial to Reckson and its stockholders. CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT --------------------------------------------------- 15. The Plaintiffs recognize and acknowledge the uncertain outcome and the risk of any litigation, especially in complex suits such as the Actions, as well as the difficulties and delays inherent in such litigation. In particular, the Plaintiffs have taken into account: the risks that Judge Cannon's dismissal of the Maryland actions will be upheld on appeal and that the New York Federal Court Actions and the New York State Court Actions will also be dismissed on the grounds that plaintiffs failed to make pre-suit demands; the expense and length of continued proceedings necessary to prosecute the Actions through trial and any appeals; and the inherent problems of proof and possible defenses to the particular claims asserted in the Actions. -7- Based on their evaluation and the advice of their counsel, the Plaintiffs believe that the settlement set forth in this Stipulation confers substantial benefits upon and is in the best interests of Reckson and its stockholders. DEFINITIONS ----------- 16. As used in this Stipulation, the following terms have the meanings specified below: (a) "Actions" means the three consolidated Maryland Actions (SEKUK GLOBAL, ET AL. v. RECKSON ASSOCS. REALTY CORP., ET AL.), the three consolidated New York Federal Court Actions (TUCKER, ET AL. v. RECHLER, ET AL.) and the three New York State Court Actions (LOWINGER v. RECHLER, ET AL., STEINER v. RECHLER, ET AL. and LIGHTER v. RECHLER, ET AL.). (b) "Effective Date" means the first date by which each and all of the events and conditions specified in paragraph 29 of the Stipulation have been met and have occurred. (c) "Final Date" means: (i) if no appeal from the Judgment approving the Stipulation or no petition for a writ of review of the Judgment approving the Stipulation is filed, the expiration date of the period for filing or noticing any such appeal or petition; or (ii) if an appeal from the Judgment or a petition for a writ of review of the Judgment is filed, the date that the affirmance of the Judgment, the dismissal of the appeal or the denial of the petition for the writ of review becomes final. (d) "Individual Defendants" means Reckson Operating Partnership, L.P., Walter Gross, Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri, Donald J. Rechler, Gregg M. Rechler, Mitchell D. Rechler, Roger M. Rechler, Scott H. Rechler and Conrad D. Stephenson. -8- (e) "Industrial Properties" means the 95 Long Island properties listed in Exhibit A hereto. (f) "Judgment" means the judgment to be rendered by the Court, substantially in the form attached hereto as Exhibit F. (g) "Non-Management Directors" means Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri and Conrad D. Stephenson. (h) "Person" means an individual, corporation, limited liability corporation, professional corporation, partnership, limited partnership, limited liability partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof and any business or legal entity, and their spouses, heirs, predecessors, successors, representatives or assignees. (i) "Plaintiffs" means Roberta Chirko, Clinton Charter Township Police and Fire Retirement System, Charles D. Hoffman, Lydia J. Hoffman, Lawrence Lighter, Robert Lowinger, Sekuk Global Enterprises Profit Sharing Plan, William Steiner, Teachers Retirement System of Louisiana and Judith A. Tucker. (j) "Plaintiffs' Counsel" means counsel who have appeared for any of the Plaintiffs in the Actions. (k) "Plaintiffs' Settlement Counsel" means the following Counsel for the Plaintiffs: David A.P. Brower Todd L. Kammerman Milberg Weiss Bershad & Schulman LLP One Pennsylvania Plaza New York, New York 10119-0165 Tel: (212) 594-5300 Fax: (212) 868-1229 -9- Nicholas E. Chimicles Kimberly M. Donaldson Chimicles & Tikellis LLP One Haverford Centre 361 West Lancaster Avenue Haverford, Pennsylvania 19041 Tel: (610) 642-8500 Fax: (610) 649-3633 (l) "Rechler Defendants" means Donald J. Rechler, Gregg M. Rechler, Mitchell D. Rechler, Roger M. Rechler and Scott H. Rechler. (m) "Rechler Purchasing Entities" ("RPE") means the entity or entities formed to purchase and hold the Industrial Properties on behalf of the Rechler family. (n) "Reckson Stockholders of Record" means any and all nominal or beneficial owners of Reckson common stock as of the date of the entry of the Order Regarding Preliminary Approval and Notice, as specified in paragraph 24 of the Stipulation. (o) "Related Persons" means each of the Individual Defendants' and Reckson's past or present directors, officers, managers, employees, partners, members, principals, agents, advisors, underwriters, controlling shareholders, attorneys, accountants or auditors, banks or investment banks, associates, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated entities or any past or present directors, officers, managers or employees thereof, any entity in which a Reckson or an Individual Defendant has a controlling interest, any members of their immediate families or any trust of which any Individual Defendant is the settlor or which is for the benefit of any Individual Defendant and/or member(s) of his or her family. (p) "Released Claims" shall mean any and all statutory or common-law claims or causes of action under federal, state, local or any other law (including Unknown Claims and including claims within the exclusive jurisdiction of the federal courts) that are based upon or -10- related to, in whole or in part, the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to act that were alleged, or could have been alleged, in the Actions up to and including the date of the Stipulation, by Reckson, Reckson Operating Partnership, L.P. or Reckson stockholders, on their own behalf or on behalf of Reckson, or any of them, against the Released Persons. The final judgments entered in the Actions will bar all Released Claims. (q) "Released Persons" means each and all of the Individual Defendants, Reckson and any Related Persons. (r) "Settling Parties" means, collectively, each of the Individual Defendants, Reckson and the Plaintiffs on behalf of themselves and/or derivatively on behalf of Reckson. (s) "Unknown Claims" means any Released Claim that any Plaintiff, Reckson, Reckson Operating Partnership, L.P. or any Reckson stockholder does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons which, if known by him, her or it, might have affected his, her or its settlement with and release of the Released Persons, or might have affected his, her or its decision not to object to this settlement. RECKSON CORPORATE GOVERNANCE CHANGES ------------------------------------ 17. At the first meeting of the Reckson Board of Directors following the Effective Date (as defined in subparagraph 16(b) hereof), the Reckson Board of Directors will adopt resolutions or amendments to the Company's By-Laws or Articles of Incorporation to ensure adherence to the Corporate Governance Policies specified in paragraphs 18 and 19 hereof. These Corporate Governance Policies shall remain in effect until the first to occur of, three years or a change in control of Reckson, unless earlier revoked or amended. Any revocation or amendment of these Policies within three years after adoption must be: (a) recommended by two-thirds of -11- the members of Reckson's Nominating/Governance Committee; (b) approved by two-thirds of the independent directors on the Board; and (c) approved by a majority of Reckson's stockholders. Notwithstanding the foregoing, any of these Corporate Governance Policies may be revoked or amended by a majority of the Board if such majority, in good faith and upon the advice of counsel, determines that one or more of the Policies conflicts with or is substantially redundant of any law, regulation, rule or amendment to Reckson's Articles of Incorporation approved by Reckson's stockholders. 18. Reckson shall establish an Affiliate Transaction Committee consisting of three or more independent directors as defined in paragraph 19 hereof. The function of this Committee shall be to review and approve or disapprove any proposed transaction between (a) Reckson or any of its subsidiaries, and (b) any person or entity who was an affiliate of Reckson at any time in the three-year period preceding the date of the proposed transaction, but only if (c) the value of the consideration to be paid by or to Reckson or any of its subsidiaries pursuant to the transaction equals or exceeds $10 million or (d) pursuant to the transaction, at least five percent of Reckson's assets are proposed to be sold, disposed of or transferred, in any manner or form. The Committee shall have standing authorization, in its sole discretion, to retain legal and/or other advisors of its choice, which advisors shall report directly to the Committee. The Committee shall have the authority, in its sole discretion, to make public any opinions or reports it shall receive from such advisors. Subsequent to its approval of any transaction, the Committee shall report its findings to Reckson's Chief Executive Officer and Chief Financial Officer, and, subject to any applicable confidentiality obligations, Reckson shall include a summary of the Committee's findings in the next regular quarterly or annual report to be filed by Reckson under the Securities Exchange Act of 1934. -12- 19. At least two-thirds of the members of the Board of Directors of Reckson shall be independent directors, as defined by Reckson in its Corporate Governance Guidelines; provided, however, that in the event that any vacancy shall occur in the Board which reduces the number of such independent directors below the two-thirds level, Reckson shall not be required to comply with this provision until six months from the date of such vacancy. In determining whether this two-thirds requirement is satisfied, any individual who first becomes a member of the Board of Directors of Reckson in connection with Reckson's or any of its subsidiaries' engagement in any acquisition or other business or commercial transaction, and who is not an independent director as defined in this paragraph, will not be considered a member of the Reckson Board of Directors. 20. In addition to the foregoing corporate governance changes, Reckson and the Individual Defendants hereby acknowledge that the prosecution of the Actions was a direct and substantial factor in Reckson's adoption and implementation of the following other corporate government changes which have already been implemented, that these changes have benefited Reckson and its stockholders and that these changes constitute a material part of this settlement: (a) the mandatory rotation of at least one independent director every three years; (b) an increase in the minimum required equity ownership for Reckson directors to $100,000 in Reckson common stock; and (c) a readjustment of the compensation of Reckson Board members such that a substantial portion of their compensation is now in Reckson common stock, which such members must hold throughout their tenure on the Board. PROFIT SHARING -------------- 21. For purposes of this paragraph, the following definitions shall apply: (a) "Profit Percentage" shall mean: 30% until September 1, 2005; 25% from September 2, 2005 through September 1, 2006; 20% from September 2, 2006 through September -13- 1, 2007; 15% from September 2, 2007 through September 1, 2008; and 10% from September 2, 2008, through September 1, 2009. (b) "Sale" shall mean a voluntary sale or transfer and shall not include conveyances by means of foreclosure, or deed in lieu thereof, condemnation or bankruptcy court order. (c) "Subject Properties" shall mean: through December 31, 2005, all of the properties listed in Exhibit B hereto; from January 1, 2006, through January 1, 2007, all of the properties listed in Exhibit B hereto, exclusive of those that are listed as Pool B; from January 2, 2007, through September 1, 2009, all of the properties listed in Exhibit B hereto, exclusive of those that are listed as Pools B, A-5 and A-7. (d) "Net After Tax Profit" shall mean an amount computed by subtracting from the gross proceeds of Sale of the Subject Property the following amounts: (i) the costs of the Sale, including brokerage commissions, legal fees and transfer taxes; (ii) any prepayment premium or defeasance cost incurred in respect of any indebtedness encumbering the Property or the ownership interests therein; (iii) the gross value attributed by RPE (as defined in subparagraph 16(m) hereof) to the Subject Property on November 10, 2003, plus a return on the equity portion thereof of twelve percent per annum, compounded monthly from November 10, 2003 through the date of Sale; (iv) any amounts invested by the Rechler family and/or RPE in the Subject Property for capital items, including capital improvements, additions, replacements and leasing costs, such as brokerage commissions and tenant allowances, plus a return thereon of twelve percent per annum, compounded monthly from the date of investment through the date of Sale; (v) an amount equal to the maximum combined federal, New York State and New York City income taxes which would be imposed on an individual owner of the Subject Property -14- based on the Sale, assuming that such individual was a New York City resident with the income tax basis of RPE for such Subject Property. To the extent that the payment required under subparagraph (iii) above in respect of a Subject Property actually results in a reduction of the income taxes payable on account of such Sale, the amount to be deducted in subparagraph (v) above shall be reduced by the amount of such reduction. The Rechler Defendants have caused RPE to agree that if, before September 2, 2009, RPE shall make a Sale to an unaffiliated third party of any of the then Subject Properties, RPE shall pay to Reckson the then applicable Profit Percentage of the Net After Tax Profit resulting from such Sale; provided, however, that no such payment shall be due unless the Effective Date has been reached. If any of the gross proceeds of such Sale are payable on a deferred basis or are held back or put in escrow, such amounts shall only be treated as "gross proceeds of Sale" when they become unconditionally available in cash to RPE. If RPE has any surviving indemnification or payment obligations or liabilities with respect to the Subject Property, there shall be deducted from the gross proceeds of the Sale the maximum amount of such obligation or liability until the amount of such obligation or liability is finally determined. Any Subject Property which is exchanged in a ss. 1031 transaction shall be treated as having been sold in a fully taxable transaction. It shall be the sole duty of the Rechler Defendants to cause RPE to notify Reckson and the Affiliate Transaction Committee that the Sale of a Subject Property has occurred during the Profit Sharing Period. Such notice shall be given within 30 days after entering into an agreement of Sale with respect to any of the then Subject Properties. During its term, the Affiliate Transaction Committee described at paragraph 18 hereof shall have the responsibility to confirm that RPE, in computing the amount of the Profit Percentage of the Net After Tax Profit on the Sale of a Subject Property, has complied with the provisions of this -15- subparagraph. The Committee shall have standing authority, on its own decision and in its sole discretion, to retain accounting and/or other advisors of its choice to assist in the confirmation process, which advisors shall report directly to the Committee. The responsibility of the Committee to confirm compliance with the provisions of this subparagraph shall not include the responsibility to investigate or otherwise determine whether there has been a Sale of any of the Subject Properties by RPE. 22. The Rechler Defendants agree that RPE hereby surrenders the right of first offer it obtained in connection with the acquisition of the Industrial Properties from Reckson on the parcels of vacant land located at (i) Sunrise Highway, East Patchogue - STCM #200-973.4-4-1, 3, 5 & 6, and (ii) 70 Andrews Road, Hicksville, New York - Section 12 Block 623 Lot 1. 23. The Rechler Defendants hereby acknowledge that the prosecution of the Actions was a direct and substantial factor in their decision to cause RPE to extend three times the outside date for the closing of the acquisition of 300 and 350 Kennedy Drive to accommodate Reckson's need to locate an appropriate like-kind exchange property in order to defer taxable gains on the sale. PRELIMINARY APPROVAL, NOTICE AND SETTLEMENT HEARING --------------------------------------------------- 24. Within fifteen days after the execution of the Stipulation, the Settling Parties shall make a joint motion to the Maryland Court of Special Appeals seeking remand of the Maryland Actions to the Circuit Court for Baltimore City, Maryland. Assuming that the Maryland Actions are so remanded, the Settling Parties shall thereafter submit the Stipulation, together with its Exhibits, to the Circuit Court, and shall apply for entry of an order (the "Order Regarding Preliminary Approval and Notice"), substantially in the form of Exhibit C hereto, preliminarily approving the Settlement, and providing for notice to Reckson Stockholders of Record (as -16- defined in subparagraph 16(n) hereof) of the hearing on this settlement. If for any reason the Maryland Actions are not remanded by the Court of Special Appeals, the Settling Parties shall seek the Order Regarding Preliminary Approval and Notice from that Court. Should the Settling Parties be required to proceed before the Court of Special Appeals, then the Stipulation and the Exhibits accompanying the Stipulation shall be amended as may be necessary to reflect the change of court. The Stipulation shall be effective only if the Order Regarding Preliminary Approval and Notice approved by the Court: (a) preliminarily approves the Stipulation and the settlement set forth herein; (b) approves the Notice of Proposed Settlement of Derivative Actions and provided that the Notice, substantially in the form of Exhibit D hereto, shall be mailed to Reckson Stockholders of Record by Reckson, that the Summary Notice, substantially in the form of Exhibit E hereto, shall be published in INVESTOR'S BUSINESS DAILY and that the costs of Notice shall be borne by Reckson; (c) finds that the Notice given pursuant to subparagraph (b) above constitutes the best practicable form and method of notice to Reckson Stockholders of Record; (d) schedules a hearing (the "Settlement Hearing") to be held by the Court to determine: (i) whether the proposed settlement of the Actions as contained in the Stipulation should be approved as fair, just, reasonable and adequate; (ii) whether Plaintiffs are adequate representatives of the interests of similarly-situated stockholders in enforcing the rights of Reckson; (iii) whether the Judgment approving the settlement should be entered; and (iv) whether Plaintiffs' Counsel's application for attorneys' fees and reimbursement of expenses ("Fees and Expenses") should be granted; -17- (e) provide that any objections by Reckson stockholders to: (i) the proposed settlement contained in the Stipulation; (ii) the adequacy of Plaintiffs as representatives of the interests of similarly-situated stockholders in enforcing the rights of Reckson; (iii) entry of the Judgment approving the settlement; and/or (iv) Plaintiffs' Counsel's application for an award of Fees and Expenses shall be heard and any papers submitted in support of said objections shall be received and considered by the Court at the hearing only if, on or before a date to be specified in the Notice that is at least fifteen days prior to the Settlement Hearing, Persons making objections file notice of their intention to appear and copies of any papers in support of their position with the Clerk of the Circuit Court for Baltimore City, Maryland, and serve such notice and papers on counsel as identified in the Notice via first class mail, overnight courier or hand delivery such that they are received at least fifteen days prior to the Settlement Hearing; (f) provides that, pending final determination of whether the settlement contained in the Stipulation should be approved, neither the Plaintiffs, nor any Reckson stockholder, either directly, representatively, derivatively or in any other capacity, shall commence or prosecute any action or proceeding in any court or tribunal asserting any of the Released Claims against the Released Persons (as defined in subparagraph 16(q) hereof); and (g) provides that the Settlement Hearing may, from time to time and without further notice to Reckson stockholders, be continued or adjourned by order of the Court. 25. As soon as practicable after the Final Date, the Settling Parties shall request hearings before the courts where the New York Federal Court Actions and the New York State Court Actions are pending in order to fashion an efficient and prompt procedure for the dismissal with prejudice of those actions. -18- RELEASES -------- 26. Upon the Court's entry of the Judgment, the Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, shall be deemed to have, and by operation of the Judgment shall have, fully, finally and forever released, relinquished and discharged all Released Claims, and any and all claims arising out of, relating to or in connection with the Settlement or resolution of the Actions, against the Released Persons. 27. The Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed upon the Effective Date to have, and by operation of the Judgment shall have, fully, finally and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling Parties acknowledge that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part. 28. The release contemplated by the Stipulation extends to claims that the Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders do not know or suspect to exist at the time of the release, and which, if known, might have affected the decision to enter -19- into this release. Each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed to waive any and all provisions, rights and benefits conferred by any law of the United States, or any state or territory of the United States or principle of common law, which governs or limits a Person's release of Unknown Claims. The foregoing waiver includes without limitation an express waiver, to the full extent permitted by law, by the Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, of any and all rights under California Civil Code Section 1542, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. In addition, each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed to waive any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code Section 1542. CONDITIONS OF SETTLEMENT, EFFECT OF DISAPPROVAL OF SETTLEMENT, CANCELLATION OR TERMINATION, AND PUBLIC STATEMENTS REGARDING SETTLEMENT -------------------------------------------------------------------------------- 29. The Effective Date of the Stipulation shall be conditioned on the occurrence of each and all of the following events: (a) the Court has entered the Order Regarding Preliminary Approval and Notice, substantially in the form of Exhibit C attached hereto, as required by paragraph 24 hereof; -20- (b) the Court has entered the Judgment, or a judgment substantially in the form of Exhibit F attached hereto; (c) the Final Date has been reached; and (d) the New York Federal Court Actions and the New York State Court Actions have been dismissed with prejudice and said dismissals have become final and not subject to appeal. 30. If the conditions specified in paragraph 29 hereof are not met following reasonable efforts by the Settling Parties seeking the satisfaction of such conditions, then the Stipulation shall be canceled and terminated, unless Plaintiffs' Settlement Counsel, counsel for the Individual Defendants and counsel for Reckson mutually agree in writing to proceed with the Stipulation. 31. In the event that the Stipulation fails for any reason to become effective in accordance with its terms, the Settling Parties shall be restored to their respective positions in the Actions as of the date of the Stipulation, set forth in paragraph 1 hereof. In such event, the terms and provisions of the Stipulation shall have no force and effect with respect to the Settling Parties and shall not be used in the Actions or in any other proceeding for any purpose, and any judgment or order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, NUNC PRO TUNC. 32. Following the execution of this Stipulation, Reckson will file a Form 8-K with the SEC attaching a copy of the Stipulation and its Exhibits, including the Notice of Proposed Settlement (Exhibit D hereto), and stating: that the parties have agreed to settle the actions pursuant to the Stipulation, that the proposed settlement includes various changes to Reckson's corporate governance policies to provide for an Affiliate Transaction Committee and to require -21- that Reckson's Board of Directors be comprised of at least two-thirds independent directors (as defined in Reckson's Corporate Governance Guidelines), as well as certain other concessions; and that the proposed settlement is subject to court approval. The Settling Parties will not make any other substantive public statements relating to the proposed settlement, other than the terms relating to corporate governance, except for statements: required by law; in response to SEC or other regulatory inquiry; or in connection with judicial proceedings relating to the settlement or the enforcement thereof. In response to questions by the press, analysts, investors, persons attending industry conferences or financial analyst conference calls, or similar inquiries with respect to settlement matters other than corporate governance, the Settling Parties will refer questioners to the Stipulation and Notice of Proposed Settlement. Substantive violations of this paragraph by a Settling Party shall be a material breach of this agreement; provided however that no breach of this paragraph by any Settling Party shall have any effect on the validity or operation of the releases and covenants not to sue provided for in this Stipulation and the Order and Final Judgment (Exhibit F hereto). PLAINTIFFS' SETTLEMENT COUNSELS' REQUEST FOR ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES -------------------------------------------------------------------------------- 33. The Plaintiffs have conferred a benefit on Reckson and its stockholders, accordingly, Plaintiffs' Counsel will apply to the Court for Fees and Expenses in an amount not to exceed $ 2,150,000, in total. The payment of any Fees and Expenses awarded by the Court shall be the sole responsibility of Reckson and shall be made to Plaintiffs' Settlement Counsel within fifteen business days after the Effective Date. 34. The procedure for and the allowance or disallowance by the Court of any applications by Plaintiffs' Counsel for Fees and Expenses are not part of the settlement set forth in the Stipulation, and are to be considered by the Court separately from the Court's -22- consideration of the fairness, reasonableness and adequacy of the settlement set forth in the Stipulation. Any order or proceeding relating to Fees and Expenses, or any appeal from any order relating thereto or reversal or modification thereof, shall not operate to terminate or cancel the Stipulation or the settlement of the Actions set forth herein. MISCELLANEOUS PROVISIONS ------------------------ 35. The Settling Parties (a) acknowledge that it is their intent to consummate this agreement, and (b) agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and conditions of the Stipulation and to exercise their best efforts to accomplish the foregoing terms and conditions of the Stipulation. 36. Neither the Stipulation, nor the settlement, nor any act performed or document executed pursuant to or in furtherance of the Stipulation or the settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity of any Released Claim, or of any wrongdoing or liability of any of the Individual Defendants, Reckson or the Released Persons; or (b) is or may be deemed to be or may be used as an admission of, or evidence of, any fault or omission of any of the Individual Defendants, Reckson or the Released Persons in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal. Any Individual Defendant, Reckson or any Released Person may use the Stipulation, the Judgment or both, in any action in order to support a defense or counterclaim based on principles of RES JUDICATA, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim. 37. All agreements made and orders entered during the course of the Actions relating to the confidentiality of information shall survive the Stipulation. -23- 38. All of the Exhibits to the Stipulation are material and integral parts hereof and are fully incorporated herein by this reference. In the event of any conflict between the Stipulation and any other document, the Stipulation shall govern. 39. The Stipulation may be amended or modified only by a written instrument signed by or on behalf of all Settling Parties or their respective successors-in-interest. 40. The Stipulation and the Exhibits attached hereto constitute the entire agreement among the parties hereto, and no representations, warranties or inducements have been made to any party concerning the Stipulation or its Exhibits other than the representations, warranties and covenants contained and memorialized in these documents. Except as otherwise provided herein, each party shall bear its own costs. 41. Plaintiffs' Settlement Counsel are expressly authorized by the Plaintiffs to take all appropriate action required or permitted to be taken pursuant to the Stipulation to effectuate its terms and also are expressly authorized to enter into any modifications or amendments to the Stipulation which they deem appropriate. 42. Each counsel or other Person executing the Stipulation or any of its Exhibits on behalf of any party hereto hereby warrants that such counsel or Person has the full authority to do so. 43. The Stipulation may be executed in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument. A complete set of original executed counterparts shall be filed with the Court. 44. The Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the parties hereto. -24- 45. The Court shall retain jurisdiction with respect to implementation and enforcement of the terms of the Stipulation, and all parties hereto submit to the jurisdiction of the Court for purposes of implementing and enforcing the settlement embodied in the Stipulation. 46. The Stipulation and the Exhibits hereto shall be considered to have been negotiated, executed and delivered, and to be wholly performed, in the State of Maryland, and the rights and obligations of the parties to the Stipulation shall be construed and enforced in accordance with, and governed by, the internal, substantive laws of the State of Maryland without giving effect to that State's choice of law principles. -25- IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed, by their duly authorized attorneys, dated as of March 14, 2005. LAW OFFICES OF CHARLES J. PIVEN, P.A. By: /s/ Marshall N. Perkins ---------------------------------- Charles J. Piven, Esq. Marshall N. Perkins, Esq. The World Trade Center 401 East Pratt Street, Suite 2525 Baltimore, Maryland 21202 Tel: (410) 332-0030 Fax: (410) 685-1300 TYDINGS & ROSENBERG LLP By: /s/ John B. Isbister ---------------------------------- John B. Isbister, Esq. 100 East Pratt Street, 26th Floor Baltimore, Maryland 21202 Tel: (410) 752-9700 Fax: (410) 727-5460 MILBERG WEISS BERSHAD & SCHULMAN LLP By: /s/ David A.P. Brower ---------------------------------- David J. Bershad, Esq. David A.P. Brower, Esq. Todd L. Kammerman, Esq. One Pennsylvania Plaza New York, New York 10119-0165 Tel: (212) 594-5300 Fax: (212) 868-1229 -26- SCHIFFRIN & BARROWAY, LLP By: /s/ Eric L. Zagar ---------------------------------- Eric L. Zagar, Esq. Robin Winchester, Esq. 280 King of Prussia Road Radnor, Pennsylvania 19087 Tel: (610) 667-7706 Fax: (610) 667-7056 GOODKIND LABATON RUDOFF & SUCHAROW LLP By: /s/ Lynda J. Grant ---------------------------------- Lynda J. Grant, Esq. 100 Park Avenue, 12th Floor New York, New York 10017-5563 Tel: (212) 907-0700 Fax: (212) 818-0477 WECHSLER HARWOOD LLP By: /s/ Robert I. Harwood ---------------------------------- Robert I. Harwood, Esq. Matthew M. Houston, Esq. Joshua D. Glatter, Esq. 488 Madison Avenue, 8th Floor New York, New York 10022 Tel: (212) 935-7400 Fax: (212) 753-3630 -27- LASKY & RIFKIND, LTD. By: /s/ Leigh R. Lasky ---------------------------------- Leigh R. Lasky, Esq. 351 W. Hubbard Street, Suite 406 Chicago, Illinois 60610 Tel: (312) 634-0057 Fax: (312) 634-0059 HAROLD B. OBSTFELD, P.C. By: /s/ Harold B. Obstfeld ---------------------------------- Harold B. Obstfeld, Esq. 100 Park Avenue, 20th Floor New York, New York 10017 Tel: (212) 696-1212 Fax: (212) 867-7369 FEDERMAN & SHERWOOD By: /s/ William B. Federman ---------------------------------- William B. Federman, Esq. 120 North Robinson Street, Suite 2720 Oklahoma City, Oklahoma 73102 Tel: (405) 235-1560 Fax: (405) 239-2112 COUNSEL FOR PLAINTIFFS SEKUS GLOBAL ENTERPRISES PROFIT SHARING PLAN, CHARLES D. HOFFMAN, LYDIA J. HOFFMAN AND ROBERTA CHIRKO -28- ZWERLING, SCHACHTER & ZWERLING, LLP By: /s/ Robert S. Schachter ---------------------------------- Robert S. Schachter, Esq. Shaye J. Fuchs, Esq. 50 Charles Lindbergh Boulevard, Suite 501A Uniondale, New York 11553 Tel: (516) 832-9600 Fax: (516) 832-9605 By: /s/ Anthony F. Prisco ---------------------------------- Anthony F. Prisco, Esq. 41 Madison Avenue, 32nd Floor New York, New York 10010 Tel: (212) 223-3900 Fax: (212) 371-5969 CHIMICLES & TIKELLIS LLP By: /s/ Nicholas E. Chimicles ---------------------------------- Nicholas E. Chimicles, Esq. Kimberly M. Donaldson, Esq. One Haverford Centre 361 West Lancaster Avenue Haverford, Pennsylvania 19041 Tel: (610) 642-8500 Fax: (610) 649-3633 BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP By: /s/ Daniel L. Berger ---------------------------------- Daniel L. Berger, Esq. Douglas M. McKeige, Esq. Javier Bleichmar, Esq. 1285 Avenue of the Americas New York, New York 10019 Tel: (212) 554-1400 Fax: (212) 554-1444 -29- VANOVERBEKE MICHAUD & TIMMONY, P.C. By: /s/ Michael J. VanOverbeke ---------------------------------- Michael J. VanOverbeke, Esq. Michael E. Moco, Esq. 79 Alfred Street Detroit, Michigan 48201 Tel: (313) 578-1200 Fax: (313) 578-1201 COUNSEL FOR PLAINTIFFS JUDITH A. TUCKER, CLINTON CHARTER TOWNSHIP, POLICE AND FIRE RETIREMENT SYSTEM AND TEACHERS' RETIREMENT SYSTEM OF LOUISIANA ABRAHAM FRUCHTER & TWERSKY LLP By: /s/ Jeffrey S. Abraham ---------------------------------- Jeffrey S. Abraham, Esq. One Pennsylvania Plaza, Suite 2805 New York, New York 10119 Tel: (212) 279-5050 Fax: (212) 279-3655 COUNSEL FOR PLAINTIFF ROBERT LOWINGER GOODKIND LABATON RUDOFF & SUCHAROW LLP By: /s/ Lynda J. Grant ---------------------------------- Lynda J. Grant, Esq. 100 Park Avenue, 12th Floor New York, New York 10017 Tel: (212) 907-0700 Fax: (212) 818-0477 COUNSEL FOR PLAINTIFF WILLIAM STEINER -30- WECHSLER HARWOOD LLP By: /s/ Robert I. Harwood ---------------------------------- Robert I. Harwood, Esq. Matthew M. Houston, Esq. Joshua D. Glatter, Esq. 488 Madison Avenue, 8th Floor New York, New York 10022 Tel: (212) 935-7400 Fax: (212) 753-3630 COUNSEL FOR PLAINTIFF LAWRENCE LIGHTER KRAMON & GRAHAM, P.A. By: /s/ Andrew Jay Graham ---------------------------------- Andrew Jay Graham, Esq. Max H. Lauten, Esq. One South Street, Suite 2600 Baltimore, Maryland 21202-3201 Tel: (410) 752-6030 Fax: (410) 539-1269 FARRELL FRITZ, P.C. By: /s/ John P. McEntee ---------------------------------- John P. McEntee, Esq. 1320 EAB Plaza, West Tower-13th Floor Uniondale, New York 11556-1320 Tel: (516) 227-0700 Fax: (516) 227-0777 COUNSEL FOR DEFENDANT RECKSON ASSOCIATES REALTY CORP. -31- WACHTELL, LIPTON, ROSEN & KATZ By: /s/ Robert B. Mazur ---------------------------------- Robert B. Mazur, Esq. Maura R. Grossman, Esq. 51 West 52nd Street New York, New York 10019-6150 Tel: (212) 403-1000 Fax: (212) 403-2000 VENABLE LLP By: /s/ G. Stewart Webb, Jr. ---------------------------------- James J. Hanks, Jr., Esq. G. Stewart Webb, Jr., Esq. 1800 Mercantile Bank & Trust Building Two Hopkins Plaza Baltimore, Maryland 21201 Tel: (410) 244-7400 Fax: (410) 244-7742 COUNSEL FOR DEFENDANTS WALTER GROSS, HERVE A. KEVENIDES, JOHN V.N. KLEIN, RONALD H. MENAKER, PETER QUICK, LEWIS S. RANIERI AND CONRAD D. STEPHENSON, -31- FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP By: /s/ Matthew Gluck ---------------------------------- Matthew Gluck, Esq. One New York Plaza New York, New York 10004-1980 Tel: (212) 859-8000 Fax: (212) 859-4000 SCHULMAN, TREEM, KAMINKOW, GILDEN & RAVENELL, P.A. By: /s/ Andrew M. Dansicker ---------------------------------- Robert B. Schulman, Esq. Andrew M. Dansicker, Esq. The World Trade Center 401 East Pratt Street, Suite 1800 Baltimore, Maryland 21202-3004 Tel: (410) 332-0850 Fax: (410) 332-0866 COUNSEL FOR DEFENDANTS RECKSON OPERATING PARTNERSHIP, L.P., DONALD J. RECHLER, GREGG M. RECHLER, MITCHELL R. RECHLER, ROGER M. RECHLER AND SCOTT H. RECHLER -33- EXHIBIT A LIST OF INDUSTRIAL PROPERTIES NO. ADDRESS CITY STATE ZIP TOWN -------------------------------------------------------------------------------- 1 20 Melville Park Road Melville NY 11747 Huntington 2 20 Orville Drive Bohemia NY 11716 Islip 3 20 Oser Avenue Hauppauge NY 11788 Smithtown 4 25 Davids Drive Hauppauge NY 11788 Smithtown 5 30 Hub Drive Melville NY 11747 Huntington 6 30 Oser Avenue Hauppauge NY 11788 Smithtown 7 32 Windsor Place Central Islip NY 11722 Islip 8 35 Engel Street Hicksville NY 11801 Oyster Bay 9 40 Oser Avenue Hauppauge NY 11788 Smithtown 10 42 Windsor Place Central Islip NY 11722 Islip 11 45 Adams Avenue Hauppauge NY 11788 Smithtown 12 45 Melville Park Road Melville NY 11747 Huntington 13 50 Orville Drive Bohemia NY 11716 Islip 14 50 Oser Avenue Hauppauge NY 11788 Smithtown 15 55 Engineers Road Hauppauge NY 11788 Smithtown 16 60 Oser Avenue Hauppauge NY 11788 Smithtown 17 63 Oser Avenue Hauppauge NY 11788 Smithtown 18 65 Engineers Road Hauppauge NY 11788 Smithtown 19 65 Marcus Drive Melville NY 11747 Huntington 20 65 Orville Drive Bohemia NY 11716 Islip 21 65 Oser Avenue Hauppauge NY 11788 Smithtown 22 70 Maxess Road, a/k/a 45 Melville Park Road Melville NY 11747 Huntington 23 70 Orville Drive Bohemia NY 11716 Islip 24 70 Schmitt Boulevard Farmingdale NY 11735 Babylon 25 73 Oser Avenue Hauppauge NY 11788 Smithtown 26 80 Oser Avenue Hauppauge NY 11788 Smithtown 27 85 Adams Avenue Hauppauge NY 11788 Smithtown 28 85 Engineers Road Hauppauge NY 11788 Smithtown 29 85 Nicon Court Hauppauge NY 11788 Islip 30 85 Orville Drive Bohemia NY 11716 Islip 31 85 South Service Road Plainview NY 11803 Oyster Bay 32 90 Oser Avenue Hauppauge NY 11788 Smithtown 33 90 Plant Avenue Hauppauge NY 11788 Smithtown 34 95 Orville Drive Bohemia NY 11716 Islip 35 100 Andrews Road Hicksville NY 11801 Oyster Bay 36 104 Parkway Drive South Hauppauge NY 11788 Smithtown 37 110 Marcus Drive Melville NY 11747 Huntington 38 110 Orville Drive Bohemia NY 11716 Islip 39 110 Plant Avenue Hauppauge NY 11788 Smithtown 40 120 Wilbur Place Bohemia NY 11716 Islip 41 125 Ricefield Lane Hauppauge NY 11788 Smithtown 42 125 Wilbur Place Bohemia NY 11716 Islip 43 135 Fell Court Hauppauge NY 11788 Islip 44 160 Wilbur Place Bohemia NY 11716 Islip 45 170 Wilbur Place Bohemia NY 11716 Islip 46 180 Oser Avenue Hauppauge NY 11788 Smithtown -1- LIST OF INDUSTRIAL PROPERTIES (CONTINUED) NO. ADDRESS CITY STATE ZIP TOWN -------------------------------------------------------------------------------- 47 185 Oser Avenue Hauppauge NY 11788 Smithtown 48 208 Blydenburgh Road Islandia NY 11749 Islip 49 210 Blydenburgh Road Islandia NY 11749 Islip 50 225 Oser Avenue Hauppauge NY 11788 Smithtown 51 265 Spagnoli Road Melville NY 11747 Huntington 52 360 Oser Avenue Hauppauge NY 11788 Smithtown 53 375 Oser Avenue Hauppauge NY 11788 Smithtown 54 390 Motor Parkway Hauppauge NY 11788 Smithtown 55 395 Oser Avenue Hauppauge NY 11788 Smithtown 56 400 Oser Avenue Hauppauge NY 11788 Smithtown 57 410 Motor Parkway Hauppauge NY 11788 Smithtown 58 505 Walt Whitman Road Melville NY 11747 Huntington 59 600 Old Willets Path Hauppauge NY 11788 Smithtown 60 611 Old Willets Path Hauppauge NY 11788 Smithtown 61 631-641 Old WilletsPath Hauppauge NY 11788 Smithtown 62 651-661 Old Willets Path Hauppauge NY 11788 Smithtown 63 681 Old Willets Path Hauppauge NY 11788 Smithtown 64 740 Old Willets Path Hauppauge NY 11788 Smithtown 65 933 Motor Parkway Hauppauge NY 11788 Islip 66 1101 Lakeland Avenue Bohemia NY 11716 Islip 67 1385 Lakeland Avenue Bohemia NY 11716 Islip 68 2001 Orville Drive North Bohemia NY 11716 Islip 69 2002 Orville Drive North Bohemia NY 11716 Islip 70 2004 Orville Drive North Bohemia NY 11716 Islip 71 2005 Orville Drive North Bohemia NY 11716 Islip 72 4040 Veteran's Highway Bohemia NY 11716 Islip 73 80 Orville Drive Bohemia NY 11716 Islip 74 110 Bi-County Boulevard Babylon NY 11735 Babylon 75 5 Hub Drive Melville NY 11747 Huntington 76 10 Hub Drive Melville NY 11747 Huntington 77 25 Orville Drive Bohemia NY 11716 Islip 78 71 Hoffman Lane a/k/a Islandia NY 11749 Islip 71 Bridge Road 79 140 Wilbur Place Bohemia NY 11716 Islip 80 150 Engineers Road Hauppauge NY 11788 Smithtown 81 180 Orville Drive Bohemia NY 11716 Islip 82 325 Rabro Drive Hauppauge NY 11788 Smithtown 83 595 Old Willets Path Hauppauge NY 11788 Smithtown 84 250 Kennedy Drive Hauppauge NY 11788 Smithtown 85 120 Ricefield Lane Hauppauge NY 11788 Smithtown 86 425 Rabro Drive Hauppauge NY 11788 Islip 87 360 Motor Parkway Hauppauge NY 11788 Smithtown 88 135 Ricefield Lane Hauppauge NY 11788 Smithtown 89 1516 Motor Parkway Hauppauge NY 11788 Islip 90 300 Kennedy Drive Hauppauge NY 11788 Smithtown 91 350 Kennedy Drive Hauppauge NY 11788 Smithtown 92 19 Nicholas Drive Yaphank NY 11980 Brookhaven 93 100 Engineers Road Hauppauge NY 11788 Smithtown 94 105 Price Parkway Farmingdale NY 11735 Babylon 95 400 Moreland Road Commack NY 11725 Smithtown -2- EXHIBIT B SUB-LIST OF INDUSTRIAL PROPERTIES WITH POOL INDICATIONS NO. ADDRESS CITY STATE ZIP TOWN POOL -------------------------------------------------------------------------------- 1 20 Melville Park Road Melville NY 11747 Huntington B 2 20 Orville Drive Bohemia NY 11716 Islip A-8 3 20 Oser Avenue Hauppauge NY 11788 Smithtown A-5 4 25 Davids Drive Hauppauge NY 11788 Smithtown A-5 5 30 Hub Drive Melville NY 11747 Huntington B 6 30 Oser Avenue Hauppauge NY 11788 Smithtown A-10 7 40 Oser Avenue Hauppauge NY 11788 Smithtown A-10 8 42 Windsor Place Central Islip NY 11722 Islip A-5 9 50 Orville Drive Bohemia NY 11716 Islip A-5 10 50 Oser Avenue Hauppauge NY 11788 Smithtown A-10 11 55 Engineers Road Hauppauge NY 11788 Smithtown A-7 12 60 Oser Avenue Hauppauge NY 11788 Smithtown A-10 13 63 Oser Avenue Hauppauge NY 11788 Smithtown A-8 14 65 Engineers Road Hauppauge NY 11788 Smithtown A-10 15 65 Marcus Drive Melville NY 11747 Huntington B 16 65 Orville Drive Bohemia NY 11716 Islip A-5 17 65 Oser Avenue Hauppauge NY 11788 Smithtown A-8 18 70 Maxess Road a/k/a Melville NY 11747 Huntington B 45 Melville Park Road 19 70 Orville Drive Bohemia NY 11716 Islip A-10 20 70 Schmitt Boulevard Farmingdal NY 11735 Babylon A-10 21 73 Oser Avenue Hauppauge NY 11788 Smithtown A-7 22 80 Oser Avenue Hauppauge NY 11788 Smithtown A-10 23 85 Adams Avenue Hauppauge NY 11788 Smithtown A-5 24 85 Engineers Road Hauppauge NY 11788 Smithtown A-10 25 85 Nicon Court Hauppauge NY 11788 Islip B 26 85 Orville Drive Bohemia NY 11716 Islip A-8 27 85 South Service Road Plainview NY 11803 Bay Oyster A-7 28 90 Oser Avenue Hauppauge NY 11788 Smithtown A-10 29 90 Plant Avenue Hauppauge NY 11788 Smithtown A-7 30 95 Orville Drive Bohemia NY 11716 Islip A-5 31 100 Andrews Road Hicksville NY 11801 Oyster Bay B 32 104 Parkway Drive South Hauppauge NY 11788 Smithtown A-5 33 110 Marcus Drive Melville NY 11747 Huntington A-5 34 110 Orville Drive Bohemia NY 11716 Islip A-10 35 110 Plant Avenue Hauppauge NY 11788 Smithtown B 36 120 Wilbur Place Bohemia NY 11716 Islip A-8 37 125 Ricefield Lane Hauppauge NY 11788 Smithtown B 38 125 Wilbur Place Bohemia NY 11716 Islip A-5 39 135 Fell Court Hauppauge NY 11788 Islip A-7 40 160 Wilbur Place Bohemia NY 11716 Islip A-7 41 170 Wilbur Place Bohemia NY 11716 Islip A-10 42 180 Oser Avenue Hauppauge NY 11788 Smithtown A-8 43 185 Oser Avenue Hauppauge NY 11788 Smithtown A-7 44 208 Blydenburgh Road Islandia NY 11749 Islip A-10 45 210 Blydenburgh Road Islip NY 11749 Islip A-8 -1- EXHIBIT B SUB-LIST OF INDUSTRIAL PROPERTIES WITH POOL INDICATIONS (CONTINUED) NO. ADDRESS CITY STATE ZIP TOWN POOL -------------------------------------------------------------------------------- 46 225 Oser Avenue Hauppauge NY 11788 Smithtown A-5 47 265 Spagnoli Road Melville NY 11747 Huntington B 48 360 Oser Avenue Hauppauge NY 11788 Smithtown A-8 49 375 Oser Avenue Hauppauge NY 11788 Smithtown A-8 50 390 Motor Parkway Hauppauge NY 11788 Smithtown B 51 395 Oser Avenue Hauppauge NY 11788 Smithtown A-7 52 400 Oser Avenue Hauppauge NY 11788 Smithtown A-8 53 410 Motor Parkway Hauppauge NY 11788 Smithtown A-7 54 505 Walt Whitman Road Melville NY 11747 Huntington A-5 55 600 Old Willets Path Hauppauge NY 11788 Smithtown A-7 56 611 Old Willets Path Hauppauge NY 11788 Smithtown A-5 57 631-641 Old Willets Path Hauppauge NY 11788 Smithtown A-10 58 651-661 Old Willets Path Hauppauge NY 11788 Smithtown A-8 59 681 Old Willets Path Hauppauge NY 11788 Smithtown A-8 60 740 Old Willets Path Hauppauge NY 11788 Smithtown B 61 933 Motor Parkway Hauppauge NY 11788 Islip A-8 62 1101 Lakeland Avenue Bohemia NY 11716 Islip A-7 63 1385 Lakeland Avenue Bohemia NY 11716 Islip A-10 64 2001 Orville Drive North Bohemia NY 11716 Islip A-5 65 2002 Orville Drive North Bohemia NY 11716 Islip A-10 66 2004 Orville Drive North Bohemia NY 11716 Islip A-7 67 2005 Orville Drive North Bohemia NY 11716 Islip A-8 68 4040 Veteran's Highway Bohemia NY 11716 Islip A-7 69 80 Orville Drive Bohemia NY 11716 Islip B 70 110 Bi-County Boulevard Babylon NY 11735 Babylon B 71 5 Hub Drive Melville NY 11747 Huntington B 72 10 Hub Drive Melville NY 11747 Huntington B 73 25 Orville Drive Bohemia NY 11716 Islip A-7 74 71 Hoffman Lane a/k/a Islandia NY 11749 Islip B 71 Bridge Road 75 140 Wilbur Place Bohemia NY 11716 Islip A-10 76 150 Engineers Road Hauppauge NY 11788 Smithtown A-10 77 180 Orville Drive Bohemia NY 11716 Islip A-5 78 325 Rabro Drive Hauppauge NY 11788 Smithtown B 79 595 Old Willets Path Hauppauge NY 11788 Smithtown A-10 80 250 Kennedy Drive Hauppauge NY 11788 Smithtown B 81 120 Ricefield Lane Hauppauge NY 11788 Smithtown A-8 82 425 Rabro Drive Hauppauge NY 11788 Islip B 83 360 Motor Parkway Hauppauge NY 11788 Smithtown B 84 135 Ricefield Lane Hauppauge NY 11788 Smithtown B -2- EXHIBIT C IN THE CIRCUIT COURT FOR BALTIMORE CITY ------------------------------------- SEKUK GLOBAL ENTERPRISES PROFIT ) SHARING PLAN, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., ) Civil No. 24-C-03-007496 HERVE A. KEVENIDES, JOHN V.N. ) Judge Evelyn Omega Cannon KLEIN, RONALD H. MENAKER, PETER ) QUICK, LEWIS D. RANIERI, DONALD J. ) RECHLER, GREGG M. RECHLER, MITCHELL ) D. RECHLER, ROGER M. RECHLER, SCOTT ) H. RECHLER and CONRAD D. STEPHENSON, ) ) DEFENDANTS. ) ) ------------------------------------- ) CHARLES D. HOFFMAN, et al., ) ) PLAINTIFFS, ) Civil No. 24-C-03-007876 ) Judge Evelyn Omega Cannon v. ) ) DONALD J. RECHLER, et al., ) ) DEFENDANTS. ) ) ------------------------------------- ) ROBERTA CHIRKO, ) ) PLAINTIFF, ) Civil No. 24-C-03-008010 ) Judge Evelyn Omega Cannon v. ) ) RECKSON ASSOCIATES REALTY CORP., et ) al., ) ) DEFENDANTS. ) ------------------------------------- ORDER REGARDING PRELIMINARY APPROVAL AND NOTICE ORDER REGARDING PRELIMINARY APPROVAL AND NOTICE WHEREAS, as of March 14, 2005, the parties to: (i) the above-captioned consolidated shareholder derivative actions (the "Maryland Actions"); (ii) the consolidated shareholder derivative actions captioned TUCKER, ET AL. v. RECHLER, ET AL., Index Nos. 03-CV-4917, 03-CV-5008, and 03-CV-5178, pending before the United States District Court for the Eastern District of New York (the "New York Federal Court Actions"); and (iii) the shareholder derivative actions captioned LOWINGER v. RECHLER, ET AL., Index No. 03-014162, pending before the Supreme Court of the State of New York, County of Nassau, as well as STEINER v. RECHLER, ET AL., Index No. 03-23545, and LIGHTER v. RECHLER, ET AL., Index No. 03-23593, pending before the Supreme Court of the State of New York, County of Suffolk (the "New York State Court Actions,"), (collectively, (i), (ii) and (iii), the "Actions"), have entered into a Stipulation of Settlement (the "Stipulation"), which is subject to judicial review under Maryland law, and which, together with the Exhibits thereto, sets forth the terms and conditions for the proposed settlement (the "Settlement") of all of the claims alleged, or that could have been alleged in the Actions, upon the terms and conditions set forth in the Stipulation; the Court having read and considered the Stipulation and the accompanying documents; the parties to the Stipulation having consented to the entry of this Order; and all capitalized terms used herein having the meanings defined in the Stipulation; NOW, THEREFORE, IT IS HEREBY ORDERED, this ___ day of ________, 2005, that: 1. Pursuant to Maryland law and for the purposes of the Settlement only, the Court finds that the Maryland Actions were appropriately pled as shareholder derivative actions for and on behalf of Reckson Associates Realty Corp. ("Reckson"), rather than as direct actions, and that -2- for the purposes of the Settlement only, the plaintiffs in the Maryland Actions fairly and adequately represent the interests of all similarly-situated Reckson stockholders in enforcing the rights of Reckson. 2. A hearing (the "Settlement Hearing") is hereby scheduled to be held before the Court on -----------------, 2005, at --:-- -.m., for the following purposes: (a) to determine whether the proposed Settlement is fair, reasonable, adequate and in the best interest of Reckson and its stockholders, whether the plaintiffs are adequate representatives of the interests of similarly-situated stockholders in enforcing the rights of Reckson and whether the Settlement should be finally approved by the Court; (b) to determine whether the Judgment as provided in the Stipulation should be entered dismissing with prejudice the complaints filed in the Actions; (c) to determine whether releases should be provided to the Released Persons (as defined in the Stipulation); (d) to consider Plaintiffs' Settlement Counsels' application for Fees and Expenses as provided in the Stipulation; and (e) to rule upon such other matters as the Court may deem appropriate. 3. The Court preliminarily approves the Settlement. However, the Court reserves: (a) the right to approve finally the Settlement, with such modifications as may be agreed upon by counsel for the parties to the Settlement consistent with such Settlement, without further notice to Reckson stockholders; and (b) the right to continue or adjourn the Settlement Hearing from time to time, by oral announcement at the Hearing or at any adjournment thereof, without further notice to Reckson stockholders. -3- 4. Plaintiffs' Settlement Counsel (as defined in the Stipulation) shall submit any briefs, affidavits, papers and any other documentation in support of approval of the Settlement by the Court, as well as any application for Fees and Expenses as provided in the Stipulation, no fewer than ten days before the Settlement Hearing. 5. The Court approves the form, substance and requirements of the Notice of Proposed Settlement of Derivative Actions (the "Notice"), attached as Exhibit D to the Stipulation. 6. Reckson shall cause the Notice to be mailed, by first class mail, postage prepaid, to all Reckson Stockholders of Record (as defined in the Stipulation) commencing within 15 days from the entry of this Order. Reckson shall use reasonable efforts to give notice to nominee owners such as brokerage firms and other persons or entities who hold Reckson common stock as record owners but not as beneficial owners. Such nominee owners will be directed to forward copies of the Notice to their beneficial owners. Additional copies of the Notice shall be made available to any record holder requesting such copies for the purpose of distribution to beneficial owners. Reckson shall, at or before the Settlement Hearing, file with the Court proof of mailing of the Notice. 7. The Court also approves the Summary Notice, attached as Exhibit E to the Stipulation, and directs that Reckson shall cause the Summary Notice to be published in the print version of INVESTOR'S BUSINESS DAILY between seven and ten days following the commencement of the mailing of the Notice. Reckson shall, at or before the Settlement Hearing, file with the Court proof of publication of the Summary Notice. 8. The form and method set forth herein of notifying Reckson Stockholders of Record of the Settlement and its terms and conditions meet the requirements of Maryland law, -4- constitute the best practicable notice under the circumstances and shall constitute due and sufficient notice to all persons and entities entitled thereto. 9. Plaintiffs' Settlement Counsel is authorized to act on behalf of Reckson stockholders with respect to each and all of the acts required by the Stipulation or such other acts that are reasonably necessary to consummate the proposed settlement set forth in the Stipulation. 10. Any Reckson stockholder may appear and show cause that he, she or it has any reason to believe: (a) that the Settlement of the Actions embodied in the Stipulation should not be approved as fair, reasonable and adequate; (b) that the Plaintiffs should not be determined to be adequate representatives of similarly-situated stockholders in enforcing the rights of Reckson; (c) that the Judgment should or should not be entered on the Settlement; or (d) that the application for Fees and Expenses by Plaintiffs' Counsel should not be granted. Notwithstanding the foregoing, no Reckson stockholder or any other Person (as defined in the Stipulation) shall be heard or entitled to contest the approval of the Settlement or the Judgment to be entered thereon unless at least fifteen days before the Settlement Hearing that Person has caused to be filed written objections, stating all supporting bases and reasons, with: THE CLERK OF THE CIRCUIT COURT FOR BALTIMORE CITY, MARYLAND 111 North Calvert Street, Room 462 Baltimore, Maryland 21202, and has also served copies of all such papers via first class mail, overnight courier or hand delivery - such that these copies are received no more than fifteen days before the Settlement Hearing - upon the following: -5- Charles J. Piven Marshall N. Perkins The Law Offices of Charles J. Piven, P.A. The World Trade Center 401 East Pratt Street, Suite 2525 Baltimore, Maryland 21202 Tel: (401) 332-0030 Fax: (401) 685-1300 John B. Isbister Tydings & Rosenberg LLP 100 East Pratt Street, 26th Floor Baltimore, Maryland 21202 Tel: (410) 752-9700 Fax: (410) 727-5460 Andrew J. Graham Kramon & Graham, P.A. One South Street, Suite 2600 Baltimore, Maryland 21202-3201 Tel: (410) 752-6030 Fax: (410) 539-1269 James J. Hanks, Jr. G. Stewart Webb, Jr. Venable LLP 1800 Mercantile Bank & Trust Building Two Hopkins Plaza Baltimore, Maryland 21201 Tel: (410) 244-7400 Fax: (410) 224-7742 Robert B. Schulman Andrew M. Dansicker Schulman, Treem, Kaminkow, Gilden & Ravenell, P.A. The World Trade Center 401 East Pratt Street, Suite 1800 Baltimore, Maryland 21202-3004 Tel: (410) 332-0850 Fax: (410) 332-0866 Attendance at the Settlement Hearing is not necessary for an objection to be considered by the Court; however, Persons wishing to be heard orally in opposition to the approval of the Settlement are required to indicate in their written objection their intention to appear at the 6 Hearing. All written objections shall state the basis upon which the Person submitting the objection claims to be a Reckson stockholder and shall clearly identify any and all witnesses, documents and/or evidence of any other kind that are to be presented at the Settlement Hearing in connection with such objection and shall further set forth the substance of any testimony to be given by such witnesses. 11. Any Reckson stockholder who does not make his, her or its objection in the manner provided in the preceding paragraph shall be deemed to have waived such objection and shall forever be foreclosed from making any objections to the fairness, adequacy or reasonableness of the Settlement or the Fees and Expenses. 12. If: (a) the Settlement is terminated by Reckson or any of the Individual Defendants (as defined in the Stipulation) pursuant to the terms of the Stipulation; (b) any specified condition to the Settlement set forth in the Stipulation is not satisfied and the satisfaction of such condition is not waived in writing by Plaintiffs' Settlement Counsel, counsel for Reckson and counsel for the Individual Defendants; (c) the Court rejects, in any respect, the Order and Final Judgment in substantially the form and content attached as Exhibit F to the Stipulation, and any of Plaintiffs' Settlement Counsel, counsel for Reckson and counsel for the Individual Defendants fails to consent to the entry of another form of order in lieu thereof; (d) the Court rejects the Stipulation, including any amendment thereto approved by Plaintiffs' Settlement Counsel, counsel for Reckson and counsel for the Individual Defendants; or (e) the Court approves the Stipulation, including any amendment thereto approved by Plaintiffs' Settlement Counsel, counsel for Reckson and counsel for the Individual Defendants, but such approval is reversed on appeal and such reversal becomes final, then in any such event, the Stipulation (including any amendments thereto) and this Order shall be null and void, of no -7- further force or effect and without prejudice to any party, and may not be introduced as evidence or referred to in any action or proceeding by any Person, and each party shall be restored to his, her or its respective position as existed prior to the execution of the Stipulation. 13. All Reckson stockholders shall be bound by the Judgment and applicable determinations and orders, whether favorable or unfavorable to any of them. 14. The Plaintiffs (as defined in the Stipulation) and all other Reckson stockholders shall be enjoined from commencing or prosecuting any action or proceeding in any court or tribunal asserting any of the Released Claims (as defined in the Stipulation) against the Released Persons pending final determination of the Settlement. 15. The Court retains jurisdiction over the Settlement to consider all further matters arising out of or connected with the Settlement. Dated:----------------------------, 2005 ------------------------------ Judge Evelyn Omega Cannon -8- EXHIBIT D IN THE CIRCUIT COURT FOR BALTIMORE CITY ------------------------------------- ) SEKUK GLOBAL ENTERPRISES PROFIT ) SHARING PLAN, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., ) Civil No. 24-C-03-007496 HERVE A. KEVENIDES, JOHN V.N. ) Judge Evelyn Omega Cannon KLEIN, RONALD H. MENAKER, PETER ) QUICK, LEWIS D. RANIERI, DONALD J. ) RECHLER, GREGG M. RECHLER, MITCHELL ) D. RECHLER, ROGER M. RECHLER, SCOTT ) H. RECHLER and CONRAD D. STEPHENSON, ) ) DEFENDANTS. ) -------------------------------------) ) CHARLES D. HOFFMAN, et al., ) ) PLAINTIFFS, ) Civil No. 24-C-03-007876 ) Judge Evelyn Omega Cannon v. ) ) DONALD J. RECHLER, et al., ) ) DEFENDANTS. ) ) ------------------------------------- ) ROBERTA CHIRKO, ) ) PLAINTIFF, ) Civil No. 24-C-03-008010 ) Judge Evelyn Omega Cannon v. ) ) RECKSON ASSOCIATES REALTY CORP., et ) al., ) ) DEFENDANTS. ) ------------------------------------- NOTICE OF PROPOSED SETTLEMENT NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE ACTIONS TO: ALL RECORD AND BENEFICIAL HOLDERS OF THE COMMON STOCK OF RECKSON ASSOCIATES REALTY CORP. ("RECKSON" OR THE "COMPANY"). BROKERAGE FIRMS, BANKS AND/OR OTHER PERSONS OR ENTITIES WHO HOLD RECKSON SHARES OF RECORD, WHO ARE NOT THE BENEFICIAL OWNERS, ARE REQUESTED TO FORWARD THIS NOTICE PROMPTLY TO THE BENEFICIAL OWNERS OF SUCH SHARES. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THESE ACTIONS. PLEASE NOTE THAT THIS IS NOT A SECURITIES CLASS ACTION SUIT AND ACCORDINGLY, NO INDIVIDUAL RECKSON STOCKHOLDER HAS A RIGHT TO RECEIVE INDIVIDUAL COMPENSATION AS A RESULT OF THE SETTLEMENT OF THESE ACTIONS. 1. This Notice has been sent to you pursuant to Maryland law and an order of the Circuit Court for Baltimore City, Maryland (the "Court"). The purpose of this Notice is to inform you of the proposed settlement of the above-captioned shareholder derivative actions (the "Maryland Actions"), the proposed settlement of related, consolidated shareholder derivative actions captioned TUCKER, ET AL. v. RECHLER, ET AL., Index Nos. 03-CV-4917, 03-CV-5008 and 03-CV-5178, pending before the United States District Court for the Eastern District of New York (the "New York Federal Court Actions") and the proposed settlement of three other, related shareholder derivative actions pending in New York State Court (the "New York State Court Actions"): LOWINGER v. RECHLER, ET AL., Index No. 03-014162, pending before the Supreme Court of the State of New York, County of Nassau, and STEINER v. RECHLER, ET AL., Index No. 03-23545, and LIGHTER v. RECHLER, ET AL., Index No. 03-23593, both pending before the Supreme Court of the State of New York, County of Suffolk. (All of these shareholder derivative actions are collectively referred to as the "Actions" in this Notice.) The purpose of this Notice is also to inform you of the hearing to be held by the Court to consider the fairness, reasonableness and adequacy of the settlement and to determine whether Plaintiffs' Counsels' application for attorneys' fees and reimbursement of expenses ("Fees and Expenses") should be granted. This Notice describes the rights you may have in connection with this settlement and what acts you may take in relation to the settlement and the resolution of the Actions. This Notice is not intended to be and should not be construed as an expression of any opinion by the Court about the merits of any of the claims or defenses asserted by any party to the Actions, or the fairness or adequacy of the proposed settlement. A Settlement Hearing will be held on ------------, 2005 at -:-- -.m., or at such other time as the Court may order, before the Honorable Judge Evelyn Omega Cannon of the Circuit Court for Baltimore City, Maryland, 329 Courthouse East, 111 North Calvert Road, Baltimore, Maryland 21202, to determine, among other things, whether the proposed settlement should be approved as fair, just and adequate, to rule upon the adequacy of the Plaintiffs as representatives of Reckson stockholders, to consider Plaintiffs' Counsels' application for Fees and Expenses in an amount not to exceed $2,150,000, in total, and to consider any other matters that may come before the Court. BACKGROUND OF THE CASE 2. Nominal defendant Reckson Associates Realty Corp. ("Reckson" or the "Company") is a Maryland corporation that operates as a real estate investment trust which owns, develops and manages office and industrial properties in the New York tri-state area. On September 10, 2003, Reckson announced a strategic plan that included: (a) the sale of 95 Industrial Properties (as defined in subparagraph 16(e) hereof) to members of the Rechler family, some of whom were executive officers and directors of the Company; (b) the resignation of Gregg, Roger and Mitchell Rechler from executive management and director positions, and the resignation of Donald Rechler from executive management, but not as non-executive Chairman of the Board of Directors; and (c) various other corporate governance changes, including de-staggering the Board, opting Reckson out of certain Maryland anti-takeover provisions and -2- providing for the appointment of only independent directors to the Audit, Compensation and Nominating/Governance Committees of the reconstituted Board. 3. Six Non-Management Directors (collectively, as defined in subparagraph 16(g) hereof, Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri and Conrad D. Stephenson), who made up a majority of Reckson's then eleven-member Board of Directors, reviewed and approved the transaction on behalf of the Company. They were advised by and received a fairness opinion from Citigroup Global Markets, Inc. ("Citigroup"). 4. Reckson owned its interests in real properties through the Reckson Operating Partnership, L.P. On November 11, 2003, Reckson announced the closing of the sale of the Industrial Properties to the Rechler family for $315.5 million (of which approximately $225.1 million was in cash and debt assumption, and $90.4 million was in Reckson Operating Partnership units owned by the Rechler family). As a result of its purchase of the Industrial Properties, the Rechler family no longer owned any Reckson Operating Partnership units. 5. The first of nine shareholder derivative actions in response to Reckson's announcement of the sale of the Industrial Properties to the Rechler family, LOWINGER v. RECHLER, ET AL., Index No. 03-014162, was filed in the Supreme Court of the State of New York, County of Nassau, on September 16, 2003. Two additional suits, STEINER v. RECHLER, ET AL., Index No. 03-23545, and LIGHTER v. RECHLER, ET AL., Index No. 03-23593, were filed in the Supreme Court of the State of New York, County of Suffolk, on October 2, 2003 and October 3, 2003, respectively. The STEINER and LIGHTER suits are in the process of consolidation with the LOWINGER action before Judge Ira Warshawsky in Nassau County. -3- 6. On September 26, 2003, the first of three consolidated shareholder derivative suits, TUCKER v. RECHLER, ET AL., Index No. 03-CV-4917, was filed in the United States District Court for the Eastern District of New York. TUCKER was followed by CLINTON CHARTER TOWNSHIP POLICE AND FIRE RET. SYS. v. RECHLER, ET. AL., Index No. 03-CV-5008, on October 1, 2003, and TEACHERS' RET. SYS. OF LOUISIANA v. RECHLER, ET AL., Index No. 03-CV-5178, on October 14, 2003. The First Amended and Consolidated Complaint in TUCKER, ET. AL. v. RECHLER, ET AL. was filed on October 31, 2003. That consolidated complaint was superseded by the Second Amended and Supplemented Consolidated Complaint filed on January 20, 2004, and Judge Thomas C. Platt signed a Stipulation and Order to Consolidate the New York Federal Court Actions on May 12, 2004. 7. The first of three consolidated actions filed in the Circuit Court for Baltimore City, Maryland, SEKUK GLOBAL ENTERS. PROFIT SHARING PLAN v. RECKSON ASSOCS. REALTY CORP., ET AL., Civil No. 24-C-03-007496, was filed on October 16, 2003. SEKUK GLOBAL was followed by HOFFMAN, ET AL. v. RECHLER ET AL., Civil No. 24-C-03-007876, on October 27, 2003, and CHIRKO v. RECKSON ASSOCS. REALTY CORP., ET AL., Civil No. 24-C-03-008010, on October 30, 2003. Judge Evelyn Omega Cannon signed a Stipulation and Order of Consolidation on December 12, 2003, and the Consolidated Amended Complaint in SEKUK GLOBAL, ET. AL. v. RECHLER, ET AL., was filed on January 20, 2004. 8. The complaints in the New York State Court Actions, the New York Federal Court Actions and the Maryland Actions all allege substantially the same facts and claims and purport, derivatively on behalf of Reckson, to challenge the sale of the Industrial Properties to the Rechler family. The gravamen of the complaints, which each include one or more claims of breach of statutory and common law fiduciary duties, breach of contract, abuse of control, gross -4- mismanagement, waste of corporate assets and/or unjust enrichment, is that the Industrial Properties were sold to the Rechler family for insufficient consideration and that Reckson settled its contractual obligations to the Rechler family members who resigned their employment as executive officers of the Company for excessive consideration. The complaints seek primarily money damages, as well as restitution, disgorgement of profits and extraordinary equitable and injunctive relief. None of the plaintiffs made a demand on Reckson's Board of Directors to take remedial action before commencing suit. RECENT DEVELOPMENTS IN THIS ACTION 9. On March 2, 2004, the defendants in the Maryland Actions filed a motion to dismiss the Consolidated Amended Complaint on the ground that the plaintiffs in those actions had failed to make a pre-suit demand on Reckson's Board of Directors or to allege facts showing that such a demand would have been futile. That motion was heard by Judge Cannon on May 13, 2004. The defendants in the New York Federal Court Actions filed a motion to dismiss the Second Amended and Supplemented Consolidated Complaint on May 11, 2004, on the same ground. On May 21, 2004, the date of the scheduled hearing on that motion, Judge Platt entered an Order in the New York Federal Court Actions directing the defendants to withdraw their motions to dismiss without prejudice to renew and extending the time for the defendants to respond to the Second Amended and Supplemented Consolidated Complaint until thirty days after the ruling on the motion to dismiss the Maryland Actions. On May 25, 2004, Judge Cannon granted the defendants' motions to dismiss the Maryland Actions. Final judgment in the Maryland Actions was entered on June 8, 2004. On June 30, 2004, the plaintiffs in the Maryland Actions filed a notice of appeal from that judgment to the Maryland Court of Special Appeals. On November 30, 2004, the Maryland Court of Special Appeals issued a briefing schedule for the appeal. On December 23, 2004, the parties to the Maryland Actions filed with the Maryland -5- Court of Special Appeals a Stipulation to Extend Time, and on January 26, 2005, they filed a Joint Motion to Postpone Oral Argument until after September 2005. 10. By Stipulations and Orders signed by Judge Platt on June 23, 2004, July 23, 2004, August 31, 2004, October 20, 2004 and December 21, 2004, the parties to the New York Federal Court Actions extended the time for the defendants in those actions to respond to the Second Amended and Supplemented Consolidated Complaint so that the parties could engage in settlement discussions. The response(s) of the defendants in the New York Federal Court Actions are now due on March 28, 2005. 11. By stipulations dated January 20, 2004 and so ordered on January 22, 2004, the parties to the New York State Court Actions agreed that the plaintiffs would file an amended complaint five days after an order was entered consolidating the New York State Court Actions and that the defendants' time to answer, move against or otherwise respond to the amended complaint would be due ten days after the amended complaint was filed. The New York State Court Actions have not yet been consolidated. DISCOVERY, INVESTIGATION AND RESEARCH CONDUCTED BY PLAINTIFFS' COUNSEL 12. Plaintiffs' Counsel (as defined in subparagraph 16(j) hereof) represent that they have conducted extensive formal and informal discovery and investigation during the development and prosecution of the Actions. Plaintiffs' Counsel represent that this discovery and investigation has included, among other things: (a) research regarding the valuation of the Industrial Properties; (b) preparation for and conduct of a deposition of Citigroup concerning the fairness opinion that Citigroup provided to the Non-Management Directors for their consideration in connection with the review and approval of the sale of the Industrial Properties to the Rechler family; (c) extensive review and analysis of the documents provided by Citigroup; -6- and (d) review and analysis of the Individual Defendants' and Reckson's public statements including press releases, Reckson's public filings with the United States Securities and Exchange Commission (the "SEC"), analyst reports and news articles. 13. Plaintiffs' Counsel also represent that they retained several experts to assist them in their discovery and investigation, including two valuation experts and an accounting expert. INDIVIDUAL DEFENDANTS' AND RECKSON'S DENIALS OF WRONGDOING AND LIABILITY 14. The Individual Defendants (as defined in subparagraph 16(d) hereof) and Reckson have denied and continue to deny all of the claims and contentions alleged by the Plaintiffs in the Actions, including allegations that Reckson, Reckson Operating Partnership, L.P., the Plaintiffs or other Reckson stockholders have suffered any damages as a result of the conduct that was alleged, or that could have been alleged, in the Actions. The Individual Defendants and Reckson have further asserted and continue to assert that, at all relevant times, they acted in good faith and in a manner they reasonably believed to be in the best interests of Reckson and Reckson stockholders. The Individual Defendants and Reckson are entering into the Stipulation because they believe that it will benefit Reckson by eliminating the substantial expense and the concomitant distraction of resources and effort from the business of Reckson that continued litigation would inevitably engender, and by providing for the implementation of the provisions of the Stipulation that the Individual Defendants and Reckson believe to be substantially beneficial to Reckson and its stockholders. CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT 15. The Plaintiffs recognize and acknowledge the uncertain outcome and the risk of any litigation, especially in complex suits such as the Actions, as well as the difficulties and delays inherent in such litigation. In particular, the Plaintiffs have taken into account: the risks -7- that Judge Cannon's dismissal of the Maryland actions will be upheld on appeal and that the New York Federal Court Actions and the New York State Court Actions will also be dismissed on the grounds that the plaintiffs failed to make pre-suit demands; the expense and length of continued proceedings necessary to prosecute the Actions through trial and any appeals; and the inherent problems of proof and possible defenses to the particular claims asserted in the Actions. Based on their evaluation and the advice of their counsel, the Plaintiffs believe that the Settlement set forth in the Stipulation confers substantial benefits upon and is in the best interests of Reckson and its stockholders. DEFINITIONS 16. As used in the Stipulation and herein, the following terms have the meanings specified below: (a) "Actions" means the three consolidated Maryland Actions (SEKUK GLOBAL, ET AL. v. RECKSON ASSOCS. REALTY CORP., ET AL.), the three consolidated New York Federal Court Actions (TUCKER, ET AL. v. RECHLER, ET al.) and the three New York State Court Actions (LOWINGER v. RECHLER, ET AL., STEINER v. RECHLER, ET AL. and LIGHTER v. RECHLER, ET AL.). (b) "Effective Date" means the first date by which each and all of the events and conditions specified in paragraph 29 of the Stipulation have been met and have occurred. (c) "Final Date" means: (i) if no appeal from the Judgment approving the Stipulation or no petition for a writ of review of the Judgment approving the Stipulation is filed, the expiration date of the period for filing or noticing any such appeal or petition; or (ii) if an appeal from the Judgment or a petition for a writ of review of the Judgment is filed, the date that the affirmance of the Judgment, the dismissal of the appeal or the denial of the petition for the writ of review becomes final. -8- (d) "Individual Defendants" means Reckson Operating Partnership, L.P., Walter Gross, Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri, Donald J. Rechler, Gregg M. Rechler, Mitchell D. Rechler, Roger M. Rechler, Scott H. Rechler and Conrad D. Stephenson. (e) "Industrial Properties" means the 95 Long Island properties listed in Exhibit A to the Stipulation. (f) "Judgment" means the judgment to be rendered by the Court, substantially in the form attached to the Stipulation as Exhibit F. (g) "Non-Management Directors" means Herve A. Kevenides, John V.N. Klein, Ronald H. Menaker, Peter Quick, Lewis S. Ranieri and Conrad D. Stephenson. (h) "Person" means an individual, corporation, limited liability corporation, professional corporation, partnership, limited partnership, limited liability partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof and any business or legal entity, and their spouses, heirs, predecessors, successors, representatives or assignees. (i) "Plaintiffs" means Roberta Chirko, Clinton Charter Township Police and Fire Retirement System, Charles D. Hoffman, Lydia J. Hoffman, Lawrence Lighter, Robert Lowinger, Sekuk Global Enterprises Profit Sharing Plan, William Steiner, Teachers Retirement System of Louisiana and Judith A. Tucker. (j) "Plaintiffs' Counsel" means counsel who have appeared for any of the Plaintiffs in the Actions. -9- (k) "Plaintiffs' Settlement Counsel" means the following Counsel for the Plaintiffs: David A.P. Brower Todd L. Kammerman Milberg Weiss Bershad & Schulman One Pennsylvania Plaza New York, New York 10119 Tel: (212) 594-5300 Fax: (212) 868-1229 Nicholas E. Chimicles Kimberly M. Donaldson Chimicles & Tikellis LLP One Haverford Plaza 361 West Lancaster Avenue Haverford, Pennsylvania 19041 Tel: (610) 642-8500 Fax: (610) 649-3633 (l) "Rechler Defendants" means Donald J. Rechler, Gregg M. Rechler, Mitchell D. Rechler, Roger M. Rechler and Scott H. Rechler. (m) "Rechler Purchasing Entities" ("RPE") means the entity or entities formed to purchase and hold the Industrial Properties on behalf of the Rechler family. (n) "Reckson Stockholders of Record" means any and all nominal or beneficial owners of Reckson common stock as of the date of the entry of the Order Regarding Preliminary Approval and Notice, as specified in paragraph 24 of the Stipulation. (o) "Related Persons" means each of the Individual Defendants' and Reckson's past or present directors, officers, managers, employees, partners, members, principals, agents, advisors, underwriters, controlling shareholders, attorneys, accountants or auditors, banks or investment banks, associates, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated entities or any past or present directors, officers, managers or employees thereof, any entity in which a Reckson or an Individual Defendant has a controlling interest, any members of -10- their immediate families or any trust of which any Individual Defendant is the settlor or which is for the benefit of any Individual Defendant and/or member(s) of his or her family. (p) "Released Claims" shall mean any and all statutory or common-law claims or causes of action under federal, state, local or any other law (including Unknown Claims and including claims within the exclusive jurisdiction of the federal courts) that are based upon or related to, in whole or in part, the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to act that were alleged, or could have been alleged, in the Actions up to and including the date of the Stipulation, by Reckson, Reckson Operating Partnership, L.P. or Reckson stockholders, on their own behalf or on behalf of Reckson, or any of them, against the Released Persons. The final judgments entered in the Actions will bar all Released Claims. (q) "Released Persons" means each and all of the Individual Defendants, Reckson and any Related Persons. (r) "Settling Parties" means, collectively, each of the Individual Defendants, Reckson and the Plaintiffs on behalf of themselves and/or derivatively on behalf of Reckson. (s) "Unknown Claims" means any Released Claim that any Plaintiff, Reckson, Reckson Operating Partnership, L.P. or any Reckson stockholder does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons which, if known by him, her or it, might have affected his, her or its settlement with and release of the Released Persons, or might have affected his, her or its decision not to object to this settlement. RECKSON CORPORATE GOVERNANCE CHANGES 17. At the first meeting of the Reckson Board of Directors following the Effective Date (as defined in subparagraph 16(b) hereof), the Reckson Board of Directors will adopt resolutions or amendments to the Company's By-Laws or Articles of Incorporation to ensure -11- adherence to the Corporate Governance Policies specified in paragraphs 18 and 19 hereof. These Corporate Governance Policies shall remain in effect until the first to occur of, three years or a change in control of Reckson, unless earlier revoked or amended. Any revocation or amendment of these Policies within three years after adoption must be: (a) recommended by two-thirds of the members of Reckson's Nominating/Governance Committee; (b) approved by two-thirds of the independent directors on the Board; and (c) approved by a majority of Reckson's stockholders. Notwithstanding the foregoing, any of these Corporate Governance Policies may be revoked or amended by a majority of the Board if such majority, in good faith and upon the advice of counsel, determines that one or more of the Policies conflicts with or is substantially redundant of any law, regulation, rule or amendment to Reckson's Articles of Incorporation approved by Reckson's stockholders. 18. Reckson shall establish an Affiliate Transaction Committee consisting of three or more independent directors as defined in paragraph 19 hereof. The function of this Committee shall be to review and approve or disapprove any proposed transaction between (a) Reckson or any of its subsidiaries, and (b) any person or entity who was an affiliate of Reckson at any time in the three-year period preceding the date of the proposed transaction, but only if (c) the value of the consideration to be paid by or to Reckson or any of its subsidiaries pursuant to the transaction equals or exceeds $10 million or (d) pursuant to the transaction, at least five percent of Reckson's assets are proposed to be sold, disposed of or transferred, in any manner or form. The Committee shall have standing authorization, in its sole discretion, to retain legal and/or other advisors of its choice, which advisors shall report directly to the Committee. The Committee shall have the authority, in its sole discretion, to make public any opinions or reports it shall receive from such advisors. Subsequent to its approval of any transaction, the Committee -12- shall report its findings to Reckson's Chief Executive Officer and Chief Financial Officer, and, subject to any applicable confidentiality obligations, Reckson shall include a summary of the Committee's findings in the next regular quarterly or annual report to be filed by Reckson under the Securities Exchange Act of 1934. 19. At least two-thirds of the members of the Board of Directors of Reckson shall be independent directors, as defined by Reckson in its Corporate Governance Guidelines; provided, however, that in the event that any vacancy shall occur in the Board which reduces the number of such independent directors below the two-thirds level, Reckson shall not be required to comply with this provision until six months from the date of such vacancy. In determining whether this two-thirds requirement is satisfied, any individual who first becomes a member of the Board of Directors of Reckson in connection with Reckson's or any of its subsidiaries' engagement in any acquisition or other business or commercial transaction, and who is not an independent director as defined in this paragraph, will not be considered a member of the Reckson Board of Directors. 20. In addition to the aforementioned corporate governance changes, Reckson and the Individual Defendants hereby acknowledge that the prosecution of the Actions was a direct and substantial factor in Reckson's adoption and implementation of the following other corporate government changes which have already been implemented, that these changes have benefited Reckson and its stockholders and that these changes constitute a material part of this settlement: (a) the mandatory rotation of at least one independent director every three years; (b) an increase in the minimum required equity ownership for Reckson directors to $100,000 in Reckson common stock; and (c) readjustment of the compensation of Reckson Board members such that a substantial portion of their compensation is now in Reckson common stock, which such members must hold throughout their tenure on the Board. -13- PROFIT SHARING 21. For purposes of this paragraph, the following definitions shall apply: (a) "Profit Percentage" shall mean: 30% until September 1, 2005; 25% from September 2, 2005 through September 1, 2006; 20% from September 2, 2006 through September 1, 2007; 15% from September 2, 2007 through September 1, 2008; and 10% from September 2, 2008, through September 1, 2009. (b) "Sale" shall mean a voluntary sale or transfer and shall not include conveyances by means of foreclosure, or deed in lieu thereof, condemnation or bankruptcy court order. (c) "Subject Properties" shall mean: through December 31, 2005, all of the properties listed in Exhibit B of the Stipulation; from January 1, 2006, through January 1, 2007, all of the properties listed in Exhibit B of the Stipulation, exclusive of those that are listed as Pool B; from January 2, 2007, through September 1, 2009, all of the properties listed in Exhibit B of the Stipulation, exclusive of those that are listed as Pools B, A-5 and A-7. (d) "Net After Tax Profit" shall mean an amount computed by subtracting from the gross proceeds of Sale of the Subject Property the following amounts: (i) the costs of the Sale, including brokerage commissions, legal fees and transfer taxes; (ii) any prepayment premium or defeasance cost incurred in respect of any indebtedness encumbering the Property or the ownership interests therein; (iii) the gross value attributed by RPE (as defined in subparagraph 16(m) hereof) to the Subject Property on November 10, 2003, plus a return on the equity portion thereof of twelve percent per annum, compounded monthly from November 10, 2003 through the date of Sale; (iv) any amounts invested by the Rechler family and/or RPE in the Subject Property for capital items, including capital improvements, additions, replacements and leasing costs, such as brokerage commissions and tennant allowances, plus a return thereon -14- of twelve percent per annum, compounded monthly from the date of investment through the date of Sale; (v) an amount equal to the maximum combined federal, New York State and New York City income taxes which would be imposed on an individual owner of the Subject Property based on the Sale, assuming that such individual was a New York City resident with the income tax basis of RPE for such Subject Property. To the extent that the payment required under subparagraph (iii) above in respect of a Subject Property actually results in a reduction of the income taxes payable on account of such Sale, the amount to be deducted in subparagraph (v) above shall be reduced by the amount of such reduction. The Rechler Defendants have caused RPE to agree that if, before September 2, 2009, RPE shall make a Sale to an unaffiliated third party of any of the then Subject Properties, RPE shall pay to Reckson the then applicable Profit Percentage of the Net After Tax Profit resulting from such Sale; provided, however, that no such payment shall be due unless the Effective Date has been reached. If any of the gross proceeds of Such sale are payable on a deferred basis or are held back or put in escrow, such amounts shall only be treated as "gross proceeds of Sale" when they become unconditionally available in cash to RPE. If RPE has any surviving indemnification or payment obligations or liabilities with respect to the Subject Property, there shall be deducted from the gross proceeds of the Sale the maximum amount of such obligation or liability until the amount of such obligation or liability is finally determined. Any Subject Property which is exchanged in a Section 1031 transaction shall be treated as having been sold in a fully taxable transaction. It shall be the sole duty of the Rechler Defendants to cause RPE to notify Reckson and the Affiliate Transaction Committee that the Sale of a Subject Property has occurred during the Profit Sharing Period. Such notice shall be given within 30 days after entering into an agreement of Sale with respect to any of the then Subject Properties. During its -15- term, the Affiliate Transaction Committee described at paragraph 18 hereof shall have the responsibility to confirm that RPE, in computing the amount of the Profit Percentage of the Net After Tax Profit on the Sale of a Subject Property, has complied with the provisions of this subparagraph. The Committee shall have standing authority, on its own decision and in its sole discretion, to retain accounting and/or other advisors of its choice to assist in the confirmation process, which advisors shall report directly to the Committee. The responsibility of the Committee to confirm compliance with the provisions of this subparagraph shall not include the responsibility to investigate or otherwise determine whether there has been a Sale of any of the Subject Properties by RPE. 22. The Rechler Defendants agree that RPE hereby surrenders the right of first offer it obtained in connection with the acquisition of the Industrial Properties from Reckson on the parcels of vacant located at (i) Sunrise Highway, East Patchogue - STCM #200-973.4-4-1,3,5 & 6, and (ii) 70 Andrews Road, Hicksville, New York - Section 12 Block 623 Lot 1. 23. The Rechler Defendants hereby acknowledge that the prosecution of the Actions was a direct and substantial factor in their decision to cause RPE to extend three times the outside date for the closing of the acquisition of 300 and 350 Kennedy Drive to accommodate Reckson's need to locate an appropriate like-kind exchange property in order to defer taxable gains on the sale. RELEASES 24. Upon the Court's entry of the Judgment, the Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, shall be deemed to have, and by operation of the Judgment shall have, fully, finally and forever released, relinquished and discharged all Released Claims, and any and all claims arising out of, -16- relating to or in connection with the Settlement or resolution of the Actions, against the Released Persons. 25. The Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed upon the Effective Date to have, and by operation of the Judgment shall have, fully, finally and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling Parties acknowledge that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part. 26. The release contemplated by the Stipulation extends to claims that the Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders do not know or suspect to exist at the time of the release, and which, if known, might have affected the decision to enter into the release. Each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed to waive any and all provisions, rights and benefits conferred by any law of the United States, or any state or territory of the United States or principle of common -17- law, which governs or limits a Person's release of Unknown Claims. The foregoing waiver includes without limitation an express waiver, to the full extent permitted by law, by the Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, of any and all rights under California Civil Code Section 1542, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. In addition, each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders shall be deemed to waive any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code Section 1542. CONDITIONS OF SETTLEMENT, EFFECT OF DISAPPROVAL OF SETTLEMENT, CANCELLATION OR TERMINATION, AND PUBLIC STATEMENTS REGARDING SETTLEMENT 27. The Effective Date of the Stipulation shall be conditioned on the occurrence of each and all of the following events: (a) the Court has entered the Order Regarding Preliminary Approval and Notice, substantially in the form of Exhibit C to the Stipulation, as required by paragraph 24 of the Stipulation ; (b) the Court has entered the Judgment, or a judgment substantially in the form of Exhibit F to the Stipulation; (c) the Final Date has been reached; and -18- (d) the New York Federal Court Actions and the New York State Court Actions have been dismissed with prejudice and said dismissals have become final and not subject to appeal. 28. If the conditions specified in paragraph 27 hereof are not met following reasonable efforts by the Settling Parties seeking the satisfaction of such conditions, then the Stipulation shall be canceled and terminated, unless Plaintiffs' Settlement Counsel, counsel for the Individual Defendants and counsel for Reckson mutually agree in writing to proceed with the Stipulation. 29. In the event that the Stipulation fails for any reason to become effective in accordance with its terms, the Settling Parties shall be restored to their respective positions in the Actions as of the date of the Stipulation, as specified at paragraph 1 thereof. In such event, the terms and provisions of the Stipulation shall have no force and effect with respect to the Settling Parties and shall not be used in the Actions or in any other proceeding for any purpose, and any judgment or order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, NUNC PRO TUNC. 30. Following the execution of the Stipulation, Reckson will file a Form 8-K with the SEC attaching a copy of the Stipulation and its Exhibits, including the Notice of Proposed Settlement (Exhibit D to the Stipulation), and stating: that the parties have agreed to settle the actions pursuant to the Stipulation, that the proposed settlement includes various changes to Reckson's corporate governance policies to provide for an Affiliate Transaction Committee and to require that Reckson's Board of Directors be comprised of at least two-thirds independent directors (as defined in Reckson's Corporate Governance Guidelines), as well as certain other concessions; and that the proposed settlement is subject to court approval. The Settling Parties -19- will not make any other substantive public statements relating to the proposed settlement, other than the terms relating to corporate governance, except for statements: required by law; in response to SEC or other regulatory inquiry; or in connection with judicial proceedings relating to the settlement or the enforcement thereof. In response to questions by the press, analysts, investors, persons attending industry conferences or financial analyst conference calls, or similar inquiries with respect to settlement matters other than corporate governance, the Settling Parties will refer questioners to the Stipulation and Notice of Proposed Settlement. Substantive violations of paragraph 32 of the Stipulation by a Settling Party shall be a material breach of the agreement; provided however that no breach of paragraph 32 of the Stipulation by any Settling Party shall have any effect on the validity or operation of the releases and covenants not to sue provided for in the Stipulation and the Order and Final Judgment (Exhibit F to the Stipulation). PLAINTIFFS' SETTLEMENT COUNSELS' REQUEST FOR ATTORNEY'S FEES AND REIMBURSEMENT OF EXPENSES 31. Plaintiffs' Counsel represent that they have not received any fees during the prosecution of the Actions and have funded substantial out-of-pocket expenses, including experts' fees. Plaintiffs' Counsel will apply to the Court for Fees and Expenses in an amount not to exceed $ 2,150,000, in total. The payment of any Fees and Expenses awarded by the Court shall be the sole responsibility of Reckson and shall be made to Plaintiffs' Settlement Counsel within fifteen business days after the Effective Date. 32. The procedure for and the allowance or disallowance by the Court of any applications by Plaintiffs' Counsel for the Fees and Expenses are not part of the settlement set forth in the Stipulation, and are to be considered by the Court separately from the Court's consideration of the fairness, reasonableness and adequacy of the settlement set forth in the Stipulation. Any order or proceeding relating to Fees and Expenses, or any appeal from any -20- order relating thereto or reversal or modification thereof, shall not operate to terminate or cancel the Stipulation or the settlement of the Actions set forth therein. NOTICE OF HEARING ON PROPOSED SETTLEMENT 33. A Settlement Hearing will be held on ------------------------- 2005 at -:-- -.m., or at such other time as the Court may order, before the Honorable Judge Evelyn Omega Cannon of the Circuit Court for Baltimore City, Maryland, 329 Courthouse East, 111 North Calvert Street, Baltimore, Maryland 21202. The purpose of the Settlement Hearing will be to determine, among other things, whether the Court should grant final approval of the settlement, to rule upon the adequacy of the Plaintiffs as representatives of Reckson stockholders, to consider Plaintiffs' Counsel's application for Fees and Expenses and to consider any other matters that may come before the Court. 34. The Court may adjourn the Settlement Hearing by oral announcement at such hearing or at any adjournment without further notice of any kind. The Court may approve the settlement with or without modifications and enter an Order and Final Judgment without further notice of any kind. THE RIGHT TO BE HEARD AT THE SETTLEMENT HEARING 35. Any Reckson stockholder may, but is not required to, enter an appearance in the Actions and be represented by counsel of his, her or its choice and expense. Any Reckson stockholder who does not enter an appearance will be represented by the attorneys for the Plaintiffs listed below. Any Reckson stockholder who objects to any aspect of the settlement may appear and be heard at the Settlement Hearing. Any such Person, however, must submit a written notice of objection, sent via first class mail, overnight courier or hand delivered, that is received on or before ---------------------------, 2005, by each of the following persons: -21- CLERK OF THE CIRCUIT COURT FOR BALTIMORE CITY, MARYLAND 111 North Calvert Street, Room 462 Baltimore, Maryland 21202 Charles J. Piven Marshall N. Perkins The Law Offices of Charles J. Piven, P.A. The World Trade Center 401 East Pratt Street, Suite 2525 Baltimore, Maryland 21202 Tel: (401) 332-0030 Fax: (401) 685-1300 John B. Isbister Tydings & Rosenberg LLP 100 East Pratt Street, 26th Floor Baltimore, Maryland 21202 Tel: (410) 752-9700 Fax: (410) 727-5460 Andrew J. Graham Kramon & Graham, P.A. One South Street, Suite 2600 Baltimore, Maryland 21202-3201 Tel: (410) 752-6030 Fax: (410) 539-1269 James J. Hanks, Jr. G. Stewart Webb, Jr. Venable LLP 1800 Mercantile Bank & Trust Building Two Hopkins Plaza Baltimore, Maryland 21201 Tel: (410) 244-7400 Fax: (410) 224-7742 -22- Robert B. Schulman Andrew M. Dansicker Schulman, Treem, Kaminkow, Gilden & Ravenell, P.A. The World Trade Center 401 East Pratt Street, Suite 1800 Baltimore, Maryland 21202-3004 Tel: (410) 332-0850 Fax: (410) 332-0866 Any Person who wishes to object to any aspect of the settlement must demonstrate that he, she or it is a Reckson stockholder. The notice of objection must also contain a written statement which sets out the reasons(s) for the objection, the identity of any witness(es) that the objector intends to call at the Settlement Hearing and the substance of the intended testimony of such witness(es) at the Settlement Hearing. The written notice of objection must also disclose the number of shares of Reckson common stock owned by the objecting Person. Only Reckson stockholders who have submitted written notices of objection in this manner will be entitled to be heard at the Settlement Hearing, although attendance at the Settlement Hearing is not necessary in order for an objection to be considered by the Court. HOWEVER, UNLESS OTHERWISE ORDERED BY THE COURT, ANY RECKSON STOCKHOLDER WHO DOES NOT MAKE HIS, HER OR ITS OBJECTION OR OPPOSITION TO THE SETTLEMENT IN THE MANNER DESCRIBED ABOVE SHALL BE DEEMED TO HAVE WAIVED ALL OBJECTIONS AND OPPOSITION TO THE FAIRNESS, REASONABLENESS AND ADEQUACY OF THE SETTLEMENT, THE ADEQUACY OF THE PLAINTIFFS AS REPRESENTATIVES OF RECKSON STOCKHOLDERS, PLAINTIFFS' SETTLEMENT COUNSEL'S APPLICATION FOR FEES AND EXPENSES AND ANY OTHER MATTERS PERTAINING TO THE ACTIONS. NOTICE TO PERSONS OR ENTITIES HOLDING RECORD OWNERSHIP ON BEHALF OF OTHERS 36. Brokerage firms, banks and other persons or entities who are Reckson stockholders in their capacities as record owners, but not as beneficial owners, are requested to -23- send this Notice promptly to the beneficial owners. Additional copies of this Notice for transmittal to beneficial owners are available on request directed to: Susan McGuire Senior Vice President Investor Relations Reckson Associates Realty Corp. 225 Broadhollow Road, Suite 212W Melville, New York 11747-4883 EXAMINATION OF PAPERS 37. This Notice is a summary and does not describe all of the details of the settlement. The Stipulation of Settlement as executed by counsel for the Settling Parties, along with the accompanying Exhibits, may be viewed on the websites of Plaintiffs' Settlement Counsel at http://www.milbergweiss.com and http://www.chimicles.com, or may be examined, during normal business hours, at the office of the Clerk of the Circuit Court for Baltimore City, Maryland, 111 North Calvert Street, Room 462, Baltimore, Maryland 21202. PLEASE CONSULT THE STIPULATION OF SETTLEMENT FOR A MORE DETAILED STATEMENT OF THE TERMS OF THE SETTLEMENT. PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE. DATED: --------------------------, 2005 ----------------------------- Judge Evelyn Omega Cannon -24- EXHIBIT E --------- IN THE CIRCUIT COURT FOR BALTIMORE CITY ----------------------------------------------------- ) SEKUK GLOBAL ENTERPRISES PROFIT ) SHARING PLAN, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., ) HERVE A. KEVENIDES, JOHN V.N. KLEIN, )Civil No. 24-C-03-007496 RONALD H. MENAKER, PETER QUICK, )Judge Evelyn Omega Cannon LEWIS D. RANIERI, DONALD J. RECHLER, ) GREGG M. RECHLER, MITCHELL D. ) RECHLER, ROGER M. RECHLER, SCOTT H. ) RECHLER and CONRAD D. STEPHENSON, ) ) ) DEFENDANTS. ) ----------------------------------------------------- ) CHARLES D. HOFFMAN, et al., ) ) PLAINTIFFS, ) )Civil No. 24-C-03-007876 v. )Judge Evelyn Omega Cannon ) DONALD J. RECHLER, et al., ) ) DEFENDANTS. ) ) ----------------------------------------------------- ) ROBERTA CHIRKO, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., et al., )Civil No. 24-C-03-008010 )Judge Evelyn Omega Cannon DEFENDANTS. ) ----------------------------------------------------- SUMMARY NOTICE OF PROPOSED SETTLEMENT ------------------------------------- SUMMARY NOTICE OF PROPOSED SETTLEMENT OF SHAREHOLDER DERIVATIVE ACTIONS TO: ALL RECORD AND BENEFICIAL HOLDERS OF THE COMMON STOCK OF RECKSON ASSOCIATES REALTY CORP. ("RECKSON" OR THE "COMPANY"). BROKERAGE FIRMS, BANKS AND/OR OTHER PERSONS OR ENTITIES WHO HOLD RECKSON SHARES OF RECORD, WHO ARE NOT ALSO THE BENEFICIAL OWNERS, ARE REQUESTED TO FORWARD THIS NOTICE PROMPTLY TO THE BENEFICIAL OWNERS OF SUCH SHARES. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THESE ACTIONS. PLEASE NOTE THAT THIS IS NOT A SECURITIES CLASS ACTION SUIT AND ACCORDINGLY, NO INDIVIDUAL STOCKHOLDER HAS A RIGHT TO RECEIVE INDIVIDUAL COMPENSATION AS A RESULT OF THE SETTLEMENT OF THESE ACTIONS. You are hereby notified pursuant to Maryland Law and an order of the Maryland Circuit Court for Baltimore City (the "Court") of the proposed settlement of the above-captioned shareholder derivative actions (the "Maryland Actions"), the proposed settlement of related, consolidated shareholder derivative actions captioned TUCKER, ET AL. V. RECHLER, ET AL., Index Nos. 03-CV-4917, 03-CV-5008 and 03-CV-5178, pending before the United States District Court for the Eastern District of New York (the "New York Federal Court Actions") and the proposed settlement of three other, related shareholder derivative actions pending in New York State Court (the "New York State Court Actions"): LOWINGER V. RECHLER, ET AL., Index No. 03-014162, pending before the Supreme Court of the State of New York, County of Nassau, and STEINER V. RECHLER, ET AL., Index No. 03-23545, and LIGHTER V. RECHLER, ET AL., Index No. 03-23593, both pending before the Supreme Court of the State of New York, County of Suffolk. A Final Settlement Hearing will be held on ___________, 2005 at __:__ _.m., or at such other time as the Court may order, before the Honorable Judge Evelyn Omega Cannon of the Circuit Court for Baltimore City, Maryland, 329 Courthouse East, 111 North Calvert Street, Baltimore, Maryland 21202, to determine, among other things, whether the proposed settlement should be approved as fair, just and adequate, to rule upon the adequacy of the Plaintiffs as representatives of Reckson stockholders, to consider Plaintiffs' Settlement Counsels' application for attorneys' fees and reimbursement of expenses and to consider any and any other matters that may come before the Court. If the Court approves the proposed settlement at the Final Settlement Hearing and the settlement becomes effective, Reckson Associates Realty Corp., Reckson Operating Partnership, L.P. and Reckson stockholders will be barred from asserting any claims that were alleged or could have been alleged in the Maryland Actions, the New York Federal Court Actions or the New York State Court Actions (collectively, the "Actions"), and the courts where the New York Federal Court Actions and the New York State Court Actions are pending will be requested to dismiss those actions with prejudice based on the approval of the Court. A more detailed form of notice describing the proposed settlement of the Actions may have already been mailed to you. If you have not received the detailed notice, you may obtain a copy of it by submitting proof that you are a Reckson common stockholder and writing to: Susan McGuire Senior Vice President Investor Relations Reckson Associates Realty Corp. 225 Broadhollow Road, Suite 212W Melville, New York 11747-4883 Inquiries, other than requests for the detailed form of Notice, may be made to Plaintiffs' Settlement Counsel: David A.P. Brower Todd L. Kammerman Milberg Weiss Bershad & Schilman LLP One Pennsylvania Plaza New York, New York 10119-0165 Tel: (212) 594-5300 Fax: (212) 868-1229 Nicholas E. Chimicles Kimberly M. Donaldson Chimicles & Tikellis LLP One Haverford Centre 361 West Lancaster Avenue Haverford, Pennsylvania 19041 Tel: (610) 642-8500 Fax: (610) 649-3633 -3- PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR INFORMATION CONCERNING THE SETTLEMENT. Dated: , 2005 ----- By Order of the Court ------------------------------------- Judge Evelyn Omega Cannon -4- EXHIBIT F IN THE CIRCUIT COURT FOR BALTIMORE CITY ------------------------------------- ) SEKUK GLOBAL ENTERPRISES PROFIT ) SHARING PLAN, ) ) PLAINTIFF, ) ) v. ) ) RECKSON ASSOCIATES REALTY CORP., ) Civil No. 24-C-03-007496 HERVE A. KEVENIDES, JOHN V.N. ) Judge Evelyn Omega Cannon KLEIN, RONALD H. MENAKER, PETER ) QUICK, LEWIS D. RANIERI, DONALD J. ) RECHLER, GREGG M. RECHLER, MITCHELL ) D. RECHLER, ROGER M. RECHLER, SCOTT ) H. RECHLER and CONRAD D. STEPHENSON, ) ) DEFENDANTS. ) -------------------------------------) ) CHARLES D. HOFFMAN, et al., ) ) PLAINTIFFS, ) Civil No. 24-C-03-007876 ) Judge Evelyn Omega Cannon v. ) ) DONALD J. RECHLER, et al., ) ) DEFENDANTS. ) ) ------------------------------------- ) ROBERTA CHIRKO, ) ) PLAINTIFF, ) Civil No. 24-C-03-008010 ) Judge Evelyn Omega Cannon v. ) ) RECKSON ASSOCIATES REALTY CORP., et ) al., ) ) DEFENDANTS. ) ------------------------------------- ORDER AND FINAL JUDGMENT ORDER AND FINAL JUDGMENT THIS CAUSE having now come before the Court upon a Motion for Final Judgment and Order of Dismissal and with respect to certain matters relating to the proposed settlement (the "Settlement") of the Actions in accordance with the Stipulation of Settlement dated as of March 14, 2005, and the Exhibits thereto (the "Stipulation"), and The Court having read and considered the Stipulation, heard arguments of counsel, granted preliminary approval of the settlement by Order dated ---------------------, 2005, and the Court having considered objections, if any, raised by Reckson stockholders at the Settlement Hearing, and being otherwise fully appraised in the premises, and All parties having consented to the entry of this Order; it is ORDERED, ADJUDGED AND DECREED THAT: DEFINITIONS 1. For purposes of this Final Judgment and Order of Dismissal (the "Judgment"), the Court adopts and incorporates the definitions contained in the Stipulation. JURISDICTION 2. This Court has jurisdiction over the subject matter of the above-captioned litigation, and all actions within this litigation or related to this litigation, including, for settlement purposes, claims or actions within the exclusive jurisdiction of the federal courts, and over all parties in the Actions, including all Reckson stockholders. NO ADMISSION OR EVIDENCE OF LIABILITY 3. This Court hereby decrees that neither the Stipulation, nor this Judgment, nor the fact of the Settlement, is an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by the Released Persons or of the truth of any of the claims or allegations alleged in the Actions, or that could have been alleged in the Actions. This Judgment is not a finding of the validity or invalidity of any of the claims in the Actions or of any wrongdoing or lack thereof by any defendant. The Settlement and the Stipulation, and any and all negotiations, documents and discussions associated with them, shall not be deemed or construed to be an -2- admission or evidence of any violation of any statute or law or of any liability or wrongdoing by the Released Persons, or of the truth of any of the claims or allegations, or of any alleged defense, or of the absence of any wrongdoing or limitation of damage or injury, and evidence thereof shall not be discoverable or used directly or indirectly, in any way, by any Person, in any other proceeding. FINALIZATION OF PRELIMINARY FINDINGS 4. The Court makes final and unconditional the conditional and preliminary findings made by the Court regarding Notice, the appropriateness of the pleading of the Maryland Actions as shareholder derivative actions for and on behalf of Reckson Associates Realty Corp. ("Reckson"), rather than as direct actions, and the settlement terms in the Order Regarding Preliminary Approval and Notice ("Preliminary Order") dated ----------------------, 2005. NOTICE TO RECKSON STOCKHOLDERS 5. The Court finds that the Notice of Settlement of the Actions was given in accordance with the Preliminary Order and that such notice was reasonable and constituted the best practicable notice under the circumstances, constituted valid, due and sufficient notice to all Reckson stockholders and complied fully with the requirements of due process, the Maryland Constitution, the Constitution of the United States and applicable Maryland law. 6. Pursuant to Maryland law and for the purposes of Settlement only, the Court finds that the Maryland Actions were appropriately pled as shareholder derivative actions for and on behalf of Reckson, rather than as direct actions, and that Sekuk Global Enterprises Profit Sharing Plan, Charles D. Hoffman, Lydia J. Hoffman and Roberta Chirko fairly and adequately represent the interests of all Reckson stockholders in enforcing the rights of Reckson. APPROVAL OF THE SETTLEMENT 7. This Court hereby approves the Settlement set forth in the Stipulation and finds in accordance with Maryland law that the Settlement is, in all respects, fair, reasonable, adequate and in the best interest of Reckson and its stockholders, and directs the consummation and implementation of the Settlement in accordance with the terms and provisions of the Stipulation. -3- 8. This Court further finds that the settlement has been entered into and made in good faith, and that the Plaintiffs, Plaintiffs' Counsel and Plaintiffs' Settlement Counsel have fairly and adequately represented the interests of Reckson and its stockholders in connection with this litigation and the Settlement. DISMISSAL WITH PREJUDICE 9. The Court hereby dismisses the above-captioned actions with prejudice, without costs to any party, except as provided herein. 10. The Court directs plaintiffs' counsel in the New York Federal Court Actions and the New York State Court Actions to seek dismissal of those actions with prejudice in accordance with the terms of the Stipulation. RELEASES AND COVENANTS 11. Plaintiffs on their own behalf as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders have fully, finally and forever released, relinquished and discharged all Released Claims, and any and all claims arising out of, relating to or in connection with the Settlement or resolution of the Actions, against the Released Persons. 12. Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs, on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson shareholders, has nonetheless fully, finally and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling -4- Parties acknowledge that the foregoing waiver was separately bargained for and a key element of the Settlement of which this release is a part. 13. The release extends to claims that Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, do not know or suspect to exist at the time of the release, which, if known, might have affected the decision to enter into this release. Each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs, on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, have waived any and all provisions, rights and benefits conferred by any law of the United States, or any state or territory of the United States or principle of common law, which governs or limits a Person's release of unknown claims. The foregoing waiver includes without limitation an express waiver, to the full extent permitted by law, by Plaintiffs on their own behalf, as well as on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders, of any and all rights under California Civil Code Section 1542, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. In addition, each of Reckson, Reckson Operating Partnership, L.P. and the Plaintiffs on their own behalf and on behalf of Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders also has waived any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code Section 1542. 14. Plaintiffs, Reckson, Reckson Operating Partnership, L.P. and Reckson stockholders are hereby permanently barred and enjoined from asserting, instituting, maintaining, prosecuting or enforcing against any of the Released Persons any of the Released Claims (including Unknown Claims and including claims within the exclusive jurisdiction of the federal courts) in any court or other forum whatsoever, including such Released Claims as already may have been asserted in any pending action, arbitration or other proceeding. -5- CONTINUING JURISDICTION 15. Without affecting the finality of this Judgment in any way, this Court retains continuing jurisdiction: (a) over the implementation, administration and consummation of the Settlement; (b) over these Actions until the Final Judgment contemplated hereby has become effective and each and every act agreed to be performed by the parties to the Stipulation shall have been performed pursuant to the Stipulation; and (c) over all parties to these Actions and all parties to the Stipulation for the purpose of taking such other actions as may be necessary to conclude and administer this Settlement and to implement and enforce the Stipulation. TERMINATION OF SETTLEMENT 16. In the event that the Settlement does not become effective or is terminated in accordance with the terms and provisions of the Stipulation, then this Final Judgment shall be rendered null and void and be vacated and the Stipulation and all orders entered in connection therewith by this Court shall be rendered null and void. COMPLIANCE WITH PROCEDURAL RULES 17. The Court finds that during the course of the Actions, the Settling Parties and their respective counsel have at all times complied with the requirements of the applicable Maryland Rules of Civil Procedure. FEES AND EXPENSES 18. Plaintiffs' Settlement Counsel are hereby awarded attorneys' fees and reimbursement of expenses ("Fees and Expenses") in the amount of Dollars--------.The foregoing Fees and Expenses have been determined by the Court to be fair, reasonable and entirely appropriate. No other fees, costs or expenses may be awarded to Plaintiffs' Counsel in connection with the Actions, or any other related action. The Fees and Expenses shall be paid by Reckson pursuant to the terms of the Stipulation. 19. Any costs and expenses associated with the consummation and/or administration of the Settlement shall be paid pursuant to the terms of the Stipulation. -6- ENTRY OF FINAL JUDGMENT 20. The Court finds that no just reason exists for delay in entering final judgment in accordance with the Stipulation. Accordingly, the Clerk is hereby directed to enter this Final Judgment forthwith. Dated: -----------------------, 2005 -------------------------------------- Judge Evelyn Omega Cannon -7-